Court Opinion

ID: 27156
Source: CourtListenerOpinion
Date Created: 2010-04-25 09:04:51+00
Date Added: 2024-06-11T14:55:58.142947
License: Public Domain

UNITED STATES COURT OF APPEALS
                      FOR THE FIFTH CIRCUIT

                          No. 01-41462

                  AMERICAN V SHIPS LIMITED, LLC

                                    Plaintiff

                               v.

           NORDICA ENGINEERING SERVICES, INC; RADIO HOLLAND
         USA INC; ROBERT MIHOVIL, doing business as Milhovil
       Photography; NORBANKEN AB; MCNATT CONTRACTING INC; THE
      MILLHOUSE INC; SUDERMAN STEVEDORES INC; SMITH-HAMM INC,
    doing business as Malin Construction Co; HISTORIC BEVERAGE
COMPANY; SAM SAKOWITZ CLARK; PALMS LIQUOR INC, doing
 business as Palms Liquor; SPEEDY’S PRINTING INC, doing business
    as Speedy’s Kwik Kopy Printing; WARSILA NORTH AMERICA INC;
   AALBORG INDUSTRIES HOUSTON INC; AGGREKO INC; NAUTICAL DESIGN
 INC; GAMBLERS GENERAL STORE INC; MANNING ELECTRIC INC; HIBERNIA
 NATIONAL BANK; CERTAIN UNDERWRITERS SUBSCRIBING TO MARINE PORT
RISK INSURANCE POLICY DATED MARCH 5, 2001; US FILTER RECOVERY
        SERVICES SOUTHWEST INC; PETROLEUM COMMUNICATIONS INC

                              Intervenor-Plaintiffs-Appellees

                               v.

                     TALISMAN CRUISES ET AL

                              Defendants

               TALISMAN CRUISES, LLC, in personam

                              Defendant-Appellee

                               v.

                     CASINO DATA SYSTEMS INC

                              Movant-Appellant
           Appeal from the United States District Court
                for the Northern District of Texas
                           (G-01-CV-443)
                            March 19, 2002

Before ALDISERT*, DAVIS, and PARKER, Circuit Judges.

PER CURIAM:**

     Casino Data Systems, Inc. (“Appellant”) appeals from an

Order Denying Motion for Leave to Intervene in the U.S. Marshal’s

sale of the vessel M/V TALISMAN (“vessel”).    We must decide

whether the district court erred in denying Appellant’s Motion to

Intervene as untimely.

                                  I.

     Appellant is a Nevada corporation, with its principal place

of business in Las Vegas, Nevada, which provides various venues

with gaming technology and related services.    The record

indicates that Appellant contracted with Talisman Cruises LLC

(“Talisman”) to provide various gambling equipment to be used on

the vessel, an ocean-going commercial passenger/casino cruise

ship under Bahamian flag.

     *
      Circuit Judge of the Third Circuit Court of Appeals,
sitting by designation.
     **
       Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.4.

                                  2
     Pursuant to the agreement, Appellant furnished the ship

with:    slot machines; various spare parts; signage; hardware and

software related to surveillance monitors, diagnostic monitors,

slot accounting and player tracking; and labor and reimbursable

expenses related to installing these various hardware and

computer systems and in training users in their application.     The

equipment was shipped to Talisman between March and September of

2001.    This equipment and services form the basis of Appellant’s

claim for a maritime lien, in an amount not less than

$451,441.52, upon the vessel for “necessaries” pursuant to 46

U.S.C. § 31342.

        The vessel was arrested at the Port of Galveston on or

about July 19, 2001.    Shortly thereafter, on September 7, 2001,

the district court ordered it sold at a Marshal’s auction to take

place on November 20, 2001.    In its order, the court set an

October 19, 2001 deadline for filing all claims related to the

sale.    The court also ordered publication of the sale in the

Houston Chronicle, the Galveston County Daily News, the Journal

of Commerce and Tradewinds.    Appellant alleges, however, that it

did not receive actual notice of the action until October 29,

2001, when Deborah Neese, the Credit and Collections Manager of

CDS, received a telephone call from Robin Powell, an employee of

Talisman.    Along with the telephone call, Ms. Neese also received

a facsimile copy of the district court’s order dated October 26,

                                  3
2001 denying Talisman’s Motion to Remove Gaming Equipment and

Other Property Owned by Talisman from the Vessel Before Sale.

