Opinion
Civil Action 2:03-CV-523
October 9, 2003
OPINION AND ORDER
In this diversity action, removed from state court, plaintiff seeks recovery of underinsured motorist coverage under policies issued by defendant to plaintiff's employer in connection with injuries sustained by plaintiff in a motor vehicle accident. This matter is currently before the Court on the motion of General Motors Corporation (hereinafter "GM") for leave to intervene as a defendant in this action.
I. Background
On July 29, 1995, plaintiff was riding with Alan P. Schultz, now deceased, in his vehicle on Hayes road in Ashtabula County, Ohio. Complaint, at ¶ 2, attached to Defendant's Notice of Removal. Plaintiff alleges that Schultz negligently operated the vehicle and, as a result, lost control of the vehicle which traveled off the right side of the road and into a ditch. Id. The vehicle flipped over three times causing permanent physical injuries to plaintiff. Id., at ¶ 3. Plaintiff also alleges that, as a result of the accident, he has and will continue to experience "great physical pain, suffering, loss of enjoyment of life, and attendant emotional distress" and has and will continue to incur "hospital, surgical, and medical expenses." Id., at ¶¶ 4-5. Additionally, plaintiff asserts that he has and will continue to sustain "losses of earnings, as well as other economic losses. . . ." Id., at ¶ 6.
Schultz carried an automobile insurance policy issued by Progressive Insurance Company. Id., at ¶ 8. Progressive Insurance Company paid up to its coverage limit, i.e., $12,500.00 for bodily injury. Id., at ¶ 9. However, this amount was apparently insufficient to compensate plaintiff for his losses. Additionally, plaintiff alleges that he has been unable to collect any amount from Schultz's estate. Id., at ¶ 11.
Plaintiff contends that Schultz was operating an "underinsured motor vehicle" as that term is defined by O.R.C. § 3937.18 et seq. Id., at ¶ 10. Plaintiff seeks underinsured motorist benefits under a business auto policy, excess business auto policy, commercial umbrella liability policy and commercial general liability policy issued by defendant National Union Fire Insurance Company of Pittsburgh (hereinafter "National Union") to his employer. National Union argues, inter alia, that the insurance policies are actually "fronting policies," i.e., that GM, plaintiffs employer, is actually a "self-insurer" not subject to O.R.C. § 3937.18, and that neither GM nor National Union has any duty to provide underinsured motorist coverage to plaintiff in this case. Answer, at ¶ 22.
II. Discussion
GM seeks to intervene in this case pursuant to Rule 24 of the Federal Rules of Civil Procedure, which provides in relevant part:
(a) Intervention of Right. Upon timely application anyone shall be permitted to intervene in an action: (1) when a statute of the United States confers an unconditional right to intervene; or (2) when the applicant claims an interest relating to the property or transaction which is the subject of the action and the applicant is so situated that the disposition of the action may as a practical matter impair or impede the applicant's ability to protect that interest, unless the applicant's interest is adequately represented by existing parties.
(b) Permissive Intervention. Upon timely application anyone may be permitted to intervene in an action: (1) when a statute of the United States confers a conditional right to intervene; or (2) when an applicant's claim or defense and the main action have a question of law or fact in common. . . . In exercising its discretion the court shall consider whether the intervention will unduly delay or prejudice the adjudication of the rights of the original parties.
GM argues that, in this case, both provisions of the rule authorize its intervention. Plaintiff, however, argues that there is no basis upon which to permit GM to intervene in this action.
As an initial matter, any application for intervention must be timely. The United States Court of Appeals for the Sixth Circuit has identified five factors for consideration in assessing whether an application for leave to intervene is timely:
(1) the point to which the suit has progressed;
(2) the purpose for which intervention is sought;
(3) the length of time preceding the application during which the proposed intervener knew or reasonably should have known of [its] interest in the case;
(4) the prejudice to the original parties due to the proposed intervener's failure, after [it] knew or reasonably should have known of [its] interest in the case, to apply promptly for intervention; and
(5) the existence of unusual circumstances militating against or in favor of intervention.Cuyahoga Valley Ry. Co. v. Tracey, 6 F.3d 389, 396 (6th Cir. 1993) (quoting Grubbs v. Norris, 870 F.2d 343, 345 (6th Cir. 1989)).
Plaintiff filed his complaint against defendant in the Court of Common Pleas for Franklin County, Ohio, on June 2, 2003. Defendant removed the action to this Court on June 10, 2003. On July 11, 2003, GM moved to intervene. At most, GM had little more than one month's notice of the case. Moreover, this Court has established a discovery completion date of February 2, 2004 and a dispositive motions filing date of March 2, 2004. Preliminary Pretrial Order (July 24, 2003). Thus, this case has not progressed to the point that allowing GM to intervene would materially disrupt the course of the litigation.
