Medical Liability Mut. v. Alan Curtis LLC

• Decision Date: 17 May 2007
• Docket Number: No. 06-4055.,06-4055.
• Citation: 485 F.3d 1006
• Parties: MEDICAL LIABILITY MUTUAL INSURANCE COMPANY, Plaintiff-Appellee, v. ALAN CURTIS LLC; Alan Curtis; Evergreene Properties of North Carolina, LLC; Alan Curtis Enterprises, Inc., Defendants-Appellees, Mary Redden, individually, and as Executor of the estate of Annie Redden, Intervenor below-Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

485 F.3d 1006

MEDICAL LIABILITY MUTUAL INSURANCE COMPANY, Plaintiff-Appellee, v. ALAN CURTIS LLC; Alan Curtis; Evergreene Properties of North Carolina, LLC; Alan Curtis Enterprises, Inc., Defendants-Appellees Mary Redden, individually, and as Executor of the estate of Annie Redden, Intervenor below-Appellant.

No. 06-4055.

United States Court of Appeals, Eighth Circuit.

Submitted: April 13, 2007.

Filed: May 17, 2007.

Luther Sutter, Little Rock, AR, for appellant.

Jess Askew III, Little Rock, AR (Bonnie J. Johnson, Little Rock, on the brief), for appellee.

Before MURPHY, BENTON, and SHEPHERD, Circuit Judges.

MURPHY, Circuit Judge.

Medical Liability Mutual Insurance Company brought this declaratory judgment action seeking to clarify its obligations under two insurance policies to indemnify and defend Evergreene Properties of North Carolina, LLC (Evergreene), Alan Curtis Enterprises, Inc. (Curtis Enterprises), and other related entities in connection with a separate negligence lawsuit brought against them by Mary Redden. Redden moved to intervene in this action, and the district court¹ denied the motion. Redden appeals and we affirm.

Appellant Mary Redden (Redden) is the daughter of Annie Redden, a former resident of Crestpark Retirement Inn-Marianna (Crestpark) who died of numerous health complications in November 2003. Crestpark is an Arkansas nursing home operated by Evergreene and at least partially managed by Curtis Enterprises. Individually and as executrix of her mother's estate, Redden filed a lawsuit on March 3, 2005 in the Circuit Court of Lee County, Arkansas against Evergreene, Curtis Enterprises, other related entities, and unnamed defendants. She alleged that Crestpark's failure to diagnose and treat Annie Redden's health problems had caused her death. Redden asserted causes of action for negligence, wrongful death, breach of contract, and violations of the Arkansas Long Term Care Resident's Rights Act, Ark.Code Ann. § 20-10-1201 et seq. (Resident's Rights Act).

Medical Liability Mutual Insurance Company (MLMIC), which provides insurance coverage for healthcare facilities, succeeded to the obligations of two insurance policies issued to Evergreene covering the period of January 15, 2000 to January 15, 2001. After Redden instituted her action in state court, Evergreene demanded that MLMIC provide coverage for its defense. MLMIC agreed to provide coverage under a reservation of rights.

On September 22, 2005 MLMIC filed this diversity action in federal court against Evergreene, Curtis Enterprises, Alan Curtis, and Alan Curtis LLC (the defendants) seeking a declaratory judgment that it had no obligation to defend or indemnify them in connection with Redden's lawsuit. MLMIC argued that the insurance policy covers Evergreene alone and does not extend to the other defendants. It also alleged that the injuries for which Redden seeks compensation did not occur within the one year coverage period of Evergreene's policies. Specifically, MLMIC urged that Redden's claims must have arisen after the termination of coverage for otherwise they would be barred by various statutes of limitation under Arkansas law.

On November 13, 2006 Redden filed a motion to intervene in MLMIC's action both mandatorily and permissively under Federal Rule of Civil Procedure 24(a)(2) and (b)(2). She argued that she has a property interest in the lawsuit because she might in the future need to look to MLMIC to satisfy any judgment she might obtain in state court against defendants. She also asserted an interest in any determination the court might make about the statutes of limitations applicable to her claim and sought a determination from the district court that the statute for the Resident's Right Act was five years, rather than the three years urged by MLMIC. Plaintiff and defendants both opposed her motion.

The district court denied the motion to intervene, concluding that Redden did not have standing to intervene and that intervention would also cause undue delay and prejudice to the current parties to the lawsuit. Redden appeals, claiming a right to intervene under Rule 24(a)(2) and arguing in the alternative that the district court should have granted her leave to intervene under Rule 24(b)(2).

We review a district court's denial of mandatory intervention de novo. Sierra Club v. Robertson, 960 F.2d 83, 85 (8th Cir.1992). Under Rule 24(a)(2), a party is entitled to intervene as a matter of right upon filing a timely motion² if: (1) she has a cognizable interest in the subject matter of the litigation, (2) the interest may be impaired as a result of the litigation, and (3) the interest is not adequately protected by the existing parties to the litigation. Chiglo v. City of Preston, 104 F.3d 185, 187 (8th Cir.1997).

The central issue on appeal is whether Redden has a cognizable interest in this action. Redden asserts that she has an interest in ensuring that MLMIC will indemnify the defendants in the event that she wins a favorable judgment against them and they are unable to pay. She also argues that she had an interest in the legal issues at stake in this action, particularly any determination of the statutes of limitations applicable to her claims.

An interest is cognizable under Rule 24(a)(2) only where it is "direct, substantial, and legally protectable." United States v. Union Elec. Co., 64 F.3d 1152, 1161 (8th Cir.1995). An economic interest in the outcome of the litigation is not itself sufficient to warrant mandatory intervention. Curry v. Regents of the Univ., 167 F.3d 420, 422-23 (8th Cir.1999). An interest that is "contingent upon the occurrence of a sequence of events before it becomes colorable" is also not sufficient to satisfy Rule 24(a)(2). Standard Heating & Air Conditioning Co. v. City of Minneapolis, 137 F.3d 567, 571 (8th Cir.1998), quoting Washington Elec. v. Mass. Mun. Wholesale Elec., 922 F.2d 92, 97 (2d Cir.1...