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Connecticut: Intervention by Mortgagee Allowed in Fire Insurance Lawsuit

Posted By USFN, Wednesday, January 08, 2014
Updated: Monday, October 12, 2015

January 8, 2014


by Geoffrey K. Milne
Hunt Leibert – USFN Member (Connecticut)

In a case of first impression, the Connecticut Supreme Court allowed intervention by the note holder and mortgagee in a lawsuit pertaining to a fire insurance claim (Austin-Casares v. Safeco Insurance Company of America).

BSI Financial Services, Inc., as note holder and mortgagee, filed an appeal to reverse a trial court’s refusal to allow intervention in a claim for an insured loss brought by Austin-Casares against Safeco. The subject fire insurance policy contained a one-year contractual limitation of action. The trial court concluded that BSI could not intervene as a matter of right; there was no evaluation by the trial court as to whether a basis for permissive intervention existed.

The fire occurred on October 26, 2008. Plaintiff Austin-Casares’s complaint was filed on October 12, 2009 — within Safeco’s one-year contractual limitation. Safeco denied coverage, claiming the plaintiff concealed material facts or circumstances. BSI, as holder of the note and mortgage, filed a motion to intervene on March 22, 2011. The trial court denied BSI’s intervention as untimely for not having been filed within one year of the fire loss.

A four-part test assesses a party’s capacity to intervene: (1) intervention must be timely; (2) the intervenor must have a direct and substantial interest in the subject matter; (3) the intervenor’s interest must be impaired without intervention; and (4) the intervenor must not be represented adequately by any other party to the litigation.

The Connecticut Supreme Court determined that the timeliness of BMI’s intervention more than two years after the fire loss was not a topic subject to plenary review, but would be evaluated as to whether or not the trial court abused its discretion. The Supreme Court emphasized that the trial record did not reflect any consideration of BSI’s argument that its motion to intervene should be viewed as relating back to the plaintiff’s original complaint or any assessment of potential prejudice to either party that might stem from a decision to grant or deny the motion to intervene.

The specific limiting language in Safeco’s policy precluded “action” unless brought within one year. BSI contended that the threshold question, which the trial court failed to address, was whether the motion to intervene constituted an “action” or was merely tantamount to amending the plaintiff’s complaint. The Supreme Court concluded that “as a matter of law, the motion to intervene relate[d] back to the original complaint and [wa]s not a separate action for purposes of intervention.”

The Supreme Court accepted BSI’s contention that it was seeking the precise relief sought in the plaintiff’s original complaint, which was payment for fire-damaged property, and did not involve any new or different facts, theories, or claims. BSI merely wanted to be paid first from any payment under the policy. The case was remanded to the trial court to enable a proper exercise of legal discretion based upon permissive intervention.

Editor’s Note: The author’s firm represented BSI in the proceedings summarized in this article.

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