2020 WL 2316061

United States District Court, W.D. Texas, San Antonio Division.
Elijah ZAMORANO, Plaintiff
v.
ZYNA LLC, NAZ Logistics LLC, Mohamed Almajidi, John Norton Hayes Jr., Deceased; Ahmed Mousa, J.W. Logistics Operations, LLC, Defendants.
SA-20-CV-00151-XR
|
Signed 05/11/2020
Attorneys and Law Firms
Phillip C. Ripper, Thomas J. Henry Injury Attorneys, San Antonio, TX, for Plaintiff.
Justin T. Woods, Goldman & Associates, Larry J. Goldman, Goldman & Peterson PLLC, San Antonio, TX, for Defendants NAZ Logistics LLC, Mohamed Almajidi.
Allan K. DuBois, Law Office of Allan K. DuBois, P.C., San Antonio, TX, for Defendant Ahmed Mousa.
Edward L. Osuna, Nicholas A. Parma, Curney, Farmer, House, Osuna and Jackson, P.C., San Antonio, TX, for Defendant J.W. Logistics Operations, LLC.
Zyna LLC, Dallas, TX, pro se.
John Norton Hayes, Jr., San Antonio, TX, pro se.

ORDER
XAVIER RODRIGUEZ, UNITED STATES DISTRICT JUDGE
*1 On this date, the Court considered Defendant J.W. Logistics Operations, LLC’s Motion to Dismiss (ECF No. 4), Plaintiff Elijah Zamorano’s Response (ECF No. 5), and Defendant’s Reply (ECF No. 6). After careful consideration, the Court will GRANT the motion.

BACKGROUND
This case arises out of a motor vehicle collision that occurred in San Antonio, Texas on November 28, 2018. Defendant John Norton Hayes, Jr. (“Hayes”) was operating a commercial vehicle, crashed into another vehicle driven by non-party Nicholas Sanchez, exited his commercial vehicle, and fled the scene. Pl.’s First Am. Pet. ¶ 13, ECF No. 1 at 16–25 (hereinafter, “Pl.’s Compl.”). As a result of the crash, both Hayes’ commercial vehicle and Sanchez’s vehicle were disabled in the roadway. Id. Plaintiff Elijah Zamorano (“Plaintiff”) was lawfully operating his motor vehicle and crashed into one or both of the disabled vehicles. Id. ¶ 14. After the impact, Plaintiff’s vehicle was struck from behind by yet another vehicle operated by another non-party. Id. As a result of the collision, Plaintiff sustained severe and permanent bodily injuries. Id. ¶ 15.

Defendant Hayes received a citation for failing to stop and render aid. Id. ¶ 14. Plaintiff alleges that the injuries he sustained “were proximately and directly caused by the negligent conduct” of Hayes. Id. ¶ 16. As to the rest of the Defendants, Plaintiff does not clearly allege their role in the collision or their relationship to each other. He alleges that Defendant Ahmed Almajidi (“Almajidi”) is the owner of the commercial vehicle Hayes was driving, and that Almajidi is the owner of Defendants Zyna LLC (“Zyna”) and NAZ Logistics LLC (“NAZ”). Id. ¶ 21. Plaintiff also claims, in one instance, that Hayes was employed by Almajidi, Zyna, and/or NAZ; but, in another instance, he claims that Hayes was “operating the commercial vehicle while in the course and scope of employment with and/or with the consent and permission of” some or all of the other five Defendants: Almajidi, Zyna, NAZ, Ahmed Mousa (“Mousa”), and, as relevant to the present motion, J.W. Logistics Operations, LLC (“JWLO”). Compare id. ¶ 12 with ¶ 19.

Plaintiff filed his Original Petition on February 7, 2019 in the 285th Judicial District Court of Bexar County, Texas. ECF No. 2 at 65. In that Petition, Plaintiff named only Hayes, Almajidi, Zyna, and NAZ as Defendants. Id. After conducting some discovery, “one of the Defendants identified [JWLO] as a potential liable party to the matter,” so Plaintiff filed his First Amended Petition on January 10, 2020, naming Mousa and JWLO as additional Defendants. Pl.’s Resp. to Def.’s Mot. to Dismiss ¶¶ 1–3, ECF No. 5 (hereinafter, “Pl.’s Resp.”). Plaintiff brings numerous claims sounding in negligence against the Defendants. As to JWLO, Plaintiff brings claims under several negligence theories: respondeat superior; negligent hiring, entrustment, training and supervision, retention, and failing to ensure driver qualifications; and gross negligence. Pl.’s Compl. ¶¶ 19–20, 22–24. On February 7, 2020, JWLO removed the case to this Court on the basis of federal question jurisdiction.1 Def.’s Notice of Removal ¶¶ 5–21, ECF No. 1. JWLO now moves to dismiss all claims against it pursuant to Rule 12(b)(6), arguing Plaintiff’s claims are completely preempted by federal law. Def.’s Mot. to Dismiss, ECF No. 4 (hereinafter, “Def.’s Mot.”).

