United States v. Cherokee General Corporation

[7] UNITED STATES DISTRICT COURT [8] WESTERN DISTRICT OF WASHINGTON AT SEATTLE [10] UNITED STATES OF AMERICA, for the CASE NO. 2:22-cv-00299-LK 11 use and benefit of SCI INFRASTRUCTURE LLC; and SCI ORDER GRANTING MOTION 12 INFRASTRUCTURE LLC, a Washington FOR STAY AND TO JOIN NORTH limited liability company, AMERICAN SPECIALTY 13 INSURANCE COMPANY Plaintiffs, 14 v. 15 CHEROKEE GENERAL CORPORATION, an Oregon corporation; 16 and HARTFORD FIRE INSURANCE COMPANY, a Connecticut corporation, [17] Defendants. [19] This matter comes before the Court on the stipulated motion of plaintiff SCI Infrastructure [20] LLC (“SCI”), defendant Cherokee General Corporation (“Cherokee”), and defendant Hartford Fire [21] Insurance Company (“Hartford”) seeking a stay of this proceeding and joinder of North American [22] Specialty Insurance Company (“NASIC”). Dkt. No. 10-1. Cherokee also seeks leave under Federal [24] 1 Rules of Civil Procedure 13(h) and 20(a) to join NASIC as a counterclaim defendant at the time 2 that Cherokee files its answer and counterclaims. Dkt. No. 10-1 at 4. 3 A case schedule may be modified only for good cause and with the Court’s consent. LCR 4 16(b)(6); see also LCR 10(g). The Court finds that the parties have established good cause for a 5 stay because, as related in the motion, the parties have entered an agreement that prohibits suit by 6 SCI or Cherokee against one another or against their respective sureties, NASIC and Hartford, 7 until 60 days after the resolution of an ongoing lawsuit between Cherokee and the United States 8 Army Corps of Engineers (the “Tolling Period”). Dkt. No. 10-1 at 3. 9 The Court also finds that the requirements for joinder of NASIC are met. Under Federal 10 Rule of Civil Procedure 20(a)(2), a party may be joined as a defendant if (1) a right to relief is 11 asserted against it relating to or arising out of the same transaction, occurrence, or series of 12 transactions or occurrences; and (2) there is some question of law or fact common to all defendants. 13 Joinder must comport with the principles of fundamental fairness. See Desert Empire Bank v. Ins. 14 Co. of N. Am., 623 F.2d 1371, 1375 (9th Cir. 1980) (a court should consider such factors as the 15 possible prejudice to the parties in the litigation, the closeness of the relationship between the new 16 and the old parties, and the new party’s notice of the pending action). Here, the parties stipulate to 17 the following: 18 1. NASIC is a compensated surety and bonding company for SCI, and Cherokee’s 19 counterclaims will assert that NASIC’s liability to Cherokee is coextensive with 20 SCI’s liability to Cherokee; 21 2. NASIC’s alleged liability arises out of the same transaction, occurrence, or series 22 of transactions or occurrences at issue between the existing parties; 23 3. Questions of law and fact common to NASIC and the existing parties will arise; 24 and 1 4. Joinder of NASIC comports with principles of fundamental fairness because 2 joinder of NASIC “will result in no prejudice to any party, will result in no delay 3 to the litigation, and will not disturb this Court’s exercise of jurisdiction over this 4 action.” 5 Dkt. No. 10-1 at 4. NASIC’s Vice President has also signed the stipulated motion. Id. at 5. Based 6 on the parties’ stipulation, the Court finds that the requirements for joinder have been met. See 7 also U.S. for Use & Benefit of Newton v. Neumann Caribbean Int’l, Ltd., 750 F.2d 1422, 1426 (9th 8 Cir. 1985). 9 For these reasons, the Court GRANTS the motion and ORDERS a stay of this proceeding. 10 The parties are DIRECTED to submit a status report to the Court providing the date upon which 11 the Tolling Period will conclude as soon as that date is known. The Court also GRANTS leave to 12 Cherokee to join NASIC as a counterclaim defendant at the time that its counterclaims are filed. 13 Dated this 27th day of May, 2022. 14 A 15 Lauren King United States District Judge