Am. Empire Surplus Lines Ins. Co. v. Disano Demolition Co.
| Decision Date | 12 November 2020 |
| Docket Number | 18 CV 5047 (NGG) (CLP) |
| Parties | AMERICAN EMPIRE SURPLUS LINES INSURANCE COMPANY, Plaintiff, v. DISANO DEMOLITION CO., INC., et al, Defendants. |
| Court | U.S. District Court — Eastern District of New York |
REPORT AND RECOMMENDATION
On September 6, 2018, plaintiff American Empire Surplus Lines Insurance Company ("American Empire") commenced this action against Disano Demolition Co., Inc. ("Disano"), seeking to recover premiums owed under Common General Liability Insurance Policies and Excess Liability Insurance Policies issued to Disano. Plaintiff also seeks a declaration that American Empire owes no duty to defend or indemnify the defendant under the American Empire policies for any occurrence, claim or suit which may have been reported to plaintiff. (Compl.1 ¶¶ 23, 25, 26).
Currently pending before this Court are two separate motions to intervene - the first filed by Edgar Ventura on January 29, 2020, and the second filed by Un Lee and Yun Lee-Ito on February 13, 2020. Both motions to intervene were referred to the undersigned.
For the reasons set forth below, the Court respectfully recommends that the motions to intervene be denied.
As set forth in greater detail in this Court's Report and Recommendation, dated January 2, 2020, American Empire issued a Commercial General Liability insurance policy to Disano on July 6, 2016, to cover the period June 25, 2016 to July 25, 2017 (the "2016 Primary Policy").2 (Held Aff.3 ¶ 3). In addition to the 2016 Primary Policy, American Empire issued an Excess Liability insurance policy to Disano, bearing Policy No. 16CX0204629, that covered the period June 25, 2016 through July 25, 2017 (the "2016 Excess Policy"4). (Id. ¶ 10).
The premiums charged for both the 2016 Primary Policy and the 2016 Excess Policy were to be computed as a percentage of Disano's gross receipts for the policy period. (Held Aff. ¶¶ 4, 11). American Empire assigned an "Advance Premium" calculated on an estimate of Disano's gross receipts; this premium was subject to adjustment at the close of each audit period if the gross receipts exceeded the estimate. (Id. ¶¶ 5, 12, 13).
American Empire also issued a Commercial General Liability Policy for the period June 25, 2017 to July 25, 2018 (the "2017 Primary Policy"5), along with an Excess Liability Policy for the same period (the "2017 Excess Policy"6). (Id. ¶¶ 14-21). Similar to the 2016 Policies, the premiums for both the 2017 Primary and Excess Policies were calculated based on an estimate of Disano's gross receipts, with provisions for adjustment. (Id. ¶¶ 15-18, 22-24).
Based on audits7 conducted of Disano in 2017 and 2018, it was determined that Disano owed additional premiums totaling $216,394.00 on all four of the American Empire policies. (Id. ¶¶ 26, 27; see also Audit Endorsements8). According to the Affidavit of Mr. Held, American Empire had not received payment of any part of this amount as of the date of the Affidavit. (Id. ¶ 28).
On September 6, 2018, American Empire filed the initial Complaint in this action, seeking to recover unpaid premiums owed by Disano. Thereafter, on November 2, 2018, plaintiff filed an Amended Complaint, naming various additional parties; defendants filed an Answer and Counterclaim on November 9, 2018. On April 29, 2019, plaintiff filed a Second Amended Complaint,9 seeking damages in the amount of $216,394.00 in unpaid premiums, and a declaratory judgment that plaintiff had no duty to indemnify or defend. (Pl.'s Sec. Am. Compl. ¶¶ 31, 35, 38; O'Connor Aff.10 ¶ 5). Disano was served with copies of the Second Amended Complaint and Summons on May 6, 2019, and thereafter on May 23, 2019, this Court granted Disano's counsel's motion to withdraw. (O'Connor Aff. ¶¶ 6, 7; 5/23/2019 Order11). Although Disano was given an extended deadline to obtain new counsel and to file an Answer, no new counsel appeared and a Certificate of Default was entered by the Clerk of Court.12Thereafter, on October 23, 2019, plaintiff moved for entry of a default judgment, which motion was referred to the undersigned to conduct an inquest and prepare a Report and Recommendation.13
On January 2, 2020, this Court issued its Report and Recommendation, recommending that a default judgment enter in favor of plaintiff American Empire in the amount of $216,394.00. (R&R14 at 10). The Report also recommended that a declaration issue declaring that American Empire had no duty to indemnify or defend Disano for any claims brought under the 2016 and 2017 Primary and Excess Policies.
