UNITED STATES CO URT OF APPEALS FOR THE TENTH CIRCUIT

STATEWIDE MASONRY, Plaintiff-Counter- Defendant-Appellee,

v. JAMES R. ANDERSON; QM COMPANY, INC., A Colorado company, Defendants- Counterclaimants- Third-Party Plaintiffs,

v. VIRGINIA ADENT; KENNETH ADENT, Third-Party Defendants,

----------------- ------------- QM OF WYOMING, a Wyoming corporation, Intervenor-Appellant. No. 12-8045 (D.C. No. 1:12-CV-00022-SWS) (D. Wyo.)

ORDER AND JUDGMENT *

* After examining the briefs and appella te record, this pa nel has determined unanimously to grant the parties’ request for a decision on the briefs without oral argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore ordered submitted without oral argument. This order and judgment is not binding precedent, except under the doctr ines of law of the case, res judicata, and collateral (continued)

FILED United States Court of Appeals Tenth Circuit 

### February 25, 2013
Elisabeth A. Shumaker Clerk of Court- 2 - Before HARTZ , EBEL , and GORSUCH , Circuit Judges.
QM of Wyoming appeals from a distri ct court order denying its motion to intervene in this diversity action arising ou t of a construction project in Wyoming. Plaintiff Statewide Masonry (Statewide), a Wyoming corpora tion, brought suit asserting claims for breach of contract and quantum me ruit against defendant QM Company, Inc. (QM of Colorado), a Colo rado corporation, a nd a claim for fraud against defendant James R. Anderson, a Co lorado resident who is president of both QM of Colorado and QM of Wyoming. We have jurisdiction under 28 U.S.C. § 1291, see WildEarth Guardians v. U.S. Forest Serv. , 573 F.3d 992, 994 (10th Cir. 2009), and affirm for the reasons stated below. I. BACKGROUND The relevant allegations of the complain t are as follows. Statewide contracted with QM of Colorado to install concrete masonry units, grout, and punch list items for the St. Anthony’s Tri-Pari sh School Project in Casper, Wyoming (St. Anthony’s Project). Statewide completed its work, but QM of Colorado breached the contract by refusing to pay the remaining $349,771.88 it owed to Statewide. Alternatively, the reasonable value of the uncompensated work done by Statewide at QM of

estoppel. It may be cite d, however, for its persuasi ve value consistent with Fed. R. App. P. 32.1 a nd 10th Cir. R. 32.1.- 3 - Colorado’s request was $364,234.00, for whic h a quantum meruit recovery would be appropriate. Finally, during the performance of the work for QM of Colorado, James R. Anderson knowingly made false represen tations to Statewide regarding progress payments and lien waivers on the project wi th the intent and effect of inducing detrimental reliance, result ing in substantial financia l harm to Statewide. Shortly after this action was filed, defendants QM of Colorado and James R. Anderson moved to dismiss under Federa l Rules of Civil Procedure 12(b)(7) and (19), urging the district court to find that QM of Wyoming was a necessary party whose joinder would defeat di versity jurisdiction. The primary basis for the motion was that Statewide owed QM of Wyoming money: it had entered into a financial agreement obligating it to split its gross margins 80%-20% with QM of Wyoming, to which it also owed a substa ntial sum for unpaid loans. Defendants argued that a failure to join QM of Wyoming would harm both QM companies: First, because QM of Wyoming is not a named party to this litigation, QM of Wyoming will not be able to collect the outstanding loan proceeds owed by Statewide Masonry to QM of Wyoming. Second, QM [of