Opinion
Jenner & Block LLP, Chicago, IL (Craig C. Martin, Peter J. Brennan, Matthew J. Thomas of counsel), and Husch Blackwell LLP, St. Louis, MO (Alan E. Popkin, David W. Sobelman, Jerry K. Ronecker, Joel B. Samson of counsel), for plaintiff Olin Corporation.
Kennedys CMK, LLP, Philadelphia, PA (Ralph J. Luongo, Elaine Whiteman Klinger, Bradley J. Mortensen, Benjamin A. Blume, Erik B. Derr, Victoria Allen, Elizabeth A. Sutton, Diane M. Karnes, Gary S. Kull of counsel), and Simpson, Thacher & Bartlett LLP, New York, N.Y. (Bryce L. Friedman, Susannah S. Geltman of counsel), for defendant/third-party plaintiff Lamorak Insurance Company f/k/a OneBeacon America Insurance Company.
Mendes & Mount, LLP, New York, N.Y. (Matthew B. Anderson, John McAndrews, William Seo of counsel), for third-party defendants Certain Underwriters at Lloyd’s, London and Certain London Market Insurance Companies.
Ford, Marrin, Esposito, Witmeyer & Gleser, LLP, New York, N.Y. (Michael L. Anania, Gregory R. Bruno of counsel), for third-party defendants Continental Casualty Company and Munich Reinsurance America, Inc.
Bates Carey LLP, Chicago, IL (Robert J. Bates, Jr. of counsel), for third-party defendant Munich Reinsurance America, Inc.
Budd Larner, P.C., Short Hills, N.J. (Michael J. Balch of counsel), for third-party defendant General Reinsurance Corporation.
Shipman & Goodwin, LLP, Washington, DC (Miranda Turner, James P. Ruggeri, Joshua P. Mayer of counsel), for third-party defendant Great American Insurance Company.
MEMORANDUM ORDER
JED S. RAKOFF, U.S.D.J.
Before the Court is the motion of plaintiff Olin Corporation ("Olin") to intervene as of right, or, alternatively, to intervene pursuant to the Court’s discretion, in the third-party claims brought by defendant and third-party plaintiff Lamorak Insurance Company ("Lamorak") against third-party defendant London Market Insurers seeking equitable contribution and indemnity as to the remaining sites. ECF No. 2068. The London Market Insurers support Olin’s motion. See ECF No. 2083. Lamorak opposes. See ECF No. 2082. Familiarity with all prior proceedings is herein assumed.
The general thrust of Olin’s motion— and its affirmative defenses to Lamorak’s third-party claims— is that Lamorak and the London Market Insurers, together with the companies that "control" the London Market Insurers, have engaged in a scheme to "manipulate claims in order to improperly limit Lamorak’s losses to Olin." See Memorandum of Law in Support of Olin Corporation’s Motion to Intervene ("Olin Mem.") at Ex. A ¶¶ 36 (Proposed Answer), ECF No. 2069. The opportunity for this alleged collusion arises in part because of the Judgment Reduction Provision in Olin’s settlement agreement with the London Market Insurers, which obliges Olin to "automatically reduce[ ]" the amount owed by Lamorak such that Lamorak’s contribution claims against the London Market Insurers are "satisfied and extinguished." See Third-Party Defendants Certain Underwriters at Lloyd’s, London and Certain London Market Insurance Companies’ Claims Pursuant to Federal Rules of Civil Procedure 14(a)(2)(D) Against Plaintiff Olin Corporation ("London Market Insurers’ Rule 14 Claims") at ¶ 13, ECF No. 2008/2011. That is, Olin ultimately bears the financial burden of Lamorak’s contribution claims. See, e.g., Third-Party Defendants Certain Underwriters at Lloyd’s, London and Certain London Market Insurance Companies’ Response to Olin Corporation’s Motion to Intervene ("London Mem.") at 3, ECF No. 2083 (describing Olin "as the party with the actual money at risk"). Olin further alleges that the potential for mutual profit from collusion arises because the London Market Insurers reinsure Lamorak, giving them a direct financial interest in Lamorak’s ultimate judgment obligations in this action. Proposed Answer at ¶ 43. Moreover, Olin contends, the London Market Insurers and Lamorak’s direct insurance obligations to Olin, as well as the London Market Insurers’ reinsurance obligations to Lamorak, were and are controlled and further insured by the National Indemnity Company ("NICO"), Resolute Management Inc. ("RMI"), and Resolute Management Services Limited ("RMSI") (which in turn are all ultimately owned, controlled, or part of Berkshire Hathaway) Id. at ¶ 44. Therefore, Olin concludes, Lamorak and the London Market Insurers both stand to gain from a reduction in Lamorak’s liability.
