A federal court in Alabama has allowed members of a limited liability company to intervene in a declaratory judgment action filed against the limited liability company by its CGL insurer. Essex Ins. Co. v. J & J Cable Constr., LLC, 2015 WL 6872505 (M.D. Ala. Nov. 9, 2015).
A limited liability company was sued in state court by tenants of a residence served by a sewer line that became damaged while the limited liability company installed an electrical conduct. The limited liability company’s CGL insurer brought a declaratory judgment action to determine its rights and obligations relating to the underlying state court case.
The members of the limited liability company moved to intervene, alleging that as members of the limited liability company, they are insureds under a policy provision which states “your members are also insureds, but only with respect to the conduct of your business.” The CGL insurer argued the movants had no interest in the declaratory judgment action because no claims were asserted against them in the underlying state court case. The court noted the movants seek to bring a claim for breach of the insurance contract as insureds and as third-party beneficiaries. The court found that the movants are named insureds under the policy and that the standard to intervene was met.