Alstom Caribe, Inc. v. Geo. P. Reintjes Co., Et Al - Document No. 281

Alstom Caribe, Inc. v. Geo. P. Reintjes Co., et al Doc.
281
Case 3:02-cv-02466-RLA Document 281 Filed 05/24/2007 Page 1 of 15
1 IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO
2
3 COMBUSTION ENGINEERING CARIBE,

INC., et al.,
4
Plaintiffs,
5 CIVIL NO. 02-2466 (RLA)
v.
6
GEO P. REINTJES CO., INC., et
7 al.,
8 Defendants.
10 ORDER GRANTING INTERVENTION

AND TRANSFERRING CASE TO THE
11 U.S. DISTRICT COURT, WESTERN DISTRICT OF MISSOURI
CASE NO. 05-0345-CV-ODS
12
At this time we must determine whether or not ST. PAUL FIRE &
13
MARINE INSURANCE COMPANY (“ST. PAUL”) should be allowed to intervene
14
in these proceedings which petition was opposed by the two remaining
15
parties to this action at the time the request was made.
16
I. BACKGROUND
17
Briefly, this action arose out of a contract for construction
18
work to be performed at a power plant in Guayama, Puerto Rico.
19
Plaintiffs, ALSTOM POWER, INC. and ALSTOM CARIBE, INC. (“ALSTOM”)1
20
contracted defendant, GEO. P. REINTJES CO. (“REINTJES”), to carry out
21
part of the work. ST. PAUL provided both payment and performance
22
bonds in connection with REINTJES’ contracted responsibilities.
23
REINTJES entered into an Indemnity Agreement with ST. PAUL for
24
any damages or costs incurred under the bonds. On or about
25
26 1
Formerly known as COMBUSTION ENGINEERING CARIBE, INC.
Dockets.Justia.com
1 CIVIL NO. 02-2466 (RLA) Page 2
2
December 8, 1992, REINTJES and other related entities (collectively
3
“Indemnitors”) executed General Agreement of Indemnity (“GAI”)
4
whereby they jointly and severally obligated themselves to, inter
5
alios, (1) indemnify ST. PAUL, as surety, from all losses, costs and
6
expenses incurred by ST. PAUL as a result of the issuance of any
7
bonds on behalf of REINTJES, as principal,2 and (2) post collateral
8
security to cover any losses, costs or expenses incurred by ST. PAUL
9
as a result of issuing bonds on REINTJES’ behalf.3 The GAI further
10
states that in the event of default, Indemnitors assigned to ST. PAUL
11
the rights and interests of REINTJES in any funds due on any bonded
12
project.4
13
Lastly, in its introductory paragraph, the GAI specifically
14
provided that it was being executed as a condition precedent for ST.
15
PAUL to issue the corresponding bonds.
16
Subsequent to the execution of the GAI, a Payment Bond and a
17
Performance Bond were issued by ST. PAUL each in the penal amount of
18
$4,141,448.00 in connection with the installation of refractory
19
materials in boilers on a power plant project in Guayama, Puerto
20
Rico. The Payment Bond was intended to guarantee payment to REINTJES’
21
subcontractors and suppliers whereas the Performance Bond guaranteed
22
completion of the work by REINTJES.
23
24 2
GAI ¶ 2.
25 3
GAI ¶ 3.
26 4
GAI ¶ 4(c).
2
ST. PAUL alleges that REINTJES has refused to honor its
3
obligations under the GAI despite its repeated entreaties.
4
The relationship between ALSTON and REINTJES eventually soured
5
and culminated in suits filed by ALSTON against both REINTJES and ST.
6
PAUL seeking damages from REINTJES purportedly caused by a breach of
7
contract, delays in completion of work, as well as defective design
8
and installation of refractory materials. Plaintiffs further called
9
for a declaratory judgment determining the validity of the bonds
10
issued by ST. PAUL as well as the surety’s obligation to pay
11
thereunder.
12
REINTJES counter-claimed against plaintiffs5 for failure to pay
13
invoiced payments and for extra labor charges and overtime
14
purportedly resulting from delays and disruptions in the refractory
15
work. ST. PAUL also filed a counter-claim against plaintiffs
16
challenging the validity of the bonds.
17
In December 2003, ST. PAUL negotiated ALSTOM’s claim against the
18
Performance Bond in the amount of $2,925,000.00 which caused ALSTOM
19
to drop its claims against REINTJES and ST. PAUL. However, REINTJES
20
continued to prosecute its counter-claims against ALSTOM and
21
disclaimed any obligation to reimburse ST. PAUL.
22
23
24 5
A parallel proceeding was previously initiated by REINTJES in
the U.S. District Court for the Western District of Missouri, Geo P.
25 Reintjes Co. Inc. v. Alstom Power, Inc., Case No. 02-0657-CV-W-GAF.
That action was subsequently transferred to this District and the
26 parties realigned under a single consolidated pleading.
2
Thereafter, ST. PAUL also settled the claims against the Payment
3
Bond asserted on behalf of JR INSTALLATION SALES & SERVICE, INC., a
4
REINTJES subcontractor, for $465,000.00.
5
In April 2005, ST. PAUL instituted a suit against REINTJES in
6
the Western District of Missouri seeking indemnification for the sums
7
expended in the ALSTOM settlement.6
8
After intense mediation efforts, on June 15, 2006, ALSTON and
9
REINTJES advised the court that they had reached an agreement to
10
settle their differences in this case which, at the time, were the
11
only remaining claims in these proceedings. Pursuant to their
12
settlement agreement, ALSTON would pay REINTJES $2,000,000.00.
13
On July 13, 2006, ST. PAUL moved to intervene in this action. In
14
its tendered complaint, petitioner sought a declaratory judgement
15
regarding REINTJES’ duty to collateralize ST. PAUL for the losses
16
incurred relative to the bonds issued on behalf of REINTJES as well
17
as its equitable subrogation rights resulting from having paid claims
18
asserted against the aforementioned bonds.
19
Additionally, ST. PAUL prayed for an order proscribing REINTJES
20
from receiving any funds in connection with the disputes in this
21
22
6
23 ST. PAUL demands payment of the following sums:
Settlement with JRI $ 465,000.00

