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Skinnner Pile Driving, Inc. v. Atlantic Specialty Insurance Co.

United States District Court, S.D. Alabama, Southern Division

March 31, 2015

SKINNNER PILE DRIVING, INC., Plaintiff/Counter Defendant,
v.
ATLANTIC SPECIALTY INSURANCE COMPANY, Defendant/Counter Claimant.

ORDER

KATHERINE P. NELSON, Magistrate Judge.

This action is before the Court on the Motion for Leave to Intervene (Doc. 20) filed by Natures Way Marine, LLC ("Natures Way") pursuant to Federal Rule of Civil Procedure 24. Though given the opportunity ( see Doc. 21), no party has filed opposition to the motion. With the consent of the parties (Doc. 4), this action has been referred to the undersigned Magistrate Judge to conduct all proceedings in this action, including trial; to order entry of final judgment; and to conduct all post-judgment proceedings, in accordance with 28 U.S.C. ยง 636(c) and Federal Rule of Civil Procedure 73. ( See Doc. 5).

I. Background

This action involves an insurance coverage dispute arising from an incident in which a Linkbelt Crane attached to a barge was damaged while the crane and barge were in the custody and control of Plaintiff Skinner Pile Driving, Inc. ("Skinner"). Skinner sought coverage for the damage to the crane under its policy of insurance with Defendant Atlantic Specialty Insurance Company ("Atlantic"). After Atlantic denied the claim, Skinner filed the present action against Atlantic, alleging breach of contract, fraud, misrepresentation, deceit, and bad faith. Atlantic filed a counterclaim for declaratory judgment as to the rights, remedies, obligations, and liabilities of Skinner and Atlantic under the subject insurance policy, claiming that it owes no coverage for damage to the crane due to certain exclusions in the insurance policy. ( See Doc. 1-1; Doc. 2; Doc. 15 at 2-3).

In its motion to intervene (Doc. 20), Natures Way asserts that it is the owner of the damaged crane and barge, which it had chartered to Skinner for use in a project in Florida, during which the damage allegedly occurred. Natures Way has demanded that Skinner pay for the damages to the crane, but Skinner has refused, citing an inability to pay "and/or" its intention to seek coverage for the damage under its insurance policy with Atlantic. In its proposed Complaint in Intervention (Doc. 20-1), Natures Way asserts only a breach of contract claim against Skinner, alleging that "Skinner breached its duties under the Charter Agreement by (a) failing and refusing to pay monies due for the hire of the Barge and Crane, and b) failing and refusing to pay monies due for the damage to the Crane." Natures Way demands $60, 000 for "unpaid charter hire" and $30, 715 for the cost of repairs to the crane. Natures Way asserts no claim against Atlantic. Natures Way argues that it is entitled to both intervention of right under Rule 24(a) and permissive intervention under Rule 24(b).

II. Intervention of Right under Rule 24(a)

Rule 24(a)(2) provides that, "[o]n timely motion, the court must permit anyone to intervene who[] claims an interest relating to the property or transaction that is the subject of the action, and is so situated that disposing of the action may as a practical matter impair or impede the movant's ability to protect its interest, unless existing parties adequately represent that interest."[1] "Rule 24(a)(2) requires a third party moving for intervention of right show:[] (1) his application to intervene is timely; (2) he has an interest relating to the property or transaction which is the subject of the action; (3) he is so situated that disposition of the action, as a practical matter, may impede or impair his ability to protect that interest; and (4) his interest is represented inadequately by the existing parties to the suit.'" Huff v. Comm'r of IRS, 743 F.3d 790, 795-96 (11th Cir. 2014) (quoting Fox v. Tyson Foods, Inc., 519 F.3d 1298, 1302-03 (11th Cir. 2008) (quoting Chiles v. Thornburgh, 865 F.2d 1197, 1213 (11th Cir. 1989))) (internal citation omitted). "Intervention of right is only available if the interest asserted is direct, substantial, [and] legally protectable.' In other words, the intervenor must be at least a real party in interest in the transaction which is the subject of the proceeding.'" Id. at 796 (quoting Athens Lumber Co., Inc. v. Fed. Election Comm'n, 690 F.2d 1364, 1366 (11th Cir. 1982) (citations omitted)).[2] "In deciding whether a party has a protectable interest, ...courts must be flexible' and must focus[ ] on the particular facts and circumstances' of the case." Id. (quoting Chiles, 865 F.2d at 1214).

