LEXINGTON INSURANCE COMPANY

v.

The AMBASSADOR GROUP, LLC et al.

  ORDER

Judge Justin R. Walker referred this matter to U.S. Magistrate Judge Lanny King for hearing and determining all pretrial matter pending before the Court in this action. [DN 23]. Pursuant to General Order 20-16, it has since been reassigned to Judge David J. Hale, with the referral remaining with Judge King. [DN 37].

This matter is currently before the Court on State National Insurance Company, Inc.'s ("State National") Motion to Intervene as a plaintiff pursuant to Fed. R. Civ. P. 24(a) and (b). [DN 31]. Defendants filed their Response indicating that, while they contest the validity of State National's proposed claims, they have no objection to its intervention. [DN 38]. State National then filed its Reply in support of its Motion to Intervene. [DN 42]. The motion is now fully briefed and ripe for adjudication.

For the reasons set forth herein, State National's Motion to Intervene, [DN 31], shall be GRANTED.

  BACKGROUND

This matter arises from an alleged series of fraudulent insurance transactions in which Plaintiff Lexington Insurance Company alleges that Defendants sold forged insurance policies bearing Plaintiff's name. [DN 1].

On May 11, 2020, Plaintiff filed its Complaint alleging that Defendants committed these fraudulent actions. Specifically, Plaintiff claims involved two types of insurance policies: (1) policies sold to sports teams, leagues, and individual athletes ("the Gagliardi Scheme"); and (2) policies involving Texas homeowners/renters' insurance ("the Madera Scheme"). Id. As a result of this alleged fraud, Plaintiff asserts that Defendants violated the Lanham Act, prohibiting the unauthorized use of Plaintiff's trademark, and engaged in deceptive trade practices, the misappropriation of another's name, and insurance fraud, amongst other things. Id. In addition to damages, Plaintiff seeks injunctive relief. Id.

On June 11, 2020, Plaintiff served State National with a subpoena for documents. [31-2]. Thereafter, State National discovered documents that indicated allegedly indicates it was a victim of the purported Madera Scheme. State National contends that "there are thousands of…counterfeit certificates issued to Madera renters fraudulently listing State National as the insurer" and that Defendants may have done the same thing to State National with regard to the purported Gagliardi Scheme. [DN 31 at 741].

In addition to those two purported schemes, State National also claims that it discovered a third scheme in which Defendants issued counterfeit State National insurance policies and certificates, this time involves insurance for "fleets of commercial waste removal operations throughout New York." Id. at 741.

On August 19, 2020, State National filed the instant Motion to Intervene, [DN 31], seeking to intervene as a matter of right and seeking permissive intervention. On September 9, 2020, Defendants' filed their Response, stating that, while they contest State National's factual allegations, they do not object to State National's intervention. [DN 38]. State National then filed a reply on September 16, 2020. The motion is now fully briefed and properly before this Court.

  DISCUSSION

State National filed its Motion to Intervene, [DN 31], pursuant to Fed. R. Civ. P. 24(a) and (b), seeking intervention as a matter of right and seeking permissive intervention.

Rule 24(a) provides for intervention as a matter of right. There, it states, inter alia, "On timely motion, the court must permit anyone to intervene who…claims an interest relating to the property or transaction 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 that interest." Fed. R. Civ. P. 24(a).

Rule 24(b) provides for permissive intervention. There, it states, inter alia, "On timely motion, the court may permit anyone to intervene who…has a claim or defense that shares with the main action a common question of law or fact." Fed. R. Civ. P. 24(b)(1). Importantly, "[i]n exercising its discretion, the court must consider whether the intervention will unduly delay or prejudice the adjudication of the original parties' rights." Fed. R. Civ. P. 24(b)(3).

Here, State National's claims share common questions of law or fact with the main action. The claims asserted by the original parties and State National's proposed claims all revolve around allegedly fraudulent behavior regarding the issuance of certain insurance policies. Accordingly, State National's claims share common questions of law or fact with the main action. Given the interconnection of the alleged fraud, it could also be said that State National is so situated that disposing of this action would impair or impede its ability to protect its interest if it were not permitted to intervene.

Furthermore, allowing State National to intervene in this action will not unduly delay or prejudice the adjudication of the original parties' rights. This matter is still in its infancy. No Rule 26(f) Conference Report has been filed and this Court has yet to hold a Rule 16 Scheduling Conference. As this matter is in its early stages, allowing State National to intervene should not prejudice or delay the adjudication of the original parties' rights.

  CONCLUSION

As State National's Motion to Intervene meets the required notice and pleading standards, the claims contained therein share a common question of law or fact to the main action, and adding these claims will not prejudice or delay the adjudication of the original parties' rights, IT IS HEREBY ORDERED:

1. State National's Motion to Intervene, [DN 31], is GRANTED.
2. State National's Intervening Complaint, [DN 31-5], shall be deemed filed as of the entrance of this Order.

IT IS SO ORDERED.

September 17, 2020

/s/ Lanny King

Lanny King, Magistrate Judge

United States District Court