The Ninth Circuit has held that the California rule permitting
insurers to intervene to defend suspended corporate insureds also
applies under federal procedural rules. (See California Dept.
of Toxic Substances Control v. Jim Dobbas, Inc. (9th Cir.
2022) 54 F.4th 1078, 1082.)
In Jim Dobbas, the Department of Toxic Substances
Control (DTSC) sought a default judgment against a bankrupt limited
liability company (Collins), which formerly owned contaminated land
in Elmira, California. The DTSC had obtained an order in Bankruptcy
Court permitting it to sue Collins, but only to seek recovery from
Collins' insurers.
Upon receiving notice of the suit and the request for a default
judgment, Collins' insurers filed a motion to intervene as of
right under Federal Rule of Civil Procedure 24(a)(2) to defend the
claims against Collins, and also moved to set aside the default
that had been entered. (Id. at 1083-1084.) The District
Court denied the insurers' motions to intervene
