United States ex rel. Preferred Masonry Restoration, Inc. v. Int'l Fid. Ins. Co.
| Decision Date | 30 August 2019 |
| Docket Number | No. 17-CV-1358 (KMK),17-CV-1358 (KMK) |
| Parties | UNITED STATES OF AMERICA, for the use of PREFERRED MASONRY RESTORATION, INC., Plaintiff, v. INTERNATIONAL FIDELITY INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — Southern District of New York |
Appearances:
Kevin T. Conklin, Esq.
Mead, Hecht, Conklin & Gallagher
White Plains, NY
Counsel for Plaintiff
Thomas P. Stevens, Esq.
Flamm Walton Heimbach
Blue Bell, PA
Counsel for Plaintiff
Matthew E. Ward, Esq.
The Ward Firm, PLLC
Baldwinsville, NY
Counsel for Defendant
Preferred Masonry Restoration, Inc. ("PMRI" or "Plaintiff") brings the instant Action against International Fidelity Insurance Company ("IFIC" or "Defendant"), alleging breach of contract. Before the Court is a Motion To Intervene and To Stay (the "Motion") filed by Defendant on behalf of itself and its principal, S.J. Thomas Co., Inc. ("SJTC"), the putative intervenor. (Not. of Mot. (Dkt. No. 63).) For the reasons that follow, the Motion is granted.
The following facts are drawn from Plaintiff's Complaint, (Compl. (Dkt. No. 1)), and Defendant's Answer, (Answer (Dkt. No. 11)). The Court recounts only those facts necessary for consideration of the instant Motion.
SJTC is a general contracting company. (Compl. ¶¶ 7-8.) SJTC was the prime contractor on a federally-funded restoration project (the "Project"). (Id. ¶¶ 6, 9; Answer ¶ 24.) Pursuant to the Miller Act, 40 U.S.C. § 3131 et seq., SJTC was required to post a labor and material payment bond on the Project, and, accordingly, Defendant IFIC, as SJTC's agent, did so on May 26, 2015. (Compl. ¶¶ 9-10; Answer ¶ 24.)
Plaintiff PMRI is a masonry restoration contractor. (Compl. ¶ 1.) On May 14, 2015, SJTC and Plaintiff entered into a contract (the "Contract") in which Plaintiff agreed to do certain work for SJTC on the Project.
Plaintiff alleges that it completed substantial work on the Project through August 2016 — when SJTC "barred" it from further performance — and that notwithstanding Plaintiff's performance, SJTC only paid Plaintiff a portion of the amount due under the Contract. (Compl. ¶¶ 25-32, 41, 44.) Defendant brings two counterclaims against Plaintiff, alleging breach of contract by failing to timely and adequately perform, (Answer ¶¶ 26-27), and by providing SJTC with defective materials, (id. ¶ 30).
Plaintiff filed the Complaint on February 23, 2017. (Compl. (Dkt. No. 1).) Defendant's Answer was filed on March 29, 2017. (Answer (Dkt. No. 11).) Plaintiff's Answer to thecounterclaims was filed on April 17, 2017. (Pl.'s Answer (Dkt. No. 13).) The Court held an initial conference on October 10, 2017, after which it adopted a case management plan, (Dkt. No. 18), which was amended on January 9, 2018, (Dkt. No. 26).
On April 30, 2018, Defendant filed a pre-motion letter in anticipation of moving to stay the case pending arbitration. (Dkt. No. 36.) Plaintiff filed a response on May 3, 2018. (Dkt. No. 38.) The Court held a conference on July 19, 2018 addressing the issue. (Dkt. (minute entry for July 19, 2018).) On August 1, 2018, Defendant filed a pre-motion letter in anticipation of filing a motion to intervene and to stay on behalf of SJTC. (Dkt. No. 49.) On August 10, 2018, Plaintiff filed a responsive letter. (Dkt. No. 58.) The Court held a conference on September 12, 2018 addressing the issue, after which it adopted a briefing schedule. (Dkt. No. 60.)
On October 23, 2018, Defendant and SJTC filed the instant Motion To Intervene and To Stay. (Not. of Mot. (Dkt. No. 63); Mem. of Law in Supp. of Mot. ("Def.'s Mem.") (Dkt. No. 64); Aff. of Matthew E. Ward, Esq. in Supp. of Mot. ("Def.'s Decl.") (Dkt. No. 65).) On October 24, 2018, Plaintiff filed a response in opposition. (Mem. of Law in Opp'n to Mot. ("Pl.'s Mem.") (Dkt. No. 66).) On November 2, 2018, Defendant filed a reply. (Reply Aff. of Matthew E. Ward, Esq. in Supp. of Mot. ("Def.'s Reply") (Dkt. No. 67).)