Colorado] will not be able to off-set any of the outstanding loans made by QM of Wyoming or work performed by QM of Wyoming against any monies found to be owing to Statewide Masonry as a result of the St. Anth ony’s Tri Parish School project. Without joining QM of Wyoming, the Court cannot accord complete relief among the existing parties a nd failure to join QM of Wyoming will impede QM of Wyomi ng’s ability to protect it s interests in its loan proceeds. App. Vol. I at 28. Noting that the subject matter of this suit brought by Statewide against QM Colorado and James R. A nderson was distinct from any financial- 4 - obligations owed by Statewide to QM of Wyoming, the district court rejected defendants’ argument and denied the motion to dismiss: Under ordinary circumstan ces, a person does not become indispensable in contract actions simply because that person’s rights under an entirely separate cont ract will be a ffected. See Francis Oil & Gas Company, Inc. v[.] Exxon Corp. , 661 F.2d 873, at 878 [(10th Cir. 1981)]. Here, the duties and obligations under the contract for the St. Anthony’s Tri-Parish Project and under which Statewide Masonry has sued are limited to Statewide Masonry and QM [of Colorado]. Therefore, the duties and obligations relevant thereto will be those that are determined in this matter and do not involve the other agreements or the obligations that exist separate a nd apart, the other contractual duties between QM of Wyoming and Statewide Masonry. Id. at 181. QM of Wyoming then moved to interv ene in the action, as of right under Fed. R. Civ. P. 24(a)(2), a nd permissively under Fed. R Ci v. P. 24(b)(1)(B). For the former, the movant must “cla im[]an interest relating to the property or transaction that is the subject of the act ion, and [be] so situated th at 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.” The requi site interest here tracks that required for joinder under Rule 19(a). Navajo Tribe of Indians v. New
Mexico , 809 F.2d 1455, 1472 n.25 (10th Cir. 1987) (noting interest that satisfied Rule 19(a) would perforce satisfy Rule 24(a)); United Keetoowah v. United States , 480 F.3d 1318, 1324 n.3 (Fed. Cir. 2007) (sam e). Thus, in denying intervention as of- 5 - right, the district court referr ed back to its earlier ruling that QM of Wyoming lacked the necessary interest in the litigation to be an indispensable party: This Court has already determined QM of Wyoming does not satisfy the definition of necessary party under Rule 19(a) because its absence from this litigation will not impa ir or impede its ability to protect its separate contractual interests. This finding forecloses QM of Wyoming’s ability to intervene under Rule 24(a)(2). App. Vol. II at 348-49. Thus, the district court denied intervention as of right because QM of Wyoming’s protection of its interests, whic h are dependent upon contract rights separate from the contract at issue in th is case, did not require its participation in th e litigation. For permissive intervention, Rule 24(b)(1)(B) affords th e district court discretion to allow intervention by a nonparty who “has a claim or defense that shares with the main action a common question of la w or fact.” Noting that the main action here related to work on the St . Anthony’s Project pursuant to an alleged contract that did not involve QM of Wyoming, whose claims against Statewide arose out of separate and distinct cont ractual obligations, the dist rict court concluded that permissive intervention was also ina ppropriate. App. Vol. II at 349

