Cal. Dep't of Substs. Control v. Dobbas

Intervenors under Rule 24(a)(2) must assert an interest “protectable under some law,” which has a relationship with the “claims at issue.” Fed. R. Civ. P. 24(a)(2); see Wilderness Soc’y v. U.S. Forest Serv., 630 F.3d 1173, 1179 (9th Cir. 2011) (en banc).

Respondent filed a suit in district court against current and former landowners of certain property seeking relief under state law and the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §§ 9601–75 (CERCLA). One former owner, Collins & Aikman Products, filed for bankruptcy 10 years previously, but stipulated to preserve Respondent’s ability to sue in the future for the sole purpose to be paid from insurance proceeds. Four years after a default judgement was entered against Collins & Aikman, their historic insurers, Petitioners, were first notified of the suit and denied intervention by right by the district court. Fed. R. Civ. P. 24(a)(2).  Intervenors under Rule 24(a)(2) must assert an interest “protectable under some law,” which has a relationship with the “claims at issue.” See Wilderness Soc’y v. U.S. Forest Serv., 630 F.3d 1173, 1179 (9th Cir. 2011) (en banc). Insurers who timely intervene in a tort action due to their insured being unwillingly or unable to defend themselves have a protected interest by law. Cal. Ins. Code § 11580; Clemmer v. Hartford Insurance Co., 587 P.2d 1098 (Cal. 1978), overruled on other grounds by Ryan v. Rosenfeld, 395 P.3d 689 (Cal. 2017). Petitioners attempted to intervene as soon as provided notice of the suit against their insured, and there is no dispute their interest is related to the underlying claims. The Court held that under the California direct action statute, See  Cal. Ins. Code sec. 11580, all three insurers had a legally protected interest in defending their helpless insured and preventing the entry of default judgment. Reversed and remanded.