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First Nonprofit Insurance Co. v. Alexander

July 27, 2009

FIRST NONPROFIT INSURANCE COMPANY, PLAINTIFF,
v.
DENISE D. ALEXANDER, DEFENDANT.



The opinion of the court was delivered by: Robert F. Kelly, Sr. J.

MEMORANDUM

Presently before the Court is a Motion to Intervene and Stay filed by James Tyler ("Tyler"), Guardian ad Litem for Nyfese Taylor ("Taylor"). For the reasons set forth below, Tyler's Motion will be denied.

I. FACTS

Plaintiff First Nonprofit Insurance Company ("FNIC"), an insurance company domiciled in Illinois, issued a "Nonprofit Multiple Peril Policy" and an "Umbrella Liability Policy" to New Foundations, Inc. ("New Foundations"), both effective from July 1, 2007 through July 1, 2008 (collectively, "the Policies"). (Decl. J. Compl. ¶ 3.) New Foundations is a nonprofit corporation incorporated in the Commonwealth of Pennsylvania, which at all relevant times provided foster care services to the Philadelphia Department of Human Services ("DHS") pursuant to a contract with the City of Philadelphia. (Taylor Compl. ¶ 4.) Defendant Denise D. Alexander ("Alexander") was, at all relevant times, a foster parent chosen by New Foundations. (Id. ¶ 2.) Pursuant to an endorsement in the Policies extending coverage to foster parents, Alexander qualified as an insured under the Policies, subject to certain conditions. (Decl. J. Compl. ¶ 17.) From August 17, 2006 to November 11, 2006, DHS placed Taylor, a minor, in Alexander's home. (Id. ¶ 6.)

On June 5, 2008, Alexander was arrested by the Philadelphia police for allegedly abusing Taylor, and charged with aggravated assault, simple assault, criminal conspiracy, unlawful restraint, false imprisonment, endangering the welfare of a child, reckless endangerment, and possession of an instrument of a crime (the "underlying criminal action").*fn1 (Mot. to Intervene at 3.) Alexander retained defense attorney Thomas Burke, Esquire, and was released on bail. (Id.) On February 22, 2008, Taylor, by his mother and natural guardian, filed a Complaint in the Court of Common Pleas of Philadelphia County under Civil Action No. 2958, February Term, 2008 (the "underlying lawsuit").*fn2 The Complaint alleges that Taylor suffered neglect and bodily injuries while in the custody of Alexander. (Taylor Compl. ¶¶ 19-25.) The Complaint further alleges that New Foundations was grossly negligent in providing foster care to Taylor. (Id. ¶ 36.) On March 20, 2008, New Foundations submitted the Complaint to FNIC seeking coverage under the Policies. (Decl. J. Compl. ¶ 13.)

On April 10, 2008, FNIC retained William Banton, Esquire ("Banton") to represent Alexander in the underlying lawsuit. FNIC proceeded to defend Alexander in the underlying lawsuit while it investigated the coverage owed under the Policies. (Id. ¶ 14.) On May 16, 2008, FNIC avers that it sent a letter via certified mail to Alexander advising that FNIC would continue to defend Alexander in the underlying lawsuit, subject to certain exclusions and conditions, as well as a complete reservation of rights under the Policies and Pennsylvania law. (Id. ¶¶ 15-17.) Subsequent to sending the May 16, 2008 letter, FNIC avers that it learned that Alexander was refusing to cooperate with Banton in the defense of the underlying lawsuit, and that a Motion for Default Judgment had been filed against Alexander by counsel for Taylor. (Id. ¶ 18.) On May 22, 2008, FNIC contends that it sent a letter via overnight mail to Alexander advising that the Policies required her to cooperate with FNIC and Banton in the investigation and defense of the underlying lawsuit.*fn3 (Id. ¶ 19.) FNIC avers that the letter further stated that Alexander's failure to cooperate could result in Alexander losing coverage under the Policies and FNIC withdrawing its defense of her in the underlying suit. (Id.)

