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Emerson Hall Associates, L.P. v. Travelers Casualty Insurance Co. of America

United States District Court, W.D. Wisconsin

January 19, 2016

EMERSON HALL ASSOCIATES, L.P., Plaintiff,
v.
TRAVELERS CASUALTY INSURANCE COMPANY OF AMERICA, Defendant.

OPINION & ORDER

JAMES D. PETERSON District Judge

This is an insurance dispute between plaintiff Emerson Hall Associates, L.P., and its insurer, defendant Travelers Casualty Insurance Company of America. The dispute arose out of damage to Emerson Hall’s building and Travelers’s refusal to pay the full amount of Emerson Hall’s insurance claim. There are two motions before the court.[1] First, Sid Grinker Restoration, Inc. (Grinker) has moved to intervene in this action, pursuant to Federal Rule of Civil Procedure 24. Dkt. 12. Grinker proposes to assert a claim against Emerson Hall, alleging that Emerson Hall failed to pay Grinker for its restoration services. Second, Travelers has moved to amend its answer to add a counterclaim against Emerson Hall for breach of contract. Dkt. 28. The court will grant both motions.

BACKGROUND

In September 2013, a fire broke out in a building that Emerson Hall owns, causing damage. A few months later, the same building suffered water damage when a pipe burst. Emerson Hall eventually submitted a claim to its insurer, Travelers, which determined that both the fire damage and the water damage were covered under Emerson Hall’s insurance policy. But Travelers paid only part of Emerson Hall’s claim, refusing to reimburse the full amount of Emerson Hall’s lost business income, expenses for demolition and consulting, and depreciation.

Emerson Hall hired Grinker to provide restoration services and repair the building. The contract provided for a contingent payment structure: Emerson Hall agreed to pay Grinker the greater of $400, 000 or the total of seven installments. For the installment option, the amount of the seventh installment depended on how much money Travelers paid Emerson Hall on its insurance claim. The rest of the installments were for fixed amounts. Emerson paid some of the fixed installments, but it did not pay the seventh installment. According to Grinker, Emerson Hall refused to pay because Travelers had not paid the full amount of Emerson Hall’s insurance claim. Grinker alleges that Emerson Hall currently owes just over $200, 000 in unpaid invoices.

Emerson Hall sued in Wisconsin state court on June 29, 2015, alleging state law claims against Travelers for breach of contract and bad faith. Travelers removed the case to federal court on the basis of diversity. Grinker moved to intervene on November 3, 2015.

ANALYSIS

A. Grinker’s motion to intervene

Grinker moves to intervene as of right, under Rule 24(a)(2). In the alternative, Grinker moves for permissive intervention, under Rule 24(b). Permissive intervention is appropriate in this case, and so the court will not address whether Grinker may intervene as of right. Emerson Hall consents to intervention; Travelers opposes it.

“Permissive intervention is within the discretion of the district court where the applicant’s claim and the main action share common issues of law or fact and where there is independent jurisdiction.” Ligas ex rel. Foster v. Maram, 478 F.3d 771, 775 (7th Cir. 2007). Rule 24(b)(3) also requires district courts to consider whether intervention will unduly delay the case or prejudice the existing parties. These considerations recognize that “Rule 24(b) is just about economy in litigation.” City of Chicago v. Fed. Emergency Mgmt. Agency, 660 F.3d 980, 987 (7th Cir. 2011).

As to jurisdiction, Grinker is a Wisconsin corporation with its principal place of business in Wisconsin. Dkt. 12-3, ¶ 1. Emerson Hall is a citizen of Illinois, Maryland, and Florida, Dkt. 25, and Travelers is a citizen of Connecticut, Dkt. 23, ¶ 11. Thus, permitting Grinker to intervene will not destroy diversity, and the court would have jurisdiction over Grinker’s claim under 28 U.S.C. § 1332.

Grinker’s claim also shares common issues of fact with Emerson Hall’s claims, so permitting the company to intervene will not disrupt the case or prejudice the existing parties. Grinker contends that its proposed claim in this case-which would be against Emerson Hall-“relate[s] to the very same work and unpaid invoices for which Emerson [Hall] seeks to recover from Travelers.” Dkt. 13, at 6. Indeed, Emerson Hall’s contract with Grinker provides that the amount of the seventh installment payment depends on the amount that Travelers eventually pays on Emerson Hall’s insurance claim. Dkt. 12-3, at 14. Emerson Hall’s complaint against Travelers specifically alleges that “Travelers has refused to reimburse Emerson Hall approximately $170, 650 in recoverable depreciation related to work completed by Sid Grinker Restoration, Inc., despite being provided with an invoice showing the same.” Dkt. 23-1, at 5. Thus, the services that Grinker provided are already at issue in this case.

Travelers opposes Grinker’s intervention principally because Grinker’s entitlement to relief will require the court to address legal issues that would not otherwise be in the case.[2] In particular, Travelers argues that Grinker’s claim relies on an entirely different contractual relationship, one to which Travelers was not a party. Travelers also argues that Grinker’s claim may be moot because of payments that Emerson Hall has already made, or because of mortgages that Emerson Hall issued. But even if the legal questions that Grinker’s claim will present do not align perfectly with the legal questions pertaining to the underlying action, the interests of judicial economy weigh in favor of letting these parties resolve the entire dispute in one case.

It does not appear that permitting Grinker to intervene will delay this case or cause prejudice to the existing parties. As Grinker points out, the company was likely going to be involved in the litigation anyway, to attest to the necessity and cost of the work that it performed. Dkt. 13, at 6. Travelers does not dispute this point. Moreover, Grinker is not asserting any claims against Travelers, only a claim against Emerson Hall. Emerson Hall does not oppose Grinker’s intervention. Dkt. 17. Most important, Grinker represents that there ...


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