Judge: Virginia Keeny, Case: 19STCV30507, Date: 2023-01-04 Tentative Ruling

Case Number: 19STCV30507    Hearing Date: January 4, 2023    Dept: W

DAVID SEAQUIST v. LANDMARK RECOVERY SOUTH, LLC

National Union Fire Insurance Company’s motion for leave to intervene

Date of Hearing:        January 4, 2023                                 Trial Date:       September 11, 2023  

Department:              W                                                        Case No.:        19STCV30507

Moving Party:            National Union Fire Insurance Company, moving to appear as the Intervenor in the place of Defendant BLVD Centers, Inc.

Responding Party:     Plaintiffs David Seaquist, by and through his successors in interest Robert Seaquist and Kim Seaquist, Robert Seaquist, and Kim Seaquist

BACKGROUND

This is a wrongful death action. Plaintiffs David Seaquist, by and through his successors in interest, Robert Seaquist and Kim Seaquist, and Robert Seaquist and Kim Seaquist as individuals, filed the instant action against Landmark Recovery South, LLC, Venture Recovery, LLC, Goldman Brent D Family Trust, and Brent Goldman asserting causes of action for 1) Wrongful Death; 2) Survival Action – Negligence; and 3) Survival Action – Dependent Adult Abuse/Neglect.

Plaintiffs allege David was a client of Defendants for nonmedical drug rehabilitation treatment between approximately between January 19, 2018 and June 27, 2018. David died on June 21, 2018, while under the care and custody of Defendants. Plaintiffs allege David’s wrongful death was caused by the acts and omissions of Defendants.

On November 13, 2019, Plaintiffs named Defendant Farnaz Poorkarim as Doe 1. In March, August, and December of 2020, Plaintiffs also named Defendant Landmark Recovery, LLC as Doe 2, Pacific Recovery Solutions, LLC dba Westwind Recovery Resources as Doe 3, Max Bosworth as Doe 4, Ian Keumerie as Doe 5, New Age Solutions as Doe 6, Harmony Hollywood LLC as Doe 7, and Blvd Centers Inc. as Doe 8.

On March 9, 2021, Plaintiff filed a First Amended Complaint.

On February 20, 2020, Brent Goldman, individually and as trustee of Brent D. Goldman Family Trust, filed a cross-complaint against Landmark Recovery South LLC and Venture Recovery LLC asserting causes of action for indemnity, contribution, and declaratory relief.

On May 4, 2020, Farnaz Poorkarim filed a cross-complaint against Landmark Recovery South LLC and Venture Recovery LLC asserting causes of action for indemnity, contribution, and declaratory relief.

[Tentative] Ruling

National Union Fire Insurance Company’s Motion for Leave to Intervene is GRANTED

disCUSSION

National Union Fire Insurance Company (“NUFIC”) moves the court for an order granting leave to intervene for Defendant BLVD Centers, Inc. on the grounds that NUFIC is the insurance company for Defendant BLVD and counsel for Defendant BLVD has recently learned that the corporate status of BLVD is now suspended with the California Secretary of State and as a result, cannot defend itself in this action.

Code of Civil Procedure section 387 sets forth the rules for intervention by a third party in existing litigation. Section 387(a) states in relevant part: “Upon timely application, any person, who has an interest in the matter in litigation, or in the success of either of the parties, or an interest against both, may intervene in the action or proceeding.” Section 387(b) provides that “if the person seeking intervention claims an interest relating to the property or transaction which is the subject of the action and that person is so situated that the disposition of the action may as a practical matter impair or impede the person's ability to protect that interest, unless that person's interest is adequately represented by existing parties, the court shall, upon timely application, permit that person to intervene.”

In the case of intervention as a right, “[t]he court shall, upon timely application, permit a nonparty to intervene in the action or proceeding if… [either] [a] provision of law confers an unconditional right to intervene[,] [or] [t]he person seeking intervention claims an interest relating to the property or transaction that is the subject of the action and that person is so situated that the disposition of the action may impair or impede that person’s ability to protect that interest, unless that person’s interest is adequately represented by one or more of the existing parties.”  (CCP §387(d)(1)(A)-(B).) 

In the case of permissive intervention, “[t]he court may, upon timely application, permit a nonparty to intervene in the action or proceeding if the person has an interest in the matter in litigation, or in the success of either of the parties, or an interest against both.”  (CCP §387(d)(2).)  

