Court Opinion

ID: 37320
Source: CourtListenerOpinion
Date Created: 2010-04-25 19:51:43+00
Date Added: 2024-06-11T17:15:38.996754
License: Public Domain

United States Court of Appeals
                                                                 Fifth Circuit
                                                              F I L E D
               IN THE UNITED STATES COURT OF APPEALS
                       FOR THE FIFTH CIRCUIT                 December 10, 2004
                       _____________________
                                                          Charles R. Fulbruge III
                             No. 04-50368                         Clerk
                           Summary Calendar
                        _____________________

              In the Matter of: CPWH RESIDENTIAL LTD,

                               Debtor,

           CPWH RESIDENTIAL LTD; HUBER CONTRACTING LTD;
 UNITED STATES FIRE INSURANCE COMPANY; EDWARD P. POTTER COMPANY;
                MANGOLD ROOFING & SHEET METAL INC.;
               POTTER AIR CONDITIONING COMPANY INC.;
 WTH CORPORATION, doing business as Direct-Flo Heating and Air,

                             Appellees,

                               versus

                     UNION PLANTERS BANK, NA,

                            Appellant.
_________________________________________________________________

           Appeal from the United States District Court
          for the Western District of Texas, San Antonio
             District Court Cause Nos. SA-03-CV-1046,
                   SA-03-CV-1047 & SA-03-CV-1195
_________________________________________________________________

Before JONES, BARKSDALE and PRADO, Circuit Judges.1

PRADO, Circuit Judge.

     In this appeal, Appellant Union Planters Bank (UPB)

challenges the denial of its motion to intervene as a matter of

right.   After considering UPB’s appeal, this court affirms the

     1
      Pursuant to 5TH CIRCUIT RULE 47.5, this Court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIRCUIT
RULE 47.5.4.

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district court’s order.

     The facts relevant to this appeal are as follows.    Under the

terms of a lending agreement, UPB obtained a security interest in

the real property for a construction project under development by

Appellee CPWH Residential, Ltd. (CPWH).   CPWH eventually became

the subject of a bankruptcy proceeding.   Nineteen months after

the bankruptcy case began, UPB sought to intervene in an

adversary proceeding filed by special counsel for CPWH’s

creditors to recover CPWH’s alleged damages from some of the

contractors working on the construction project.   The district

court determined that UPB did not meet the requirements for

intervening as a matter of right and denied the motion.    In

particular, the district court determined that UPB’s motion was

untimely.

     An order denying a motion to intervene as a matter of right

is an appealable final order2 which this court generally reviews

de novo.3   The court, however, reviews the district court's

ruling on the timeliness of the motion for an abuse of discretion

so long as the district court specifies why the motion was

     2
      See Edwards v. City of Houston, 78 F.3d 983, 992 (5th Cir.
1996).
     3
      See Trans Chem. Ltd. v. China Nat’l Mach. Imp. and Exp.
Corp., 332 F.3d 815, 822 (5th Cir. 2003); Heaton v. Monogram
Credit Card Bank of Ga., 297 F.3d 416, 422 (5th Cir. 2002).

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untimely.4   Because the district court here specified a reason

for its untimeliness determination, this court reviews the

district court’s ruling for an abuse of discretion.

     An applicant may intervene in a lawsuit as a matter of right

“when the applicant claims an interest relating to the property

or transaction which is the subject of the action and . . .

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.”5   A party seeking to intervene as of right must satisfy

four requirements:

     (1) [t]he application must be timely; (2) the
     applicant must have an interest relating to the
     property or transaction that is the subject of the
     action; (3) the applicant must be so situated that the
     disposition of the action may, as a practical matter,
     impair or impede its ability to protect its interest;
     and (4) the applicant's interest must be inadequately
     represented by the existing parties to the suit.6

“If a party seeking to intervene fails to meet any one of those

requirements, it cannot intervene as a matter of right.”7

     When determining whether a motion to intervene is timely, a

     4
      See Heaton, 297 F.3d at 422; John Doe No. 1 v. Glickman,
256 F.3d 371, 376 (5th Cir. 2001). If the district court fails
to specify a reason, the court of appeals reviews the timeliness
ruling de novo. See Glickman, 256 F.3d at 376.
     5
      FED. R. CIV. P. 24(a).
     6
      Sierra Club v. Espy, 18 F.3d 1202, 1204-05 (5th Cir. 1994).
     7
      Sierra Club, 18 F.3d at 1205.

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court must consider the following four factors:

     (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 that
     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.8

After applying these factors to this appeal, it is evident that

the district court did not abuse its discretion.

     The district court’s order denying UPB’s motion to intervene

clearly demonstrates that the district court considered each of

the applicable factors for determining whether a motion to

intervene is timely.   In the order, the district court stated,

     UPB’s motion is not timely. In the unique circumstances
     of this bankruptcy case, this Motion should have been
     filed sooner. It was filed after approval of special
     litigation counsel for this matter. UPB filed no
     objection nor asked to be included. It was filed after
     appointment of a Trustee. This Court will not place
     additional burdens on a bankrupt [sic] estate at this
     stage in the litigation.

Thus, the order indicates that: (1) UPB knew about its purported

interest in the underlying lawsuit well before it sought to

intervene, (2) the district court considered the prejudicial

effect that intervention would have on the existing parties to

the lawsuit, (3) the district court considered the role of the

bankruptcy Trustee in alleviating any prejudice UPB might incur,

     8
      Glickman, 256 F.3d at 376.

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and (4) the district court was concerned that intervention would

place additional burdens on the bankruptcy estate.

     The record supports the district court’s determinations.

The record indicates that UPB knew or should have known about its

purported interest in CPWH’s causes of action as early as

November 14, 2002—the date on which UPB filed its proof of claim

in the bankruptcy proceeding.   If not then, UPB knew or should

have known that CPWH was alleging causes of action as early as

April 16, 2003—the day when CPWH filed its initial complaint

against certain construction defendants in the bankruptcy

proceeding.   Although UPB should have known about its purported

stake in the case by April 16, 2003, UPB did not seek to

intervene until February 20, 2004.    By that time, the parties to

the lawsuit had undoubtedly developed their trial strategy.

UPB’s intervention at that point would have prejudiced the

existing parties because it would have required them to inject

UPB into established trial strategy and delayed the litigation.

But even though intervention would prejudice existing parties,

there is no indication that UPB would be prejudiced if it was not

permitted to intervene because the bankruptcy Trustee and the

bankruptcy court are charged with protecting creditors’

interests.    Under these circumstances, the district court did not

abuse its discretion by determining that UPB’s motion was

untimely.

     Because the motion was untimely, UPB failed to satisfy each

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of the requirements for intervening as a matter of right.9   As a

result, the district court did not err by denying UPB’s motion to

intervene.   Consequently, the court AFFIRMS the district court’s

order.   Having reached this determination, the court need not

reach UPB’s other arguments.

AFFIRMED.

     9
      Sierra Club, 18 F.3d at 1205.

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