Certain Underwriters at Lloyd's, London v. Bass
461 S.W.3d 317
Ark.2015Background
- Appellees (purchasers of surplus-lines insurance) filed a class action against Arkansas surplus-lines brokers, alleging brokers placed coverage with insurers not approved by the Arkansas Insurance Commissioner and seeking to void those contracts and obtain restitution.
- "Certain Underwriters at Lloyd’s, London" (appellants) moved to intervene, asserting they were the insurers (subscribers) on the policies at issue and thus real parties in interest whose contractual rights would be affected.
- Appellants submitted affidavits and a Rule 24(c) pleading denying the complaint and identified policies by policy/syndicate numbers; brokers’ affidavits stated the brokers could identify individual underwriter subscribers.
- The circuit court denied intervention, finding appellants too "amorphous" (arguing the group designation obscured individual names) and citing other objections; appellants appealed.
- The Arkansas Supreme Court reversed, holding the shorthand designation did not render the proposed intervenors amorphous and that appellants satisfied the three Rule 24(a)(2) requirements for intervention as of right.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether appellants were too amorphous to intervene | "Certain Underwriters" is an anonymous/unincorporated designation; names weren’t in the record | Shorthand referencing policy/syndicate numbers sufficed; brokers could identify subscribers | The shorthand did not make appellants amorphous; denial on that basis was error |
| Whether appellants had a sufficient interest in the litigation (Rule 24(a)(2) prong 1) | Appellees: complaint doesn’t implicate insurers; relief sought targets brokers and restitution, not insurers | Appellants: policies are contracts between insureds and insurers; appellants are real parties in interest | Appellants demonstrated a recognized interest as insurers in the contracts |
| Whether disposition of suit could impair appellants’ interests (Rule 24(a)(2) prong 2) | Appellees: plaintiffs seek restitution from brokers, leaving insurers unaffected; insurers can pursue independent remedies | Appellants: voiding contracts or adjudicating their validity would impair their contractual and legal rights | Appellants met the impairment requirement; their contractual rights could be affected |
| Whether existing parties adequately represent appellants’ interests (Rule 24(a)(2) prong 3) | Appellees: brokers and underwriters share counsel and defenses; brokers adequately represent insurers | Appellants: brokers are intermediaries with different interests and potential divergence in outcomes; brokers may not protect insurers’ contractual rights | Appellants showed inadequate representation by existing parties; intervention of right required |
Key Cases Cited
- Fort Smith Sch. Dist. v. Deer/Mt. Judea Sch. Dist., 450 S.W.3d 239 (Ark. 2014) (recognition that denial of motion to intervene as of right is appealable)
- Pearson v. First Nat’l Bank of DeWitt, 924 S.W.2d 460 (Ark. 1996) (intervention of right must be permitted if Rule 24(a)(2) factors are satisfied)
- Billabong Prods., Inc. v. Orange City Bank, 644 S.W.2d 594 (Ark. 1983) (distinguishing permissive intervention review and discussing intervention standards)
- UHS of Ark., Inc. v. City of Sherwood, 752 S.W.2d 36 (Ark. 1988) (applying intervention principles and evaluating claimed interests)
- Matson, Inc. v. Lamb & Assocs. Packaging, Inc., 947 S.W.2d 324 (Ark. 1997) (party opposing intervention bears burden to show adequate representation by existing parties)
- Medical Park Hosp. v. Bancorp South Bank of Hope, 166 S.W.3d 19 (Ark. 2004) (discussing standards for reviewing denials of intervention and Rule 24 requirements)