A party may intervene as of right under Federal Rule of Civil Procedure Rule 24(a)(2) if it: "(1) files a timely motion; (2) asserts an interest relating to the property or transaction that is the subject of the action; (3) is so situated that without intervention the disposition of the action may, as a practical matter, impair or impede its ability to protect its interests; and (4) has an interest not adequately represented by the other parties." United States v. Pitney Bowes, Inc., 25 F.3d 66, 70 (2d Cir. 1994). Alternatively, Federal Rule of Civil Procedure 24(b) grants a court discretion to, "[o]n timely motion," "permit anyone to intervene who ... has a claim or defense that shares with the main action a common question of law or fact." Fed.R.Civ.P. 24(b). The rule "is to be liberally construed." Degrafinreid v. Ricks, 417 F.Supp.2d 403, 407 (S.D.N.Y. 2006). In deciding whether to permit intervention under Rule 24(b), courts generally consider the same factors that are relevant as of right under Rule 24(a)(2). Peterson v. Islamic Republic of Iran, 290 F.R.D. 54, 57 (S.D.N.Y. 2013) (citing R Best Produce, Inc. v. Shulman-Rabin Marketing Corp., 467 F.3d 238, 240 (2d Cir. 2006) ). However, "[t]he principal guide in deciding whether to grant permissive intervention is ‘whether the intervention will unduly delay or prejudice the adjudication of the rights of the original parties.’" Pitney Bowes, 25 F.3d at 73 (quoting Fed.R.Civ.P. 24(b)(3) ).
With respect to timeliness, courts consider "(1) how long the applicant had notice of the interest before it made the motion to intervene; (2) prejudice to existing parties resulting from any delay; (3) prejudice to the applicant if the motion is denied; and (4) any unusual circumstances militating for or against a finding of timeliness." Pitney Bowes, Inc., 25 F.3d at 70. The parties dispute when Olin was on notice of its interest. Lamorak moved to file a third-party complaint on August 22, 2017. See ECF No. 1987. Lamorak renewed this motion on September 26, 2017, see ECF No. 1990, after the Second Circuit’s mandate issued, see ECF No. 1989. Lamorak, having received leave of Court, filed its third-party complaint on October 19, 2017. ECF No. 2003. On December 8, 2017, the insurance companies filed answers to Lamorak’s third-party complaint. See ECF Nos. 2029, 2031, 2033, 2035. The London Market Insurers filed fourth-party claims against Olin on November 20, 2017. See ECF No. 2011. Olin moved to intervene on January 4, 2018. See ECF No. 2068.
Lamorak argues that Olin was on notice as soon as Lamorak officially moved for leave to file its third-party complaint, i.e. September 26, 2017, and that Olin’s motion accordingly is untimely. However, until Lamorak actually filed its third-party claims, Olin had no interest to protect. Olin, by contrast, argues that it only became aware of the necessity of defending its interest through intervention when the London Market Insurers filed their claims against Olin, which, according to Olin, "made clear" for the first time that the London Market Insurers would seek enforcement of the Judgment Reduction Provision. Olin Mem. at 6. Lamorak challenges that contention, asserting that Olin has been aware of, or at least on notice of, the factual predicates for Olin’s motion to intervene for a long time: the reinsurance relationship between London and Lamorak is evident on the face of the copies of produced Lamorak policies, and the business relationships between London, Lamorak, Berkshire Hathway, NICO, and Resolute entities are "old news." Opposition of Lamorak Insurance Company to Olin Corporation’s Motion to Intervene in Third-Party Action ("Lamorak Opp.") at 11, ECF No. 2082.
