- 1 2 3 4 5 6 7 8 9 UNITED STATES DISTRICT COURT 10 EASTERN DISTRICT OF CALIFORNIA 11 ----oo0oo---- 12 13 CITY OF WEST SACRAMENTO, No. 2:18-cv-00900 WBS EFB CALIFORNIA; and PEOPLE OF THE 14 STATE OF CALIFORNIA,, 15 Plaintiff, 16 v. ORDER RE ARROWOOD INDEMNITY COMPANY’S MOTION TO INTERVENE 17 R AND L BUSINESS MANAGEMENT, a California corporation, 18 f/k/a STOCKTON PLATING, INC., d/b/a CAPITOL PLATING INC., 19 a/k/a CAPITOL PLATING, a/k/a CAPITAL PLATING; CAPITOL 20 PLATING, INC., a dissolved California corporation; JOHN 21 CLARK, an individual; ESTATE OF NICK E. SMITH, DECEASED; 22 et al., 23 Defendant. 24 ----oo0oo---- 25 Plaintiffs City of West Sacramento, California (“the 26 City”) and the People of the State of California (collectively, 27 “plaintiffs”) brought this action against R and L Business 28 1 Management (“R&L”), John Clark, and the Estate of Nick E. Smith 2 (collectively, “defendants”) to address toxic levels of soil and 3 groundwater pollution resulting from the release of hazardous 4 substances at a property once occupied by a metal plating 5 facility. Plaintiffs’ lawsuit involves contamination at the 6 property located at 319 3rd Street in West Sacramento, California 7 (the “Site”). 8 Plaintiffs filed their original complaint in April 9 2018. (See Docket No. 1.) Now, almost three years later, and 10 just six weeks before trial is set to begin, defendants’ insurer, 11 Arrowood Indemnity Company (“Arrowood”), has filed a motion to 12 intervene as a matter of right under Rule 24(a) or, in the 13 alternative, to permissively intervene under Rule 24(b). (See 14 Mot. to Intervene (Docket No. 244).) 15 I. Factual and Procedural Background 16 Plaintiffs commenced this action against defendants on 17 April 12, 2018, asserting claims against defendants under 18 CERCLA § 107(a), the Porter-Cologne Water Quality Control Act, 19 and California public nuisance law, as well as other claims that 20 are not relevant to the instant motion.1 (See Docket No. 1.) 21 Plaintiffs first filed for summary judgment against 22 defendants on August 28, 2019. (See Docket No. 95.) The court 23 granted plaintiffs’ motion as to their CERCLA § 107(a) claim, 24 holding that defendants were liable to the City for its response 25 costs at the Site. (See Docket No. 125.) The court then held a 26 1 The operative complaint in this matter is Plaintiffs’ 27 Third Amended Complaint. (Docket No. 45.) The Third Amended Complaint contains the same claims against defendants that are 28 specified above. (See id.) 1 status conference on January 21, 2020, at which it discussed 2 scheduling an evidentiary hearing on the defendants’ affirmative 3 defense of divisibility. (Docket No. 129.) At the hearing, 4 counsel for plaintiffs agreed to dismiss their claims for 5 trespass and ultrahazardous activity, as well as their prayer for 6 damages under their public nuisance claim. (Id.) 7 The court conducted a three-day evidentiary hearing 8 regarding divisibility in August 2020. (See Docket Nos. 190-93.) 9 Following the hearing, the court held that the harm to the site 10 was not divisible, and that each defendant was jointly and 11 severally liable for the City’s response costs under CERCLA 12 § 107(a). (See Docket No. 203.) 13 Plaintiffs then filed for summary judgment on their 14 public nuisance and Porter-Cologne Water Quality Control Act 15 claims. (Docket No. 204.) The court denied plaintiffs’ motion 16 on October 29, 2020. (Docket No. 211.) Following the close of 17 discovery and the dispositive motion cutoff, the court held a 18 pretrial conference on January 4, 2021 (Docket No. 232), and 19 issued a Final Pretrial Order on January 5, 2021 (Docket No. 20 233). 21 Arrowood moved to intervene on January 20, 2021. (See 22 Mot. to Intervene.) Arrowood contends that it must be permitted 23 to intervene to contest evidence introduced by the parties at 24 trial--either by cross-examining the parties’ witnesses or by 25 introducing its own evidence--that could prejudice its ability to 26 disclaim coverage under the insurance policy issued by Arrowood’s 27 predecessor to defendants. Under the policy, coverage only 28 exists for property damage caused by hazardous substances if the 1 release of those substances was “sudden and accidental.” (See 2 Mot. to Intervene at 8-10; Decl. of Kevin Keyes (“Keyes Decl.”) 3 at ¶¶ 3-4 (Docket No. 244-1).) Arrowood argues that, if it is 4 not permitted to intervene, the court could make findings at 5 trial that would impair Arrowood’s ability to argue in future 6 proceedings that releases at the Site were not “sudden and 7 accidental.” (See generally Mot. to Intervene.) 