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Maxum Indemnity Co. v. Biddle Law Firm, PA

United States District Court, D. South Carolina, Florence Division

January 17, 2019

Maxum Indemnity Company, Plaintiff,
v.
Biddle Law Firm, PA, and James Marshall Biddle, individually Defendants, and Summit Shores Lender, LLC, and Chicago Title Insurance Company, Proposed Intervenor-Defendants.

          ORDER

          R. Bryan Harwell United States District Judge.

         Maxum Indemnity Company (“Plaintiff”) filed this declaratory judgment action against Biddle Law Firm, PA and attorney James Marshall Biddle (“Defendants”) seeking a declaration that it has no duty to defend or indemnify Defendants in a legal malpractice lawsuit pending in state court. The plaintiffs in that malpractice suit-Summit Shores Lender, LLC (“Summit Shores”) and Chicago Title Insurance Company (“Chicago Title”) (collectively, “Movants”)-have filed a motion seeking to intervene as of right in the instant action. The Court grants the motion for the reasons herein.[1]

         Background[2]

         In 2014, Plaintiff issued a professional liability insurance policy to Defendant Biddle Law Firm, PA; Defendant James Biddle, the sole owner of the firm, is insured under the policy. Complaint [ECF No. 1] at ¶¶ 4, 8, 21-24; Answer [ECF No. 12] at ¶¶ 2, 5; see ECF No. 1-3 (policy).

         In 2016, Movants sued Defendants in state court alleging claims for legal malpractice, negligence, negligent misrepresentation, and breach of fiduciary duty. Compl. at ¶ 26; see ECF Nos. 1-5 & 8-2 (state court complaint). That lawsuit is captioned “Summit Shores Lender, LLC and Chicago Title Insurance Co. v. James Marshall Biddle and Biddle Law Firm, P.A.” and, generally speaking, involves Defendants' allegedly negligent actions in a mortgage foreclosure proceeding (including their closing of a loan provided by Summit Shores, the issuance of a title insurance policy by Chicago Title, and the disbursement of the loan proceeds). Before Movants filed suit, Defendant James Biddle had filed for bankruptcy, and the bankruptcy court had authorized Movants to prosecute their claims against him and/or his firm and seek enforcement of any judgment or settlement “solely through the application of the proceeds of any available insurance.”[3] See ECF No. 8-5 (bankruptcy court order).

         On March 16, 2018, Plaintiff filed the instant action seeking a declaration that it has no duty to defend or indemnify Defendants in the pending state-court malpractice suit, as well as rescission of the policy.[4] See ECF No. 1. Plaintiff alleges the policy should be rescinded due to certain material misrepresentations made by Defendants in connection with the insurance application. Id.; see ECF No. 1-2 (application) & 1-1 (Biddle affidavit in prior suit).

         On April 24, 2018, Movants filed the instant motion to intervene as of right pursuant to Fed.R.Civ.P. 24(a), as well as a proposed answer.[5] See ECF No. 8. Plaintiff filed a response in opposition to the motion, and Movants filed a reply. See ECF Nos. 10 & 11. Defendants have not responded to the motion, but they have filed an answer asserting Plaintiff's claims for declaratory relief and rescission should be denied. See ECF No. 12; see also ECF No. 20 (subsequent notice of appearance of counsel for Defendants).

         Discussion

         Movants seek to intervene as defendants pursuant to Fed.R.Civ.P. 24(a)(2), which provides for “intervention of right” and requires a court to permit such intervention for anyone who files a timely motion and “claims an interest relating to the property or transaction that is the subject of the action, and is so situated that disposing of the action may as a practical matter impair or impede the movant's ability to protect its interest, unless existing parties adequately represent that interest.” Fed.R.Civ.P. 24(a)(2).[6] “[L]iberal intervention is desirable to dispose of as much of a controversy involving as many apparently concerned persons as is compatible with efficiency and due process.” Feller v. Brock, 802 F.2d 722, 729 (4th Cir. 1986) (internal quotation marks omitted).

         “[T]o intervene as a matter of right under Rule 24(a), a movant generally must satisfy four criteria: (1) timeliness, (2) an interest in the litigation, (3) a risk that the interest will be impaired absent intervention, and (4) inadequate representation of the interest by the existing parties.” Scott v. Bond, 734 Fed.Appx. 188, 191 (4th Cir. 2018); see Houston Gen. Ins. Co. v. Moore, 193 F.3d 838, 839 (4th Cir.1999) (listing these same four criteria). Movants assert they satisfy all four requirements, and the Court agrees.

         A. Timeliness

         “In order to properly determine whether a motion to intervene in a civil action is sufficiently timely, a trial court in this Circuit is obliged to assess three factors: first, how far the underlying suit has progressed; second, the prejudice any resulting delay might cause the other parties; and third, why the movant was tardy in filing its motion.” Alt v. EPA, 758 F.3d 588, 591 (4th Cir. 2014). “[T]imeliness is a cardinal consideration of whether to permit intervention . . . .” Moore, 193 F.3d at 839 (internal quotation marks omitted).

         Movants promptly filed their motion to intervene approximately one month after Plaintiff commenced this action. Compare ECF No. 1 (complaint filed Mar. 16, 2018), with ECF No. 8 (motion to intervene filed Apr. 24, 2018). Besides Defendants filing an answer and counsel appearing on their behalf, see ECF Nos. 12 & 20, no other activity has occurred in this case. Most of the deadlines in the current scheduling order have not yet expired, and therefore any resulting delay due to intervention is minimal. See ECF No. 23 (setting discovery deadline as July 16, 2019, and dispositive motions deadline as July 31, 2019). Accordingly, the Court finds the motion to intervene is timely.[7]

         B. Interest ...


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