United States District Court, E.D. Virginia, Newport News Division
Liberty Mutual Fire Insurance Company, Liberty Insurance
Corporation, Employers Insurance Company of Wausau, Wausau
Business Insurance Company, Wausau Underwriters Insurance
Company, Plaintiffs: Edwin Ford Stephens, LEAD ATTORNEY,
Christian & Barton LLP, Richmond, VA; Amos Hugh Scott, Robert
Allen Kole, Samantha Aurora Krasner, PRO HAC VICE, Choate,
Hall & Stewart LLP, Boston, MA NA.
Lumber Liquidators, Inc., Lumber Liquidators Holdings, Inc.,
Defendants: Paul Keidel Stockman, LEAD ATTORNEY, PRO HAC
VICE, McGuireWoods (PA-NA), Pittsburgh, PA NA; Michael Hugh
Brady, McGuireWoods LLP (Richmond), Richmond, VA; Richard
Joshua Cromwell, McGuireWoods LLP (Norfolk), Norfolk, VA.
Continental Casualty Company, Intervenor Plaintiff: Paul Alan
Sheldon, PRO HAC VICE, Elenius Frost & Walsh, Chicago, IL NA;
Richard Johan Conrod, Jr., Kaufman & Canoles PC, Norfolk, VA.
American Guarantee and Liability Insurance Company,
Intervenor Plaintiff: Kelly Marie Lippincott, William J.
Carter, Carr Maloney PC (DC), Washington, DC; Michael Miron
Marick, PRO HAC VICE, Hinshaw & Culbertson LLP, Chicago, IL
Paul Fire and Marine Insurance Company, Intervenor Plaintiff:
Eric Louis Sophir, LEAD ATTORNEY, Dentons U.S. LLP (DC),
Washington, DC; Daniel Feinberg, Donna J Vobornik, PRO HAC
VICE, Dentons U.S. LLP, Chicago, IL NA.
Federal Insurance Company, Intervenor Plaintiff: Richard Alan
Saunders, LEAD ATTORNEY, Furniss Davis Rashkind & Saunders
PC, Norfolk, VA; David Arthur Westrup, PRO HAC VICE, von
Briesen & Roper, s. c., Milwaukee, WI NA.
OPINION AND ORDER
A. Jackson, United states District Judge.
the Court are Motions to Intervene by four insurance
companies providing policies in excess of the current
Plaintiffs' policies, Lumber Liquidators, Inc.'s
(" Defendant's" ) Stipulation to Entry of
Judgment in Plaintiffs' Favor for Count Three, and
Defendant's Motion to Dismiss Amended Complaint on
abstention grounds. ECF Nos. 23. 25. 29. 35. 70. 71. For the
reasons stated below, I recommend that the Motions to
Intervene be GRANTED, Defendant's Stipulation be GRANTED,
and Defendant's Motion to Dismiss be DENIED.
FACTUAL AND PROCEDURAL HISTORY
April 22. 2015, Liberty Mutual Fire Insurance Company,
Liberty Insurance Corporation, Employers Insurance Company of
Wausau, Wausau Business Insurance Company, and Wausau
Underwriters Insurance Company (collectively "
Plaintiffs" ) filed their three-count Complaint seeking
declaratory judgment that their policies do not obligate them
to defend or indemnify Defendant (Counts One and Two,
respectively) and requesting reformation of the Wausau
Business Insurance Company policy (Count Three). Pls.'
Compl. 7-9, ECF No. 1. To date. 99 other complaints ("
Underlying Lawsuits" ) have been filed against Defendant
based upon their sales of flooring containing excess amounts
of formaldehyde. These cases have been consolidated in a
multidistrict litigation proceeding in this District before
the Honorable Anthony J. Trenga. Defs.' Revised Mem. in
Supp. of Mot. to Dismiss 3, ECF No. 60.
April 27, 2015, Defendant filed a four-count complaint in the
Circuit Court for Dane County, Wisconsin (" Wisconsin
Complaint" ). Defs.' Revised Mem. in Supp. of Mot.
to Dismiss 4,ECF No. 60. In that suit, Defendant named the
Plaintiffs and four other insurers -- American Guarantee &
Liability Insurance Company, Continental Casualty Company,
Federal Insurance Company, and St. Paul Fire & Marine
Insurance Company (collectively " Intervening
Insurers" ). Id. These four insurers have filed
Motions to Intervene in this federal suit. ECF Nos. 23, 25,
Wisconsin Complaint, Defendant alleges that the Plaintiff
lnsurers breached the terms of the general liability
insurance policies they issued to Defendant by refusing to
defend Defendant against the underlying lawsuits consolidated
in this District. Defs.' Revised Mem. in Supp. of Mot. to
Dismiss 4. The Wisconsin Complaint also requests a
declaratory judgment that the Plaintiff lnsurers and the four
other insurers who seek to intervene in the instant federal
suit are obligated to defend and indemnify Defendant.