8 Because the hearing on Arrowood’s motion was scheduled 9 for February 22, 2021, and the trial date between plaintiffs and 10 defendants in this action is scheduled for March 9, 2021, 11 Arrowood also filed an ex parte application to shorten time on 12 its motion, which the court granted. (See Docket Nos. 246, 247.) 13 The court ordered the parties to file responsive briefs, if any, 14 no later than close of business on January 25, 2021. (Docket No. 15 247.) Plaintiffs timely filed an opposition to Arrowood’s motion 16 on January 25, 2021. (Pls.’ Opp’n (Docket No. 249).) Third- 17 party defendant County of Yolo (“Yolo County”) filed a short 18 opposition later that same evening, in which they largely adopted 19 plaintiffs’ arguments. (See Yolo County’s Opp’n (Docket No. 20 250).) Defendants did not file any response. 21 II. Discussion 22 A. Rule 24(a) 23 Rule 24 traditionally receives liberal construction in 24 favor of applicants for intervention. Arakaki v. Cayetano, 324 25 F.3d 1078, 1083 (9th Cir. 2003) (citing Donnelly v. Glickman, 159 26 F.3d 405, 409 (9th Cir. 1998)). An applicant seeking to 27 intervene as of right under Rule 24 has the burden of 28 demonstrating that four requirements are met: 1 (1) the intervention application is timely; 2 (2) the applicant has a significant protectable interest relating to the 3 property or transaction that is the subject of the action; (3) the disposition of the 4 action may, as a practical matter, impair or impede the applicant's ability to protect 5 its interest; and (4) the existing parties may not adequately represent the applicant's 6 interest. 7 Citizens for Balanced Use v. Montana Wilderness Ass'n, 647 F.3d 8 893, 897 (9th Cir. 2011). 9 The first factor, timeliness, is ‘the threshold 10 requirement’ for intervention as of right,” and “if [the court] 11 find[s] ‘that the motion to intervene was not timely, [it] need 12 not reach any of the remaining elements of Rule 24.’” League of 13 United Latin Am. Citizens v. Wilson, 131 F.3d 1297, 1302 (9th 14 Cir. 1997). In determining whether a motion to intervene is 15 timely, the court weighs “(1) the stage of the proceedings; (2) 16 whether the parties would be prejudiced; and (3) the reasons for 17 any delay in moving to intervene.” Nw. Forest Res. Council v. 18 Glickman, 82 F.3d 825, 836 (9th Cir. 1996). 19 Arrowood argues that the first two Glickman factors are 20 “neutral” as to intervention because (1) discovery is closed, (2) 21 the parties only intend to call witnesses at trial who already 22 testified at the court’s August hearing on divisibility, and (3) 23 Arrowood does not seek to continue trial. (See Mot. to Intervene 24 at 12-13.) Arrowood further argues that the third Glickman 25 factor weighs in favor of granting intervention because the 26 necessity of its intervention has only become apparent since the 27 court issued its Final Pretrial Order on January 5, 2021. (See 28 1 id.) 2 Arrowood points to two decisions in the court’s Final 3 Pretrial Order as prompting its need to intervene in the case. 4 First, Arrowood contends that, until the court indicated in the 5 Order that the causation elements of plaintiffs’ claims under the 6 Porter-Cologne Water Quality Control Act and California public 7 nuisance law would be at issue at trial, it “remained unclear . . 