The Court finds that Natures Way has not shown entitlement to intervene of right because it has not demonstrated a direct, substantial, and legally protectable interest "in the transaction which is the subject of this action" - the insurance policy between Skinner and Atlantic. Natures Way, noting that "[t]he issue of how the damage occurred - which is a threshold question to whether or not insurance coverage exists - will be decided in this lawsuit[, ]" argues that "[c]ertainly, the owner of property has a sufficiently protectable interest in participating in such determination." (Doc. 20 at 4). In support of this proposition, Natures Way cites Diaz v. Southern Drilling Corp., 427 F.2d 1118 (5th Cir. 1970), [3] in which the former Fifth Circuit held: "We do not believe... that the interest[ in the subject of the action] has to be of a legal nature identical to that of the claims asserted in the main action... All that is required by the terms of [Rule 24(a)(2)] is an interest in the property or other rights that are at issue, provided the other elements of intervention are present." 427 F.2d at 1124.

Diaz, however, is distinguishable. In Diaz, the United States government "intervened...because it wanted to assert a lien (unrelated to the underlying issues) on a fund before the court." Id. In finding that the government properly intervened of right under Rule 24(a)(2), the court stated: "[T]he Government in this case is asserting a tax lien, clearly a legally cognizable interest in property, which it seeks to attach to a res that is before the court. Interests in property are the most elementary type of right that Rule 24(a) is designed to protect...We hold that the Government is asserting an interest in the property that is the subject of the suit within the meaning of Rule 24(a)." Id.

Natures Way has asserted no "legally cognizable interest" similar to the government's tax lien in Diaz (e.g., a judgment against Skinner for damages to the crane). Indeed, in upholding the government's intervention in Diaz, the court rejected application of cases cited by the appellants because they were "cases in which intervention was denied because the interest was speculative or had no legally protectable nature." Id. at 1124 & n.2. As to this line of reasoning, the Court finds Mt. Hawley Insurance Co. v. Sandy Lake Properties, Inc., 425 F.3d 1308, 1311 (11th Cir. 2005) (per curiam), to be on point.

There, an insurer, Mt. Hawley, filed a declaratory judgment action against two insured property owners, claiming that it had no duty to defend or indemnify the insureds under the subject policy for a drowning death occurring on the insureds' property. See Mt. Hawley Ins., 425 F.3d at 1309-10. After the property owners failed to respond to the declaratory judgment action and the insurer had moved for default judgment, Andre Rigaud, the personal representative for the decedent, who prior to the declaratory judgment action had filed a wrongful death action against the insureds, filed a motion to intervene in the declaratory judgment action under both Rule 24(a) and Rule 24(b), attempting to argue that Mt. Hawley should not be able to deny coverage. See id. The Eleventh Circuit, affirming the district court's denial of the motion to intervene of right, rejected the personal representative's argument that he had "a direct, substantial, and legally protectable interest in the subject matter of the declaratory action because if Mt. Hawley owes neither a defense nor coverage to [the insureds], then Rigaud will not have [a] pool or fund from which to recover his damages.'" Id. at 1311. In so doing, the Eleventh Circuit stated:

This Court has held that a legally protectable interest "is something more than an economic interest." United States v. South Fla. Water Mgmt. Dist., 922 F.2d 704, 710 (11th Cir. 1991) (quotation marks and citation omitted). "What is required is that the interest be one which the substantive law recognizes as belonging to or being owned by the applicant." Id. (quotation marks and citation omitted). Thus, a legally protectable interest is an interest that derives from a legal right.
In this case, Rigaud's interest in the subject matter of the declaratory action is purely economic. Rigaud is not a party to the Mt. Hawley insurance policy and has no legally protectable interest in that insurance policy. Rigaud fails to cite any legally protectable interest and states only that there will be less money available from which he can recover his wrongful death damages if Mt. Hawley is released from defending and providing coverage to Muria International and Sandy Lake Properties. Further, Rigaud's interest is purely speculative because it is contingent upon his prevailing against Muria International and Sandy Lake Properties in the wrongful death action.

Id. (footnote omitted).[4] Accord Canal Indem. Co. v. Dueitt, Civil Action No. 10-0526-WS-B, 2011 WL 335166, at *1 (S.D. Ala. Jan. 31, 2011) (Steele, C.J.) ("An injured party has no legally protected interest in an insurance policy to which it is not a party; its economic interest in having proceeds from a tortfeasor's insurance policy available to satisfy ...


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