Non-Parties Cannot Intervene In Insurance Company’s Declaratory Judgment Action
In County Hall Insurance Company, Inc. v. Mountain View Transportation, LLC, the M.D.P.A ruled that non-parties who had a personal injury claim against an insured individual cannot intervene in the insurance’s company’s declaratory judgment action that it filed against the same insured. The underlying state court suit stemmed from a motor vehicle accident in which a number of occupants were seriously injured. Following this accident, County Hall, Mountain View’s Insurance provider, filed a declaratory judgment action against Mountain View and John Humes, arguing it was not obligated to provide coverage under the policy because John Humes was not a scheduled driver of Mountain View and any punitive damages awarded are not recoverable under the policy. When Mountain View and Humes failed to file an answer, County Hall requested default judgment be entered against them. Around the same time, individuals who were allegedly involved in the underlying motor vehicle accident filed a motion to intervene, arguing that they had a claim to the property at the center of insurance company’s declaratory judgment, and thus they should have the ability to protect their interests.
The Court denied the non-parties attempt to get involved in County Hall’s declaratory judgment against Mountain View. The Court ruled that under federal law, “strangers to an insurance contract cannot intervene as of right in a declaratory judgment action…to establish scope of coverage.” Although the non-parties claimed their economic interest in the applicability of the policy was sufficient to support their motion, the Court disagreed, stating the “mere economic interest in the outcome of litigation” is insufficient to the support the motion.
In short, despite the outcome of County Hall’s declaratory judgment having a practical effect on the non-parties ability to recover in their personal injury suit, they have no right to participate in the action.
Thanks to Brian Zappala for his contribution to this post. Please contact Heather Aquino with any questions.