Two motions and a cross-motion have been filed in this action by parties seeking to intervene in the declaratory judgment action brought by plaintiff against the defendant herein. The motions by Francisco Palizzotto and Leticia Palizzotto and Natalia Vanchytska and the cross-motion by Thomas Dougherty, Barbara Dougherty, Daniel Trocchia and Santa Trocchia to intervene pursuant to C.P.L.R. §1012 and §1013, are granted without opposition.

The cause of action involves a declaratory judgment action brought by an excess insurer against a primary insurer. The complaint alleges that the primary insurer breached its duty of good faith and fair dealing by, inter alia, refusing to implead a potentially responsible third party into the underlying actions, specifically, the party that designed and supplied the materials for the shoring platform that collapsed. [*2]

The underlying cause of action involved a scaffolding collapse that occurred on January 14, 2008 at the Trump SoHo Tower project at 246 Spring Street in New York County. As a result of the scaffolding collapse, several workers sustained injuries including the proposed intervenors, Francisco Palizzotto, Thomas Dougherty and Daniel Trocchia. Yuriy Vanchytska, died in the collapse. His wife, Natalia Vanchytska, the Administratrix of his estate, is likewise a proposed intervenor.

The Palizzotto movants assert that they should be permitted to intervene in the instant declaratory judgment action because they are unrepresented or may be inadequately represented in the declaratory judgment action and may be bound by the judgment entered in that action. Movants contend, and their arguments have been adopted by proposed intervenors Vanchytska, Dougherty and Trocchia, that all parties in the underlying actions and in the declaratory action would agree that the collapse of the scaffold constituted a violation of Labor Law §240 and that summary judgment will be granted in their favor determining that the underlying defendants are liable. However, they have been unable to make their respective summary judgment motions because their attempts to continue and complete depositions of the defendants have been complicated and frustrated by the instant declaratory judgment action and the dispute between the plaintiff and defendant insurance companies.

The proposed intervenors argue that plaintiff in the declaratory judgment action (hereinafter "Lloyd's") seeks a declaration that the actions of defendant insurance company (hereinafter "Virginia Surety") have amounted to bad faith resulting in a breach of its obligations to the defendants in the personal injury/wrongful death actions. If that bad faith is proven, Lloyd's claims that it is entitled to vitiate its excess coverage of $25 million. The proposed intervenors argue that any bad faith would be the result of the actions by Virginia Surety and not the actions of the injured plaintiffs or the insured defendants in the personal injury/wrongful death actions. Removing any obligation by Lloyd's would eliminate any claim that the injured plaintiffs may have to coverage provided in the excess policy. Additionally, Lloyd's seeks a declaration that Virginia Surety must pay all excess amounts recovered by the injured plaintiffs over the limit of Virginia Surety's policy. The intervenors assert that such a request by Lloyd's has a direct effect on the injured plaintiffs since their claims will assuredly result in amounts in excess of Virginia Surety's policy. This is particularly true since Virginia Surety has already entered into mediation with three of the injured plaintiffs and has agreed to settle those claims, thereby reducing the available primary coverage for the remaining personal injury/wrongful death plaintiffs.

If the proposed intervenors were part of the declaratory judgment action, they would object to the application by Lloyd's to be relieved of its obligation to pay the injured plaintiffs under its excess policy since this would severely prejudice them through no fault of their own.The proposed intervenors cite to Hartford Accident and Indemnity Co., v. Michigan Mutual Insurance Co., 93 AD2d 337 (1st Dept. 1983), in support of their argument that if an excess carrier proves bad faith by the primary carrier, then the excess carrier, not the injured plaintiffs, has the right to recover against the primary carrier because the primary carrier owes to [*3]the excess insurer the same fiduciary obligation which the primary insurer owes to its insured.

The proposed intervenors contend that if they are permitted a place in this action, their interests could be adequately represented by objecting to any order extinguishing the obligation of Lloyd's to pay under its excess policy. They would argue that the proper course of action is for the two carriers to litigate the issue of bad faith by Virginia Surety without removing the umbrella of excess coverage as Lloyd's would have the right to recover any amount it pays as excess over the Virginia Surety policy if it is successful in the action. However, if the court were to grant the relief sought by Lloyd's and vitiates Lloyd's excess coverage obligations, then the judgment would have a preclusive effect against the injured plaintiffs in the underlying actions. They would then be left having to move against Virginia Surety or the individual defendants in the personal injury/wrongful death actions to recover any amounts awarded to them in excess of the primary limits and they would have to re-litigate the same bad faith issue being asserted by Lloyd's in the instant declaratory judgment action.

Additionally, the proposed intervenors argue that if Lloyd's request that prosecution of the underlying personal injury/wrongful death actions be stayed is granted, the injured plaintiffs would be prejudiced as their actions would be delayed interminably. Therefore, since the proposed intervenors are not adequately represented in the declaratory judgment action, their request to intervene should be granted.

This court did not receive any papers in opposition to the motions and cross-motions of the proposed intervenors.

C.P.L.R. §1012(a)(2) states, "Upon timely motion, any person shall be permitted to intervene in any action: when the representation of the person's interest by the parties is or may be inadequate and the person is or may be bound by the judgment." In Vantage Petroleum, Bay Isle Oil Co. v. Board Assessment Review of Town of Babylon, 61 N.Y2d 695 (1984), the Court of Appeals stated, "...whether movant will be bound by the judgment within the meaning of that subdivision is determined by its res judicata effect..." (citations omitted). Id. Moreover, in Yuppy Puppy Pet Prods., Inc. v. Street Smarts Realty, LLC, 77 AD3d 197 (1st Dept. 2010), cited by the proposed intervenors, the Appellate Division, First Department held that, "Intervention is liberally allowed by courts, permitting persons to intervene in actions where they have a bona fide interest in an issue involved in that action..." (citations omitted). Id. at 201.

In the case at bar, the proposed intervenors have demonstrated that their interests in the declaratory judgment action will not be adequately represented if they are not permitted to intervene. Additionally, if Lloyd's obtains a declaratory judgment extinguishing its obligation to pay any excess awards to the injured plaintiffs, that declaration may have a res judicata effect on the injured plaintiffs' attempts to collect excess amounts over Virginia Surety's policy limits.

Accordingly, the motions and cross-motion by the proposed intervenors for permission to intervene in this declaratory judgment action, are granted. [*4]

This constitutes the decision and order of the court.

Dated: November 18, 2011

J.S.C.