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Hartford Underwriters Insurance Co. v. Worldwide Transportation Shipping Corp.

United States District Court, N.D. Illinois, Eastern Division

March 6, 2017

Hartford Underwriters Insurance Co., Plaintiff,
v.
Worldwide Transportation Shipping Corp. et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          VIRGINIA M. KENDALL, U.S. DISTRICT COURT JUDGE

         USF Holland, LLC (Holland) had an independent contractor agreement with Worldwide Transportation Shipping Corp. (Worldwide) at the time of John Finnegan's death, and Worldwide agreed to indemnify Holland for injury claims brought under worker's compensation. Holland is fearful that if Plaintiff Hartford Underwriter's Insurance Company (Hartford) prevails in this action, Worldwide will not have the financial means to indemnify Holland for the worker's compensation claims brought by the Finnegan Estate. Holland filed the instant motion to intervene [35] in Hartford's declaratory action in order to protect its financial interests. For the reasons stated below, the motion is denied.

         I. Background

         On September 17, 2014, John Finnegan was killed in a workplace accident in McCook, Illinois. (Dkt. 35-1 at 41). At the time of his death, Finnegan was employed as a truck driver by Worldwide. (Dkt. 36 at 2.) A few months prior to the accident, near the end of June 2014, Worldwide entered into an independent contractor agreement (the Trucking Contract) with Holland, in which Worldwide agreed to “provide pickup and delivery services as requested by [the] Rock Island terminal manager.” (Dkt. 35-1 at 36.)[1] The Trucking Contract also provided, among other things, for limited defense and indemnification from Worldwide to Holland for “any liabilities, claims or demands… for injuries or damages claimed under worker's compensation or similar acts.” (Id. at 32.) In June 2014, near the time Worldwide entered the Trucking Contract, Worldwide also bought a Workers Compensation and Liability Policy from Hartford, and the policy designated Worldwide's address in Iowa. (Dkt. 1 at 5). The policy was effective at the time of Finnegan's death. (Id.)

         Mr. Finnegan's wife Noreen Finnegan, acting on behalf of her husband's estate (the Finnegan Estate), filed a claim for benefits with the Illinois Worker's Compensation Commission (IWCC) on August 5, 2015. (Id. at 38-39.) On the first claim that she filed, she listed under “Employer's name, ” Worldwide. (Id.) The same day, she filed an amended version of the claim, this time listing both Worldwide and Holland as the employers. (Id. at 41-42.) Holland filed a Limited and Special Appearance by Counsel at the IWCC on October 26, 2015. (Dkt. 44, Exh. B.)

         On February 18, 2016, Hartford filed a declaratory judgment action in this Court against Worldwide and the Finnegan Estate, (Dkt. 1 at 1), pursuant to 28 U.S.C. §§ 2201 and 2202 seeking a declaration that it owes no duty to defend or indemnify Worldwide or to pay insurance benefits to the Finnegan Estate because the claim was brought outside of Iowa[2] (Id. at 9-10); or alternatively, that Hartford owes no duty to defend or indemnify Worldwide or to pay insurance benefits to the Finnegan Estate as might be required under any Iowa Worker's Compensation statute. (Id. at 10.) On July 14, 2016, Worldwide filed a third-party complaint against Goetsch- Kay LLC d/b/a/ Sheridan & Associates Agency (Sheridan) for negligent failure to procure for Worldwide a policy that covered states other than Iowa. (Dkt. 35 at 2.)

         On July 14, 2016, Hartford served Holland a subpoena for documents. (Dkt. 44, Exh. D.) Counsel for Holland coordinated transmission of documents, including the Trucking Contract, to Hartford's legal team between August and November 1, 2016. (See Dkt. 44 at 5, Exh. D.) Holland asserts that the subpoena was the first time that Holland became aware of the Hartford action. (Dkt. 36 at 7.) On November 1, 2016, Holland filed the present Motion to Intervene. (Dkt. 35 at 1.) Holland seeks leave to file an Answer and Affirmative Defenses to the Hartford Action, and leave to file a Crossclaim against Worldwide for breach of contract. (Id. at 2.)

