Court Opinion

ID: 6479313
Source: CourtListenerOpinion
Date Created: 2022-06-26 22:51:09.076576+00
Date Added: 2024-06-11T15:54:05.846080
License: Public Domain

JONES, Vice Chief Justice,
dissenting.
¶ 19 I respectfully dissent. In my view, the Counties of Arizona are entitled to intervene in this action as a matter of law. See Rule 24, Arizona Rules of Civil Procedure. The question is not whether permissive intervention should be allowed, but whether the Counties may intervene as a matter of right. The role of the Counties should be governed only by the “basic jurisprudential assumption that the interest of justice is best served when all parties with a real stake in a controversy are afforded an opportunity to be heard.” Hodgson v. United Mine Workers of Am., 473 F.2d 118, 130 (D.C.Cir.1972).
¶ 20 I would order the Counties’ intervention solely on the question of apportionment of the fund between the Counties and the State. The court has discretion to allow such conditional or limited intervention as to specified issues. See 7C Charles Alan Wright, Arthur R. Miller and Mary Kay Kane, Federal Practice and Procedure § 1922 at 505-07 (2d ed.1986); Deborah L. Rhode, Class Conflicts in Class Action, 34 Stan. L. Rev. 1183,1222 (1982). Conditional intervention would limit the Counties strictly to the matter of apportionment. Accordingly, the division and distribution of settlement proceeds between the State and the Counties would be properly accomplished by the application of law in a judicial proceeding as in the instant case, rather than by a partisan political action in the state legislature. As to the tobacco companies, the existing judgment would remain final. In this manner, State Specific Finality is accomplished, the tobacco companies suffer no prejudice, and the Counties are protected under the rule of law.
¶ 21 Under Rule 24(a)(2), Arizona Rules of Civil Procedure, intervention of right is required if the Counties have claimed an “interest relating to the property or transaction which is the subject of the action and [are] so situated that the disposition of the action may as a practical matter impair or impede [their] ability to protect that interest, unless [that] interest is adequately represented by existing parties.”
¶ 22 The Counties meet all requirements of Rule 24. In summary: (a) the Counties have defined a legitimate interest in the settlement fund based on the State’s inclusion of county health care expenditures in the settlement formula reflected in the settlement agreement (the MSA), (b) the Counties’ interest suffers actual impairment by reason of the MSA provision purporting to release County claims in favor of the tobacco companies, and (c) the State’s representation of the Counties is rendered inadequate by the State’s contradictory position, alleging on one hand that the action is brought against the tobacco companies on behalf of the “political subdivisions” of Arizona {i.e., the Counties) and on the other, simply abandoning County interests without consent and with no guarantee of County participation in the settlement fund.
TIMELINESS
1123 The majority correctly states that timely application is a prerequisite for a motion to intervene. Timeliness, however, is not a mathematical calculation under Rule 24, but rather, is a flexible matter to be decided within the discretion of the trial court upon the proper application of law. See Purvis v. Hartford Accident and Indem., 179 Ariz. 254, 257, 877 P.2d 827, 830 (App. 1994). While this Court may overturn a trial court’s finding on the timeliness question only for abuse of discretion, the abuse standard is easily met where the lower court has misapplied the law. See Brown v. Beck, 64 Ariz. 299,169 P.2d 855 (1946).
¶24 By finding the Counties’ motion to intervene untimely, the trial court abused its discretion because it did not apply the appropriate legal standard. The rationale for its order consists entirely of one conclusory sentence: “[T]he cases cited by the Plaintiffs make it clear that this motion, coming after the settlement has been negotiated and approved, and, if granted, would cause delay, if not the unraveling of an historic settlement, is untimely.” The court made no finding as *388to when the Counties should have intervened to avoid this result. And the court ignored the law regarding timely intervention after judgment. It is an abuse to fail to consider the full test of timeliness. See, e.g., Walker v. Jim Dandy Co., 747 F.2d 1360, 1366 (11th Cir.1984). Arizona has ample case law by which to resolve the timeliness issue.
¶25 When a motion to intervene comes after judgment, it is granted in extraordinary and unusual circumstances. See Weaver v. Synthes Ltd., 162 Ariz. 442, 446, 784 P.2d 268, 272 (App.1989). But the timeliness test is case specific, see Winner Enterprises, Ltd. v. Superior Court, 159 Ariz. 106, 109, 765 P.2d 116, 119 (App.1988), and the mere passage of time does not preclude intervention of right. See United States v. Oregon, 745 F.2d 550, 553 (9th Cir.1984).
¶26 This court has held that a “strong showing of entitlement and of justification for failure to request intervention sooner” would be enough to meet the extraordinary circumstances requirement and demand a resolution on the merits of the motion. In re: One Cessna 206 Aircraft, 118 Ariz. 399, 402, 577 P.2d 250, 253 (1978) (quoting United States v. Associated Milk Producers, Inc., 534 F.2d 113, 115-16 (8th Cir.1976)); see also William Z. v. Arizona Dep’t of Econ. Sec., 192 Ariz. 385, 965 P.2d 1224 (App.1998); Salvatierra v. National Indem. Co., 133 Ariz. 16, 20, 648 P.2d 131,135 (App.1982).