24 Settlement with ALSTON $2,925,000.00
Expert Fees re: JRI claim $ 10,000.00
25 Expenses $ 547,896.00
26 TOTAL $3,947,896.00
2
litigation and ordering REINTJES to pay into the court any such
3
monies received in order “to prevent the dissipation of the funds
4
until there has been a judicial determination in [its] indemnity
5
lawsuit against Reintjes regarding St. Paul’s entitlement to the
6
funds.” Motion for Leave to Intervene (docket No. 246) p. 2.
7
On July 28, 2006, we approved the Settlement Agreement entered
8
into between ALSTOM and REINTJES, denied the intervention and ordered
9
that the settlement award be transferred to the Missouri court for
10
eventual disposition in the case instituted by ST. PAUL.
11
Our denial for intervention was reversed on appeal with
12
instructions to consider ST. PAUL’s petition anew.
13
II. INTERVENTION
14
ST. PAUL argues that it is entitled to intervene in these
15
proceedings as a matter of right pursuant to Rule 24(a)(2) Fed. R.
16
Civ. P. or in the alternative, under the provisions for permissive
17
intervention under Rule 24(b)(2).7
18
In pertinent part, Rule 24(a)(2) provides:
19
Upon timely application anyone shall be permitted to
20
intervene in an action... when the applicant claims an
21
interest relating to the property or transaction which is
22
the subject of the action and the applicant is so situated
23
that the disposition of the action may as a practical
24
25 7
Because we find the arguments under Rule 24(a) dispositive, there
is no need to discuss the applicability of the provisions for permissive
26 intervention under Rule 24(b).
2
matter impair or impede the applicant’s ability to protect
3
that interest, unless the applicant’s interest is
4
adequately represented by existing parties.
5
Hence, a party wishing to intervene based on the aforementioned
6
provision “must show that (1) it timely moved to intervene; (2) it
7
has an interest relating to the property or transaction that forms
8
the basis of the ongoing suit; (3) the disposition of the action
9
threatens to create a practical impediment to its ability to protect
10
its interest; and (4) no existing party adequately represents its
11
interests.” B. Fernandez & Hnos., Inc., 440 F.3d 541, 544-45 (1st Cir.
12
2006); Public Serv. Co. of New Hampshire v. Patch, 136 F.3d 197, 204
13
(1st Cir. 1998); Caterino v. Barry, 922 F.2d 37, 39 (1st Cir. 1990).
14
All four elements must be met in order to qualify for
15
intervention. B. Fernandez, 440 F.3d at 545; Patch, 136 F.3d at 204;
16
Caterino, 922 F.2d at 39.
17
In applying these factors, the court must utilize a “holistic,
18
rather than a reductionist, approach” keeping in mind “a commonsense
19
view of the overall litigation.” Patch, 136 F.3d at 204. “The inquiry
20
under Rule 24(a)(2) must focus on the particular facts and procedural
21
posture of each application.” 6 James Wm. Moore, et al., Moore’s
22
Federal Practice ¶ 24.03[1][b]. However, “[b]ecause small differences
23
in fact patterns can significantly affect the outcome, the very
24
nature of a Rule 24(a)(2) inquiry limits the utility of comparisons
25
between and among published opinions.” Patch, 136 F.3d at 204.
26
2
A. TIMELINESS
3
REINTJES argues that the petition is untimely because, at the
4
time it was made, there were no claims pending in this action based
5
on the settlement of its counter-claims with the plaintiffs.
6
Additionally, it points to the fact that even though ST. PAUL was a
7
party to these proceedings since 2002 and was aware of REINTJES’
8
demands against plaintiffs all along it failed to take any course of
9
action to defend its rights in this case until now.
10
It is important to note that the “court’s determination of
11
timeliness is case-specific....” The Cadle Co. v. Schlictmann,
12
Conway, Crowley & Hugo, 338 F.3d 19, 21 (1st Cir. 2003) and “is to be
13
determined from all the circumstances.” Flemming v. Lind-Waldock &
14
