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Atlantic Refinishing & Restoration, Inc. v. Travelers Casualty and Surety Company of America

December 21, 2010

ATLANTIC REFINISHING & RESTORATION, INC. PLAINTIFF,
v.
TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA, DEFENDANT.



Re Document No.: 6

MEMORANDUM OPINION GRANTING THE PETITIONER'S MOTION TO INTERVENE

I. INTRODUCTION

This matter is before the court on the motion of Desbuild, Inc. ("the petitioner"), to intervene as a defendant. The petitioner was selected as the general contractor for the government-funded restoration of a historical building in Washington, D.C. The plaintiff, one of the petitioner's subcontractors on this project, claims that it did not receive full compensation under its contract and is suing the petitioner's surety, Travelers Casualty and Surety Company of America ("Travelers"). Because the petitioner has shown it has a right to intervene under Federal Rule of Civil Procedure 24, the court grants the petitioner's motion.

II. FACTUAL & PROCEDURAL BACKGROUND

The petitioner entered into a contract with the General Services Administration ("GSA") to act as the prime contractor for the exterior masonry repair, repointing and cleaning of the historic Sydney Yates Building in Washington, D.C. Compl. ¶ 5. The petitioner and the plaintiff subsequently entered into a subcontract whereby the plaintiff, in exchange for payment, would provide certain materials and services for the project. Id. ¶¶ 9-10. The petitioner asserts that the subcontract also included a mandatory arbitration clause. Petr's Mot., Ex. B at 2.

On September 18, 2009, and again on September 29, 2009, the GSA terminated the petitioner's contract for cause. Id. ¶ 26. While working as a subcontractor, the plaintiff sent the petitioner invoices totaling $197,344.25. Id. ¶¶ 27-33. The plaintiff alleges that to date, $97,281.25 remains unpaid. Id. ¶¶ 34-35.

As the prime contractor, the petitioner was required to issue a bond for the benefit of its subcontractors and suppliers ("payment bond"). Compl. ¶ 6. The bond named the petitioner as the principal and the defendant as the surety. Id. ¶ 7. According to the petitioner, the defendant and the petitioner entered into a surety agreement whereby the defendant could seek indemnification from the petitioner for a judgment entered against it due to the petitioner's actions. Petr's Mot. ¶ 2.

The plaintiff commenced this action on April 30, 2010, naming Travelers as the sole defendant. See generally Compl. The plaintiff claims that that the petitioner refuses to remit the remainder of the payment which it is entitled to and is therefore demanding payment from the defendant, who the plaintiff maintains, is liable to the plaintiff for such costs. Id. ¶¶ 42-43. On July 19, 2010, the petitioner filed the present motion to intervene as a defendant. See generally Petr's Mot. With this motion now ripe for adjudication, the court turns to the applicable legal standard and the parties' arguments.

III. ANALYSIS

A. Legal Standard for a Motion to Intervene Federal Rule of Civil Procedure 24 sets forth the requirements for intervention as of right and permissive intervention. FED. R. CIV. P. 24; Fund for Animals, Inc. v. Norton, 322 F.3d 728, 731 (D.C. Cir. 2003). First, Rule 24(a) provides for intervention as of right, stating that [u]pon timely application anyone shall be permitted to intervene in an action . . . when a statute of the United States confers an unconditional right to intervene; or . . . when the applicant claims an interest relating to the property or transaction which is the subject of the action and the applicant is so situated that the disposition of the action may as a practical matter impair or impede the applicant's ability to protect that interest, unless the applicant's interest is adequately represented by existing parties.

Id. As paraphrased by this Circuit, the rule indicates that an applicant's right to intervene depends on "(1) the timeliness of the motion; (2) whether the applicant claims an interest relating to the property or transaction which is the subject of the action; (3) whether the applicant is so situated that the disposition of the action may as a practical matter impair or impede the applicant's ability to protect that interest; and (4) whether the applicant's interest is adequately represented by existing parties." Fund for Animals, 322 F.3d at 731; see also Jones v. Prince George's Cnty, Md., 348 F.3d 1014, 1017 (D.C. Cir. 2003) (listing the four elements of Rule 24(a) as "timeliness, interest, impairment of interest, and adequacy of representation"). In addition, an applicant must demonstrate that it has standing. Jones, 348 F.3d at 1017-18; Fund for Animals, 322 F.3d at 731-32.

Alternatively, Rule 24(b) authorizes permissive intervention for an applicant who timely files a motion when a federal statute confers a conditional right to intervene or the applicant's claim or defense has a question of law or fact in common with the main action. FED. R. CIV. P. 24(b). In considering a motion for permissive intervention, a court must determine whether the proposed intervention "will unduly delay or prejudice the adjudication of the rights of the original parties." Id.

B. The Court Grants the Petitioner's Motion to Intervene

The petitioner asserts that it should be permitted to intervene as a matter of right, or, alternatively, with the court's permission because it has an interest in the litigation that will not be adequately represented if the case proceeds without its participation. Petr's Mot. at 1-2. More specifically, the petitioner contends that as the principal of the payment bond, its interests are directly implicated by this action because the defendant will seek indemnification from it if judgment is awarded for the plaintiff. Id. at 2. The petitioner further asserts that without being permitted to intervene, "its ability to directly protect its financial interests and avoid the possibility of judgment against it will be materially impaired or impeded." Id. Lastly, the petitioner argues that its interests are ...


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