DISCUSSION

I. Legal Standards

a. Rule 12(b)(6)
*2 A party may move for dismissal of a claim where the plaintiff fails to state a claim upon which relief can be granted. FED. R. CIV. P. 12(b)(6). “To survive a Rule 12(b)(6) motion to dismiss, a complaint … must provide the plaintiff’s grounds for entitlement to relief—including factual allegations that when assumed to be true ‘raise a right to relief above the speculative level.’ ” Cuvillier v. Taylor, 503 F.3d 397, 401 (5th Cir. 2007) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). That is, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). A complaint must contain “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555. When considering a Rule 12(b)(6) motion to dismiss, a court must “accept the complaint’s well-pleaded facts as true and view them in the light most favorable to the plaintiff.” Johnson v. Johnson, 385 F.3d 503, 529 (5th Cir. 2004).

b. Preemption Provisions of Section 14501
JWLO’s removal and its present motion are premised on preemption provisions found in 49 U.S.C. § 14501. Def.’s Mot. 1. Specifically, Section 14501(c)(1) provides that no state may “enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier … or any motor private carrier, broker, or freight forwarder with respect to the transportation of property.” 49 U.S.C. § 14501(c)(1). Section 14501(b)(1) provides that no state may “enact or enforce any law, rule, regulation, standard, or other provision having the force and effect of law relating to intrastate rates, intrastate routes, or intrastate services of any freight forwarder or broker.” 49 U.S.C. § 14501(b)(1).

These preemption provisions, originally enacted by the Federal Aviation Administration Authorization Act (“FAAAA”)2 in 1994 and amended by the Interstate Commerce Commission Termination Act (“ICCTA”)3 in 1995, were part and parcel of Congress’ determination to deregulate the trucking industry. See Rowe v. New Hampshire Motor Transp. Ass’n, 552 U.S. 364, 368 (2008) (discussing history of trucking deregulation).4 FAAAA’s preemption provisions were intended to “pre-empt state trucking regulation” and “to avoid … a State’s substitution of its own governmental commands for ‘competitive market forces’ in determining … the services that motor carriers will provide.” Id. at 368, 372. ICCTA extended preemption beyond motor carriers to freight forwarders and brokers.5

These preemption provisions (collectively referred to herein as “FAAAA preemption”)6 are interpreted broadly: preemption “may occur even if a state law’s effect on rates, routes, or services ‘is only indirect’ ” and it does “occur[ ]at least where state laws have a ‘significant impact’ related to Congress’ deregulatory and pre-emption related objectives.” Rowe, 552 U.S. at 370–71 (citing Morales v. Trans World Airlines, Inc., 504 U.S. 374, 384–90 (1992)). Thus, courts have held many claims against brokers preempted by the provisions of Section 14501. See, e.g., Ameriswiss Tech., LLC v. Midway Line of Illinois, Inc., 888 F. Supp. 2d 197, 208 (D.N.H. 2012) (granting judgment as a matter of law to broker on four non-contractual claims that were expressly preempted by 49 U.S.C. § 14501(c)(1)); Chatelaine, Inc. v. Twin Modal, Inc., 737 F. Supp. 2d 638, 643 (N.D. Tex. 2010) (dismissing all non-contractual claims against broker, including negligence, as preempted); Huntington Operating Corp. v. Sybonney Exp., Inc., No. CIV.A. H-08-781, 2010 WL 1930087, at *3 (S.D. Tex. May 11, 2010) (same).

*3 When it comes to whether these preemption provisions apply to personal injury claims sounding in state-law negligence—the types of claims at issue in this case—“[f]ederal district courts are sharply divided.” Gillum, 2020 WL 444371, at *3 (discussing split among district courts). Although there is no binding authority on this issue, this Court recently held that personal injury negligence claims against a freight broker which “directly implicate[ ] how” that broker “performs its central function of hiring motor carriers” are preempted by FAAAA. Id. at *5.