Indeed, when Lamorak filed its motion for leave to file a third-party complaint, Olin defended its interest in the most sensible way available: it filed an opposition. See ECF No. 1992. Lamorak also does not explain why, under the logic its argument, Olin should not be deemed as having had notice on August 22, 2017, when Lamorak "unofficially" filed its motion for leave to file a third-party complaint. See ECF No. 1987.
However, regardless of whether Olin’s timeliness is measured from the date Lamorak filed its third-party contribution claims (October 19, 2017) or the date that the London Market Insurers filed their Rule 14(a) claims (November 20, 2017), see ECF No. 2011, Olin’s motion is timely. As an initial matter, courts have found motions to intervene timely where, as here, these motions were brought a "few months" after the claims. See, e.g., Med. Diagnostic Imaging, PLLC v. CareCore Nat’l, LLC, 542 F.Supp.2d 296, 304 (S.D.N.Y. 2008) (contrasting cases finding intervention untimely when sought a year or more after notice); Hartford Fire Ins. Co. v. Mitlof, 193 F.R.D. 154, 160 (S.D.N.Y. 2000) (finding intervention timely when sought within three months of complaint); Citizens for an Orderly Energy Policy, Inc. v. Suffolk Cty., 101 F.R.D. 497, 501 (E.D.N.Y. 1984) (finding intervention timely, even if it could have been "brought on a bit earlier," because "the delay will not prejudice the existing parties to the action").
More significantly, Olin’s intervention will not prejudice Lamorak or any of the Third-Party Defendants. Although discovery deadlines have come and gone, Olin contends that its intervention "will not cause the Court’s current case management order, including its discovery, pretrial, and trial dates, to be amended." Olin Mem. at 2. Moreover, summary judgment briefing has not yet begun.
Lamorak argues that the existing parties nonetheless will suffer prejudice if Olin is allowed to intervene because Olin seeks to relitigate questions already settled by In re Viking Pump, 27 N.Y.3d 244, 33 N.Y.S.3d 118, 27 N.Y.3d 244 (2016), the Second Circuit, and this Court about the availability of contribution and the timeliness of Lamorak’s claims. But to the extent that is true, Lamorak can raise those (presumably straightforward) arguments in its motion for summary judgment on Olin’s affirmative defenses.
By contrast, Olin would be prejudiced by a denial of its motion. Lamorak contends that Olin would not suffer any prejudice were it not permitted to intervene because Olin can bring any potential defenses to its indemnification obligations in a separate action. As Lamorak points out, Olin filed an action in state court against the London Market Insurers that has been removed to federal court and related to this case. See Olin Corporation v. Certain Underwriters at Lloyd’s London and Certain London Market Insurance Companies, No. 18-cv-418 (S.D.N.Y.). But Olin’s potential defenses regarding its obligations to the London Market Insurers under the Settlement Agreement are different from the defenses it seeks to raise here. Here, Olin intends to argue that Lamorak is not entitled to seek contribution from the London Market Insurers. In an action concerning Olin’s obligations under the Settlement Agreement, Olin could only argue that it is not required to indemnify the London Market Insurers for any contribution to which Lamorak might be entitled.
Turning next to the related question of Olin’s interest, to satisfy Rule 24(a), Olin’s interest must be "direct, substantial, and legally protectable." Wash. Elec. Coop., Inc. v. Mass. Mun. Wholesale Elec. Co., 922 F.2d 92, 97 (2d Cir. 1990) (internal citations omitted). Olin has an interest in defeating Lamorak’s third-party contribution claims because any of the settled insurers could "foist[ ] their third-party liability to Lamorak back onto Olin and reduc[e] a judgment in Olin’s favor." Olin Mem. at 9.