. II. ANALYSIS We review the denial of intervention as of right de novo and the denial of permissive intervention for abuse of discretion. City of Colo. Springs v. Climax Molybdenum Co. , 587 F.3d 1071, 1078 (10th Cir. 200 9). We take up each ruling in turn below.- 6 - A. Intervention as of Right We agree with the district court’s c onclusion that QM of Wyoming failed to demonstrate its right to intervene under Ru le 24(a). Although the district court treated QM of Wyoming’s asserted in terest in the litig ation as a single undifferentiated matter—a cl aim against Statewide base d on collateral contract rights—we distinguish between two arguabl y different types of economic interest supporting QM of Wyoming’s motion for in tervention. These interests warrant distinct treatment. 1. Creditor’s general economic interest versus intrinsic economic interest in the subject matter of the action QM of Wyoming is a creditor of St atewide, which allegedly owes it a substantial sum in loan oblig ations. Thus, any financial gain accruing to Statewide may lead to a financial benefit to QM of Wyoming in terms of a source of recovery. In that general sense, QM of Wyoming could be said to have an interest in any monetary claims successfully asserted by Statewide in this (or any other) case. As a more specific matter, QM of Wyoming also asserts a contract right to 20% of Statewide’s gross marg ins in several building projects, including the project at issue here. Addressing joinder and intervention, ma ny courts loosely say that “a mere economic interest is not enough” to warrant inclusion of a nonparty. Flying J, Inc. v. Van Hollen , 578 F.3d 569, 571 (7th Cir. 2009 ) (internal quotation marks omitted) (citing cases); see also Wolfsen Land & Cattle Co. v. Pac. Coast Fed’n of- 7 - Fisherman’s Ass’ns , 695 F.3d 1310, 1315 (Fed. Cir. 2012); Mountain Top Condo. Ass’n v. Dave Stabbert Master Builder, Inc. , 72 F.3d 361, 366 (3d Cir. 1995). “[T]hat is a confusing form ulation—most civil litigati on is based on nothing more than an ‘economi c interest.’” Flying J, Inc. , 578 F.3d at 571. Indeed, this circuit recognizes that an economic interest can support intervention, see United States v. Albert Inv. Co. , 585 F.3d 1386, 1396 (10th Cir. 2009) , though, of course, “‘practical judgment must be applied in determining wh ether the strength of the interest and the potential risk of injury to that interest justify intervention,’” id. at 1392 (quoting San Juan Cnty., Utah v. United States , 503 F.3d 1163, 1199 (10t h Cir. 2007) (en banc)). But “all that the [other courts ] mean is that the fact that you might anticipate a benefit from a judgment in favor of one of the par ties to a lawsuit—maybe you’re a creditor of one of them—does not entitle you to intervene in their suit.” Flying J, Inc. , 578 F.3d at 571 (citing cases). Otherwise, an y suit potentially involvi ng financial gain or loss—a great deal of civil litigation—would be subject to intervention by anyone to whom any of the parties owed money. None of our cases have extended the notion of an economic interest supporting in tervention to that extreme. While intervention may not be based on a creditor’s mere an ticipation that a debtor’s success in a lawsuit will at some point redound to its own economic benefit, there are circumstances in which intervention may be supported by a more focused economic interest in the subject matte r of the litigation –which is the focal point of the intervention (or joinder) analysis, see WildEarth Guardians v. Nat’l Park Serv. ,- 8 - 604 F.3d 1192, 1198 (10th Cir. 2010) (“The movant’s claimed interest is measured in terms of its relationship to the property or transaction that is the subject of the action[.]”). One relevant example is that “a n intervenor’s interest in a specific fund is sufficient to en title intervention in a case affecting that fund.” Mountain Top Condo. Ass’n , 72 F.3d at 366 (holding beneficiaries’ interest in fund sufficient to intervene in action brought by third parties seeking recovery against fund). Thus, in Citizen Potawatomi Nation v. Norton , 248 F.3d 993, 997 (10th Cir. 2001), this court held that where a federal appropriation wa s allocated among severa l Indian Tribes on the basis of a particular fo rmula that one tribe had file d an action to challenge, the other tribes had a sufficient interest in the s ubject matter of the action to qualify as necessary parties und er Rule 19(a). 2. Application of economic-interest distinction to this case The distinction just drawn between (1 ) a nonparty creditor’s economic interest in a suit involving its debtor and (2) a nonp arty’s specific economic interest derived from a claim on funds at issue in the suit, helps flesh out the deficient nature of the two interests asserted by QM of Wyoming identified earl ier. QM of Wyoming’s claim that Statewide owes it a substantial sum in unpaid lo ans clearly fa lls into the first category. Any suit with financial re percussions brought by or against Statewide would have a potential impact on Statewide’s ability to repay the lo ans (as such a suit would also have on Statewide’s ability to make good on any other obligations to- 9 - creditors), but, as we have seen, that is not enough to give QM of Wyoming an interest in the subject matter of the suit sufficient to warrant intervention. 1 We also hold that QM of Wyoming’s claim of a contract right to 20% of Statewide’s gross margins on the St. Anthony’s Project does not fall into the second category. Unlike the cases invol ving a distinct or separate fund or res, here there is no separate asset or entity as of yet, de scribed as Statewide’ s gross margin on the St. Anthony’s Project. Statew ide’s gross margin on the St . Anthony’s Project merely describes an end result of a number of co mplex legal, business and accounting events which have not yet played out. So far as the record reflects, th e gross profits on the St. Anthony’s Project are not yet known or knowable, a nd won’t be known until the resolution of pending litigati on. Related to this point , and further reflecting the remote and derivative nature of the interest asserted here, is th e fact that QM of Wyoming does not assert a claim based on a ny contract it has for the St. Anthony’s Project (with either Statew ide or QM of Colorado), but only looks to Statewide’s potential recovery on the project as a sour ce from which to collect on the collateral contractual obligation it is owed by Statewide. QM of Wyoming seeks to intervene on the basis of a claim th at does not relate to a fund or res in the case or arise out of the contract at issue between the parties to