II. Analysis
JWLO argues that FAAAA “expressly preempts Plaintiff’s state-law negligence claims against a licensed freight broker such as JWLO.” Def.’s Mot. 1. According to JWLO, the facts in this case are nearly identical to those presented to this Court in Gillum, because:
Plaintiff’s allegations in this case relate to brokerage services. Plaintiff alleges Defendant JWLO—a freight broker—was negligent in its vetting of freight carrier NAZ Logistics, LLC (who, in turn, was negligent in vetting the driver involved in the accident). In essence, Plaintiff claims that Defendant JWLO was negligent in arranging for the transportation of property between motor carriers.
Id. at 7. Thus, “Plaintiff seeks to enforce a duty of care related to how JWLO arranged for the transportation of property by the defendant motor carriers, which are the very ‘services’ JWLO provides as a federally-licensed freight broker.” Id. at 9. JWLO argues that, as in Gillum, “[t]hese allegations ‘go to the core of what it means to be a careful broker,’ ” and the Court should follow its analysis in Gillum to find Plaintiff’s claims are “squarely preempted.” Id. at 7 (citing Gillum, 2020 WL 444371, at *8); id. at 10.

In response, Plaintiff asks that the Court (1) find his claims are not preempted and remand this case to state court, (2) treat JWLO’s motion to dismiss as a motion for summary judgment and grant Plaintiff adequate time to conduct discovery, or (3) grant Plaintiff leave to amend his complaint to address “any issues raised in [JWLO’s] Motion to Dismiss subject to a Motion to Remand.” Pl.’s Resp. 9–10.

a. Are Plaintiff’s claims preempted?
Plaintiff claims that his “valid causes of action of negligence and gross negligence” against JWLO “are not preempted by the FAAAA or any other federal statute, which Plaintiff can demonstrate with proper time to take discovery.” Pl.’s Resp. 1. Plaintiff argues “a determination of a broker’s liability is not determined by whether they are a licensed broker, but rather based on fact-specific inquiry into the broker’s relationship with the shipper.” Id. at 6. On this basis, Plaintiff asks for the opportunity to conduct discovery about “the true nature of [JWLO’s] relationship with the other Defendants in this case.” Id. Essentially, Plaintiff argues that whether JWLO is a broker protected by FAAAA’s preemption provisions is a fact question that cannot be resolved on the present motion to dismiss. The Court disagrees.

Plaintiff confuses the issue by citing to inapposite authority for the proposition that “[t]he difference between a carrier and a broker is often blurry.” Id. at 6 (citing Nebraska Turkey Growers Co-op Ass’n v. ATS Logistics Servs., Inc., No. 4:05CV3060, 2005 WL 3118008, at *5 (D. Neb. Nov. 22, 2005)). Plaintiff block-quotes a case from a Texas court of appeals, relying on that authority to support his proposition that “a broker’s liability is not determined by whether they are a licensed broker, but rather based on fact-specific inquiry into the broker’s relationship with the shipper.” Id. (citing CEVA Logistics U.S., Inc. v. Acme Truck Line, Inc., No. 01-16-00482-CV, 2018 WL 6694606, at *5 (Tex. App.—Houston [1st Dist.] Dec. 20, 2018)). However, those cases deal with a broker’s liability for lost or damaged shipments arising under the Carmack Amendment, 49 U.S.C. § 14706. In those instances, because “only ‘carriers’ are liable for lost or damaged shipments under the Carmack Amendment,” a court will look to whether a purported “broker” “qualifies as a carrier” by virtue of “accept[ing] responsibility for ensuring delivery of the goods, regardless of who actually transported them.” CEVA Logistics, 2018 WL 6694606, at *5 (internal citations omitted).

*4 That issue is entirely separate from the one presented in this case, which is whether JWLO is a broker under the preemption provisions of 49 U.S.C. § 14501. Under FAAAA, a “broker” is “a person, other than a motor carrier or an employee or agent of a motor carrier, that as a principal or agent sells, offers for sale, negotiates for, or holds itself out by solicitation, advertisement, or otherwise as selling, providing, or arranging for, transportation by motor carrier for compensation.” 49 U.S.C. § 13102. In other words, a broker “arranges for the transportation of property by a motor carrier for compensation. A broker does not transport the property and does not assume responsibility for the property.”7

Even accepting the well-pleaded facts in Plaintiff’s complaint as true, it is clear that JWLO’s only role in the collision that injured Plaintiff was as a broker. Plaintiff admits as much. See Pl.’s Resp. 9 (“The Defendant broker in Gillum was not a known licensed freight broker like [JWLO] … In contrast, Defendant [JWLO] is a licensed broker that provides a variety of different services.”) (emphasis added).8 The entire basis of Plaintiff’s claims against JWLO—that JWLO “had a duty to ensure the companies it retained, referred or provided the work used due care to hire competent and safe drivers to perform the services offered,” id. at 8—“go to the core of what it means to be a careful broker.” Gillum, 2020 WL 444371, at *4; see also supra n. 7 (defining a broker’s duties as “arrang[ing] for the transportation of property by a motor carrier.”). The Court also takes judicial notice of JWLO’s broker authority issued by the Federal Motor Carrier Safety Administration. Def.’s Mot., Ex. B.9 Because the record is clear that JWLO’s only role in the collision was as a broker, Plaintiff cannot plausibly allege a cause of action against JWLO that is not preempted by 49 U.S.C. § 14501.

