The opinion of the court was delivered by: Judge Joan H. Lefkow
MEMORANDUM OPINION AND ORDER
First Specialty Insurance Corporation ("First Specialty"), has applied under Rule 24 of the Federal Rules of Civil Procedure to intervene (as a defendant) in this declaratory judgment action instituted by Maxum Indemnity Company ("Maxum") and Security Insurance Company of Hartford, ("Security") in connection with a coverage dispute with their mutual insured, defendant M&M Rental Center, Inc. ("M&M").*fn1 Like Maxum and Security, First Specialty seeks a declaration that it has no obligation to defend and indemnify M&M in an underlying lawsuit involving M&M's alleged violations of the Telephone Consumer Protection Act, 47 U.S.C. § 227 ("TCPA"). First Specialty also seeks to bring claims against Maxum and Security for equitable contribution. Maxum and Security oppose the petition arguing that it is untimely and that First Specialty cannot establish the other prerequisites for either intervention as a matter of right or permissive intervention. The court's jurisdiction is based in diversity. 28 U.S.C. § 1332.*fn2 For the reasons discussed herein, First Specialty's motion to intervene is granted.
According to the First Amended Complaint for Declaratory Judgment [Docket No. 80] ("Amended Complaint"), this case arises from a dispute over certain insurers' obligation to indemnify or defend M&M in Robert Hinman and Italia Foods, Inc. v. M and M Rental Center, Inc., No. 06 C 1156 ("Hinman suit"), currently pending in this court on Judge Bucklo's calendar. The Hinman suit is a class action alleging that M&M sent unsolicited faxes in violation of TCPA.*fn3 M&M tendered the defense to all three insurers because the offending faxes were allegedly sent sometime between 2000 and 2006, the period during which each issued to M&M general commercial insurance policies.*fn4 Each of these insurers provided two types of coverage to M&M: bodily injury or property damage coverage ("Coverage A") and personal and advertising injury coverage ("Coverage B"). Coverage A is similarly defined under all three insurers' policies. Coverage B, however, is not. Under Security's policy, Coverage B includes "[o]ral or written publication of material that violates a person's right of privacy." (Am. Compl. ¶ 20.e). Maxum's Coverage B included this same language (id. ¶ 40.e), as well as "'advertising injury' caused by an offense committed in the course of 'advertising' [the insured's] goods, products or services . . . ." (Id. ¶ 39.b.2). First Specialty's Coverage B contains neither of these clauses.*fn5
Of the three insurers, only First Specialty elected to fund M&M's defense in the Hinman suit subject to a full reservation of rights. Maxum and Security, instead, filed this action on September 13, 2006. Judge Bucklo granted class certification in the Hinman suit on April 7, 2008. On June 26, 2008, First Specialty filed the instant application to intervene. By this time, however, Maxum and Security had already filed their motions for partial summary judgment on the coverage issue.*fn6
First Specialty's application seeks leave to file a two-count counterclaim against Maxum and Security for a declaratory judgment that Maxum and Security have a duty to indemnify and defend M&M based on their invasion of privacy coverage and for equitable contribution based on First Specialty's expenses associated with defending M&M in the Hinman suit. First Specialty also seeks leave to allege a cross-claim against M&M, Eclipse, Hinman and Italia Foods for a declaratory judgment that First Specialty does not owe a duty to indemnify or defend in the Hinman suit.
First Specialty contends it is entitled to intervene as a matter of right under Rule 24(a) because it has an interest relating to the subject matter of this action, its interest is not adequately represented by any party, and disposition of this action may as a practical matter impair its ability to protect its interest. First Specialty also argues that the court should grant permissive intervention under Rule 24(b) because common questions of law and fact are presented by its proposed pleading and there is an independent jurisdiction basis for the court's jurisdiction. Maxum and Security argue that the motion is untimely and their interests will be prejudiced if intervention is allowed. If permissive intervention is appropriate, there will be no need to address intervention as of right.
Under Rule 24(b), "on timely motion, the court may permit anyone to intervene who . . . has a claim or defense that shares with the main action a common question of law or fact." Rule 24(c) requires the court to "consider whether the intervention will unduly delay or prejudice the adjudication of the original parties' rights." See Security Ins. Co. v. Schipporeit, Inc., 69 F.3d 1377, 1381 ("In exercising its discretion, the court must give some weight to the impact of intervention on the rights of the original parties" and consider the benefits of allowing the petition to intervene.) And, although not explicit in the rule, courts require the intervenor to demonstrate an independent ground of jurisdiction, i.e., that the claims could have been asserted in the federal court in the absence of the main action. Reedsburg Bank v. Apollo, 508 F.2d 995, 1000 (7th Cir. 1975).