Co., 922 F.2d 20, 25 (1st Cir. 1990) (citation and quotation marks
15
omitted). “The requirement of timeliness must be considered within
16
the factual context of each case, including the purpose for which the
17
intervention is sought, the need for intervention as a means of
18
preserving the applicant’s rights, and the possibility of prejudice
19
to the exiting parties.” Moore ¶ 24.21[1] (footnote omitted).
20
“The requirement that a motion to intervene be timely is not a
21
tool of retribution to punish tardiness. Rather, the requirement is
22
meant to protect the rights of the existing parties to an action.”
23
Moore ¶ 24.21[1] (footnote omitted).
24
“There is no bright-line rule delineating when a motion to
25
intervene is or is not timeous. Instead, courts must decide the
26
2
question on a case by case basis, examining the totality of the
3
relevant circumstances. One highly relevant circumstance implicates
4
the status of the case at the time when intervention is attempted.
5
The more advanced the litigation the more searching the scrutiny
6
which the motion must withstand.” Banco Popular de P.R. v.
7
Greenblatt, 964 F.2d 1227, 1230-31 (1st Cir. 1992) (internal citations
8
omitted).
9
“The stage of the proceeding at which an application to
10
intervene is made is inherently tied to the issue of potential
11
prejudice to the original parties resulting from the intervenor’s
12
delay.” Moore ¶ 24 .21[2] (footnotes and internal marks omitted).
13
In order to rule on the timeliness factor, the court must
14
consider: “(1) the length of time the applicant knew or reasonably
15
should have known that its interest was imperilled before it moved to
16
intervene; (2) the foreseeable prejudice to existing parties if
17
intervention is granted, (3) the foreseeable prejudice to the
18
applicant if intervention is denied; and (4) idiocratic circumstances
19
which, fairly viewed, militate for or against intervention.” Banco
20
Popular, 964 F.2d at 1231; Caterino, 922 F.3d at 39; Flemming, 922
21
F.2d at 25.
22
(1) Knowledge
23
“[T]he law contemplates that a party must move to protect its
24
interest no later than when it gains some actual knowledge that a
25
measurable risk exists.” Banco Popular, 964 F.2d at 1231. “The first
26
2
factor focuses on actual or constructive knowledge of possible
3
jeopardy.... a party must move to protect its interest no later than
4
when it gains some actual knowledge that a measurable risk exists.”
5
Banco Popular, 964 F.3d at 1231. “Once a potential intervenor has
6
acquired such knowledge, the tempo of the count accelerates. The
7
applicant must then act reasonably promptly.” Id.
8
Based on the evidence in record, it is uncontested that ST. PAUL
9
moved quickly to preserve its rights upon learning of the ALSTON-
10
REINTJES settlement. The two remaining parties advised the court of
11
the having agreed to resolve the controversy pertaining to the claims
12
over the Bonded Project via a Joint Status Report filed on June 15,
13
2006. “[L]ate June 2006, St. Paul came to learn that the settlement
14
entails Alstom paying an undisclosed sum of money to REINTJES, among
15
other terms that apparently remain confidential”8 and the request for
16
intervention was filed on July 13, 2006.
17
Prior thereto, there was no imminency for ST. PAUL to intervene.
18
This is so because the crucial event is not mere existence of a
19
lawsuit but rather, the point in time when it learned that its
20
interests would be affected by the litigation.
21
Knowledge of the pendency of the litigation is not the
22
relevant date for this factor, because it would encourage
23
intervention before the applicant had sufficient knowledge
24
25
8
Declaration of JANICE S. SMITH ¶ 21, attached to Motion for Leave
26 to Intervene (docket No. 246).
2
regarding the potential ramifications of the action on the
3
applicant’s interests. It would also prohibit intervention
4
in cases in which the applicant excusably failed to understand the