¶ 27 Moreover, it has been widely held that a motion to intervene at the conclusion of a case is timely if the proposed settlement or resolution creates the circumstances requiring the intervention. See 6 James Wm. Moore, et al., Moore’s Federal Practice § 24.21[2](3d ed.1999) [hereinafter Moore’s Federal Practice]. For example, in a case, as here, dealing with public law, the Pennsylvania Department of Public Welfare was entitled to intervene more than one year after settlement in a Medicaid recipient’s malpractice action in order to assert a claim for medical benefits paid on behalf of the recipient. This was allowed, although the DPW had been aware of the litigation and took no part in it, where DPW intervened upon learning of the settlement. See Miller v. Lankenau Hosp., 152 Pa.Cmwlth. 266, 618 A.2d 1197, 1198-99 (1992).
¶ 28 In Dangberg Holdings Nevada, L.L.C. v. Douglas County and Board of County Commissioners, 978 P.2d 311 (Nev.1999), the Nevada Supreme Court held that the State and the estate of a ranch vendor’s granddaughter could intervene after a settlement between the ranch purchaser and county, when the intervenors acted within two months of learning of the settlement agreement. The intervention would foster the principles of judicial economy and finality. See id. at 318-19; see also U.S. v. Yonkers Bd. of Educ., 902 F.2d 213, 217 (2d Cir.1990) (city parks board’s motion to intervene after a court order de-dedicating park land for use as a junior high was timely because board members could not have been aware that their interest in preserving the legislative process was threatened until the district court issued its order; motion was denied only because parks board’s interest was adequately represented by existing parties); Mundt v. Northwest Explorations, Inc., 947 P.2d 827, 830 (Alaska 1997) (intervention of grantee in landowner’s post-judgment motion to quiet title was timely although grantee did not intervene until after the final judgment because it was unclear whether grantee knew her parcels of land would be affected by the motion until after trial court issued its order); Shlensky v. South Parkway Bldg. Corp., 44 Ill.App.2d 135, 194 N.E.2d 35, 39-40 (1963) (intervention after final settlement was held timely where it was not until after remand of stockholders’ derivative suit that it became apparent plaintiffs began acting in their own interests rather than in the interests of the corporation); Stanford Assocs. v. Board of Assessors of Town of Niskayuna, 39 A.D.2d 800, 332 N.Y.S.2d 286, 288 (N.Y. 1972) (school district entitled to late-stage intervention in proceeding to review property tax assessment on shopping center where, though motion came after settlement reducing property tax, motion was made promptly after district learned of order); Blackburn v. Hamoudi 29 Ohio App.3d 350, 505 N.E.2d 1010, 1013-14 (1986) (although insurer, having paid uninsured/underinsured benefits, could have sought permissive intervention in its insureds’ action against joint tortfeasors *389earlier, it was not until settlement agreement was reached that insurer’s intervention of right arose); C.L. v. Edson, 140 Wis.2d 168, 409 N.W.2d 417, 419-20 (App.1987) (newspaper’s motion to intervene to open sealed documents in action which was settled more than nine months earlier was timely where newspaper moved to intervene promptly after original parties objected to stipulation to open records and where parties did not show prejudice resulting from having to defend post-judgment intervention).
¶ 29 The Counties allege their motion was timely, even though filed after settlement, because it was not until they had seen the MSA, just one month earlier, that they had reason to know County interests were impaired. The MSA purported to release the Counties’ claims against the tobacco companies. The Counties learned this for the first time from the MSA. Whether or not the MSA actually released County interests does not affect the question of timeliness. The key factor is that knowledge of the contents of the MSA was the event that first made Counties aware of the release. By any proper standard, one month is not undue delay.
¶ 30 In addition to learning of the impairment of County interests, knowledge of inadequate representation by existing parties is also a prerequisite to intervention. But here, the Counties would have had neither the need nor the ability to intervene until it became clear that the attorney general was acting in the interests of the State alone and not its political subdivisions. Cases are legion holding that a party need not intervene until it becomes apparent that the intervenor’s interests are inadequately represented by existing parties. See, e.g., United Airlines, Inc. v. McDonald, 432 U.S. 385, 97 S.Ct. 2464, 53 L.Ed.2d 423 (1977); Harris v. Pernsley, 113 F.R.D. 615 (E.D.Pa.1986); In re: City of Shawnee, 236 Kan. 1, 687 P.2d 603, 612 (1984); Weimer v. Ypparila, 504 N.W.2d 333, 336 (S.D.1993).
¶ 31 The State’s complaint itself demonstrates the soundness of the Counties’ position on the timeliness issue: “The Attorney General ... brings this action on behalf of the state and all political subdivisions of the State____” This allegation gave the Counties cause to believe the attorney general was protecting their interests, and it was not until receipt of the MSA that the Counties were alerted to the problem. Their claims were purportedly released with no guaranteed share of settlement proceeds, even though massive County health care expenditures had been included in the calculation of Arizona’s share of the settlement.