Alternatively, Plaintiff argues that his claims against JWLO are not preempted because his “causes of action of negligence and gross negligence have nothing to do with the ‘rates, routes or services’ of [JWLO] as defined by the FAAAA.” Pl.’s Resp. 7. This is contrary to the Court’s holding in Gillum: that negligence claims against a broker arising out of personal injury sustained by a motor carrier the broker hired “are indeed ‘related to’ the services that a broker is anticipated or contracted to provide.” Gillum, 2020 WL 444371, at *5.

Plaintiff’s own briefing betrays how his claims are significantly related to JWLO’s services as a broker. Plaintiff argues in his briefing that JWLO “had a duty to ensure that the companies it retained, referred or provided the work used due care to hire competent and safe drivers to perform the services offered, had proper training, supervision and safety programs and properly maintained the vehicle driven to complete the job obtained by [JWLO].” Pl.’s Resp. 8–9. Plaintiff is describing JWLO’s services as a broker—one who “arranges for the transportation of property by a motor carrier for compensation.” See supra n. 7. Plaintiff also claims in his briefing that preemption of claims such as his “would empower every truck broker to recklessly and freely hire incompetent motor carriers riddled with incompetent driver’s and safety violations, without investigating whether the motor carriers complied with safety laws or whether the commercial vehicle drivers were fit and competent to drive.” Pl.’s Resp. 7.

*5 In other words, Plaintiff seeks to hold JWLO to a standard of care that would require more than federal law does—to require a freight broker to investigate its motor carriers and drivers before hiring them to arrange for transportation. This is exactly the “patchwork of state and local regulations and standards” that Congress sought to avoid by deregulating the surface transportation industry and enacting the FAAAA’s preemption provisions.10 Gillum, 2020 WL 444371, at *5. Claims such as Plaintiff’s, which seek “to enforce a duty of care related to how [the broker] arranged for a motor carrier to transport the shipment” and arise out of “a broker hiring a motor carrier (and any related investigations of that motor carrier)” are indeed claims “relating to … services of any … broker” and are thus preempted. Id. at *5; 49 U.S.C. § 14501(b)(1).

b. Should Plaintiff be granted additional discovery?
Next, Plaintiff asks the Court to treat JWLO’s motion to dismiss as a motion for summary judgment and to grant Plaintiff adequate time to conduct discovery. Pl.’s Resp. 2, 9–10. Plaintiff’s argument for treating JWLO’s motion as one for summary judgment is not entirely clear, but seems to be premised on JWLO’s attachment of its FMCSA broker authority to its motion to dismiss. See id. at 3 (discussing treatment of motions to dismiss as motions for summary judgment where “matters outside of the pleadings” are presented to the court). As noted above, it is proper for a court reviewing a Rule 12(b)(6) motion to dismiss to take judicial notice of matters of public record. See supra n. 9. The Court’s consideration of JWLO’s broker authority, which is a matter of public record, does not convert JWLO’s motion to dismiss under Rule 12(b)(6) into one for summary judgment under Rule 56. Plaintiff’s request for additional discovery under Rule 56(d) is thus unavailing.

c. Should Plaintiff be granted leave to amend?
Finally, Plaintiff asks for leave of the Court to amend his complaint “to address any issues raised in [JWLO’s] Motion to Dismiss.” Pl.’s Resp. 10. JWLO argues that any amendment of Plaintiff’s complaint would be futile. Def.’s Reply 6, ECF No. 6. The Court agrees.

Although leave to amend pleadings “shall be freely given when justice so requires,” FED. R. CIV. P. 15(a)(2), leave to amend is not automatic. Avatar Exploration, Inc. v. Chevron, U.S.A., Inc., 933 F.2d 314, 320 (5th Cir. 1991). The decision to grant or deny a motion to amend is within the sound discretion of the Court. Id. In exercising its discretion, the Court will consider “the futility of amendment,” among other factors. Gregory v. Mitchell, 634 F.2d 199, 203 (5th Cir. 1981) (citing Foman v. Davis, 371 U.S. 178, 182 (1962)). Here, as discussed above, it is undisputed that JWLO’s only role in the collision underlying this suit was as a broker. The Court has already concluded that Plaintiff’s claims against JWLO as a broker, sounding in negligence, are completely preempted by 49 U.S.C. § 14501. As such, the Court finds that any amendment would be futile.