Id. Finally, the Wisconsin Complaint alleges breach
of contract and bad faith claims and requests compensatory
and punitive damages. Id. at 5.
22, 2015, Defendant filed a Motion to Dismiss requesting
dismissal of the reformation claim in Count Three of
Plaintiffs' Complaint and requesting that the Court
abstain from hearing the matter because of the parallel
action Defendant filed in Wisconsin state court. ECF Nos. 18,
19. On September 4, 2015, the Court granted in part and
denied in part Defendant's Motion to Dismiss. ECF No. 62.
In its Order the Court dismissed Plaintiffs' reformation
claim without prejudice, granted Plaintiffs leave to amend
their Complaint, and declined to abstain from hearing the
September 15, 2015, Plaintiffs filed their Amended Complaint.
ECF No. 67. On October 2, 2015, Defendant filed a Stipulation
to entry of judgment in the Plaintiffs' favor on the
reformation claim in Count Three of the Amended
Complaint. ECF No. 70. On this same date,
Defendant also filed a Motion to Dismiss Plaintiffs'
Amended Complaint again requesting that the Court abstain
from hearing this matter because of the parallel Wisconsin
state court action. ECF Nos. 71, 72. On October 15, 2015, the
Wisconsin state court held a hearing on the insurers'
Motion to Dismiss in which the court deferred its decision
pending a decision in this federal case. P's.' Opp.
to Mot. to Dismiss 7, ECF No. 74.
STANDARD OF REVIEW
Motions to Intervene
to Rule 24 of the Federal Rules of Civil Procedure, the Court
must permit a party to intervene as a matter of right or may
allow a party to intervene permissively. Fed.R.Civ.P. 24. The
United States Court of Appeals for the Fourth Circuit ("
Fourth Circuit" ) has held, " [L]iberal
intervention is desirable to dispose of as much of the
controversy involving as many apparently concerned persons as
is compatible with efficiency and due process."
Feller v. Brock, 802 F.2d 722, 729 (4th Cir. 1986)
(internal quotations omitted).
to Federal Rule of Civil Procedure 24(a), the Court must
permit a party to intervene on timely motion as a matter of
(1) is given unconditional right to intervene by federal
statute; or (2) claims an interest relating to the property
or transaction that is the subject of the action, and is so
situated that disposing of the action may as a practical
matter impair or impede the movant's ability to protect
its interest, unless existing parties adequately represent
Fed. R. Civ. P. 24(a). Intervention as a matter of right is
warranted if the party seeking intervention can demonstrate:
1) a timely request; 2) an interest in the subject matter of
the action; 3) that disposition of the action without its
presence would impair its ability to protect its interests;
and 4) its interests are not adequately represented by the
existing parties to the action. Houston Gen. Ins. Co. v.
Moore, 193 F.3d 838, 839 (4th Cir. 1999); Teague v.
Bakker, 931 F.2d 259, 260-61 (4th Cir. 1991). A party
seeking to intervene must meet all of these tests for
intervention to be appropriate as a matter of right under
Rule 24(a). Com. of Va. v. Westinghouse Elec. Corp.,
542 F.2d 214, 216 (4th Cir. 1976). Further, a district court
is " entitled to the full range of reasonable
discretion" to determine whether the requirements of
intervention as a matter of right have been met. Id.
(quoting Rios v. Enter. Ass'n Steamfitters Local U. #
638 of U.S., 520 F.2d 352, 355 (2d Cir. 1975)).
Rule of Civil Procedure 24(b) provides that a party may be
permitted to intervene on timely motion that " (A) is
given a conditional right to intervene by federal statute; or
(B) has a claim or defense that shares with the main action a
common question of law or fact." Fed.R.Civ.P. 24(b);
Cooper Techs., Co. v. Dudas, 247 F.R.D. 510, 515
(E.D. Va. 2007). The decision to grant or deny a permissive
motion to intervene lies within the sound discretion of the
trial court. Hill v. W. Elec. Co., 672 F.2d 381,
385-86 (4th Cir. 1982). However, the court must consider
whether the intervention will " unduly delay or
prejudice the adjudication of the rights of the original
parties." Allen v. Cty. Sch. Bd. of Prince Edward
Cty., 28 F.R.D. 358, 363 (E.D. Va. 1961).
Abstention Doctrines and the Declaratory Judgment
general rule, federal courts have a " virtually
unflagging obligation . . . to exercise the jurisdiction
given them." Colo. River Water Conservation Dist. v.
United States, 424 U.S. 800, 817, 96 S.Ct. 1236, 47
L.Ed.2d 483 (1976). This obligation applies even when there
are parallel state court proceedings. In McLaughlin,
the court noted it is well-established that " [d]espite
what may appear to result in a duplication of judicial
resources . . . 'the pendency of an action in the state
[system] is no bar to proceedings concerning the same matter
in the Federal court having jurisdiction.'"