8 . if plaintiffs would proceed with the claims necessitating proof 9 on the cause of the property damage.” (Id. at 13.) Because 10 trial of the causation elements of plaintiffs claims will 11 implicate “which entity deposited hazardous chemicals on site and 12 the manner in which the deposit occurred,” Arrowood argues that 13 it must be allowed to intervene to challenge any evidence 14 introduced by the parties that would tend to show that the 15 releases of hazardous materials at the Site were “sudden and 16 accidental.” (Id.) 17 Second, Arrowood argues that, once the court determined 18 in its Final Pretrial Order that the March 9, 2021 trial would 19 proceed as a bench trial, rather than before a jury, the risk 20 that defendants would suffer prejudice from their insurer’s 21 participation in the underlying action was reduced, as there 22 would be no risk of jury confusion based on the insurer’s 23 presence. See id. (citing Shasta Linen Supply, Inc. v. Applied 24 Underwriters Inc., No. 2:16-cv-158 WBS AC, 2019 WL 3244487, at *3 25 (E.D. Cal. Apr. 17, 2019) (holding that there was “no risk of 26 jury confusion or prejudice” when consolidating cases for purpose 27 of trial because the cases would be tried as a bench trial)). 28 Notwithstanding Arrowood’s arguments, it is apparent 1 that Arrowood’s motion was untimely. This case has been pending 2 for almost three years. See Wilson, 131 F.3d at 1302 (when 3 considering timeliness, the court “must bear in mind that any 4 substantial lapse of time weighs heavily against intervention”). 5 Arrowood seeks to intervene on the eve of trial. Discovery has 6 long since closed, the deadline for filing dispositive motions 7 has passed, and the court has already ruled on multiple motions 8 for summary judgment, conducted a pretrial conference, and issued 9 a Final Pretrial Order. (See Docket Nos. 54, 125, 211, 225, 10 233.) 11 “The crucial date for assessing the timeliness of a 12 motion to intervene is when proposed intervenors should have been 13 aware that their interests would not be adequately protected by 14 the existing parties.” Smith v. Los Angeles Unified School 15 District, 830 F.3d 843, 857 (9th Cir. 2016). Arrowood has been 16 aware of this lawsuit and its claimed interest in the suit since 17 at least October 27, 2017, when plaintiffs sent Arrowood notice 18 that they would be filing suit 90 days later. (See Decl. of Bret 19 A. Stone (“Stone Decl.”) ¶ 3 (Docket No. 249).) After filing the 20 action, plaintiffs served the summons and complaint on Arrowood, 21 and, on June 14, 2019, plaintiffs served a subpoena on Arrowood, 22 to which it responded. (See id. at ¶¶ 4-5.) As plaintiffs and 23 Yolo County point out, plaintiffs’ claims have involved the 24 elements of causation which Arrowood claims form the basis of its 25 need to intervene since plaintiffs’ complaint was first filed. 26 (See Docket Nos. 1, 34, 45; Pls.’ Opp’n at 9; Yolo County’s Opp’n 27 at 3.) 28 Arrowood acknowledges that it has fully defended R&L, 1 Clark, and Smith in connection with this action, subject to a 2 reservation of rights, including paying for independent counsel 3 selected by the defendants. (See Keyes Decl. at ¶¶ 5-6.) 4 Arrowood has therefore been kept apprised of significant 5 developments in the case, including the occurrence of the court’s 6 divisibility hearing in August 2020 and the court’s denial of 7 plaintiffs’ second Motion for Summary Judgment on October 29, 8 2020. (See Docket Nos. 200-202, 211.) Arrowood does not 9 adequately explain why it failed to intervene prior to the 10 divisibility hearing, when “evidence related to the manner of 11 defendants’ release of chemicals [was] virtually certain to 12 become part of the record” (Mot. to Intervene at 13), nor does it 13 adequately explain why it failed to intervene for months after 14 the court denied plaintiffs’ second MSJ--the date when it became 15 apparent that plaintiffs’ nuisance and Porter-Cologne Act claims 16 would be proceeding to trial (absent settlement). See Smith, 830 17 F.3d at 857. 18 Arrowood also does not explain why it waited a year to 19 move to intervene following the court’s January 22, 2020 Order, 20 in which the court stated that, in light of plaintiffs agreement 21 to dismiss certain claims, “there are no issues remaining to be 22 decided by a jury.” (Docket No. 129.) Though the court did not 23 formally rule that it would separately try the claims between 24 defendants and Yolo County--some of which will require a jury 25 trial--until the Final Pretrial Order, Arrowood should have at 26 least known as of January 22, 2020 that there was a probability 27 that the trial between plaintiffs and defendants would proceed as 28 a bench trial. The court is therefore not convinced that the 1 need for Arrowood’s intervention only became apparent once the 2 court issued its Final Pretrial Order. See Smith, 830 F.3d at 3 857. 