CONCLUSION
Because Plaintiff’s claims against JWLO are completely preempted, Plaintiff’s complaint fails to state a claim upon which relief may be granted. Defendant JWLO’s Motion to Dismiss (ECF No. 4) is GRANTED, and Plaintiff’s claims against JWLO are therefore DISMISSED with prejudice pursuant to Rule 12(b)(6). Having resolved the issue of federal preemption of the claims against JWLO, the only claims against remaining Defendants involve purely state law issues. Therefore, Plaintiff’s claims against remaining Defendants are REMANDED to state court. The Clerk is DIRECTED to mail a certified copy of this Order to the clerk of the 285th Judicial District of Bexar County, Texas.

*6 It is so ORDERED.

All Citations
Slip Copy, 2020 WL 2316061

Footnotes

1
Federal question jurisdiction under 28 U.S.C. § 1331 exists in cases of “complete preemption,” where a “federal statute completely preempts the state-law cause of action,” because such “a claim which comes within the scope of that action, even if pleaded in terms of state law, is in reality based on federal law.” See Gillum v. High Standard, LLC, No. SA-19-CV-1378-XR, 2020 WL 444371, at *2 (W.D. Tex. Jan. 27, 2020) (discussing federal jurisdiction and holding a broker-defendant properly removed a state law cause of action that was completely preempted by the FAAAA).

2
Federal Aviation Administration Authorization Act of 1994, Pub. L. 103-305, 108 Stat. 1605–06 (1994). As originally enacted, the preemption provision at Section 14501(c)(1) applied only to motor carriers. Subsequent amendment added broker and freight forwarder to the language of the section.

3
Interstate Commerce Commission Termination Act of 1995, Pub. L. 104-88, 109 Stat. 899 (1995).

4
The “long history behind the termination of the Interstate Commerce Commission” and “the substantial economic deregulation of the surface transportation industry” is also discussed in the Committee Report on the ICCTA. See supra n. 3.

5
See supra n. 3 (describing the ICCTA as “another important step in a 15-year effort to deregulation [sic] the motor carrier industry.”)

6
Although Section 14501(c)(1) was enacted as part of the FAAAA and Section 14501(b)(1) as part of the ICCTA, the parties often refer to the provisions collectively as contained in the FAAAA. The courts often interpret these provisions together, and “[j]ust as courts interpreting the FAAAA use ADA caselaw, so too do courts interpreting § 14501(b)(1) use previous cases considering § 14501(c)(1).” Gillum, at *7 n.3 (citing Dnow, L.P. v. Paladin Freight Solutions, Inc., No. 17-CV-3369, 2019 WL 398235 (S.D. Tex. Jan. 12, 2018)). Unless explicitly noted, for the sake of consistency the Court will refer to “FAAAA preemption” as encompassing both Sections 14501(c)(1) and 14501(b)(1)’s preemption provisions.

7
What are the definitions of motor carrier, broker and freight forwarder authorities?, FEDERAL MOTOR CARRIER SAFETY ADMINISTRATION (Dec. 5, 2014), https://ask.fmcsa.dot.gov/app/answers/detail/a_id/248/~/what-are-the-definitions-of-motor-carrier%2C-broker-and-freight-forwarder.

8
In the Fifth Circuit, “factual assertions in pleadings … are considered to be judicial admissions conclusively binding on the party who made them.” White v. ARCO/Polymers, Inc., 720 F.2d 1391, 1396 (5th Cir. 1983).

9
On a motion to dismiss, it is proper for a district court to “consider the complaint in its entirety, as well as other sources courts ordinarily examine when ruling on Rule 12(b)(6) motions to dismiss, in particular, documents incorporated into the complaint by reference, and matters of which a court may take judicial notice.” Funk v. Stryker Corp., 631 F.3d 777, 783 (5th Cir. 2011). This includes matters of public record, such as JWLO’s broker authority issued by the FMCSA.

10
Contrary to Plaintiff’s claims, FAAAA preemption does not “empower” brokers to act recklessly. Rather, pursuant to Congress’ preemptive intent, the FAAAA allows brokers to lawfully operate under one federal scheme of regulation rather than being subject to inconsistent duties arising out of varying states’ laws.