GM states that its purpose in seeking leave to intervene in this action is to protect its pecuniary interests. General Motors Corporation's Motion to Intervene, at p. 5. GM alleges that it is essentially a self-insurer and that, to the extent that National Union may be liable to plaintiff, GM will be required to reimburse National Union. Id. As will be discussed infra, this Court concludes that GM's reason for seeking leave to intervene in this matter is valid. Consideration of this factor weighs in favor of finding that the application was timely. Nor can this Court perceive any unusual circumstances that would lead to the conclusion that GM's motion to intervene was untimely. Therefore, this Court concludes that GM's motion to intervene is timely.
A. Intervention as of Right
GM may intervene as of right if it can demonstrate a "direct and substantial" legal interest in the subject matter of the pending action or claims, establish that disposition of the action or claims may impair or impede its ability to protect that legal interest, and demonstrate that the existing parties to the action or claims cannot adequately protect its interests. See Grutter v. Bollinger, 188 F.3d 394, 397-98 (6th Cir. 1999) (citing Jansen v. City of Cincinnati, 904 F.2d 336, 340 (6th Cir. 1990)); Meyer v. Goldberg, Inc. of Lorain v. Goldberg, 717 F.2d 290, 292 (6th Cir. 1983).
GM argues that, as a self-insurer, it has a direct and substantial interest in this litigation. The United States Court of Appeals for the Sixth Circuit has adopted "a rather expansive notion of the interest sufficient to invoke intervention of right." Michigan State AFL-CIO v. Miller, 103 F.3d 1240, 1245 (6th Cir. 1997); Bradley v. Milliken, 828 F.2d 1186, 1192 (6th Cir. 1987). Moreover, "close cases should be resolved in favor of recognizing an interest under Rule 24(a)." Grutter, 188 F.3d at 399; Miller, 103 F.3d at 1247. This Court concludes that GM has a "direct and substantial" interest in this action.
In reaching this conclusion, the Court expresses no opinion on whether or not GM is actually or "essentially" a self-insurer. This Court merely concludes that GM's allegations are sufficient to create a direct and substantial interest in this case.
The second prong of the test requires a showing that GM's interest will be impaired "as a practical matter" if intervention is not permitted. See Grutter, 188 F.3d at 397-98. To satisfy this prong, an applicant need only establish that impairment of its substantial legal interest is possible should intervention be denied. Miller, 103 F.3d at 1247. This Court is persuaded that GM's legal interests could be impaired if it is not permitted to intervene.
Finally, GM must show that its interests will not be adequately represented by National Union. It is "sufficient that the movant prove that representation may be inadequate." Miller, 103 F.3d at 1247 (emphasis added). GM argues only that National Union does not have the same incentives to defend the case as does GM. This Court agrees. Because it appears that any judgment against National Union will ultimately be borne, from a financial stand point, by GM, this Court concludes that its representation of GM's interests may be inadequate. See Indemnity Agreement, Article IV, ¶¶ 5, 7; Addendum 2, attached as Exhibit A to General Motors Corporation's Motion to Intervene. Therefore, this Court concludes that intervention as of right is appropriate in this case.
B. Permissive Intervention
Alternatively, the Court concludes that GM should be permitted to intervene in this action under Rule 24(b). Whether an applicant will be permitted to intervene under Rule 24(b) lies within the sound discretion of the trial court. Fed.R.Civ.P. 24(b). See also Redland Ins. Co. v. Chillingsworth Venture, Ltd., 171 F.R.D. 206, 208 (N.D. Ohio 1997); Morelli v. Morelli, (unreported) 2001 WL 99859 (S.D. Ohio 2001). Moreover, permissive intervention under Rule 24(b) is to be liberally granted, so as to promote the convenient and prompt disposition of all claims in one litigation. Morelli, 2001 WL 99859, *4 (citing City of Cleveland v. Cities Serv. Oil Co., 47 F.R.D. 543, 546 (N.D. Ohio 1969)).
As was discussed supra, GM's motion to intervene is timely. Also, it is clear that GM's defenses pose questions of law and issues of fact in common with at least one of the defenses raised by National Union, i.e., that because GM is a self-insurer, neither GM nor National Union is liable to plaintiff under O.R.C. § 3937.18. Finally, plaintiff has not established any prejudice that would result from allowing GM to intervene in this action.
WHEREUPON, this Court concludes that GM's motion to intervene is meritorious and it is therefore GRANTED.
The Clerk shall file GM's tendered Answer and Counterclaim.