Fahnestock v. E. Alliance Ins. Co.
| Decision Date | 21 December 2016 |
| Docket Number | Civil No. 1:13-CV-2417 |
| Parties | KENNETH FAHNESTOCK and LISA S. FAHNESTOCK Plaintiffs, v. EASTERN ALLIANCE INSURANCE COMPANY, Petitioner, v. LETTERKENNY BUSINESS PARK, LP, LETTERKENNY BUSINESS PARK, II, LP, INDUSTRIAL REALTY GROUP, LLC, STUART LICHER, UNITED STATES OF AMERICA, and U.S. ARMY CORPS OF ENGINEERS, DEPARTMENT OF THE ARMY UNITED STATES GOVERNMENT, Defendants. |
| Court | U.S. District Court — Middle District of Pennsylvania |
MEMORANDUM
In this diversity action, Plaintiffs allege that Defendants negligently maintained an unsafe premises which caused Plaintiff Kenneth Fahnestock to slip and fall, suffering permanent injuries at an army depot in Chambersburg, Pennsylvania. Because Mr. Fahnestock was injured during the scope of his employment, Eastern Alliance Insurance Company, his employer's workers' compensation carrier, indemnified him for lost wages and paid his medical expenses. Presently before the court is Eastern Alliance Insurance Company's petition to intervene pursuant to Federal Rule of Civil Procedure 24(a)(2).
On September 22, 2011, Plaintiff Kenneth Fahnestock ("Mr. Fahnestock") was employed as a "material handler" by Ram-Tech Support Services ("Ram-Tech"), which is a government contractor that provides services to the Letterkenny Army Depot (the "Depot") in Chambersburg, Pennsylvania. (Doc. 12, ¶¶ 24-25.) Mr. Fahnestock alleges that leaking water accumulated in a men's bathroom at the Depot, creating a "dangerous and hazardous condition" that caused him to slip and fall and suffer "serious, permanent, and disabling personal injuries." (Id. at ¶¶ 27-28, 40.)
On September 19, 2013, Mr. Fahnestock and his wife, co-Plaintiff Lisa S. Fahnestock ("Mrs. Fahnestock"), filed a complaint against Letterkenny Business Park, L.P., Letterkenny Business Park, II, L.P., Industrial Realty Group, LLC, Stuart Licher, the United States of America, the United States Army Corps of Engineers, and the Department of the Army of the United States (collectively, "Defendants"). (See Doc. 1.) On July 21, 2014, the court granted Plaintiffs leave to file an amended complaint (Doc. 11), which was filed the same day (Doc. 12.) In addition to Mr. Fahnestock's negligence claim, Mrs. Fahnestock filed a loss of consortium claim, which has precipitated the instant petition. (See id. at ¶¶ 58-60.)Since the action was initiated, discovery and case management deadlines have been routinely delayed because Mr. Fahnestock has been unable to participate in a deposition due to the injuries he sustained at the Depot. (See Docs. 25, 27, 29, 34, 36, 38, 40, & 42.) Currently, jury selection and trial are scheduled for July 5, 2017. (Doc. 47.)
As Ram-Tech's worker's compensation insurance carrier, Eastern Alliance Insurance Company ("Eastern") paid wage loss benefits to Mr. Fahnestock, as well as his medical bills, because he was injured "within the course and scope of his employment." (Doc. 43, p. 2 of 4.) Eastern avers that its worker's compensation lien totals $129,288.47, which continues to rise.1 (Id.) Eastern has petitioned to intervene to "protect its sizeable lien" pursuant to Federal Rule of Civil Procedure 24(a)(2). (Id.) Plaintiffs oppose Eastern's attempt to intervene as premature, unwarranted, and argue that Eastern's interests are adequately represented. (Doc. 45, pp. 1-2 of 26.) The petition has been fully briefed (Docs. 43-1 & 45) and is ripe for disposition.
A party may intervene as of right if it "claims an interest relating to the property or transaction that is the subject of the action, and is so situated thatdisposing 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." Fed. R. Civ. P. 24(a)(2). A petition to intervene will be granted if the movant can demonstrate that its petition is timely, that it has identified "a sufficient interest in the underlying litigation" which would be "impaired or affected by the disposition of the underlying action," and "that the existing parties to the action do not adequately represent the prospective intervenor's interests." Liberty Mut. Ins. Co. v. Treesdale, Inc., 419 F.3d 216, 220 (3d Cir. 2005) (internal citation omitted). A district court may not grant the petition to intervene unless all factors are satisfied. Id. (quoting Mountain Top Condo. Ass'n v. Dave Stabbert Master Builder, Inc., 72 F.3d 361, 366 (3d Cir. 1995)).