2020 WL 2299946

NOTICE: THIS OPINION HAS NOT BEEN RELEASED FOR PUBLICATION IN THE PERMANENT LAW REPORTS. UNTIL RELEASED, IT IS SUBJECT TO REVISION OR WITHDRAWAL.
District Court of Appeal of Florida, First District.
LEXINGTON INSURANCE COMPANY, Appellant,
v.
Towanna JAMES, as Personal Representative of the Estate of Naomi James, Seatruck, Inc., Seafreight Line, Ltd., Seafreight Agencies (USA), Inc., Norton Lilly International, Inc., and Crowders Fleet Maintenance, LLC, Appellees.
No. 1D19-1954
|
May 8, 2020
On appeal from the Circuit Court for Duval County. Robert M. Dees, Judge.
Attorneys and Law Firms
Michael R. D’Lugo of Wicker, Smith, O’Hara, McCoy & Ford, P.A., Orlando, for Appellant.
Guy Bennett Rubin of Rubin & Rubin, Stuart, for Appellee, Towanna James.
Samuel B. Spinner and Hinda Klein of Conroy Simberg, Hollywood, for Appellees Seatruck, Inc., Seafreight Line, Ltd., and Seafreight, Agencies (USA), Inc.
Opinion

LEWIS, J.

*1 Appellant, Lexington Insurance Company, challenges the trial court’s order denying its motion to intervene in an action brought by Appellee Towanna James, as the personal representative of the estate of Naomi James, against Appellees Seatruck, Inc., Seafreight Line, Ltd., Seafreight Agencies (USA), Inc., Norton Lilly International, Inc., and Crowders Fleet Maintenance, LLC, for the wrongful death of Naomi James that arose out of a tractor-trailer crash. We affirm because Appellant has failed to show that the trial court abused its discretion.

BACKGROUND
In her wrongful death action, James alleged that on April 11, 2014, Naomi’s car was stopped behind a school bus when it was rear-ended by a tractor-trailer that was recklessly operated by Joseph Pickett, Sr., within the course and scope of his employment with Seatruck and was carrying a load arranged by Norton Lilly and/or Seafreight Agencies. Naomi and her passenger were killed in the crash. James asserted claims for negligence, negligent entrustment, strict vicarious liability, and negligent hiring and retention.*

In December 2016, Seatruck filed a notice of bankruptcy. In October 2017, the bankruptcy court granted James’s motion for relief from the automatic stay put in place by the bankruptcy filing, allowing her to continue her wrongful death litigation. The bankruptcy court’s order provided in part as follows:
2. Accordingly, the automatic stay is modified for cause … to permit Creditor Towanna James, as Personal Representative of Naomi James (“Creditor”) to continue proceedings in … the … Wrongful Death Case … against debtor Seatruck, Inc. (“Debtor”) and the non-debtor defendants therein, and to pursue all rights, remedies, recovery and settlement against the non-debtor defendants and against the insurance coverage of debtor, provided that Creditor shall not seek recovery against Debtor or Debtor’s estate beyond the extent of insurance coverage outside of this bankruptcy case.
3. Upon entry of final judgment … in the Wrongful Death Case, and expiration of the time to appeal from it, Creditor’s claim against Debtor will be allowed in the amount of the judgment against Debtor, less amounts recovered from Debtor’s insurance coverage, but the remaining unpaid amount of the judgment against Debtor shall be enforceable against Debtor or Debtor’s estate only by means of a claim herein; notwithstanding that restriction, however, the judgment shall be fully enforceable against the Wrongful Death Case Defendants other than Debtor, and the automatic stay and any bankruptcy discharge shall have no effect upon Creditor’s rights and remedies as to the defendants other than the Debtor.

In December 2018, Appellant filed a motion to intervene in the wrongful death action, wherein it asserted as follows. The tractor-trailer accident at issue involved multiple vehicles and resulted in several bodily injury claims, in addition to two wrongful death claims. Two global mediations led to the settlement of several of the bodily injury claims and the other wrongful death claim, but Seatruck was unable to resolve James’s claim. Seatruck had an insurance coverage of $2,000,000 that was comprised of $1,000,000 through a Great West policy and $1,000,000 through a Lexington excess coverage policy. Following settlements with various claimants, $1,999,990 was tendered out of the insurance proceeds, leaving $10 of available insurance coverage through Appellant. Seatruck is being administratively dissolved, is ceasing operations, and its remaining assets are being liquidated. The bankruptcy court’s October 2017 order constitutes res judicia and caps James’s recovery against Seatruck at the extent of its available insurance coverage of $10. Given the foregoing, Appellant “hereby moves to intervene in this action for the purpose of distributing its remaining ten dollars in available insurance proceeds in an effort to promote judicial economy.”

