Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_05-cv-02045/USCOURTS-azd-2_05-cv-02045-6/pdf.json

Nature of Suit Code: 423
Nature of Suit: Bankruptcy Withdrawal 28 USC 157
Cause of Action: 28:0157 Motion for Withdrawal of Reference

---

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

In re: 

Michael Keith Schugg, dba Schuburg 

Holsteins, 

Debtor, 

In re: 

Debra Schugg, 

Debtor, 

G. Grant Lyon in his capacity as Chapter 11 

Trustee of the bankruptcy estate of Michael 

Keith Schugg and Debra Schugg; Wells 

Fargo Bank, 

Plaintiffs, 

v. 

Gila River Indian Community, 

Defendant.

No. CV-05-02045-PHX-JAT

ORDER 

 BK No. 2-04-13226-PHX-GBN 

 BK No. 2-04-19091-PHX-GBN 

 ADV. No. 2-05-ap-00384-GBN 

 Pending before the Court is Diana L. Lomahquahu’s, Beverly Sunna 

Lomadofkie’s, Ulanda C. Apodaca’s, Muriel R. Jackson’s, Alvin Jackson’s, Laverne 

Thomas’, Carol M. Thomas’, Pete Lopez’s, Jimmy Lopez’s, and Manuel Apodaca Lopez, 

Jr.’s (collectively, the “Property Owners’”) Motion to Intervene pursuant to Federal Rule 

of Civil Procedure 24(a), or alternatively, 24(b). (Doc. 359). 

Case 2:05-cv-02045-JAT Document 384 Filed 10/21/13 Page 1 of 7
- 2 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

 I. BACKGROUND 

 This case, transferred to the this Court in 2005, was originally filed by G. Grant 

Lyon acting solely in his capacity as Chapter 11 Trustee of the bankruptcy estate of 

Michael Keith Schugg and Debra Schugg (the “Trustee”). The Defendant/CounterPlaintiff Gila River Indian Community (“GRIC”) is a federally recognized Indian 

Community organized under Section 16 of the Indian Reorganization Act, 25 U.S.C. § 

461, et seq. GRIC is based on the Gila River Indian Reservation (the “Reservation”), 

which consists of approximately 372,000 acres in south-central Arizona, and includes 

members of the federally-recognized Akmil O'odham (“Pima”) and Peeposh 

(“Maricopa”) Tribes. The case centers around a 657-acre parcel of land located entirely 

within the boundaries of the Reservation (“Section 16”). 

 In a 2007 bench trial, this Court held that the owners of Section 16 have implied 

easements along Smith-Enke Road and Murphy Road to access Section 16. In its May 

25, 2012 Order, the Court further concluded that the issue of the scope of the easements 

was now ripe. In a July 24, 2012 Joint Proposed Case Management Plan, the Trustee and 

GRIC explained their positions on the scope of the easement. (Doc. 336 at 2-3). 

Currently, the Trustee seeks a declaration that the scope of the easement allows the 

owners of Section 16 to: “(1) pave the Smith-Enke and Murphy easements, at a width that 

is reasonably necessary to support development of Section 16 at one home per 1.25 acres; 

and (2) install utility lines along the Smith-Enke and Murphy easements, as reasonably 

necessary to support the development of Section 16 at one home per 1.25 acres.” Id. at 2-

3. In response, GRIC asserts that: “the improvements or expansions of the easements 

sought by the Trustee are well outside of the scope of the implied easements and, as a 

matter of law, cannot be made without the consent of the Community and the individual 

tribal members owning affected allotments.” Id. at 3. 

 The Property Owners are individual members of GRIC. Together, the Property 

Owners have ownership interests in at least eleven separate allotted parcels which 

Case 2:05-cv-02045-JAT Document 384 Filed 10/21/13 Page 2 of 7
- 3 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

directly abut Murphy Road and have additional property interests in nearby parcels. 

(Doc. 359 at 4). The Property Owners are attempting to intervene in this case to oppose 

“an expansion of the implied easement beyond its historical use.” Id. 

