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Chicago Import, Inc. v. American States Ins. Co.

August 24, 2010

CHICAGO IMPORT, INC., PLAINTIFF,
v.
AMERICAN STATES INS. CO., DEFENDANT.



The opinion of the court was delivered by: Michael T. Mason, United States Magistrate Judge.

Hon. Judge Charles R. Norgle, Sr.

MEMORANDUM OPINION AND ORDER

Pending before this Court is A. Schoeneman & Co.'s motion to intervene [17, 18].*fn1 This Court has considered the motion and exhibits in support, the response in opposition filed by defendant American States Insurance Co. [21], and A. Schoeneman & Co.'s reply [22]. For the reasons set forth below, the motion to intervene is denied.

I. BACKGROUND

This case arises out of a fire that allegedly destroyed a warehouse located at 4150 N. Knox Avenue in Chicago, Illinois. Plaintiff Chicago Import, Inc. ("plaintiff" or "Chicago Import") is an Illinois corporation with its principal place of business in Chicago, Illinois. (Compl. ¶ 4 [1].) Chicago Import maintains that at the time of the fire, that warehouse was fully stocked with its inventory, and that inventory had a cost basis of over $6 million. (Id. ¶¶ 11, 12.)

On May 12, 2009, Chicago Import filed a complaint against defendant American States Insurance Co. ("defendant" or "ASI"), seeking, among other things, a declaration that ASI owes Chicago Import $5 million, plus interest, under a first-party insurance policy that ASI issued to Chicago Import. ASI is an Indiana corporation with its principal place of business in Seattle, Washington. (Ans. & Aff. Defs. ¶ 5 [13].) The complaint invoked the Court's original jurisdiction pursuant to 28 U.S.C. 1332, as the suit is between citizens of different states, and the amount in controversy exceeds the sum of $75,000.00, exclusive of interests and costs. (Compl. ¶ 2.)

In its answer, filed July 23, 2009, ASI denied the material allegations of Chicago Import's complaint. ASI also asserted numerous affirmative defenses, including that Chicago Import failed to comply with the Duties in the Event of Loss provision of the policy, and violated the Concealment, Misrepresentation or Fraud provision of the policy. (Answer & Aff. Defs. at 18-20.)

On December 4, 2009, A. Schoeneman & Co., Inc. ("Schoeneman") filed the pending motion to intervene [17] in this case. Schoeneman is the public adjuster hired by Chicago Import to estimate the loss caused by the warehouse fire. (Mot. to Intervene ¶ 2.) Schoeneman is an Illinois corporation with its principal place of business in Illinois. (Pet. for Intervention ¶ 1 [18].)

According to Schoeneman's revised proof of loss statement, the warehouse fire caused in excess of $5 million worth of inventory damage. (Mot. to Intervene, Ex. 1B.) Under Schoeneman's three paragraph contract with Chicago Import, Schoeneman is to be paid "five per cent of whatever may be recovered from said claim or claims either by settlement, suit or in any other manner." (Id., Ex. 1A.) The contract also provides that, "[t]o secure the payment of these fees... [Chicago Import] hereby authorize[s] the insurance companies involved to withhold sufficient funds from [Chicago Import's] settlement or recovery to pay A. Schoeneman & Co., Inc. for such fees and advances and [Chicago Import] assign[s] to A. Schoeneman & Co. the proceeds of such policies of insurance to the extent necessary to satisfy such fees and advances." (Id.)

II. LEGAL STANDARD

A party may seek intervention as of right under Federal Rule of Civil Procedure 24(a) if the party has "an interest" and 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." Fed. R. Civ. P. 24(a)(2). Intervention as of right is required only where applicants "establish that: (1) their motions to intervene were timely; (2) they possess an interest related to the subject matter of the action; (3) disposition of the action threatens to impair that interest; and (4) the parties fail to represent adequately their interest." Ligas ex rel. Foster v. Maram, 478 F.3d 771, 773 (7th Cir. 2007). The party seeking intervention has the burden of establishing each of these elements. United States v. BDO Seidman, 337 F.3d 802, 808 (7th Cir. 2003). The failure to establish any of these elements is grounds to deny the petition. Id.

Under Federal Rule of Civil Procedure 24(b), "the court may permit" intervention in its discretion where the applicant's claim "shares with the main action a common question of law or fact." Fed. R. Civ. P. 24(b); see also Ligas, 478 F.3d at 775. As with Rule 24(a), applications under Rule 24(b) must also be timely. Fed. R. Civ. P. 24(b); see also Sokagon Chippewa Cmty v. Babbitt, 214 F.3d 941, 949 (7th Cir. 2000).

Finally, independent jurisdiction over the claim must exist. Ligas, 478 F.3d at 775. However, "[j]urisdiction is not defeated by the intervention of a party who had 'no interest whatsoever in the outcome of the litigation until sometime after suit was commenced.'" Aurora Loan Servs., Inc. v. Craddieth, 442 F.3d 1018, 1025 (7th Cir 2006) (quoting Freeport-McMoRan, Inc. v. K N Energy, Inc., 498 U.S. 426, 428 (1991) (per curiam)).

Under either subsection (a) or (b), a motion to intervene "must... be accompanied by a pleading that sets out the claim or defense for which ...


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