Jurisdiction is readily disposed of, as the amount in controversy is concededly more than $75,000 and the addition of First Specialty, which alleges its citizenship in Missouri and Kansas, does not disturb the complete diversity of citizenship between the plaintiffs and defendants in the case. See Am. Compl. ¶¶ 3-10; Ex. 1 to Pet. to Intervene, ¶¶ 2-9 of First Specialty's Countercl. and ¶ 32 of Cross-cl. Likewise, it is readily apparent that common questions of law and fact exist between the intervenor's counterclaim and cross claim and those posed by Maxum's and Security's Amended Complaint. Whether the injury alleged in Hinman is within or potentially within Coverage A appears to be the same for all three policies. Although the terms of Maxum's and Security's Coverage B are somewhat different, and different from First Specialty's Coverage B, First Specialty shares the common issue of whether Maxum and Security had a duty to defend or indemnify under Coverage B in order to cross the threshold of proof of its claim for equitable contribution.
In determining timeliness, the court must consider "(1) the length of time the intervenor knew or should have known of [its] interest in the case, (2) the prejudice caused to the original parties by the delay, (3) the prejudice to the intervenor if the motion is denied, and (4) any other unusual circumstances." Reid L. v. Ill. State Bd. of Educ., 289 F.3d 1009, 1018 (7th Cir. 2002) (citing Ragsdale v. Turnock, 941 F.2d 501, 504 (7th Cir. 1991)). The Seventh Circuit has stated that the timeliness requirement does not "impos[e] a precise time limit" but ensures that a party cannot "drag[ ] its heels" after learning of its interest in the lawsuit. Nissei Sangyo Am. v. United States, 31 F.3d 435, 438 (7th Cir. 1994). The passage of time is not determinative; rather, "the most important consideration in deciding whether a motion for intervention is untimely is whether the delay in moving for intervention will prejudice the existing parties to the case." Id. at 439 (citations omitted); see also Aurora Loan Servs. v. Craddieth, 442 F.3d 1018, 1027 (7th Cir. 2006) ("[I]n the absence of any indication of prejudice to the [existing parties] . . . the motion cannot be adjudged untimely as a matter of law."). The determination of whether an application to intervene is timely is "committed to the sound discretion of the district judge." South v. Rowe, 759 F.2d 610, 612 (7th Cir. 1985).
First Specialty does not deny that it has known about the coverage dispute since its inception. First Specialty explains or implies (albeit tardily in its reply memorandum) that it waited 21 months to apply to intervene until the Hinman class was certified, stating the litigation "has entered a new phase, and First Specialty seeks a resolution of its own obligation as well as those of its co-insurers." Reply in further Supp. of Pet. to Intervene at 7-8. Presumably class certification entails greater risk of expense of defense and potential indemnity, although First Specialty does not so state. Rather, First Specialty's emphasis is on the lack of prejudice to Maxum and Security because even though the case had been pending for 21 months, little discovery has been needed or taken and the motion for summary judgment rests on interpretation of the policies in light of Illinois law. Moreover, First Specialty points out it has been paying to defend M&M in the Hinman suit and monitoring the coverage dispute. See Hartford Accident and Indemnity Co. v. Dresser Indus., 1994 U.S. Dist. LEXIS 1763, at *13 (N.D. Ill. Feb. 16, 1994) (granting insurers motion to intervene in a liability dispute even though insurers knew of their interest in the lawsuit from the beginning because insurers had not been "sitting on their rights in ignorance or apathy" but had monitored discovery, obtained copies of documents and depositions, and paid their pro tanto share of reporters' fees).
From Maxum's and Security's perspective, First Specialty's reasons for delay are unconvincing, and intervention at this time will prejudice them. They contend that resolution of their motions for partial summary judgment will be further delayed, as the affirmative defenses and counterclaims will have to be answered, additional discovery will be necessary, and further dispositive motions will be needed to dispose of the additional claims. Furthermore, they argue, this expense will be unnecessary unless the court decides the coverage issue in M&M's favor.
Because the issue of timeliness and the need to weigh the burdens and benefits of intervention merge in these arguments of prejudice, the court considers them as one. Although intervention at this time will inevitably cause some delay and perhaps entail additional expense, the court is satisfied that these burdens are outweighed by the benefit to all insurers with potential liability in the Hinman litigation being heard in one litigation. If First Specialty is denied the opportunity to speak to the issues in this case, it will not have any opportunity to do so, both as to its affirmative defenses to Maxum's and Security's denials of coverage*fn7 and the critical issue of their duty to defend or indemnify as an element of First Security's right of contribution.*fn8 No other party is in precisely the same position as First Security as, indeed, Maxum and Security appear to concede.*fn9 Pls.' Resp. in Opp. to Pet. to Intervene at 13. See Commodity Futures Trading Comm'n v. Heritage Capital Advisory Servs. Ltd., 736 F.2d 384, 386-87 (7th Cir. 1984) (citing Central States, Southeast and Southwest Areas Health ...