4 Furthermore, allowing Arrowood to intervene for the 5 purposes outlined in its motion would prejudice the parties by 6 requiring them to alter their trial preparation just a few weeks 7 before trial is scheduled to begin. It would also detract from 8 the broader progress being made toward meeting the deadlines and 9 expectations already set by the court--namely, the plaintiffs’ 10 and Yolo County’s forthcoming good faith settlement motion and 11 the parties’ Settlement Conference on February 11, 2020. (See 12 Pls.’ Opp’n at 8; Yolo County’s Opp’n at 3-4.) 13 In conclusion, even in light of the “liberal 14 construction” applied to Rule 24(a) in favor of applicants for 15 intervention, see Arakaki, 324 F.3d at 1083, Arrowood has not met 16 its burden of showing that its motion to intervene was timely 17 filed. Arrowood has failed to provide the court with a 18 convincing reason for its delay, and failed to show that the 19 parties’ ability to prepare for trial would not be prejudiced by 20 intervention at this late stage. The court therefore finds that 21 Rule 24(a)’s timeliness factor counsels against granting 22 intervention as a matter of right. See Glickman, 82 F.3d at 836. 23 Accordingly, the court will deny Arrowood’s motion to intervene 24 under Rule 24(a), and need not address the remaining requirements 25 for intervention under the Rule. See Wilson, 131 F.3d at 1302. 26 B. Rule 24(b) 27 “Permissive intervention to litigate a claim on the 28 merits under Rule 24(b) requires (1) an independent ground for 1 jurisdiction; (2) a timely motion; and (3) a common question of 2 law and fact between the movant’s claim or defense and the main 3 action.” Beckman, 966 F.2d at 473. 4 In determining timeliness under Rule 24(b), the court 5 considers “precisely the same three factors--the stage of the 6 proceedings, the prejudice to existing parties, and the length of 7 and reason for the delay--that [it considers] in determining 8 timeliness under Rule 24(a)(2).” Wilson, 131 F.3d at 1308. In 9 the context of permissive intervention, however, the court 10 “analyze[s] the timeliness element more strictly than . . . with 11 intervention as of right.” Id. 12 Therefore, because Arrowood’s motion was untimely under 13 Rule 24(a), it follows that it was untimely under Rule 24(b). 14 See id. Accordingly, the court will deny Arrowood’s motion to 15 intervene under Rule 24(b) as well. 16 Nevertheless, due to concerns that the court may, in 17 Arrowood’s absence, incidentally make findings during the trial 18 that could prejudice Arrowood’s ability to prove in a later 19 proceeding that releases at the Site were not “sudden and 20 accidental,” the court will allow Arrowood’s counsel to appear 21 and participate at trial on a limited basis. Arrowood will not 22 be permitted to participate as a party by introducing its own 23 evidence, calling witnesses, cross-examining the parties’ 24 witnesses, or otherwise disrupting or delaying the trial 25 proceedings. However, the court will allow Arrowood’s counsel to 26 be virtually present during the proceedings and to address the 27 court at times which do not interfere with the progress of the 28 trial, in order to ensure the court does not make findings that ee nn een en IE EI OSE IE EEE DS eee 1 | would prejudice his client in a future coverage dispute, 2 including objecting to any proposed findings bearing on the 3 nature of releases of hazardous substances at the Site. 4 IT IS THEREFORE ORDERED that Arrowood’s Motion to 5 Intervene (Docket No. 244) be, and the same hereby is, DENIED. 6 | Arrowood will be permitted, however, to appear at trial and 7 participate pursuant to the limited conditions described above. 8 | Dated: January 27, 2021 bet¢ . ak. 1 / 9 WILLIAM B. SHUBB 10 UNITED STATES DISTRICT JUDGE 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 11
Document Info
Docket Number: 2:18-cv-00900
Filed Date: 1/27/2021
Precedential Status: Precedential
Modified Date: 6/19/2024