Intervenor NUFIC asserts it is the insurance company for Defendant BLVD. On December 1, 2020, BLVD was named as defendant Doe 8. NUFIC sought representation under a reservation of rights. (Latham III Decl. ¶1.) Upon Defendant BLVD obtaining new counsel, NUFIC discovered that BLVD was a suspended corporation. (Latham III Decl. ¶2.) Because default would be entered against Defendant BLVD as a suspended corporation and NUFIC would be called upon to satisfy any default judgment as their insurer, NUFIC seeks to intervene for their suspended insureds.

In opposition, Plaintiffs argue NUFIC has unreasonably delayed bringing this motion. Plaintiffs contend NUFIC has had actual notice of this lawsuit for years as Plaintiffs gave NUFIC notice of this lawsuit on November 19, 2020 and sent policy demand that implicated BLVD in July 2022. Moreover, NUFIC picked up the defense of another named defendant in this action – Venture Recovery. As a result, Plaintiffs contend NUFIC has either acted in bad faith against its own insured or has acted improperly in these proceedings to the Court and third-party claimants. Plaintiffs further contend defense counsel’s explanation as to the need to intervene based on the sudden discovery of BLVD’s status is unbelievable given the fact that BLVD went inactive back in 2021 and Plaintiff’s expressly referred to the terminated status of BLVD in their opposition to BLVD’s prior counsel’s motion to withdraw.

As a review, Plaintiffs filed their complaint August 28, 2019. (Rhodes Decl. ¶1.) On December 1, 2020, BLVD was named as a defendant. (Rhodes Decl. ¶5.) BLVD filed an answer to the first amended complaint on June 3, 2021. (Rhodes Decl. ¶9.) One year later, BLVD went inactive on October 25, 2021. On November 8, 2022, defense counsel filed Notice of Representation of BLVD. (Court Docket, 11/8/22.) Almost a month later, NUFIC filed the motion for leave to amend. (Court Docket, 12/1/22.)

The court cannot speculate why NUFIC did not seek to intervene when BLVD was first suspended in October 2021. However, the court finds NUFIC has made a timely application and NUFIC has a direct and immediate interest in this litigation. As noted by NUFIC, “[a]n insurer's right to intervene in an action against the insured, for personal injury or property damage, arises as a result of Insurance Code section 11580. Section 11580 provides that a judgment creditor may proceed directly against any liability insurance covering the defendant, and obtain satisfaction of the judgment up to the amount of the policy limits. (See  Cal.Practice Guide: Insurance Litigation, §§ 15:1028 et seq.) Thus, where the insurer may be subject to a direct action under Insurance Code section 11580 by a judgment creditor who has or will obtain a default judgment in a third party action against the insured, intervention is appropriate.” (Reliance Ins. Co. v. Superior Court (2000) 84 Cal.App.4th 383, 386–387.)

Because BLVD is a suspended corporation, NUFIC may be exposed to liability pursuant to Insurance Code section 11580 for a judgment taken against BLVD. Regardless of whether NUFIC also represents other defendants in the instant matter, NUFIC’s interests were not being adequately represented until it became liable when BLVD became a suspended corporation. The court further notes trial is a year out and Plaintiffs have failed to establish any prejudice in NUFIC’s delay in seeking to intervene. Discovery is moving forward and NUFIC has attested they will respond to all discovery served on prior counsel and will not duplicate previous discovery.

Accordingly, NUFIC’s motion for leave to intervene is GRANTED. The court notes that as NUFIC is asserting a defense on behalf of its insured, the “Complaint-in-Intervention” attached to the motion should actually be captioned as an Answer-in-Intervention.  NUFIC is ordered to file its Answer-in-Intervention within ten days.

Plaintiffs request that if the motion is granted, the court order NUFIC to answer any discovery without objection and that the court strike any and all affirmative defenses in the complaint in intervention. The court generally agrees that  the affirmative defenses should not expand the case, as NUFIC is basically standing in the shoes of its insured to defend against default and to present all defenses available to the insured.  BLVD raised a host of affirmative defenses in its answer; NUFIC can assert any or all of them.  As for the request that NUFIC cannot assert objections that were not raised in a timely manner, the court generally agrees.  If the time to raise objections has passed, NUFIC by intervening cannot revive those deadlines.  NUFIC should serve responses without objection forthwith.