     On October 29, 2001, Appellant attempted to engage the law

firm of Akin, Gump, Strauss, Hauer & Feld, LLP in order to

protect its interest with respect to the sale.    However, Akin

Gump informed Appellant that it could not represent them in this

matter because of a conflict with another one of its clients.

Appellant then contacted Attorney Robert Krakow of the law firm

Gibson, Dunn & Crutcher LLP on November 6, 2001.    Gibson, Dunn &

Crutcher prepared and filed a Motion for Leave to Intervene and

Verified Complaint in Intervention of Casino Data Systems, Inc.

on November 16, 2001.   The district court denied the motion the

same day as untimely.

     Subsequently, Appellant asked the law firm of Strasburger &

Price LLP to substitute as counsel.    On November 30, 2001,

Appellant filed a Motion for Reconsideration of Court’s November

16, 2001 Order Denying Casino Data Systems, Inc.’s Motion For

Leave to Intervene.   The district court denied the Motion for

Reconsideration on December 4, 2001.

     A judicial sale of the vessel was accomplished on November

20, 2001, with Intervener Norbanken AB (PUBL) (“Norbanken”)

making a credit bid purchase of the vessel for $2 million.     The

funds from the sale are currently being held by the court pending

determination of the priority of properly filed liens.

     Thereafter, Appellant filed a Notice of Appeal in the

                                 4
district court and sought leave of this court to file an

expedited appeal, pursuant to Fifth Circuit Rule 27.5.       Appellant

seeks to have the district court permit its appearance in order

to present evidence of its maritime lien for priority

consideration at the time that funds from the U.S. Marshal’s sale

are distributed.   The request for expedited appeal was granted on

December 27, 2001.   This appeal follows.

                                II.

     The district court denied Appellant’s Rule 24 Motion for

Intervention as untimely.   “If a court denies a motion to

intervene because it was untimely, we generally review this

decision, and only this decision for an abuse of discretion.”

John Doe #1 v. Glickman, 256 F.3d 371, 376 (5th Cir. 2001)

(citing Ruiz v. Estelle, 161 F.3d 814, 827 (5th Cir. 1998)).          “To

be entitled to the deferential standard of review, however, a

court must articulate the reason the motion was untimely.”

Glickman, 161 F.3d at 376 (citing Edwards v. City of Houston, 78
F.3d 983, 1000 (5th Cir. 1996)).       “If the court fails to

articulate the reason the motion to intervene was untimely, we

review the timeliness element de novo.”       Id.   “It appears that a

court fails to articulate a reason a motion to intervene is

untimely if it does not expressly reference any of the four

factors used to decide a motion to intervene’s timeliness.”         Id.

(citing Edwards, 78 F.3d at 999-1000).       Because the district

court did not reference any of the four factors       in making its

                                   5
untimeliness determination, we review its decision de novo.

     Appellant seeks to intervene as a party plaintiff in the

U.S. Marshal’s sale of the vessel, pursuant to Federal Rule of

Civil Procedure 24(a), in order to present its claim to the

distribution of sale funds.   Rule 24(a) governs interventions of

right.   It provides that:

     Upon timely application anyone shall be permitted to
     intervene in an action: (1) when a statute of the
     United States confers an unconditional right to
     intervene; or (2) when the applicant claims an interest
     relating to the property or transaction which is the
     subject of the action and the applicant is so situated
     that the disposition of the action may as a practical
     matter impair or impede the applicant’s ability to
     protect that interest, unless the applicant’s interest
     is adequately represented by existing parties.

FED. R. CIV. P. 24(a).

     This court has repeatedly recognized that “[f]ederal courts

should allow intervention where no one would be hurt and the

greater justice could be attained.”   Glickman, 256 F.3d at 375

(citing Sierra Club v. Espy, 18 F.3d 1202, 1205 (5th Cir. 1994)).

Therefore a party is entitled to an intervention of right if:

     (1) the motion to intervene is timely; (2) the
     potential intervener asserts an interest that is
     related to the property or transaction that forms the
     basis of the controversy in the case into which she
     seeks to intervene; (3) the disposition of that case
     may impair or impede the potential intervener’s ability
     to protect her interest; and (4) the existing parties
     do not adequately represent the potential intervener’s
     interest.

Id. at 375 (citing Ford v. City of Huntsville, 242 F.3d 235, 239

(5th Cir. 2001); Edwards, 78 F.3d at 1000; Espy, 18 F.3d at 1204-

                                 6
1205; Stallworth v. Monsanto, 558 F.2d 257, 263-267 (5th Cir.