Federal Rule of Civil Procedure 24 permits a party to intervene in ongoing litigation as of right or by permission of the court.1 In seeking intervention under Rule 24, the "putativeintervenor bears the burden of demonstrating" that it meets the requirements for intervention. Parris v. Fremont Inv. & Loan, No. 14-CV-6907, 2017 WL 10259778, at *2 (E.D.N.Y. Aug. 31, 2017) (collecting cases). While accepting "as true the non-conclusory allegations of the motion," courts applying Rule 24 "must be mindful that each intervention case is highly fact specific and tends to resist comparison to prior cases." Aristocrat Leisure Ltd. v. Deutsche Bank Tr. Co. Ams., 262 F.R.D. 348, 352 (S.D.N.Y. 2009) (citation and quotation marks omitted).
For intervention as of right under Rule 24(a)(2), as sought here, the moving party must show "(1) that its motion was timely, (2) that it has an interest in the action, (3) that an unfavorable ruling may, as a practical matter, impair its interest, and (4) that its interest is not otherwise protected. Parris, 2017 WL 10259778, at *2 (quotation marks omitted) (quoting Long Island Trucking, Inc. v. Brooks Pharm., 219 F.R.D. 53, 54 (E.D.N.Y. 2003)); see also United States v. Pitney Bowes, Inc., 25 F.3d 66, 70 (2d Cir. 1994) (same); St. John's Univ. v. Bolton, 450 F. App'x 81, 83 (2d Cir. 2011) (same). "All four parts must be satisfied." Parris, 2017 WL 10259778, at *2 (citation omitted); see also D'Amato v. Deutsche Bank, 236 F.3d 78, 84 (2d Cir. 2001) (same).
The threshold inquiry is whether the application for intervention is timely. Among the factors to be considered are "(1) how long the applicant had notice of the interest before it made the motion to intervene; (2) prejudice to existing parties resulting from any delay; (3) prejudice to the applicant if the motion is denied; and (4) any unusual circumstances militating for or against a finding of timeliness." Pitney Bowes, 25 F.3d at 70. While courts use these four factors as a guide, the determination of whether a motion to intervene is timely must be"evaluated against the totality of the circumstances before the court." D'Amato, 236 F.3d at 84 (citation and quotation marks omitted); see also Pitney Bowes, 25 F.3d at 70 (); United States v. Yonkers Bd. of Educ., 801 F.2d 593, 594-95 (2d Cir. 1986) ; Parris, 2017 WL 10259778, at *2 . Nevertheless, "the length of time the applicant knew or should have known of his interest before making the motion" is "[a]mong the most important factors" to be considered in determining timeliness. Catanzano by Catanzano v. Wing, 103 F.3d 223, 233 (2d Cir. 1996) (citation and quotation marks omitted).
Plaintiff argues that the Motion To Intervene is untimely. (Pl.'s Mem. 10-11.) In Plaintiff's view, SJTC had at least constructive notice of this litigation at the time it was filed in February 2017, given the principal-agent relationship between SJTC and Defendant and the fact that the two organizations share counsel, yet did not seek leave to file the instant Motion until filing a pre-motion letter in August 2018, some eighteen months later. (Id.; see also Dkt. No. 49 ().)
The Court concludes that, notwithstanding this considerable length of time, there are certain circumstances that mitigate Defendant and SJTC's failure to make a prompter application to intervene. As Defendant points out, following initiation of this Action, the Parties participated in (unsuccessful) mediation in April 2017, pursuant to the terms of the Contract; an initial conference was not held until October 2017; and Plaintiff's owner, Robert Neas ("Neas"), hadserious health issues beginning in late October 2017, thus causing litigation to effectively halt until March 2018. (Def.'s Mem. 5-6, 14-15; see also Dkt. Nos. 23, 25, 32 (letters indicating Neas's illness).) Once Neas indicated that he was ready to continue with litigation, (Dkt. No. 32), Defendant filed a pre-motion letter in April 2018 seeking to stay the case for contractually-mandated arbitration, after which the Court held a conference in July 2018 and directed that Defendant file a new pre-motion letter regarding the instant Motion To Intervene, (Dkt. No. 36). Put simply, this Action was dormant for several months for reasons outside Defendant's control.
Further, as to "the most significant criterion in determining timeliness," that is, whether the delay "has prejudiced any of the existing parties," Pike Co., Inc. v. Universal Concrete Prods., Inc., 284 F. Supp. 3d 376, 395 (W.D.N.Y. 2018) (citation and quotation marks omitted), Plaintiff has not shown that it has suffered prejudice from the delay. Plaintiff argues that "there have been substantial motions" in this Action and that it "is a small contractor with a single shareholder, Robert Neas, and the prosecution and adjudication of this case is important, costly, and will only become more costly if there are further delays." (Pl.'s Mem. 7, 13.) Yet, contrary to Plaintiff's representation, "no substantive proceedings have yet taken place in the [A]ction." Union Switch & Signal, Inc. v. St. Paul Fire & Marine Ins. Co., 226 F.R.D. 485, 488 (S.D.N.Y. 2005). Although some discovery disclosures have been made, no depositions have been taken; nor have any other motions (e.g., to dismiss, to compel production) been filed. (Pl.'s Mem. 8; Def.'s Mem. 7, 17-18; Def.'s Reply ¶¶ 7, 9.) See Pike, 284 F. Supp. 3d at 395 (...
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