The United States Court of Appeals for the Ninth Circuit ruled on November 3, 2026, that Victor and Lisa Montez could not intervene in a declaratory relief action involving Farmers Direct Property and Casualty Insurance Company and Dennis Perez. The court affirmed the lower court's decision, which denied the Montezes' motion to set aside a default judgment against Perez. This ruling affects the Montezes, who had previously won a damages award against Perez in a state court car accident case.

The case stems from a car accident in which the Montezes were awarded damages against Perez in a California state court. Following this, Farmers, Perez's insurer, initiated a federal declaratory relief action to clarify its obligations under the insurance policy. Farmers obtained a default judgment against Perez, which relieved the company of its duty to indemnify him. The Montezes were later paid $25,000 by Farmers, which was the limit of the insurance policy, but they sought to intervene in the federal case to set aside the default judgment against Perez.

The Montezes argued that they had a legal interest as judgment-creditors under California law, which allows them to pursue claims against Perez's insurer. However, the court found that their rights were satisfied when they received the policy limit payment. The Montezes' attempt to intervene was based on the possibility that Perez might assign his rights to sue Farmers for bad faith, but the court deemed this interest speculative and not legally cognizable.

The court ruled that the Montezes did not present a legally protected interest that would warrant their intervention in the case. The judges reviewed the district court's decision for abuse of discretion and found none. The opinion stated, "Because the Montezes have not identified a legally cognizable interest to support intervention under Rule 19, the district court did not abuse its discretion in denying their motion to intervene or motion for reconsideration." The ruling was made by a panel of judges, including Paez, Owens, and Sanchez.

This ruling has significant implications for the Montezes and other judgment-creditors in similar situations. It clarifies that simply being a judgment-creditor does not automatically grant the right to intervene in related insurance disputes, especially if the creditor has already received payment within the limits of the insurance policy. The decision emphasizes the necessity for a legally protected interest that goes beyond mere speculation about potential future claims.

The court's decision also reinforces the importance of understanding the limits of insurance policies and the rights of judgment-creditors under California law. The ruling indicates that creditors must have a clear and legally recognized interest to intervene in cases involving insurance coverage disputes.

Looking ahead, the Montezes may have limited options for further action. The court's decision can be appealed, but it is uncertain whether they will pursue this route. There are no related cases pending that could affect this ruling. The court filing did not provide additional details on the potential for an appeal or any other related cases.