*2 At the hearing on the motion to intervene, Appellant reiterated its arguments that James’s claim against Seatruck is capped at $10, “no matter what happens from here forward, Lexington’s involvement is capped at exactly $10,” and it was seeking to intervene “for the sole purpose of distributing that $10.” In opposing intervention, Appellees argued that Appellant was seeking to intervene to pay the $10 in order to discharge its obligation to defend its insured, Seatruck, whose attorney was getting paid by Appellant pursuant to the terms of their insurance policy. Appellees asserted that intervention would provide “zero judicial economy” because the case would proceed to trial irrespective of whether Appellant paid the $10. Appellees also contended that the bankruptcy court’s order does not limit James’s recovery to $10; rather, it simply requires her to return to the bankruptcy court with regard to Seatruck upon the entry of a judgment.

The trial court noted that it did not know what Appellant’s insurance policy says about the duty to defend, and it denied the motion as follows:
[I]t’s not up to me today to decide what Lexington’s rights and duties are under its policy, but I don’t think that it can — the way to figure that out is not to intervene in this case and do anything to alter the course of this case. I’m not sure what the right path is, but I don’t think that that’s the right path to determine Lexington’s rights to the extent that they can even be determined at this point in time, so I’m going to deny the motion to intervene.
This appeal followed.

ANALYSIS
We review a trial court’s denial of a motion to intervene for an abuse of discretion. Fla. House of Representatives v. Florigrown, LLC, 278 So. 3d 935, 938 (Fla. 1st DCA 2019). Florida Rule of Civil Procedure 1.230 governs interventions and provides that “[a]nyone claiming an interest in pending litigation may at any time be permitted to assert a right by intervention, but the intervention shall be in subordination to, and in recognition of, the propriety of the main proceeding, unless otherwise ordered by the court in its discretion.” Rule 1.230 “may be utilized by the omitted party if the plaintiff has left out a necessary or proper party.” Fla. House of Representatives, 278 So. 3d at 938.

Florida courts must apply a two-step analysis in ruling on a motion to intervene:
First, the trial court must determine that the interest asserted is appropriate to support intervention. … Once the trial court determines that the requisite interest exists, it must exercise its sound discretion to determine whether to permit intervention. In deciding this question the court should consider a number of factors, including the derivation of the interest, any pertinent contractual language, the size of the interest, the potential for conflicts or new issues, and any other relevant circumstance.
Second, the court must determine the parameters of the intervention. … Thus, intervention should be limited to the extent necessary to protect the interests of all parties.
Union Cent. Life Ins. Co. v. Carlisle, 593 So. 2d 505, 507–08 (Fla. 1992) (concluding that Union Central/insurer demonstrated the requisite interest to intervene given the contractual language entitling it to a refund of the medical benefits it had paid to the Carlisles/insureds which they subsequently recover in their malpractice action against the third-party tortfeasor, but “[b]ecause the right to intervene is limited only to the extent of that interest, Union Central may monitor the trial as a spectator, but it cannot participate in any way other than to make appropriate motions to protect its interests”).

“[T]he interest which will entitle a person to intervene … must be in the matter in litigation, and of such a direct and immediate character that the intervenor will either gain or lose by the direct legal operation and effect of the judgment.” Id. at 507 (internal citation omitted). “In other words, the interest must be that created by a claim to the demand in suit or some part thereof, or a claim to, or lien upon, the property or some part thereof, which is the subject of litigation.” Id. (internal citation omitted); see also In re Estate of Arroyo v. Infinity Indemnity Ins. Co., 211 So. 3d 240, 245–46 (Fla. 3d DCA 2017) (stating the same).

*3 That is, “[a] party’s asserted interest must already be at issue in the proceedings when the party seeks to intervene.” In re Estate of Arroyo, 211 So. 3d at 245 (finding that it was an abuse of discretion to allow Infinity to intervene because its claimed interest was not already at issue and it was, thus, improperly seeking to inject a new issue into the proceedings); see also Fla. House of Representatives, 278 So. 3d at 936 (“Intervention is a dependent remedy in the sense that an intervenor may not inject a new issue into the case.” (citation omitted)); Envtl. Confederation of Sw. Fla., Inc. v. IMC Phosphates, Inc., 857 So. 2d 207, 211 (Fla. 1st DCA 2003) (stating the same and explaining, “Confederation and Manasota–88 might be able to make an argument that would persuade the Department to deny the permit, but that would not be of any benefit to them if the argument did not fit within an issue raised by one of the parties.”). Cf. Providence Washington Ins. Co. v. S. Guarantee Ins. Co., 667 So. 2d 323, 323–24 (Fla. 1st DCA 1995) (holding that the trial court abused its discretion by denying Providence’s motion to intervene in the declaratory judgment action brought by Southern, where Providence was the excess insurance carrier and Southern was the primary insurer of their mutual insured and Southern sought a declaration that its duty to defend their insured had terminated because its policy limits had been exhausted; concluding that although Providence did not have a right to intervene as a matter of law, its interest was sufficient for intervention because as an excess carrier it had a substantial interest in whether the primary carrier continued to defend the underlying negligence claims and the mutual insured might not have the same incentive to defend the declaratory judgment action; and noting that Providence was limited to litigating the issue raised by Southern in its complaint, i.e., whether Southern had a duty to defend).

