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Reliance National Insurance Co. v. Great Lakes Aviation

August 30, 2006

RELIANCE NATIONAL INSURANCE COMPANY, A CORPORATION, PLAINTIFF,
v.
GREAT LAKES AVIATION, LTD, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Richard Mills, U.S. District Judge

OPINION

Pending before the Court is the motion of Reliance Insurance Company (in Liquidation) f/k/a Reliance National Insurance Company for leave to file a petition to intervene.

I. Factual and Procedural Background

This case arises out of a fatal airplane collision at Quincy-Baldwin Field in Quincy, Illinois, on November 19, 1996. On July 17, 1997, Petitioner Reliance commenced an interpleader action pursuant to 28 U.S.C. § 1335, in anticipation of various claims against a $1,000,000 insurance policy it had issued to one of the owners of one of the planes involved in the collision. Reliance's complaint named as Defendants all potential claimants to the insurance proceeds including its insureds, the estates of the crews of each aircraft, Great Lakes Aviation, Ltd., Raytheon Aircraft Company, and the estates of the ten passengers on the plane operated by Great Lakes.

On September 11, 1998, the Court entered an Order granting Reliance's motion for summary judgment. The Court ordered that Reliance would be dismissed from the action upon depositing the insurance proceeds with the Clerk of Court and that thereafter all Defendants would be "restrained from instituting or prosecuting any other proceeding in any other state or United States Court affecting the funds deposited with this Court." Reliance subsequently deposited $1,000,000 with the Clerk of Court. Accordingly, on December 15, 1998, the Court dismissed Reliance from the case with prejudice.

The various claimants eventually filed petitions seeking allocation of the $1,000,000 in insurance proceeds. In an Opinion entered on October 21, 2004, the Court denied the Passenger Defendants' petition seeking to allocate the interpleader funds for their exclusive benefit and allowed the joint petition of Great Lakes and Raytheon. The Passenger Defendants filed a notice of appeal from that judgment.

The United States Court of Appeals for the Seventh Circuit rendered its decision on November 23, 2005. The Seventh Circuit reversed the judgment of this Court and remanded the case for further proceedings consistent with its opinion. Following the issuance of the mandate on February 7, 2006, some of the remaining parties filed status reports. The Court then set deadlines for interested parties to file proofs of claim and replies thereto. On May 31, 2006, prior to the deadlines for filing proofs of claim, Reliance filed the motion for leave to file the petition to intervene which is now before the Court. Some of the parties have filed responses to Reliance's motion; Reliance has filed replies to those responses.

II. Reliance's Motion for Leave

In support of its motion for leave to file a petition to intervene, Reliance first points to the following passage from the Seventh Circuit's opinion:

To avoid, if possible, a further appeal, we consider finally who gets the $1 million if the passengers fail to establish the owner's liability. Great Lakes and Raytheon have no claim to it. Their only possible claim would be one based on a right of contribution, and the statute bars that. Logically, the money should go back to Reliance if the passengers fail to establish the owners' liability to them, because in that event no one will have a superior claim to Reliance's claim. The money is, after all, Reliance's, which it deposited in court solely in order to avoid being dragged into the disputes between its insureds and their tort claimants. It is no longer the law that the interpleader plaintiff (Reliance) must have no stake in the proceeding. Reliance National Insurance Co. v. Great Lakes Aviation, Ltd., et al., 430 F.3d 412, 415 (7th Cir. 2005) (citations omitted). The rule which pertains to intervention provides in pertinent part:

Upon timely application anyone shall be permitted to intervene in an action . . . 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 protected by existing parties.

Fed. R. Civ. P. 24(a).

Reliance claims that in this case, it has a significant protectable interest relating to the distribution of the $1,000,000 funds being held in escrow by the Court. It further alleges that it is clear that the disposition of the action may, as a practical matter, impair or impede Reliance's ability to protect its interest. Reliance further asserts it is apparent that the existing parties may not adequately represent Reliance's interest, as their interests are adverse to Reliance's. Pursuant to Rule 24, moreover, Reliance contends its petition is timely.

Reliance alleges that, based on its interest in stating a claim for the $1,000,000 it previously deposited with the Court and consistent with the Seventh Circuit's opinion, it has standing as a matter of right or at the Court's discretion*fn1 to intervene in this case.

III. Defendants' Response to ...


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