INJURED PASSENGERS PRECLUDED FROM INTERVENING IN COVERAGE DISPUTE CASE BETWEEN INSURANCE CARRIER AND VESSEL OWNER BY REASON OF NEW YORK'S DIRECT ACTION STATUTE.
HARTFORD FIRE INSURANCE COMPANY, Plaintiff, - against -JOSEPH MITLOF d/b/a HUDSON VALLEY WATERWAYS, VILLAGE OF TARRYTOWN, VILLAGE OF NYACK, NYACK PARKING AUTHORITY, KEY BANK U.S.A., RIVERCREST HOMEOWNERS ASSOCIATION a/k/a RIVERCREST CORP., GARRISON YACHT CLUB and NYACK BOAT CLUB, Defendants.
99 Civ. 9841 (WCC)
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
2000 U.S. Dist. LEXIS 18200
December 15, 2000, Decided
OVERVIEW: Defendant operated a water taxi service on the Hudson River. Plaintiff issued defendant a marine hull protection and indemnity policy with passenger vessel amendments for two vessels. One of the boats capsized and several injured passengers brought personal injury lawsuits against defendant in state court. None of these actions had yet been litigated to judgment. Plaintiff ultimately denied coverage and commenced declaratory judgment litigation. Defendant intervenor passengers ("passengers") moved to intervene. They claimed they should be allowed to intervene under either Fed. R. Civ. P. 24(a) (Intervention of Right) or Fed. R. Civ. P. 24(b) (Permissive Intervention). Plaintiff claimed that they were precluded from intervention by New York's direct action statute, N.Y. Ins. Law § 3420(i) and N.Y. Ins. Law § 2117(b)(3). The court had to decide whether the passengers were foreclosed by N.Y. Ins. Law § 3420(i), § 2117(b)(3) from intervening. The court concluded that the New York Court of Appeals would not allow the passengers into the action without their first obtaining a judgment against defendant. They were barred from intervening as defendants by N.Y. Ins. Law § 3420.
OUTCOME: Defendant intervenor passengers' motions to intervene were denied because they were strangers to the indemnity contract and granting them intervention would have circumvented the judgment requirement of the New York State Insurance Law, a prerequisite for actions actions by injured third parties against indemnity insurers.
