Walpert v. Solar Integrated Roofing Corp.

[7] 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA [10] 11 NICK WALPERT, Case No.: 24-CV-0041 W (SBC) 12 Plaintiff, ORDER GRANTING EX PARTE 13 v. APPLICATION TO INTERVENE [DOC. 42] 14 SOLAR INTEGRATED ROOFING CORP., [15] Defendant. [17] 18 Pending before the Court is AXIS Insurance Company’s unopposed ex parte 19 application to intervene in this action. The Court decides the matter on the papers 20 submitted and without oral argument. See Civ.L.R. 7.1 (d.1). For the reasons stated 21 below, the Court GRANTS the application [Doc. 42]. [22] 23 I. OVERVIEW 24 On November 28, 2023, Plaintiff Nick Walpert filed this lawsuit against Defendant 25 Solar Integrated Roofing Corp. (“SIRC”) in the San Diego Superior Court. (See Compl.1) [28] 1 The Complaint alleges causes of action for wrongful termination and violations of the 2 California Labor Code. (Id.) On January 5, 2024, SIRC removed the case to this Court. 3 (See Notice of Removal.) 4 Proposed intervenor, AXIS Insurance Company (“AXIS”), issued a liability policy 5 to SIRC, effective for the Policy Period January 1, 2023 to January 1, 2024. (Park Decl. 6 [Doc. 42-1] ¶ 4.) On March 4, 2024, SIRC notified AXIS of the litigation and on May 21, 7 2024, AXIS agreed to defend SIRC, subject to a reservation of rights under the applicable 8 insurance policy. (Id. ¶ 6.) 9 On October 4, 2024, Walpert filed the First Amended Complaint. (See FAC [Doc. 10 31].) On October 25, 2024, SIRC filed its answer. (See Answer to FAC [Doc. 32].) Then 11 on December 6, 2024, SIRC filed a Notice of Forfeited Corporation, stating that SIRC 12 “has been forfeited by the California Franchise Tax Board and is thus without capacity to 13 defend against a lawsuit.” (Notice [Doc. 34] 1:22–24, citing Rev. & Tax. Code §§ 23305– 14 23305d.) 15 After becoming aware of SIRC’s status as a Forfeited Corporation, on February 10, 16 2025, AXIS, through Counsel, sent correspondence to SIRC demanding that SIRC 17 remedy their forfeited status. (Park Decl. ¶ 9.) On March 3, 2025, AXIS became aware 18 that SIRC had no intention of remedying their forfeited status, that the CEO of SIRC had 19 resigned, and that SIRC had dissolved. (Id. ¶ 11.) 20 Meanwhile, on February 27, 2025, Walpert made a settlement demand. (Park 21 Decl. ¶ 15.) On March 11, Walpert and AXIS agreed, in principal, to settle this matter. 22 (Id.) On March 13, 2025, AXIS filed the pending ex parte application to intervene. AXIS 23 represents that Walpert does not oppose the application.2 (Ex Parte App. [Doc. 42] at 24 2:24–27.) [26] 27 2 This Court’s Chambers Civil Rule 5 provides: “Ex parte applications that are not opposed within two 28 (2) court days will be considered unopposed and may be granted on that ground.” For this additional 1 II. DISCUSSION 2 A. Good cause exists for ex parte relief. 3 A court may grant ex parte relief upon a showing of good cause or irreparable 4 injury to the moving party. Greer v. Cnty. of San Diego, 2022 WL 104724 at *1 (S.D. 5 Cal., Jan. 11, 2022) Good cause exists where “the moving party’s cause will be 6 irreparably prejudiced if the underlying motion is heard according to regular noticed 7 motion procedures,” and “the moving party is without fault in creating the crisis that 8 requires ex parte relief, or that the crisis occurred as a result of excusable neglect.” 9 Mission Power Eng'g Co. v. Cont'l Cas. Co., 883 F. Supp. 488, 492 (C.D. Cal. 1995). 10 Here, AXIS has established good cause for the relief requested. As a forfeited 11 corporation, SIRC cannot participate in the litigation to challenge or settle Walpert’s 12 allegations. Timberline, Inc. v. Jaisinghani, 54 Cal.App.4th 1361 , 1365–66 (1997). In 13 order for AXIS to participate in the litigation, it must intervene. See Kaufman & Broad 14 Communities, Inc., v. Performance Plastering, Inc., 136 Cal.App.4th 212, 217 (2006) 15 (“an insurance company must intervene in the lawsuit to protect the rights of its insured 16 suspended corporation.”). Based on the Court’s docket, if AXIS proceeded by filing a 17 regularly noticed motion to intervene, the earliest the motion would be considered is May 18 5. In the meantime, AXIS could not participate in the litigation by, for example, attending 19 the April 4, 2025 status conference, and it would hinder the apparent significant progress 20 that has been made at potentially settling this matter. 