Adams v. Ohio University, 2:17-cv-00200

Background

Plaintiffs Christine Adams and Susanna Hempstead sued Andrew Escobedo and others alleging sexual harassment and asserting Title IX, Fourteenth Amendment equal protection, negligence, and injunctive-relief claims.
Liberty Mutual (Liberty) insured Escobedo under a homeowner policy providing up to $300,000 personal liability coverage and moved to intervene to seek a declaratory ruling on its duty to defend/indemnify.
Liberty filed its motion to intervene on August 21, 2017; Escobedo opposed; the other parties did not oppose.
Liberty sought intervention as of right under Fed. R. Civ. P. 24(a)(2) and alternatively permissive intervention under Rule 24(b).
The magistrate judge evaluated timeliness, Liberty’s legal interest, potential impairment of that interest without intervention, and adequacy of existing parties’ representation, and also whether Liberty’s claim shared common questions of law or fact with the main action.
The court concluded Liberty’s interest was contingent and unrelated to the underlying sexual-harassment claims and thus denied both intervention of right and permissive intervention.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether an insurer may intervene as of right under Rule 24(a)(2) to litigate coverage in the underlying suit	Liberty: insurer has a direct, substantial interest in the outcome because coverage determination affects its obligations	Escobedo: insurer’s interest is contingent on liability and thus not a direct interest in this litigation	Denied — insurer’s interest is contingent and not sufficiently related to the subject matter of plaintiffs’ claims, so no intervention as of right
Whether insurer’s coverage claim relates to the transaction or property that is the subject of the action	Liberty: coverage dispute concerns the same occurrence and thus relates to the action	Escobedo: coverage dispute is a state-law contract question distinct from plaintiffs’ federal and tort claims	Denied — coverage dispute does not relate to the subject matter (alleged sexual harassment) and would involve different laws/evidence
Whether insurer’s interest would be impaired without intervention	Liberty: inability to participate will impair its ability to protect its contractual rights	Escobedo: insurer can protect its interest via a separate declaratory action; impairment is speculative	Denied — impairment is speculative because interest is contingent and separate declaratory relief is available
Whether permissive intervention under Rule 24(b) is appropriate (common question of law or fact)	Liberty: courts may permit intervention to resolve coverage issues alongside liability	Escobedo: coverage raises distinct legal and evidentiary issues that do not share common questions with plaintiffs’ claims	Denied — no common questions of law or fact; claims would require different evidence and laws

Key Cases Cited

Michigan State AFL-CIO v. Miller, 103 F.3d 1240 (6th Cir.) (elements for intervention as of right under Rule 24(a))
Cascade Nat. Gas Corp. v. El Paso Nat. Gas Co., 386 U.S. 129 (U.S.) (intervenor’s interest must be sufficiently direct and immediate)
Travelers Indem. Co. v. Dingwell, 884 F.2d 629 (1st Cir.) (insurer’s interest in liability phase is contingent when coverage is disputed)
Restor–A–Dent Dental Labs., Inc. v. Certified Alloy Prods., 725 F.2d 871 (2d Cir.) (insurer’s coverage interest may be unrelated to subject matter of underlying suit)
Coalition to Defend Affirmative Action v. Granholm, 501 F.3d 775 (6th Cir.) (clarifying limits on what constitutes a substantial legal interest for intervention)