On January 29, 2020, Edgar Ventura filed a letter application with this Court, seeking to intervene in the current action and to file an objection to this Court's Report and Recommendation. On February 13, 2020, Un Lee and Yun Lee-Ito sought to intervene as well in this action and to file an objection to the Court's Report of January 2, 2020. Both motions to intervene were referred to the undersigned.
According to the letter motion to intervene submitted by Edgar Ventura, Mr. Ventura suffered "permanent and life-altering injuries" on October 27, 2017, when he fell approximately 20 feet from a roof while performing construction on property owned by the other proposedintervenors, Un Lee and Yun Lee-Ito. (Ventura Ltr.15 at 1; Ventura Compl.16 ¶¶ 35, 36-44). On November 7, 2017, Mr. Ventura brought an action in New York Supreme Court, Queens County, Index # 715549/2017, alleging that his injuries were due to the negligence of the general contractor, Disano, and the property owners and managers, Un Lee and Yun Lee-Ito,17 in failing to provide adequate safety equipment, safeguards, lifelines or fall protection. (Ventura Compl. ¶¶ 5, 6, 10, 12, 13, 14, 16, 17, 30, 32, 37, 38, 39, 40).
Mr. Ventura contends that American Empire contracted to provide primary and excess insurance to Disano to the extent of $2,000,000 and that under the policies, American Empire is obligated to defend and indemnify the other uninsured defendants, Un Lee and Yun Lee-Ito, in the personal injury action. (Ventura Ltr. at 1, Ex. B). According to Mr. Ventura, American Empire had extended settlement offers in the underlying Queens state court action, only to withdraw them following the issuance of this Court's January 2, 2020 Report and Recommendation. (Id.) He contends that this withdrawal of a settlement offer has prejudiced Un Lee and Yun Lee-Ito, who are uninsured without the American Empire indemnity, as well as Disano and Nationwide Indemnity Insurance Company ("Nationwide"), which provides coverage to Disano upon exhaustion of the American Empire policy limits. (Id.) Thus, Mr. Ventura seeks to intervene and seeks an extension of the deadline to object to this Court's Report and Recommendation. (Id. at 2).
Un Lee and Yun Lee-Ito (collectively, the "Lees") also seek leave to intervene and file objections to this Court's Report and Recommendation. (Lee Feb. 20, 2020 Ltr.18 at 1). In their letter motion, the Lees assert that they are entitled to collect policy proceeds plus interest and attorney's fees from American Empire upon receiving a judgment against Disano in the underlying action. (Id.) Therefore, they claim they were prejudiced through denial of the opportunity to oppose the default motion and in particular the request for declaratory relief. (Id. at 2). The Lees similarly seek leave to intervene and to object to the Report and Recommendation.
Rule 24(a)(2) of the Federal Rules of Civil Procedure provides that the court must permit anyone to intervene who "claims an interest relating to the property or transaction that is 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." The Second Circuit has described intervention as "a procedural device that attempts to accommodate two competing policies: efficiently administrating legal disputes by resolving all related issues in one lawsuit, on the one hand, and keeping a single lawsuit from becoming unnecessarily complex, unwieldy or prolonged, on the other hand." Floyd v. City of New York, 770 F.3d 1051, 1057 (2d Cir. 2014). There is significant "tension that exists between these dual concerns" and thus, an intervention determination is fact-intensive and "prior decisions are not always reliable guides." Id.
In order to intervene as of right pursuant to Rule 24(a)(2), "the applicant must: (1) file a timely motion; (2) show an interest in the litigation; (3) show that its interest may be impaired by the disposition of the action; and (4) show that its interest is not adequately protected by the parties to the action." In re Holocaust Victim Assets Litig., 225 F.3d 191, 197 (2d Cir. 2000); see also St. John's Univ. v. Bolton, 450 F. App'x 81, 83 (2d Cir. 2011) (). Courts have held that a "[f]ailure to meet any of these requirements suffices for a denial of the motion." In re Bernard L. Madoff Inv. Secs., LLC, Nos. 13 CV 1300, 13 CV 2447, 2013 WL 4778163, at *2 (S.D.N.Y. Sept. 6, 2013) (quoting In re Holocaust Victim Assets Litig., 225 F.3d at 197).
In determining whether a motion to intervene is timely, the court is instructed to take into account "'all of the circumstances,' including when intervenors discovered there was a need to intervene and the procedural posture of the case." NYTDA, Inc. v. City of New York, No. 11 CV 1836, 2014 WL 4274219, at *4 (E.D.N.Y. Aug. 28, 2014) (). The Court should consider "(1) how long the applicant had notice of the interest before it made the motion to intervene; (2) prejudice to existing parties...
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