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August 11, 2015

A federal court judge recently denied a liability insurer’s request to intervene in a suit involving its insured for the purpose of proposing specific jury interrogatories relevant to an underlying insurance coverage dispute. The suit captioned Gadley v. Jerry Ellis Construction, No. 3:14-cv-00155-KRG in the Western District of Pennsylvania, involved negligence claims against Jerry Ellis Construction, who was insured under a policy of liability insurance issued by Cincinnati Insurance Company.

Cincinnati was defending the suit which sought damages related to work done on the plaintiff’s home under a reservation of rights and had filed a separate action seeking a declaratory judgment that it was not obligated to defend Ellis. In an attempt to clarify some of the issues relevant to the companion coverage action, Cincinnati sought to intervene for the sole purpose of “participating in the formulation of specific interrogatories to be submitted to the jury at the time of trial … so as to protect its interests.” The questions proposed by Cincinnati were designed primarily to segregate damages between potentially covered and uncovered exposures.

The court denied Cincinnati’s motion primarily because it was untimely. The court noted that Cincinnati had been defending the action since 2012, but did not file the motion until 2015 and only on the eve of trial. With regard to the damage interrogatories themselves, the parties argued that neither party’s expert had broken down the damages in the manner proposed by Cincinnati. The court gave credence to these objections, finding that the proposed interrogatories would be potentially confusing to the jury and burdensome on the parties.

Clearly, the moral of the story is that if an insurer believes that jury interrogatories could be potentially helpful to an underlying coverage dispute, it should put the parties on notice as early as possible of its intention to intervene. While both parties’ substantive objections in Gadley appear readily curable, the delay in bringing the motion gave the Court an easy excuse to deny the motion.