1977)).

                                 A.

     It is uncontested that Appellant asserts an interest related

to the controversy, the disposition of which may impair or impede

its ability to protect that interest.   Appellant has provided

evidence that it possesses a maritime lien for necessaries aboard

the vessel pursuant to 46 U.S.C. § 31342.   Furthermore, the

existing parties to the action do not adequately represent

Appellant’s interest.    Unless Appellant is permitted to intervene

in the present action it will be forever prohibited from making a

claim against the vessel and from recouping any of the sale

proceeds currently held in the registry of the court.    Finally,

not only are Appellees not interested in representing Appellant’s

interest, as evidenced by their opposition to intervention, in

many cases Appellant’s interest may compete with Appellees’ as

they all seek contribution from a limited stake.   Consequently,

Appellant can easily satisfy the final three requirements for

intervention of right.   This leaves only the issue of whether the

district court correctly denied Appellant’s Motion for

Intervention as untimely.

                                 B.

     This court has long recognized that “the requirement of

timeliness is not a tool of retribution to punish the tardy

would-be intervener, but rather a guard against prejudicing the

                                  7
original parties by the failure to apply sooner.”    Espy, 18 F.3d

at 1205.    Consequently, absolute or chronological measures of

timeliness should be ignored and an intervener’s “timeliness . .

. determined from all of the circumstances.”    Glickman, 256 F.3d

at 375 (citing Edwards, 78 F.3d at 1000).    “A court should ignore

‘how far the litigation has progressed when intervention is

sought[,] . . . the amount of time that may have elapsed since

the institution of the action . . . [, and] the likelihood that

intervention may interfere with the orderly judicial processes.’”

Glickman, 256 F.3d 375 (citing Stallworth, 558 F.2d at 266.

     Recognizing these considerations, this court has fashioned a

four-factor test for determining whether a motion to intervene is

timely.    A court must consider:

     (1) how long the potential intervener knew or
     reasonably should have known of her stake in the case
     into which she seeks to intervene; (2) the prejudice,
     if any, the existing parties may suffer because the
     potential intervener failed to intervene when she knew
     or reasonably should have known of her stake in the
     case; (3) the prejudice, if any, the potential
     intervener may suffer if the court does not let her
     intervene; and (4) any unusual circumstances that weigh
     in favor of or against a finding of timeliness.

Glickman, 256 F.3d 376 (citing Stallworth, 558 F.2d at 266).

                                    1.

     The first factor considered in determining whether a Rule 24

motion is timely is how long the potential intervener knew or

reasonably should have known of her stake in the case into which

she seeks to intervene.    This court has recognized that “the

                                    8
timeliness clock runs either from the time the applicant knew or

reasonably should have known of his [stake in the case into which

he seeks to intervene] or from the time he became aware that his

[stake] would no longer be protected by the existing parties to

the lawsuit.”     Glickman, 256 F.3d at 376 (citing Edwards, 78 F.3d

at 1000) (internal quotations and citations omitted).

     Appellant maintains that its delay in intervening is

excusable because it did not receive notice of the action until

October 29, 2001, ten days after the deadline imposed by the

district court.    Furthermore, Appellant asserts that once it

learned of the vessel’s arrest, it moved as quickly as possible

to intervene.   Appellee attacks these claims on three fronts.

     Appellee first directs our attention to cases interpreting

Supplemental Admiralty and Maritime Claims Rule C(4).    These

cases stand for the proposition that “[t]he in rem process of the

Admiralty Court is based upon the presumption that the fact of

seizure of a vessel alone will result in prompt, actual notice to

all interested parties, without the necessity of formal personal

notice.”   Wong Shing v. M/V Mardina Trader, 564 F.2d 1183, 1187

(5th Cir. 1977).     “This removes from an admiralty plaintiff the

cumbersome burden of attempting to locate and notify all those in

the world who have an interest in the vessel.”    Tamblyn v. River

Bend Marine, Inc. 837 F.2d 447, 488 n.1 (11th Cir. 1988).

Consequently, Appellee argues that it is irrelevant that

Appellant did not receive a phone call informing them of this

                                  9
action until October 29, 2001, because Appellant had actual

notice of the arrest on July 19, 2001.