 II. ANALYSIS 

 The Property Owners argue that they should be permitted to intervene under both 

Federal Rule of Civil Procedure 24(a), intervention as a matter of right, and Federal Rule 

of Civil Procedure 24(b), permissive intervention. The Court will address each of these 

arguments in turn. 

 A. INTERVENTION AS OF RIGHT 

 Federal Rule of Civil Procedure 24(a) states: 

On timely motion, the court must permit anyone to intervene 

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). To be entitled to intervention as of right, the applicant must 

show that: “(1) the application for intervention is timely; (2) the applicant has a 

‘significantly protectable’ interest relating to the property or transaction that is the subject 

of the action; (3) the disposition of the action may, as a practical matter, impair or impede 

the applicant’s ability to protect its interest; and (4) the existing parties do not adequately 

represent the applicant’s interest.” League of United Latin Am. Citizens (LULAC) v. 

Wilson, 131 F.3d 1297, 1302 (9th Cir. 1997) (citing Nw. Forest Res. Council v. 

Glickman, 82 F.3d 825, 836 (9th Cir. 1996)). “[T]he applicant bears the burden of 

showing that each of the four elements is met.” Freedom from Religion Found., Inc. v. 

Geithner, 644 F.3d 836, 841 (9th Cir. 2011). Further, “[f]ailure to satisfy any one of the 

requirements is fatal to the application.” Id. The Property Owners’ Motion to Intervene 

fails to satisfy the requirements in two ways. First, the Motion to Intervene is untimely, 

Case 2:05-cv-02045-JAT Document 384 Filed 10/21/13 Page 3 of 7
- 4 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

and, second, GRIC adequately represents the Property Owners’ interests. 

 1. TIMELINESS 

 To determine whether a Motion to Intervene is timely, the Court must consider: 

“(1) the stage of the proceeding at which an applicant seeks intervention; (2) the 

prejudice to the other parties; and (3) the reason for and length of delay.” LULAC, 131 

F.3d at 1302. The Property Owners argue that they satisfy the first two elements because 

they sought to intervene during discovery, and, accordingly, there is no prejudice to the 

Trustee. (Doc. 359 at 5). 

 The Trustee asserts that, although the Property Owners technically filed their 

Motion to Intervene during discovery, the discovery deadline was three weeks away and 

discovery will have ended before the Court decides the Motion to Intervene. The Trustee 

argues that he will be prejudiced by the intervention because the discovery deadline will 

have passed before he had any opportunity to obtain discovery from the Property Owners. 

In response, the Property Owners contend that any prejudice can be cured by an 

extension of the discovery deadline. 

 Turning to the third element, the reason for and length of delay, the Trustee asserts 

that the length of delay weighs against granting the Motion to Intervene. The Trustee 

argues that the Motion to Intervene was filed eight years after the lawsuit was originally 

filed and over one year after the Court determined that the scope of the easements was 

ripe. In response, the Property Owners contend that they were unaware of the extent of 

the expansion of the easement sought by the Trustee until the filing of the Trustee’s 

expert reports. The Trustee’s first applicable expert report was filed approximately three 

months before the Property Owners’ Motion to Intervene. This, the Property Owners 

contend, adequately explains any delay in their filing. The Property Owners do not point 

to any specific information in the expert reports that was new or surprising. 

 On the balance, the Property Owners’ somewhat brief explanation for delay is not 

enough to outweigh the length of the delay, the filing of the Motion to Intervene late in 

Case 2:05-cv-02045-JAT Document 384 Filed 10/21/13 Page 4 of 7
- 5 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

discovery, and the prejudice to the Trustee of either seeking an untimely extension of the 

discovery deadline or being left without discovery as to the Property Owners’ position in 

this case. The Property Owners’ stated objective is to oppose “an expansion of the 

implied easement beyond its historical use.” (Doc. 359 at 4). It has been clear since the 

beginning of this case that the Trustee intended to expand the easement “beyond its 

historical use,” as the Trustee hoped to develop Section 16 into a housing development. 