1 We recognize that the lo ans helped Statewide obtain and complete work on the St. Anthony’s Project (and others ), but of course commercial loans typically relate to the business operations of the obligor. If that sufficed to invoke Rule 24(a), a whole class of lender-creditors woul d be brought within its scope in a manner inconsistent with the distinction we have drawn above.- 10 - the litigation. Alth ough we noted in San Juan County that not every interest that could be characterized as indi rect or contingent ipso fact o fails under Rule 24(a), we also acknowledged that in terests may simply be “ too indirect” and “ too contingent” to support intervention as of right, San Juan Cnty. , 503 F.3d at 1202. That is the case here. 3. Adequacy of existing represent ation of qualifying interest But that is not the only obstacle to inte rvention here. Even if a nonparty has a qualifying interest in the litig ation, it is not entitled to intervene if “existing parties adequately represent that interest.” Fed. R. Civ. P. 24(a)(2). The nonparty bears the burden of demonstrating that no existing party adequately represents its interest. Coalition of Ariz./N.M. Cn tys. For Stable Econ. Grow th v. Dep’t of Interior , 100 F.3d 837, 844 (10th Cir. 1996). Ordina rily, that burden is minimal, id. , but a recognized presumption heightens the burden for QM of Wyoming here. We “presum[e] that representation is adequate when the objective of the applicant for intervention is identical to that of one of the parties.” San Juan Cnty. , 503 F.3d at 1204 (internal quota tion marks omitted). In th is regard, we distinguish between the objective of the suit and larg er or collateral mo tives the party and nonparty may have: the pres umption applies if they ha ve a common objective with respect to the suit; thei r motivations for pursuing that common objective are immaterial. See City of Stillwell, Okla. v. Oz arks Rural Elec. Coop. Corp. , 79 F.3d 1038, 1042 (10th Cir. 1996). Even if their ultimate goa ls are actually in opposition,- 11 - as when the party and nonparty will ultimate ly clash over any spoils of the party’s success in the suit, their common objective with resp ect to that success is the controlling consideration. See Bottoms v. Dresser Indus., Inc. , 797 F.2d 869, 872-73 (10th Cir. 1986). Here, as in Bottoms , the proposed intervenor claims a part of the recovery sought by a party in the action. While that may put them at odds in a general sense, it clearly ali gns the relevant interest of the intervenor with the success of the party in this case. Id. Consequently, any interest asserted by QM of Wyoming that may qualify under Rule 24(a) is presumed to be ade quately represented by Statewide. In its motion for intervention, QM of Wyoming’ s only argument regarding adequacy of representation was that defendants QM of Colorado and James R. Anderson could not represent its interest because QM of Wyomi ng is a separate corporate entity with an existence distinct from these defendants. But that is immate rial here where the relevant interest aligns QM of Wyoming with another pa rty—Statewide—that is in a position to adequately represent their co mmon interest. Because QM of Wyoming has made no showing to rebut the presumpti on that Statewide adequately represents the interest implicating Rule 24(a), the denial of its moti on to intervene as of right may properly be sustained on this ground as well. See City of Stilwell , 79 F.3d at
1043.- 12 - 4. Specific arguments advan ced by QM of Wyoming We have considered the arguments a dvanced by QM of Wyoming and they do not dissuade us from the analysis and conclu sion set out above. The thrust of much of its briefing is that its ab sence from the litigation means that the amounts it is owed by Statewide will not be offs et, as it insists they shoul d, against any recovery Statewide obtains in this ca se. But this argument ignor es the distinct corporate existence of QM of Colorado, from which St atewide seeks to recover on the contract at issue here, and QM of Wyoming, to which Statewide allegedly owes money on other contracts. The latter could offset the former only if th ey involved the same corporation as obli gor and obligee. QM of Wyoming also objects that James R. Anderson is being sued for fraud on the basis of conduct that should not be attri buted to him personally but to his role as president of QM of Wyoming, and that its absence from th e litigation somehow impedes him from pursuing a de fense in this regard. Whet her or not such a defense would have any merit (and Mr. Anderson is stil l free to raise it hims elf), this line of argument by QM of Wyoming, suggesting th at its absence prej udices an existing party, is irrelevant to inte rvention. Prejudice to an ex isting party can support that party’s effort to join a nonparty, see Fed. R. Civ. P. 19(a)(1)(A) & (B)(ii), but a nonparty’s unilateral effort to intervene in a case must be ba sed on prejudice to its own interests, see Fed. R. Civ. P. 24(a)(2).- 13 - Finally, QM of Wyoming asks this court to take judicial notice of an action brought by Statewide in the Shoshone and Arapaho Tribal Court arising out of a construction project on Indian Reservation la nd. In that case, Statewide sued both QM companies. QM of Wyoming cites the ca se as an example of the multiplicity of suits that intervention is intended to redu ce. But QM of Wyoming does not explain how its intervention in the instant action ov er the St. Anthony’s Project would have prevented or obviated Statewide’s separate suit to recover for work on the Indian Reservation project. In sum, we hold that QM of Wyoming has as serted an interest th at is insufficient to support intervention as of right. B. Permissive Intervention We affirm the denial of permissive intervention for the reasons stated by the district court. Permissive intervention requires a claim or defense “that shares with the main action a common question of law or f act.” Fed. R. Civ. P. 24(b)(1)(B). As the district court noted, QM of Wyoming’ s claims against St atewide arise from a contract separate from the contract between the parties at issue here. The court also properly considered the prejudice and delay to Statewide should QM of Wyoming be allowed to complicate and expand Statewid e’s circumscribed action for recovery on one building project to include a second dis pute over its collateral obligations to QM of Wyoming. Permissive in tervention is a matter entrus ted to the discretion of the- 14 - district court, City of Stilwell , 79 F.3d at 1043, and we discern no abuse of that discretion here. The judgment of the district court is affirmed. QM of Wyoming’s motion to take judicial notice is granted.

Entered for the Court

David M. Ebel Circuit Judge