Coventry Capital US LLC v. EEA Life Settlements, Inc.

Background

Coventry Capital US LLC sued EEA Life Settlements, Inc., Vincent Piscaer, and Hiren Patel. Coventry alleged that EEA, Inc. breached a binding obligation to negotiate in good faith and engaged in fraud and bad-faith conduct concerning a potential sale of a portfolio of life insurance policies. The defendants denied those allegations.

David Cohen, an investor in EEA Life Settlements Fund PCC, sought to intervene on behalf of himself and 51 other investors. The Fund is the parent company of EEA, Inc., and neither the Fund nor its directors were parties to the action. Cohen alleged that the Fund had engaged in mismanagement and deception for about a decade and that the portfolio was its final asset that could be used to repay the investors.

Legal standard

Cohen requested intervention as of right under Federal Rule of Civil Procedure 24(a) and permissive intervention under Rule 24(b). Intervention as of right requires a timely application, an interest related to the case, a showing that the case could impair that interest, and a showing that the existing parties do not adequately protect it. Permissive intervention requires a timely application and a claim or defense sharing a common legal or factual question with the main action. The court explained that failing any one of the required elements is enough to deny intervention.

Court’s analysis

The court held that Cohen’s request was untimely. He waited five years after the action began, even though he acknowledged knowing about the litigation when it was filed in 2017 and knowing about the alleged Fund mismanagement before the complaint was filed. Fact discovery had closed, and the motion was filed near the end of expert discovery.

The court rejected Cohen’s explanation that 2021 financial disclosures and an October 2022 disclosure about delayed redemptions made intervention necessary. The court viewed those events as continuing the alleged mismanagement, and the October disclosure occurred after Cohen had already sought permission to intervene.

The court also found that allowing intervention would prejudice Coventry and the defendants. Cohen proposed claims involving alleged decades-long mismanagement, damages, and a constructive trust covering the portfolio. Even though Cohen said the investors would not seek additional discovery, the court found that the original parties would likely need discovery from the investors. The new claims could also lead to additional motion practice concerning jurisdiction and standing and could significantly delay the litigation.

The court further observed that the investors’ interests were collateral and distinct from Coventry’s claims. Coventry’s case concerns whether EEA, Inc. breached a 2017 obligation to negotiate in good faith over the proposed transaction, while Cohen’s proposed claims concern alleged mismanagement of the Fund. Because untimeliness alone was sufficient, the court did not decide the other intervention requirements.

Disposition

The court denied Cohen’s motion to intervene as untimely. The Clerk was directed to terminate the motion from the docket.