Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_04-cv-02314/USCOURTS-caed-2_04-cv-02314-3/pdf.json

Nature of Suit Code: 360
Nature of Suit: Other Personal Injury
Cause of Action: 28:1332 Diversity-Breach of Contract

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

CLYDE TERRY and ANNE TERRY,

NO. CIV. S 04-2314 MCE GGH

Plaintiffs,

v. MEMORANDUM AND ORDER

THE TRAVELERS INDEMNITY CO.,

KENNEL PAK, GENTZLER & SMITH

ASSOCIATES, INC.,

Defendants.

----oo0oo----

In this case, Plaintiffs Clyde and Anne Terry (“Plaintiffs”)

claim that Defendants Travelers Indemnity Co., Kennel Pak, and

Gentzler & Smith Associates, Inc., (collectively “Defendants”)

acted negligently and fraudulently regarding an insurance policy

issued to the Plaintiffs’ tenants, Alan and Karen Levens (“the

Levens”). The Levens move to intervene as of right, pursuant to 

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Case 2:04-cv-02314-MCE -GGH Document 40 Filed 08/15/05 Page 1 of 6
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All further references to “Rule” or “Rules” are to the 1

Federal Rules of Civil Procedure, unless otherwise noted.

Because oral argument would not be of material assistance, 2

this matter was deemed suitable for decision without oral

argument. E.D. Local Rule 78-230(h).

2

Federal Rule of Civil Procedure 24(a). For the reasons set 1

forth below, the Levens’ motion to intervene is DENIED.2

BACKGROUND

The Court has already set forth a detailed factual

background for this action in its Memorandum and Order of April

27, 2005, which is incorporated by reference and need not be

reproduced herein. (Ct. Memo. & Order at 2-5.) The Levens, who

were not named as defendants in this suit, now seek to intervene

as of right. The Plaintiffs and Defendants all oppose the

Levens’ intervention.

STANDARD

An applicant has the right to intervene under Rule 24(a) if

1) the intervention request is made in a timely fashion; 2) a

“significantly protectable” interest related to the subject

matter of the litigation is asserted; 3) disposition of the

matter may impair or impede the applicant’s interest in the

absence of intervention; and 4) the applicant’s interest is not

adequately represented by existing parties. Wetlands Action

Network v. United State Army Corps of Eng’rs, 222 F.3d 1105,

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1113-14 (9th Cir. 2000). None of the parties to this action

contest the timeliness of the Levens’ motion.

ANALYSIS

The Levens argue that they have a right to intervene because

they have an interest in the insurance policy they purchased from

the Defendants, as required by their lease agreement with the

Plaintiffs. The Levens contend that if this Court later rules

that the policy is somehow unenforceable, then they will be in

technical breach of their lease for failing to have an insurance

policy. If in breach, the Levens fear they will be evicted by

the Plaintiffs, which may result in losing their dog-training

business. Thus, they argue they have a significantly protectable

interest in this action.

The Levens further argue that if the Court finds against the

Defendants here, the Defendants might withdraw the defense

services they are providing them in Terry v. Levens, a separate

state-court action brought by the Plaintiffs. Therefore, the

Levens argue they have significantly protectable interests in

maintaining Defendants’ services, and that interest would be

impaired if they are not able to join as parties here.

The Plaintiffs and Defendants rebut that this suit concerns

only the Defendants’ conduct towards the Plaintiffs and does not

concern the Levens’ interests in the policy or the lease. The

Levens can have no interest in the conduct of their insurance

company towards the Plaintiffs, according to the Plaintiffs and

Defendants. Furthermore, while the Defendants never threaten to

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withdraw their defense services, they acknowledge that any such

withdrawal would be arise from Defendants’ own actions, not the

disposition of the present suit. Thus, the Plaintiffs and

Defendants contend that the Levens have no significantly

protectable interest in this suit. The Court agrees.

Ninth Circuit precedent states that in order to establish a

significantly protectable interest, an applicant for intervention

must demonstrate a relationship between the applicant’s interest

and the claims at issue. United States v. Alisal Water Corp.,

370 F.3d 915, 920 (9th Cir. 2004); Arakaki v. Cayetano, 324 F.3d

1078, 1084 (9th Cir. 2003). Based on a review of the Levens’

moving papers, the Court finds that, other than obtaining the

insurance policy as required by their lease, the Levens have

demonstrated no interest in any transaction between the

Plaintiffs and Defendants.

The dispute here is not whether the Levens actually obtained

the policy, but whether the Defendants actually provided coverage

under the policy in favor of the Plaintiffs. The Levens’

interest in obtaining the policy and avoiding the breach of their

lease has no relationship to the issue of policy coverage. 

Whether the Levens complied with their lease is not an issue for

this Court to decide and is better left for the state court in

Terry v. Levens. Thus, the Levens’ interest here, if any, does

not rise to the level of a significantly protectable interest

because it is not related to the claims at issue. See Alisal,

370 F.3d at 920; Smith v. Pangilinan, 651 F.2d 1320, 1324 (9th

Cir. 1981).

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The Court acknowledges that there are two other factors to 3

establish the right to intervene under Rule 24(a): 1) impairment

of interest and 2) inadequate representation. In light of

finding no significantly protectable interest, the Court need not

proceed further in its analysis. However, the Court has reviewed

these other factors and finds they do not affect this Order.

Furthermore, while the Levens do not move for permissive

intervention under Rule 24(b), the Court finds that such

intervention cannot not be granted either. Adding the Levens

would destroy complete diversity and, consequently, this Court’s

jurisdiction over the entire action. See EEOC v. Nev. Resort

Ass’n, 792 F.2d 882, 886 (9th Cir. 1986).

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The Court also finds that the Levens fail to show how they

would be affected by resolution of any of the Plaintiffs’ claims.

A significantly protectable interest can exist “only if the

resolution of the plaintiff’s claims actually will affect the

applicant” Donnelly v. Glickman, 159 F.3d 405, 410 (9th Cir.

1998). Having no interest in the liability (or remedy) of the

action generally defeats intervention as of right. See Id. at

409. Even if the Court were to find for the Plaintiffs in the

underlying suit, the Levens would share none of the liability. 

Without a significant interest in the resolution of this suit,

the Levens will not be affected by it and cannot intervene.

Furthermore, this Court’s decision would have no

adjudicatory effect on the Terry v. Levens action in state court. 

The Court will not speculate whether the Defendants will withdraw

their defense services for the Levens. If Defendants decide to

do so, that will be their own, independent decision that has

nothing to do with the disposition of this suit. Thus, the

Levens have not established that they have a significantly

protectable interest here. Consequently, the Levens’ cannot

intervene in this action.3

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CONCLUSION

Based on the foregoing, the Levens’ motion to intervene is

DENIED.

IT IS SO ORDERED.

DATED: August 15, 2005

_____________________________

MORRISON C. ENGLAND, JR

UNITED STATES DISTRICT JUDGE

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