As an initial matter, it is well-settled that "a federal court must apply the substantive laws of its forum state in diversity actions." Lafferty v. St. Riel, 495 F.3d 72, 76 (3d Cir. 2007) (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938)). Under Pennsylvania law, Eastern could partially or fully recoup its subrogated lien if Plaintiffs settle or win a favorable jury verdict.2 However, Eastern can only recover funds which are apportioned to compensate Mr.Fahnestock for his physical injuries and economic damages, not funds allocated to Mrs. Fahnestock's loss of consortium claim. (Id. at p. 3 of 4.) Thus, Eastern argues that it must be allowed to intervene in this action to prevent Plaintiffs from securing a settlement or jury verdict that inequitably allocates any monetary award to Mrs. Fahnestock's loss of consortium claim. (See Doc. 43, p. 3 of 4.) Plaintiffs contend that intervention, especially at this early stage of the litigation, is not only premature, but unnecessary because their interest is aligned with Eastern's in securing the largest monetary award possible. (See Doc. 45, pp. 1-2 of 26.) The court will review the relevant factors to determine if intervention is appropriate at this time.
A court reviews the timeliness of a petition to intervene based upon the totality of the circumstances. Simmons v. Paran Mgmt. Co., Civ. No. 11-cv-0415, 2011 WL 2970969, *2 (M.D. Pa. July 20, 2011) (citing Pennsylvania v. Rizzo, 530 F.2d 501, 506 (3d Cir. 1976)). Plaintiffs filed their complaint on September 19, 2013. (Doc. 1.) Discovery in this case has been repeatedly postponed, and case management deadlines have been extended, because Mr. Fahnestock has not been available for a deposition due to his current physical condition. (See Docs. 25, 27, 29, 34, 36, 38, 40, & 42.) Eastern filed its motion to intervene on September 26, 2016. (Doc. 43.) Although the present action has languished for more than threeyears, the court finds that Eastern's petition is nevertheless timely. Delays in the discovery process could not be avoided due to Plaintiff's physical condition and extensions to the case management deadlines have been granted upon mutual request of the parties. Such delays cannot be held against Eastern. Furthermore, the petition to intervene will not unnecessarily delay the discovery process or trial.
A proposed intervenor's interest in the litigation "must be a legal interest as distinguished from interests of a general and indefinite character." Liberty Mut. Ins. Co., 419 F.3d at 220 (quoting Mountain Top Condo. Ass'n, 72 F.3d at 366). Economic interests alone do not justify intervention, and "the mere fact that a lawsuit may impede a third party's ability to recover in a separate suit ordinarily does not give the third party a right to intervene." Id.; see also Kleissler v. U.S. Forest Serv., 157 F.3d 964, 972 (3d Cir. 1998) () Under Pennsylvania law, a worker's compensation insurance carrier has a legally cognizable interest in the outcome of a tortious action brought by an insured employee against an alleged negligent third party, and the carrier could recover all of its expenses if the third party is held liable for the employee's injuries. See 77 Pa. Con. Stat. § 671.
As stated above, Eastern claims its subrogation lien equals $129,288.47, which represents Eastern's substantial interest in the outcome of the pending litigation. Plaintiffs could potentially recover sufficient funds to fully reimburse Eastern as a part of a settlement or upon a favorable jury verdict. Thus, the court finds that Eastern has a sufficient interest in the underlying litigation.
Having established Eastern's interest in the litigation, the next question is whether that interest is under threat of impairment. Eastern argues that the recovery of its lien could be jeopardized by a unilateral, arbitrary, or inequitable settlement or jury award. Because any recovery based upon Mrs. Fahnestock's loss of consortium claim would be immune from Eastern's subrogated lien, Plaintiffs would have an interest in allocating as much of any recovery to that claim in order to avoid Eastern's lien. Accordingly, the court finds that Eastern's interest is indeed under threat of impairment. See Simmons, 2011 WL 2970969 at *2; see also Urmann v. Rockwood Cas. Ins. Co., 905 A.2d 513, 522-23 (Pa. Super. Ct. 2006) (citing Darr Const. Co. v. W.C.A.B. (Walker), 715 A.2d 1075, 1080 (Pa. 1998)).
The final factor necessary for intervention as of right is whether the prospective intervenor's interests are adequately represented by the existing parties. See Liberty Mut. Ins. Co., 419 F.3d at 220 (citing Kleissler, 157 F.3d at 969). "This factor 'entails looking to such factors as proof of collusion between therepresentative and the opposing party, any adverse interest between the applicant and the representative, and whether there is any indication that the representative has been less than diligent in prosecuting the litigation.'" Simmons, 2011 WL 2970969 at *3 (quoting Olden v. Hagerstown Cash Register, Inc., 619 F.2d 271, 274-75 (3d Cir. 1980)). Eastern has not demonstrated...
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