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Developers Surety and Indemnity Co. v. Archer Western Contractors, LLC

United States District Court, M.D. Florida, Orlando Division

May 25, 2017

DEVELOPERS SURETY AND INDEMNITY COMPANY, Plaintiff,
v.
ARCHER WESTERN CONTRACTORS, LLC, Defendant.

          ORDER

          PAUL G. BYRON UNITED STATES DISTRICT JUDGE

         This cause comes before the Court on Prince Land Services, Inc.'s (“Prince”) Motion for Leave to Intervene (Doc. 44), filed February 8, 2017. On April 3, 2017, Magistrate Judge Karla R. Spaulding submitted a report recommending that the motion be denied. (Doc. 53). On April 17, 2017, Prince objected to the Magistrate Judge's recommended disposition.[1] (Doc. 57). This matter is ripe for review.

         I. BACKGROUND

         On May 21, 2012, Defendant, Archer Western Contractors (“Archer”), executed a subcontract with Prince (the “Subcontract”) for the performance of landscaping and irrigation work on a project known as the “Orlando Sunrail Station Finishes” (the “Project”). On September 7, 2012, Plaintiff, Developers Surety and Indemnity Company (“DSIC”), issued a subcontract performance bond on behalf of Prince (the “Bond”), with DSIC as principal and Archer as obligee. The Bond guaranteed Prince's work on the Project under the Subcontract and provided certain remedies to Archer were Prince not to fulfill its obligations.

         From 2012 through the spring of 2014, Prince performed its obligations under the Subcontract. However, as the Project neared completion, Archer began experiencing problems with Prince's landscaping and irrigation work. As a result, on July 3, 2014, Archer issued a letter to Prince detailing Prince's shortcomings and providing seventy-two hours for Prince to cure its deficiencies. At no time did Archer exercise or attempt to exercise its right to terminate the Subcontract.

         On July 9, 2014, Archer declared Prince to be in breach of the Subcontract, submitted a claim to DSIC, and demanded the DSIC perform under the Bond. On July 14, 2014, DSIC responded to Archer indicating that DSIC had initiated an investigation in accordance with the Bond's terms. To that end, DSIC requested that Archer provide certain information and documentation necessary for the investigation, requested a meeting with Archer to discuss the default, and advised that DSIC would formally respond to Archer's claim within fifteen days after receiving all of the information and documentation requested. Despite DSIC's numerous efforts to contact Archer, Archer did not respond to DSIC and never provided the information and documentation DSIC needed to complete its investigation. On August 20, 2014, DSIC contacted Archer to caution that Archer's failure to respond and produce the information and documentation requested may prejudice Archer's rights under the Bond. Archer again failed to respond.

         Unbeknownst to DSIC, Archer had decided to hire a new subcontractor to replace Prince and complete the work under the Subcontract. Upon discovering Archer's actions, DSIC denied Archer's claim under the Bond. DSIC denied Archer's claim on the ground that Archer had failed to follow the claim procedure required by the Bond. Two years later, Archer submitted a second claim to DSIC, again seeking to recover under the Bond. DSIC subsequently initiated this lawsuit to obtain a declaration that the Bond is null and void and that it is not liable for Archer's claim. Archer filed a counterclaim against DSIC for breaching the Bond and for a declaration that Archer followed the Bond's claim procedure.

         Prince now moves to intervene in this action pursuant to Federal Rule of Civil Procedure 24. Prince claims that it has an interest in the dispute between DSIC and Archer because of its obligations under the Subcontract.

         II. STANDARD OF REVIEW

         A district judge may designate a magistrate judge to hear and determine both dispositive and non-dispositive matters. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(a), (b). When a magistrate judge has been designated to decide a matter that is dispositive in nature, as is the case here, the magistrate judge must issue a report to the district judge specifying the magistrate judge's proposed findings of fact and recommended disposition. Fed.R.Civ.P. 72(b)(1). Any party who disagrees with the magistrate judge's recommended decision has fourteen days from the date of the recommendation to seek the district judge's review by filing objections to those specific portions of the recommendation disagreed with. Fed.R.Civ.P. 72(b)(2). The district judge must then make a de novo determination of each issue to which objection is made. Fed.R.Civ.P. 72(b)(3). De novo review “require[s] independent consideration of factual issues based on the record.” Jeffrey S. v. State Bd. of Educ., 896 F.2d 507, 512 (11th Cir. 1990) (per curiam). The district judge may then accept, reject, or modify the magistrate judge's recommendation, receive additional evidence or briefing from the parties, or return the matter to the magistrate judge for further review. Fed.R.Civ.P. 72(b)(3).

         III. DISCUSSION

         Prince moves to intervene in this action as a matter of right. In the alternative, Prince requests that it be allowed to permissively intervene. The Court examines Prince's arguments in turn.[2]

         A. Intervention as of Right

         Pertinent to this case, Rule 24 grants a right of intervention to anyone who “claims an interest relating to the property or transaction that is the subject of the action, and is so situated that disposing of the action may as a practical matter impair or impede the movant's ability to protect its interest, unless existing parties adequately represent that interest.” Fed.R.Civ.P. 24(a)(2).[3] The Eleventh Circuit has announced a four-part test for district courts to ...


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