Insurer May Intervene Where it Has Legitimate Interest as Judgment Creditor in Outcome of Litigation

U.S. Fid. & Guar. Co. v. E. Contractors, Inc., 2008 WL 190758 (D. Mass. Jan. 15, 2008)

In this case, the Federal District Court for the District of Massachusetts issued an order on a Motion to Intervene and Dissolve Attachment.  The motion to intervene was allowed and the petition for dissolution was allowed in part and denied in part.  Plaintiff was an issuer of security bonds and defendant was a construction company.  Plaintiff issued a series of bonds to secure defendant’s performance on several construction projects.  Defendant defaulted on the projects and subsequently plaintiff successfully secured an ex parte attachment of four of defendant’s properties.  Another insurance company that had also entered into surety agreements with the defendant previously secured a judgment against the defendant for $8,342,233.27.  This judgment was never satisfied due to defendant’s insolvency.  The insurance company claimed an interest in the attached properties.

The insurance company that had secured the prior judgment sought to intervene under Fed. R. Civ. P. 24(a)(2).  The court allowed the motion to intervene because it found that (1) the insurer had a legitimate interest as a judgment creditor and (2) neither plaintiff nor defendant would adequately protect the interests of the insurance company.  The court also found that, while it was proper for the plaintiff to seek attachment of the properties based on an indemnity clause, the amount of the attachment was excessive, and dissolved $3,600,000 of the $7,929,919.92 attachment.  Although the court expressed concern that plaintiff acted in bad faith in negotiations while pursuing an ex parte attachment, it declined to dissolve the entire attachment on that basis.