Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_09-cv-02833/USCOURTS-casd-3_09-cv-02833-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1332 Diversity-Insurance Contract

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

THE MEDICAL PROTECTIVE

COMPANY,

Plaintiff,

CASE NO. 09CV2833 DMS (CAB)

ORDER DENYING MOTION TO

INTERVENE AS DEFENDANTS

vs.

SHERVIN ERFANI, DMD,

Defendant.

Pending before the Court is the motion by Scott Castillo and others (collectively, “the Castillo

Interveners”) to intervene as a matter of right in this action pursuant to Rule 24(a)(2) of the Federal

Rules of Civil Procedure. For the following reasons, the Castillo Interveners’ motion to intervene as

defendants is denied. 

I.

BACKGROUND

This action arises from a professional liability insurance policy issued by Plaintiff to

Defendant. On December 17, 2009, Plaintiff filed a Complaint seeking declaratory relief regarding

its right to rescind the insurance policy on the basis that Defendant concealed the existence of legal

claims against him in his procurement of the policy. (Doc. 1.) On April 19, 2010, Plaintiff filed a

Notice indicating Defendant had filed for Chapter 7 bankruptcy on March 18, 2010. (Doc. 3.) The

Bankruptcy Court subsequently granted Plaintiff’s motion for relief from the automatic bankruptcy

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stay so that this litigation may proceed. (Doc. 4.) On September 1, 2010, the Castillo Interveners

moved to intervene as a matter of right in this action pursuant to Rule 24(a)(2) of the Federal Rules

of Civil Procedure. (Doc. 14.) Plaintiff filed an opposition to the motion and the Castillo Interveners

filed a reply. (Docs. 17, 19.)

II.

DISCUSSION

Federal Rule ofCivil Procedure 24(a) provides that, on a timely motion, “the court must permit

anyone to intervene who: . . . (2) claims an interest relating to the property or transaction that is the

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.” Courts have held that a person seeking intervention pursuant to Rule 24(a)(2) is required

to demonstrate “(1) it has a significant protectable interest relating to the property or transaction that

is the subject of the action; (2) the disposition of the action may, as a practical matter, impair or

impede the applicant’s ability to protect its interest; (3) the application is timely; and (4) the existing

parties may not adequately represent the applicant’s interest.” United States v. Alisal Water Corp., 370

F.3d 915, 919 (9th Cir. 2004) (quoting United States v. City of Los Angeles, 288 F.3d 391, 397 (9th

Cir. 2002)). Because the Court finds that the Castillo Interveners have failed to establish they have

a significant protectable interest relating to the property that is the subject of the instant litigation, it

does not address the remaining factors.

“An applicant for intervention has a significantlyprotectable interest if the interest is protected

by law and there is a relationship between the legally protected interest and the plaintiff’s claims.”

Alisal, 370 F.3d at 919. However, “[i]n general, a mere economic interest in the outcome of litigation

is insufficient to support a motion to intervene. Thus, 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

. . . .” Liberty Mut. Ins. Co. v. Treesdale, Inc., 419 F.3d 216, 221 (3d Cir. 2005) (quoting Mountain

Top Condo. Ass’n v. Dave Stabbert Master Builder, Inc., 72 F.3d 361, 366 (3d Cir. 1995)). To support

a right to intervene, “an economic interest must be concrete and related to the underlying subject

matter of the action.” Alisal, 370 F.3d at 919, 920 n.3 (“A mere interest in property that may be

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impacted by litigation is not a passport to participate in the litigation itself.”).

Here, the Castillo Interveners claim they are entitled to intervene because they “are Plaintiffs

in underlying Civil Litigation against the Defendant for which coverage under Plaintiff’s insurance

policy may apply. If coverage is established under the policy, and liability and damages are established

in the Interveners’ underlying lawsuits, then the very funds put into issue in this case by the Plaintiff

would be owed and payable to the Interveners.” (Mot. to Intervene at 2.) The Castillo Interveners

have merely established that the outcome of the instant action may affect their potential future rights

to collect damages in their underlying suits. Such an interest is not sufficiently concrete or related to

the underlying subject matter of this action to constitute a significant protectable interest relating to

the property at issue here. The one case cited by the Castillo Interveners in support of their motion,

Teague v. Bakker, 931 F.2d 259 (4th Cir. 1991), does not suggest otherwise. In Teague, as was the

case in Liberty, “there were additional facts supporting intervention . . . which are not present here.

The proposed interveners in Teague had already obtained a judgment against the insured in the

separate action.” Liberty, 419 F.3d at 223. 

III.

CONCLUSION

For the foregoing reasons, the Castillo Interveners’ motion to intervene as defendants is denied.

IT IS SO ORDERED.

DATED: November 5, 2010

HON. DANA M. SABRAW

United States District Judge

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