21 It is also clear that AXIS is not at fault for the circumstances necessitating that it 22 seek to intervene on an ex parte basis. After learning SIRC forfeited its corporate status 23 and could not challenge Walpert’s allegations, AXIS demanded SIRC remedy the 24 forfeiture. (Park Decl. ¶ 9.) Within ten days of learning that SIRC had no intention of 25 remedying the forfeiture, AXIS filed the pending ex parte application to intervene. (Id. ¶ 26 11.) During this 10-day period, AXIS complied with this Court’s Chambers Civil Rule 5 27 regarding ex parte applications by meeting and conferring with Walpert’s counsel and 28 serving Walpert with the application. (Id. ¶ 12; Proof of Service [Doc. 42-1] at 5.) AXIS 1 also represents that it has been informed by the parties’ counsel (both Plaintiff’s and 2 SIRC’s) that there “will [be] no opposition to this application]” and that “Plaintiff’s 3 counsel has advised that it supports the granting of this application so that the settlement 4 may be effectuated.” (Ex Parte Appl. at 2:24–27.) 5 For these reasons, the Court finds good cause to proceed on an ex parte basis. [6] 7 B. AXIS is entitled to intervene. 8 A court “must permit anyone to intervene who . . . claims an interest relating to the 9 property or transaction that is the subject of the action, and is so situated that disposing of 10 the action may as a practical matter impair or impede the movant’s ability to protect its 11 interest, unless existing parties adequately represent that interest.” Fed.R.Civ.P 24(a)(2). 12 To establish intervention as a matter of right, the moving party must demonstrate: (1) the 13 motion is timely; “(2) the applicant has a significant protectable interest relating to the 14 property or transaction that is the subject of the action; (3) the disposition of the action 15 may, as a practical matter, impair or impede the applicant’s ability to protect its interest; 16 and (4) the existing parties may not adequately represent the applicant’s interest.” 17 Citizens of Balanced Use v. Montana Wilderness Ass’n, 647 F.3d 893, 897 (9th Cir. 18 2011). Each element is broadly interpreted in favor of intervention. Id. 19 Here, each of the elements supports AXIS’ motion to intervene. Although the 20 lawsuit has been pending for over a year, shortly after answering the First Amended 21 Complaint, SIRC filed a Notice of Forfeited Corporation, stating that it “has been 22 forfeited by the California Franchise Tax Board and is thus without capacity to defend 23 against this lawsuit.” (Notice at 1:22–26.) As a result, the parties’ ability to conduct 24 discovery has been delayed. (See Pl’s Mot. For Extension of Time to Raise Discovery 25 Dispute [Doc. 36].) Additionally, AXIS represents that the parties have made progress in 26 potentially resolving this matter but are essentially hampered by SIRC’s inability to 27 participate in the litigation. Furthermore, as set forth above, there is no dispute that AXIS 28 diligently moved to intervene once it was clear that SIRC was not going to remedy the 1 || forfeiture of its corporate status. Under these circumstances, the Court finds intervention 2 || will not prejudice Walpert, or cause disruption or delay in the case and thus is timely. 3 AXIS has also demonstrated that it has a significant interest in this action. Because 4 || a judgment creditor can sue the liability insurer for the defendant against whom a 5 judgment is obtained, California courts recognize the right of an insurance company to 6 || intervene in an underlying case. See Reliance Ins. Co. v. Superior Court, 84 Cal.App.4th 7 (2000) Gnsurer allowed to intervene for defendant’s corporate status was suspended 8 || and thus could not defend against plaintiff’s claims); Kaufman & Broad Communities, [9] 136 Cal.App.4th at 217 (“an insurance company must intervene in the lawsuit to 10 || protect the rights of its insured suspended corporation.”). Accordingly, AXIS, as SIRC’s 11 ||insurer who has agreed to provide a defense, has a substantial interest in this litigation. 12 || Given this interest, the Court also finds that not allowing AXIS to intervene would impair 13 interests. 14 Finally, it is clear AXIS’ interest is inadequately represented. SIRC is a forfeited 15 || corporation and, thus, may not participate in the litigation. There are no other defendants 16 the litigation challenging Walpert’s claims. 17 For these reasons, the Court finds AXIS is entitled to intervene under Rule24(a)(2). [18] 19 ||TII. CONCLUSION & ORDER 20 For the reasons stated above, the Court GRANTS AXIS’ ex parte application to 21 ||intervene [Doc. 42]. 22 IT IS SO ORDERED. 23 ||Dated: March 19, 2025 \ 24 [TA wan 25 Hn. 7 omas J. Whelan 26 United States District Judge