Further, the Trustee made this clear in the Joint Proposed Case Management Plan filed 

over eleven months before the Motion to Intervene was filed.1

 Accordingly, Property 

Owners’ excuse for delay is unpersuasive and the Motion to Intervene untimely. 

 2. ADEQUACY OF REPRESENTATION 

 “Where the party and the proposed intervenor share the same ultimate objective, a 

presumption of adequacy of representation applies. Freedom from Religion Found., Inc., 

644 F.3d at 841 (internal quotations and citations omitted). “Such presumption can be 

rebutted only by a compelling showing to the contrary.” Id. (internal quotations and 

citations omitted). Here, GRIC’s ultimate objective is to show that “the improvements or 

expansions of the easements sought by the Trustee are well outside of the scope of the 

implied easements and, as a matter of law, cannot be made without the consent of the 

Community and the individual tribal members owning affected allotments.” (Doc. 336 at 

3). The Property Owners’ stated objective is to oppose “an expansion of the implied 

easement beyond its historical use.” (Doc. 359 at 4). GRIC argues that the individual 

tribe members whose lands are affected must consent to any improvements or expansions 

to the easements. Thus, as the Property Owners are the individual tribe members that 

GRIC seeks to protect, the Property Owners and GRIC share an ultimate objective, and 

 

1

 The Joint Proposed Case Management Plan states that the Trustee wishes to “(1) 

pave the Smith-Enke and Murphy easements, at a width that is reasonably necessary to 

support development of Section 16 at one home per 1.25 acres; and (2) install utility lines 

along the Smith-Enke and Murphy easements, as reasonably necessary to support the 

development of Section 16 at one home per 1.25 acres.” (Doc. 336 at 2-3). 

Case 2:05-cv-02045-JAT Document 384 Filed 10/21/13 Page 5 of 7
- 6 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

the presumption that GRIC adequately protects the Property Owners’ interests applies. 

 The Property Owners’ speculation that GRIC may be inclined to settle the 

litigation in some way that reduces litigation costs while impairing the Property Owners’ 

rights fails to rebut the presumption. This speculation does not constitute “a compelling 

showing” that GRIC’s and the Property Owners’ interests do not align. Accordingly, 

GRIC adequately represents the Property Owners’ interest in this case. 

 B. PERMISSIVE INTERVENTION 

 Federal Rule of Civil Procedure 24(b) states, “[o]n timely motion, the court may 

permit anyone to intervene who . . . has a claim or defense that shares with the main 

action a common question of law or fact.” Fed. R. Civ. P. 24(b)(1). An applicant 

seeking permissive intervention must show that: (1) the applicant’s claim or defense 

shares a common question of law or fact with the main action; (2) the applicant’s motion 

is timely; and (3) the court has an independent basis for jurisdiction over the applicant’s 

claims. LULAC, 131 F.3d at 1308. 

 Timeliness is a threshold requirement. Id. To determine whether a Motion to 

Intervene is timely, the Court considers the same three factors: (1) the stage of the 

proceeding at which an applicant seeks intervention; (2) the prejudice to the other parties; 

and (3) the reason for and length of delay. Id. Although the factors are the same as 

intervention as a matter of right, the Court analyzes the timeliness requirement more 

strictly than under intervention as of right. Id. Accordingly, because the Property 

Owners’ Motion to Intervene is not timely for the purpose of intervention as of right, it is 

also not timely when considered for permissive intervention. Because the Property 

Owners do not satisfy the threshold requirements for permissive intervention, the 

Property Owners’ Motion to Intervene under Rule 24(b) is denied. 

/ / / 

/ / / 

/ / / 

/ / 

Case 2:05-cv-02045-JAT Document 384 Filed 10/21/13 Page 6 of 7
- 7 - 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

III. CONCLUSION 

Based on the foregoing, 

 IT IS ORDERED that the Property Owners’ Motion to Intervene (Doc. 359) is 

denied. 

 Dated this 21st day of October, 2013. 

Case 2:05-cv-02045-JAT Document 384 Filed 10/21/13 Page 7 of 7