5
significance of the suit when it was filed. Thus, constructive
6
knowledge of an action’s impact on an applicant’ interests, rather
7
than knowledge of the pendency of the action, is the relevant date
8
used to determine timeliness.
9
Moore ¶ 24.21[3] (emphasis ours).
10
(2) Prejudice to Existing Parties
11
“The relevant focus under the second timeliness factor is only
12
the prejudice that may result from the applicant’s delay in filing
13
its motion after it reasonably should have known of the potential
14
impact of the action on its interest.” Moore ¶ 24.21[3] (italics in
15
original).
16
Apart from arguing that there are no controversies remaining in
17
this action REINTJES has not articulated any specific prejudice that
18
would befall upon it should intervention be allowed to proceed.
19
However, the fact that the settlement submitted by the remaining
20
parties will dispose of the only outstanding claims is not
21
dispositive in this case. Intervention may be allowed even subsequent
22
to the entry of judgment. See, Moore ¶ 24.21[2]
23
In this case ST. PAUL is not seeking to set aside the terms of
24
the settlement agreement disposing of the remaining claims between
25
ALSTON and REINTJES but rather, its interests lie precisely on the
26
2
consummation of the same. Thus, the intervention would not prove
3
disruptive of the proceedings. See, i.e., Banco Popular, 964 F.3d at
4
1232 (“As a general rule, prejudice to existing parties is less
5
likely in a case where post-judgment intervention does not seek to
6
disturb the core judgment, but merely to reconfigure an ancillary
7
term.”)
8
(3) Prejudice to Applicant
9
It is also necessary to examine the prejudice to the applicant
10
in the event that its request is rejected. As part of this analysis,
11
“we [must] determine whether the movant had intervention been
12
allowed, would have enjoyed a significant probability of success on
13
the merits.” Banco Popular, 964 at 1232 (citations and internal marks
14
omitted). We find that there is ample uncontested evidence submitted
15
by the putative intervenor documenting its claims for
16
collateralization as well as its subrogation rights.
17
Further, ST. PAUL has proffered evidentiary support for its
18
irreparable harm if it is not allowed to intervene in this action in
19
order to preserve its rights over the settlement funds. Petitioner
20
points to the fact that REINTJES is already in default of its
21
obligations and that there is a possibility of the settlement monies
22
vanishing. Further, it posits that this may be the only asset
23
24
25
26
2
available for reimbursing its significant losses related to the
3
Bonded Project as claimed in the complaint.9
4
(4) Exceptional Circumstances
5
This is a breach of contract case involving two private parties.
6
It does not involve any exceptional circumstances nor does it affect
7
matters of public interest or social impact which the court should
8
take into consideration when making its ruling.
9
B. INTEREST RELATING TO THE PROPERTY OR TRANSACTION
10
Other than arguing that the petition for intervention was
11
untimely and that there are no pending claims in these proceedings,
12
REINTJES does not specifically address this element.
13
“The goal of the interest requirement is to dispose of lawsuits
14
by involving as many concerned parties as is compatible with
15
efficiency and due process.” Moore 24[2][a]. “While the type of
16
interest sufficient to sustain intervention as of right is not
17
amenable to precise and authoritative definition, a putative
18
intervenor must show at a bare minimum that it has ‘a significantly
19
protectable interest.’” Patch, 136 F.3d at 205 (citing Donaldson v.
20
United States, 400 U.S. 517, 531, 91 S.Ct. 534, 542, 27 L.Ed.2d 580,
21
589 (1971)).
22
“[T]here is no authoritative definition of precisely what kinds
23
of interests satisfy the requirements of the rule... The goal of the
24
25
9