Lamorak argues that this interest is too indirect to satisfy the standard under Rule 24(a)(2). "A contingent interest relating to the property or transaction which is the subject of the action is not enough." Philip Morris Inc. v. Heinrich, No. 95-cv-0328, 1996 WL 457292, at *1 (S.D.N.Y. 1996). In Restor-A-Dent Dental Labs, Inc. v. Certified Alloy Prods., Inc., 725 F.2d 871 (2d Cir. 1984), the Second Circuit found that an insurer could not intervene for the narrow purpose of proposing interrogatories to the court for submission to the jury in the event that the jury returned a verdict against the insured. The insurer argued that it was critical to know the allocation of damages because it had no obligation to indemnify the insured for intangible losses. Id. at 873. The court’s conclusion that the insurer had no right to intervene was based, in part, on the fact that the insurer’s interest depended on two contingencies: a finding of liability against the insured, only at which point the question of the insurer’s liability would become relevant, and "a finding in litigation not yet even commenced between [the insured and the insurer] that [the insurer] is not responsible for indemnification of certain types of losses under the terms of the policy." Id. at 875 (internal citations omitted). Olin’s interest here also is indirect, but less so, as it depends on only one contingency: a finding that the London Market Insurers are liable to Lamorak for contribution.
The Court has found that the Judgment Reduction Provision requires any judgment entered against Lamorak and in favor of Olin to be reduced by the amount, if any, that the London Market Insurers owe in contribution. See ECF No. 2148 (bottom-line order granting the London Market Insurers’ motion for summary judgment on the remand sites).
Third, Olin argues that the third-party litigation "may as a practical matter impair or impede" its "ability to protect its interest." Fed.R.Civ.P. 24(a)(2). The requirement "that the would-be intervenor must be so situated that the disposition of the action ‘may as a practical matter impair or impede’ its ability to protect its interest has been sympathetically applied." Wright & Kane, Federal Practice Deskbook § 80. "[T]he court is to view the effect on the intervenor’s interest with a practical eye." Id.
The London Market Insurers already have indicated that if the Court finds that Lamorak has a valid equitable contribution claim against London, then London will seek to reduce any judgment entered in din’s favor by that amount. Olin suspects that other settled insurers may similarly invoke "supposed indemnification or judgment reduction obligations those Settled Insurers believe apply." Olin Mem. at 8-9. "The possibility that Lamorak, London, and other Third-Party Defendants will seek to hold Olin to the outcome of Lamorak’s third-party claims means that Olin may be prejudiced if it is not allowed to have a say in the third-party proceeding." Id. at 9; see, e.g., Certified Multi-Media Solutions, Ltd. v. Preferred Contractors Ins. Co. Risk Retention Grp. LLC, No. 14-cv-5227, 2015 WL 5676786, at *12 (E.D.N.Y. Sept. 24, 2015) (finding impairment requirement met when putative intervenors’ position in other litigation "might suffer practical disadvantage from decisions issued in this case" (internal quotation omitted) ).
Moreover, Olin argues, its interests may not be adequately represented by Third-Party Defendants, particularly those "controlled" by NICO/Resolute, since NICO/Resolute also "control" Lamorak. "[T]he burden to demonstrate inadequacy of representation is generally speaking ‘minimal,’" especially when the proposed intervenor and the existing parties do not "have the same ultimate objective" or when their interests are not aligned. Butler, Fitzgerald & Potter v. Sequa Corp., 250 F.3d 171, 179-80 (2d Cir. 2001) (quoting Trbovich v. United Mine Workers, 404 U.S. 528, 538 n.10, 92 S.Ct. 630, 30 L.Ed.2d 686 (1972) ). The belief of the London Market Insurers that the financial burden of any equitable contribution they owe to Lamorak will ultimately be borne by Olin disincentives them from zealously contesting Lamorak’s third-party claims.
Lamorak responds that "the record to date disproves Olin’s claim that the Third-Party Defendant Insurers will not defend this action." Lamorak Opp. at 18. Lamorak suggests that Olin’s only reasons for thinking that the London Market Insurers will not defend the action is that they filed answers rather than motions to dismiss. See id. But that is not the only basis for Olin’s argument, at least with respect to the London Market Insurers. Rather, Olin believes that the Third London Market Insurers will not defend the action because, in the view of the London Market Insurers, they will not actually have to pay anything in contribution to Lamorak. Therefore, Olin’s interests may not be adequately represented by the London Market Insurers.
For the foregoing reasons, Olin’s motion to intervene is granted under Federal Rule of Civil Procedure 24(b)(1). The Clerk is directed to close docket entry number 2068.
SO ORDERED.