Further, “a contingent interest in the proceedings, as opposed to a direct and immediate interest, will not justify a party’s intervention.” In re Estate of Arroyo, 211 So. 3d at 246; see also Houston Specialty Ins. Co. v. Vaughn, 261 So. 3d 607, 608–12 (Fla. 2d DCA 2018) (affirming the denial of Houston’s request to intervene because it did not have a direct and immediate interest in the tort lawsuit brought against its insured, and noting that the cases discussed in Carlisle “involved health insurers whose subrogation rights were directly impacted by the outcome of the underlying litigation” and no such right was at issue in the case before it). The Second District noted that “[i]f the possibility of owing up to the policy limits based upon entry of an adverse judgment was itself a sufficient basis to allow intervention, insurers would be permitted the unhindered and unfettered opportunity to intervene in innumerable tort cases,” which would eviscerate section 627.4136(2), Florida Statutes, Florida’s nonjoinder statute, which “dictates that an injured person lacks an interest in the tortfeasor’s liability policy until a judgment is entered against the insured” and is intended “to ensure that the availability of insurance has no influence on the jury’s determination of the insured’s liability and damages.” 261 So. 3d at 612 (citations omitted).

Here, Appellant contends that the trial court applied the wrong standard in denying the motion to intervene because instead of determining whether intervention was appropriate, it improperly focused on what would happen after intervention. We disagree. The trial court properly examined whether Appellant’s asserted interest was appropriate for intervention, and it concluded that it was not. The trial court explained that the issue of what Appellant’s rights and duties are under its policy was not before it and intervention was not the means to determine it. The trial court did not err by considering that Appellant would tender the remaining insurance policy limit of $10 upon intervention because that was the interest Appellant asserted for intervention. Appellant repeatedly stated in its motion and at the hearing that it was seeking to intervene for the sole purpose of distributing its remaining $10 in insurance proceeds.

Appellant’s asserted interest of distributing its remaining insurance proceeds is not appropriate to support intervention because it is not an interest in the matter of litigation and is not of such a direct and immediate character that Appellant would gain or lose by the direct operation of the judgment. Appellant’s interest is not created by the claim that is the subject of litigation; instead, Appellant is improperly attempting to inject a new issue into the case, i.e., whether it has the right to distribute the remaining insurance proceeds and thereby cease its obligation to defend Seatruck. Nor is Appellant’s asserted interest such that Appellant would gain or lose by the direct operation of the judgment because as Appellant itself argued at the motion hearing, “no matter what happens from here forward, [Appellant’s] involvement is capped at exactly $10.” It is undisputed that any judgment entered will have no effect on Appellant. The record makes it clear that it is only the continuation of the proceeding that affects Appellant because it is paying for Seatruck’s defense pursuant to their insurance policy agreement.

*4 We find Appellant’s arguments of judicial economy and res judicata to be likewise lacking in merit. An argument for judicial economy cannot overcome a finding that the prospective intervenor’s asserted interest is not appropriate to support intervention. Regardless, Appellant has not shown how intervention would promote judicial economy, as opposed to merely saving money to Appellant by arguably allowing it to cease defending its insured and thereby save on litigation costs. Appellant’s res judicata argument also does not alter the applicable analysis. Additionally, the bankruptcy court’s order specifically states that the final judgment in this case shall be fully enforceable against the defendants besides debtor-Seatruck. The only limitation the order places on this case is that if James obtains a judgment against Seatruck beyond the insurance coverage, she shall seek recovery for that excess amount in the bankruptcy court. The order places no further limit on James’s recovery against Seatruck and places absolutely no limit on her recovery against Seafreight Line, Seafreight Agencies, Norton Lilly, or Crowders.

CONCLUSION
In light of the interest asserted by Appellant, we hold that the trial court did not abuse its discretion in denying the motion to intervene.

AFFIRMED.

JAY, J., concurs; ROWE, J., concurs in result only.
All Citations
— So.3d —-, 2020 WL 2299946

Footnotes

*
Pickett was named as a defendant in the original complaint, but was later dropped as a party with prejudice.