See, Declaration of JANICE S. SMITH ¶¶ 22, 23 and 26 attached to
26 Motion for Leave to Intervene (docket No. 246).
2
interest requirement is to dispose of lawsuits by involving as many
3
concerned parties as is compatible with efficiency and due process.”
4
Moore ¶ 24.03[2][a] (footnotes omitted). However, “an
5
undifferentiated, generalized interest in the outcome of an ongoing
6
action is too porous a foundation on which to premise intervention as
7
of right.” Patch, 136 F.3d at 205.
8
This requirement will be interpreted broadly. See, Daggett v.
9
Comm’n on Gov’t Ethics and Election Practices, 172 F.3d 104, 110 (1st
10
Cir. 1999) (rejecting narrow reading of “property or transaction”
11
provision).
12
We find this requirement is easily met in the situation before
13
us. ST. PAUL’s interests over the settlement funds payable to
14
REINTJES derive both from petitioner’s right to collateralization
15
contained in the GAI as well as from its subrogation rights arising
16
as a result of having paid claims under the terms of the bonds both
17
which are intimately connected to the events which lead to the filing
18
of this action.
19
C. IMPAIR ABILITY TO PROTECT INTEREST
20
Having established a sufficient interest in the subject matter
21
of this action, petitioner must also prove that its ability to
22
protect its interests will be impaired if not allowed to intervene.
23
As previously noted, based on the evidence proffered ST. PAUL
24
is susceptible of withstanding significant losses, costs and expenses
25
incurred from having issued the bonds on behalf of REINTJES, the
26
2
subsequent violations to the obligations assumed by the Indemnitors
3
under the GAI and its indemnity rights unless it may prosecute those
4
claims at this time.
5
D. ADEQUATE REPRESENTATION BY EXISTING PARTIES
6
REINTJES does not address this issue nor do we find that it
7
merits much discussion. The interests of both ALSTON and REINTJES at
8
this stage of the proceedings are not compatible with those asserted
9
by ST. PAUL. To the contrary, the would-be intervenor paid ALSTON
10
claims premised on REINTJES’ default of its obligations under the
11
bonds and is now seeking settlement monies payable by ALSTON in
12
connection with REINTJES’s counter-claims. Additionally, by demanding
13
payment from REINTJES petitioner has placed itself in opposite sides
14
vis à vis this party.
15
Accordingly, it is safe to conclude that ST. PAUL’s interests
16
are not adequately represented by the existing parties to the
17
litigation.
18
III. CONCLUSION
19
Based on the foregoing, the Motion to Intervene is GRANTED.
20
It is further ORDERED that this action be TRANSFERRED to the
21
Western District of Missouri, for consolidation with Geo P. Reintjes
22
Co. Inc. v. Alstom Power, Inc., Case No. 02-0657-CV-W-GAF.
23
Plaintiffs are deemed to have fulfilled their obligations under
24
the terms of the Settlement Agreement with REINTJES. Accordingly,
25
26
2
the Final Judgment issued on July 28, 2006 (docket No. 260) is
3
reinstated.
4
IT IS SO ORDERED.
5
San Juan, Puerto Rico, this 24th day of May, 2007.
6
7
S/Raymond L. Acosta
8 RAYMOND L. ACOSTA
United States District Judge
9
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Alstom Caribe, Inc. v. Geo. P. Reintjes Co., et al Doc.

1 IN THE UNITED STATES DISTRICT COURT

3 COMBUSTION ENGINEERING CARIBE,

10 ORDER GRANTING INTERVENTION

1 CIVIL NO. 02-2466 (RLA) Page 2

1 CIVIL NO. 02-2466 (RLA) Page 3

1 CIVIL NO. 02-2466 (RLA) Page 4

Settlement with JRI $ 465,000.00

1 CIVIL NO. 02-2466 (RLA) Page 5

1 CIVIL NO. 02-2466 (RLA) Page 6

1 CIVIL NO. 02-2466 (RLA) Page 7

1 CIVIL NO. 02-2466 (RLA) Page 8

1 CIVIL NO. 02-2466 (RLA) Page 9

1 CIVIL NO. 02-2466 (RLA) Page 10

1 CIVIL NO. 02-2466 (RLA) Page 11

1 CIVIL NO. 02-2466 (RLA) Page 12

1 CIVIL NO. 02-2466 (RLA) Page 13

1 CIVIL NO. 02-2466 (RLA) Page 14

1 CIVIL NO. 02-2466 (RLA) Page 15

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