     Secondly, Appellee attempts to discredit Appellant’s

contention that it was not aware of the published notification of

the court-ordered auction sale in the Houston Chronicle, the

Galveston County Daily News, the Journal of Commerce and

Tradewinds.   Appellee has provided us with a September 12, 2001,

news article describing the arrest and pending sale of the

vessel, published in the Las Vegas Sun.   Appellee argues

ultimately argues that “[i]f CDS did not see the court ordered

publications, it should have had notice of the proceedings by

virtue of [this] article circulated in a newspaper in its home

city.”   Appellee’s Brief at 10.

     Lastly, Appellee argues that prudent business practices

should have alerted Appellant of the vessel’s arrest long before

October 29, 2001, because Talisman had been delinquent on paying

invoices due to Appellant for months.

     Although Appellee’s arguments are persuasive and do call

into question whether Appellant “knew” or “reasonably should have

known” of its interest in the vessel before October 29, 2001,

they are outweighed by the other three factors in the

“timeliness” equation.

                                   2.

     Notwithstanding Appellee’s assertions suggesting that

                                   10
Appellant acted in a dilatory manner in not asserting its claim

before November 16, 2001, these facts are outweighed by the lack

of prejudice the existing parties will suffer because of

Appellant’s intervention.   This court has determined the decisive

element of this factor to be whether the “existing parties would

. . . have suffered any less prejudice had [Appellant] filed its

motion to intervene sooner.”   Glickman, 256 F.3d at 378.

     First, it is clear that Appellant’s intervention in the sale

proceedings will cause Appellees to experience increased costs

and delays in attempting to solidify their rights.    However,

these are consequences which would have resulted whether

Appellant had moved for intervention two weeks after the district

court’s deadline or two weeks before.    “The likelihood that

intervention may interfere with orderly judicial process . . .

has nothing to do with timeliness.”     Stallworth, 558 F.2d at 266.

“Prejudice must be measured by the delay in seeking intervention,

not the inconvenience to the existing parties of allowing the

intervener to participate in the litigation.”    Espy, 18 F.3d at

1206.   As we have previously determined:

     Laches is much more than time. It is time plus
     prejudicial harm, and the harm is not merely that one
     loses what he otherwise would have kept, but that delay
     has subjected him to a disadvantage in asserting and
     establishing his claimed right or defense . . . Nothing
     in the Answers of [claimants] remotely suggested that
     by the . . . delay . . . they were worse off in proving
     their own respective maritime liens or in disproving
     the validity and amount of Intervenor's claimed lien.

Point Landing, Inc. v. Alabama Dry Dock and Shipbuilding Co., 261

                                11
F.2d 861, 865-866 (5th Cir. 1958).

     Appellee additionally argues that it will suffer prejudice

if Appellant is allowed to intervene late because Appellee’s bid

at auction was based, in part, on its reliance on the district

court’s enforcement of the claims deadline.   Appellee states

that:

     the court’s enforcement of the deadline assured
     [Appellee] that no further claims would be allowed and
     that it would be able to recover funds from its bid
     sufficient enough to offset the cost of repairing,
     maintaining and servicing the M/V Talisman. If
     allowed, CDS’ late claim of $451,000, would virtually
     eliminate these available funds, and force [Appellee]
     to incur additional and unanticipated costs and
     expenses.

Appellee’s Brief at 14.   However, recently Appellee took the

opposite position before us in its Verified Response to Motion

for Partial Stay.   In its response, Appellee conceded that even

with Appellant’s claim, there are more than enough funds in the

court’s registry to cover all claims.

     Assuming, arguendo, that CDS’ claim is a maritime lien
     for domestically provided necessaries, the claim would
     increase the total of the Claims to, at most,
     $1,769,126.60. Thus even adding CDS’ claim to the
     others, the $1.98 million in the court’s registry is
     more than sufficient to cover all of these claims. At
     least $669,026 would remain in the court’s registry
     after satisfying all current lien claimants, which is
     more than enough to satisfy CDS’ potential claim of
     $451,000. There being enough funds to cover the Claims
     and CDS’ claim, a stay is unnecessary.

Appellee’s Verified Response to Motion for Partial Stay at 2.