         I. Intervention as of Right under Rule 24(a)(2)

         A party seeking to intervene as of right must satisfy four requirements: (1) the motion to intervene must be timely; (2) the party seeking to intervene must claim an interest related to the subject matter of the action; (3) the party seeking to intervene must be so situated that the disposition of this action threatens to impair or impede the party's ability to protect that interest; and (4) the existing parties must not be adequate representatives of the movant's interest. Fed.R.Civ.P. 24(a)(2); see also Ligas ex rel. Foster v. Maram, 478 F.3d 771, 773 (7th Cir. 2007). The party seeking intervention bears the burden of establishing each of these elements. United States v. BDO Seidman, 337 F.3d 802, 808 (7th Cir. 2003).

         1. Timeliness

         The timeliness requirement is a flexible one and is determined by considering the totality of the circumstances, leaving much to the sound discretion of the courts. See Shea v. Angulo, 19 F.3d 343, 348-49 (7th Cir. 1994); Zurich Capital Markets, Inc. v. Coglianese, 236 F.R.D. 379, 383 (N.D.Ill.2006) (St.Eve, J.) (“Determining whether a motion for intervention is timely is ‘committed to the sound discretion of the district judge.'”) (quoting South v. Rowe, 759 F.2d 610, 612 (7th Cir. 1985)). The test for evaluating timeliness essentially sets out a reasonableness standard; potential intervenors need to be reasonably diligent in learning of a suit that might affect their rights and act promptly in response. See Heartwood, Inc. v. U.S. Forest Service, Inc., 316 F.3d 694, 701 (7th Cir. 2003). Intervention is unavailable to the litigant who “dragged its heels” after learning of the lawsuit. United States v. City of Chicago, 870 F.2d 1256, 1263 (7th Cir.1989).

         Holland intervened in a reasonable period of time. Holland asserts that it was on notice of the action when Hartford served the subpoena in July 2016. (Dkt. 36 at 7.) At that point, Holland began “searching its records and performing due diligence to determine background” in the matter, and filed three months later. See Dkt. 36 at 13. Although Holland could have been more diligent in learning of the action[3], there is only three months between when Hartford asserts Holland should have known of the action (at the time Hartford filed the complaint) and when Holland asserts it learned of the action (when served the subpoena). This is not a significant enough delay to find the motion untimely. And, because Holland filed its motion to intervene prior to the close of fact discovery[4], the prejudice to Hartford clearly does not rise to the prejudice in cases in which summary judgment had been decided, or the case had been settled. See Humphrey v. United States, 787 F.3d 824, 826 (7th Cir. 2015) (motion to intervene filed after the parties had already settled was untimely); see also CE Design Ltd. v. King Supply Co., 791 F.3d 722, 725-726 (7th Cir. 2015) (same); See also Grochocinski v. Mayer Brown Rowe & Maw, LLP, 719 F.3d 785, 798 (7th Cir. 2013) (motion to intervene after grant of summary judgment was untimely.). However, to show its motion was timely, Holland must also demonstrate that it would be prejudiced by the denial of the intervention. The Hartford action will not affect Holland's rights to seek indemnification from Worldwide. Although the Hartford action may impact Worldwide's economic ability to indemnify, Holland's economic interest in the outcome is not a basis for intervention, as discussed in more detail below.

         2. Interest Relating to Subject Matter of Lawsuit

         Holland fails to show a “direct, significant and legally protectable” interest in the litigation. Reich v. ABC/York-Estes Corp., 64 F.3d 316, 323 (7th Cir.1995). Although Rule 24 does not define “interest, ” a mere “economic interest” (i.e. being a creditor of one of the parties) is insufficient. Flying J, Inc. v. Van Hollen, 578 F.3d 569, 571 (7th Cir. 2009). A “betting interest” in the outcome of the litigation is not enough to establish the interest required under Rule 24. See Fed. Ins. Co. v. Illinois Funeral Dir.'s Ass'n, No. 09 C 1634, 2009 WL 2252200, at *3 (N.D. Ill. July 29, 2009) (intervenor's concern that a negative result in declaratory judgment action might affect its ability to collect from a party it sought damages from in a separate suit was a “speculative link, ” “tenuous at best, ” and did not show “the necessary protectable interest required for intervention as a matter of right”); see also Chicago Import, Inc. v. American States Ins. Co., No. 09-C-2885, 2010 WL 3385539 (N.D. Ill. Aug. 24, 2010) (intervenor's interest in insurance policy ...


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