Atlantic Refinishing & Restoration, Inc. v. Travelers Casualty and Surety Company of America
272 F.R.D. 26
D.D.C.2010Background
- Desbuild, Inc. moved to intervene as a defendant in a suit between Atlantic Refinishing & Restoration, Inc. ( plaintiff ) and Travelers Casualty and Surety Company of America ( defendant ).
- Desbuild was the prime contractor for a GSA project to repair the Sydney Yates Building, with Atlantic as a subcontractor providing materials and services; arbitration clause purportedly in the subcontract.
- GSA terminated Desbuild's prime contract for cause on September 18 and September 29, 2009, while Atlantic had invoiced Desbuild’s company $197,344.25; Atlantic claimed $97,281.25 remained unpaid.
- As prime contractor, Desbuild issued a payment bond naming Travelers as surety; an indemnity relationship allegedly exists whereby Travelers could seek indemnification from Desbuild if liable.
- Atlantic filed suit on April 30, 2010 against Travelers seeking payment; Desbuild filed its motion to intervene on July 19, 2010.
- The court analyzed Rule 24(a) and (b) standards and granted intervention, finding special circumstances and inadequacy of representation to warrant intervention.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Desbuild has a right to intervene under Rule 24(a). | Atlantic contends Desbuild lacks a direct interest and may be adequately protected by Travelers. | Travelers argues no independent interest beyond reimbursement under indemnity and that common defense suffices. | Desbuild granted intervention as of right. |
| Whether Desbuild's interest is sufficient and timely for intervention. | Atlantic asserts no concrete interest and that intervention would delay resolution. | Travelers contends interest is contingent and already protected by single defense team. | Interest and timeliness satisfied; intervention allowed. |
| Whether Desbuild would be impaired absent intervention. | Atlantic argues impairment not shown as dispute is between Atlantic and Travelers. | Travelers asserts no practical impairment risk to Desbuild’s position. | Impairment shown; intervention warranted to enable defenses against indemnity exposure. |
| Whether Desbuild's representation would be adequately represented by Travelers. | Atlantic contends Travelers can adequately represent joint defense. | Travelers maintains shared interests and common counsel with Desbuild. | Special circumstances exist; Desbuild's interests in enforcing arbitration and other defenses not adequately represented by Travelers. |
| Whether permissive intervention under Rule 24(b) could apply if Rule 24(a) denied. | Atlantic does not address 24(b) at length. | Travelers suggests 24(b) is applicable only if right to intervene is not established. | 24(b) alternative permission also warranted; intervention granted. |
Key Cases Cited
- Fund for Animals, Inc. v. Norton, 322 F.3d 728 (D.C. Cir. 2003) (sets out Rule 24(a) elements and standing considerations)
- Jones v. Prince George’s County, Md., 348 F.3d 1014 (D.C. Cir. 2003) (four elements of Rule 24(a): timeliness, interest, impairment, adequacy of representation)
- United States ex rel. MPA Constr., Inc. v. XL Specialty Ins. Co., 349 F. Supp. 2d 934 (D. Md. 2004) (direct and substantial interest of bond principal in indemnification context)
- XL Specialty Ins. Co. v. United States, 349 F. Supp. 2d 934 (D. Md. 2004) (special circumstances may rebut presumption of adequate representation)
- Schoenborn v. Wash. Metro. Area Transit Auth., 247 F.R.D. 5 (D.D.C. 2007) (explanation of impairment and adequacy considerations in intervention)
- Am. Horse Prot. Ass’n, Inc. v. Veneman, 200 F.R.D. 153 (D.D.C. 2001) (recognizes potential inadequacy of representation to justify intervention)
- Indep. Petrochemical Corp. v. Aetna Cas. & Sur. Co., 105 F.R.D. 106 (D.D.C. 1985) (contingent liability not enough for intervention; distinguishable facts)
- Revere Copper & Brass, Inc. v. Aetna Cas. & Sur. Co., 426 F.2d 709 (5th Cir. 1970) (per se right of intervention for bond principals discussed in older contexts)