On September 24, 2008, FNIC alleges that Taylor, by counsel, served interrogatories on Alexander through Banton, which were to be answered by October 24, 2008. (Id. ¶ 22.) On October 3, 2008, Taylor, by counsel, served insurance interrogatories, expert interrogatories and requests to produce on Alexander through Banton, which were to be answered by November 3, 2008. (Id.) FNIC claims that Banton attempted to contact Alexander numerous times by telephone and regular mail to schedule meetings with Alexander to comply with these deadlines. (Id. ¶ 23.) Nevertheless, FNIC asserts that Alexander refused to cooperate with FNIC and Banton by failing to return phone calls and letters from Banton, and failing to appear at scheduled meetings. (Id. ¶ 24.) FNIC argues that as a result of Alexander's failure to cooperate, Banton was not able to properly prepare responses to Taylor's written discovery requests or to obtain Alexander's verification to the Answer to the Amended Complaint. (Id.)

FNIC avers that on December 1, 2008, the court in the underlying lawsuit entered an Order requiring Alexander to serve her responses to all of Taylor's interrogatories by December 10, 2008, or suffer sanctions. (Id. ¶ 25.) FNIC claims that it retained an investigative service to personally serve Alexander with a letter reiterating her obligation to cooperate with Banton pursuant to the terms of the Policies. (Id. ¶ 29.) FNIC claims that on December 9, 2008, the letter was personally served on Alexander's father at her residence. (Id. ¶ 30.) FNIC asserts that the letter scheduled an appointment for Alexander to meet with Banton at his office on the afternoon of December 10, 2008 to prepare her responses to Taylor's written discovery and to verify the Answer to the Amended Complaint, as required by the December 1, 2008 court Order. (Id. ¶ 27.) FNIC further asserts that its investigator returned to Alexander's residence on the morning of December 10, 2008 and again met with Alexander's father, who stated that Alexander was not home, but that he had given the December 9, 2008 letter and enclosed documents to her the previous evening. (Id. ¶ 31.) FNIC avers that Alexander failed to attend the scheduled meeting with Banton on December 10, 2008, and did not contact either FNIC or its counsel to explain her inability to attend the meeting. (Id. ¶¶ 32-33.)

On January 30, 2009, FNIC filed a Complaint for Declaratory Judgment in this Court, alleging that as of the filing of its Complaint, neither FNIC nor its counsel had received any communication from Alexander in response to the December 9, 2008 letter or in response to any of Banton's attempts to schedule a time to verify the Answer to the Amended Complaint and to complete the responses to Taylor's written discovery. In its Complaint, FNIC claims that Alexander's failure to cooperate in the defense of the underlying lawsuit: 1) constitutes a breach of the Cooperation Condition; 2) has "substantially impacted and prejudiced FNIC's ability to participate meaningfully in the Underlying Lawsuit"; 3) releases FNIC from its "duty to defend Alexander in the Underlying Lawsuit with respect to any complaints, claims, allegations, or demands against her"; and 4) entitles FNIC to deny coverage under the Policies "to indemnify Alexander, as necessary, for any and all damages, costs, and judgments resulting from any of the claims asserted against her in the Underlying Lawsuit." (Id. at 8-9.)

On May 12, 2009, Tyler filed the instant Motion to Intervene and Stay, requesting that he be allowed to intervene in FNIC's Declaratory Judgment action, and that this Court stay FNIC's action until the underlying criminal action has reached a conclusion. Tyler asserts that he must be permitted to intervene because "FNIC is seeking an affirmative declaration of Nyfese Taylor's rights, specifically a declaration that Nyfese Taylor has no interest under the policies."*fn4 (Mot. to Intervene at 5.)

II. DISCUSSION

A. Intervention

Tyler seeks to intervene in FNIC's Declaratory Judgment action pursuant to Federal Rule of Civil Procedure 24. Rule 24(a) provides in relevant part:

(a) Intervention of Right. On timely motion, the court must permit anyone to intervene who:... (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 ...


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