     The doctrine of judicial estoppel prevents a party from

                                12
asserting a claim in a legal proceeding that is inconsistent with

a claim taken by that party in a previous proceeding, or in a

prior phase of the same proceeding.     18 JAMES WM. MOORE   ET AL.,

MOORE’S FEDERAL PRACTICE § 134.30 (3d ed. 1999).   Judicial estoppel

is an equitable concept intended to prevent the perversion of the

judicial process.     Id.   It is to be applied where “intentional

self-contradiction is being used as a means of obtaining unfair

advantage.”    Id.   The Court has recently accepted the doctrine

and described it as follows:

     Where a party assumes a certain position in a legal
     proceeding, and succeeds in maintaining that position,
     he may not thereafter, simply because his interests
     have changed, assume a contrary position, especially if
     it be to the prejudice of the party who has acquiesced
     in the position formerly taken by him.

New Hampshire v. Maine, 532 U.S. 742, ___, 121 S. Ct. 1808, 1814

(2001).    It would seem as if the doctrine of judicial estoppel

would apply to the case at bar.     After all, Appellee’s sudden

“about-face” on whether there are funds sufficient to cover all

claims is just the sort of conduct this doctrine is designed to

prevent.

     The fact that Appellee will suffer no prejudice by

Appellant’s late intervention outweighs any temporal delay

considered under the first timeliness factor.      When there is

minimal prejudice, courts have routinely determined motions for

intervention to be “timely” despite long interims between a

deadline for intervention and an actual filing.

                                   13
     In DnB Holdings, Limited v. M/V Hermitage, 1995 WL 692954

(E.D. La. Nov. 21, 1995), the court determined an intervention

based on a maritime lien to be timely despite an eight month

delay between the time when the potential intervener knew of its

stake and when the motion was filed.   Interestingly, in DnB

Holdings, the intervener received actual mailed notice of the

action and not just notice by publication.   In determining the

motion for intervention to be timely the court stated:

     Though World Ship was seriously dilatory in asserting
     its claim against the res and no reason for that delay
     appears, the other parties to this action were not
     prejudiced by the delay and World Ship will be
     prejudiced if the intervention is not allowed.
     Balancing these factors, the motion of World Ship
     Supply Inc. to intervene and assert a claim in this
     matter is granted.

DnB Holdings, 1995 WL 692954 at *2.

                               3.

     The third timeliness factor focuses on the prejudice the

potential intervener would suffer if not allowed to intervene.

This factor weighs heavily in favor of Appellants here.   Courts

have often found that liberality is required in allowance of

interventions to assert claims against proceeds from the sale of

a vessel.

     [This liberality] is a recognition of [the] unavoidable
     consequence of a sale of vessel in an in rem
     proceeding; the sale cuts off the right of all
     nonparties, and unless one claiming a lien is given the
     opportunity of asserting his right as against the
     proceeds resulting from the sale which has been made or
     is in the course of being carried out, the rights are

                               14
     forever and irretrievably lost.

Overstreet v. Water Vessel “Norkong”, 538 F. Supp. 53, 55-56

(S.D. Miss. 1982) (citing Point Landing, 261 F.2d at 866).

     Such is the situation in the present appeal.    If not

permitted to intervene, Appellant will be forever prohibited from

making its in rem claim against the vessel and its sale proceeds.

This permanent bar from enforcing its maritime lien was exactly

the sort of prejudice envisioned by the Stallworth court in

establishing this third factor.

     Appellee counters by arguing that although Appellant “may

lose its in rem action, [it still has] an in personam action

against Talisman.”   Appellee’s Brief at 15.   This argument has

been attempted before.   Courts often recognize that even though

an in personam claim will remain “[t]here is a strong presumption

against the waiver of a maritime lien.”   Bolongon v. M/V Nor

Atlantic, 2000 WL 222855 at *4 (E.D. La. Feb. 18, 2000).

                                  4.

     The fourth timeliness factor requires this court to consider

any unusual circumstances that weigh in favor of or against a

finding of timeliness.   A careful review of the record indicates

that this factor also weighs in favor of Appellant’s

intervention.   Appellant has its principal place of business in

Las Vegas, Nevada and did not receive notice that this action was

pending in Galveston, Texas until ten days after the court-

                                  15
imposed filing deadline.   Notice by publication was made in three

separate periodicals. However, none of these has extensive

circulation in the Nevada area.     Once Appellant received notice,

it moved as expeditiously as possible to intervene in the suit.

Appellant contacted counsel the same day it learned of the action

and ultimately had a motion before the court within three weeks.

Consequently, this final factor supports Appellant’s motion for

intervention.

                    *      *   *        *     *

     The district court erred in denying Appellant’s Rule 24

Motion for Intervention as untimely.        For the reasons stated

above, the judgment of the district court is reversed.

                                   16