¶ 32 For these reasons, knowledge of the MSA, purporting to release the claims of “political subdivisions,” should mark the moment from which the timeliness issue should have been measured. It is thus quite immaterial that the Counties knew before that date that the State of Arizona had sued big tobacco. “A court cannot impute knowledge that a person’s interests are at stake from mere knowledge that an action is pending, ‘without appreciation of the potential adverse effect an adjudication of that action might have on one’s interests____’” Howard v. McLucas, 782 F.2d 956, 959 (11th Cir.1986) (quoting United States v. Jefferson County, 720 F.2d 1511, 1516 (11th Cir.1983); see also United States v. City of Niagara Falls, 103 F.R.D. 164 (W.D.N.Y.1984)).
¶ 33 This court has also held itself bound to accept as true the factual allegations in a party’s motion to intervene. See Saunders v. Superior Court, 109 Ariz. 424, 425, 510 P.2d 740, 741 (1973); Twitchell v. Home Owners’ Loan Corp., 59 Ariz. 22, 28,122 P.2d 210, 212 (1942). Thus, it was not until November 17, 1998, when, on its own initiative, Maricopa County purchased a copy of the MSA from the publishing company and received it by facsimile, that the County learned of the release of county claims and of the absence of State representation of County interests.
¶ 34 The State makes nothing but conclu-sory assertions and can point to no part of the record that demonstrates the Counties knew the content of the MSA before that date. A persistent drumbeat of settlement potential since 1997 is not enough, when the State can produce no proof that the Counties had prior knowledge that their interests were in jeopardy.
¶ 35 Finally, prejudice either to the State or the tobacco companies would not be impli*390cated by late-stage intervention because the Counties have made it clear their challenge pertains only to the apportionment of Arizona’s share of the settlement proceeds. State Specific Finality as to the judgment against the tobacco companies would remain secure because late-stage interventions challenging not the final judgment, but merely asserting rights to moneys to be distributed thereunder, have been viewed favorably by courts and could easily be so viewed in the instant action. See Cascade Natural Gas Corp. v. El Paso Natural Gas Co., 386 U.S. 129, 87 S.Ct. 932, 17 L.Ed.2d 814 (1967); Knight v. Wacaser, 317 Ill.App. 162, 46 N.E.2d 176, 179 (1942); Breazeale v. Casteel, 4 S.W.3d 434, 436-37 (Tex.App.1999).
¶ 36 The circumstances surrounding the MSA are extraordinary, easily sufficient to - justify the sought after late-stage intervention. And the policy considerations militating against a finding of timeliness simply are not present.
THE MERITS
¶ 37 Because the trial court found the motion untimely, it made no findings of fact on the merits. This court should have undertaken a de novo review of whether the Counties established a right to intervene under the substantive requirements of Rule 24. See Purvis, 179 Ariz. at 257-58, 877 P.2d at 830-31. Suffice it to say that if the Counties’ factual allegations, which we accept as true, compel the legal conclusion that Counties had an interest in the litigation which was impaired by judicial disposition in their absence, and that such interest was not adequately represented by existing parties, the right to intervene is established, and we would have no alternative but to order the intervention. Intervention of right must be assessed solely with regard to the rights of the Counties. See 6 Moore’s Federal Practice § 24.03[l][c]' (“Considerations regarding prejudice to original parties are not incorporated in the Rule 24(a) criteria. The chief focus of Rule 24(a) is upon the applicant.”)
¶ 38 The test for intervention first requires a finding that an “interest” exists. An interest is established where, as here, “an action involves a dispute about a particular property or fund, and an applicant claims a direct, substantial, and legally protectable right to this property or fund____” 6 Moore’s Federal Practice § 24.03[2][a], Because the Counties challenge the allocation of a settlement fund that was indisputably based on expenditures made and damages suffered by the Counties, they possess the requisite legal interest.
¶39 The test also requires a finding of “impairment.” The Counties’ interests were impaired by the release provision of the MSA. Until a court actually determines that the release may not be enforced against the Counties — an issue not ripe for decision or direction by this court — all County interests remain clearly vulnerable and thus impaired. Impairment of County interests is evidenced by gross inconsistency in the State’s position, as noted, where the State, in the MSA, purported to release those interests, and in the proceeding before us, after asserting representation of the Counties, abandoned the same interests, leaving Counties to pursue the matter on their own, either in the legislature or in a separate action. Impairment of this magnitude is easily discernable.
¶ 40 Finally, because the Counties have an interest in the litigation and that interest is demonstrably impaired by the MSA, the question remaining is whether the State has adequately represented the Counties. The applicant has the burden of proving inadequate representation, but that burden is minimal. In the instant case, the State’s contradictory position on substantive issues under Rule 24 sends the clear message that while the State itself was well represented, the Counties were not. In fact, they were completely left out. They had no participation in the suit or the settlement. The State purported to represent them and then released their interests to the tobacco companies. The burden on the applicant requires only a showing that the representation may be inadequate. The applicant is viewed as the best judge of whether existing parties represent his interest. Clearly, in the case at bar, no party filled that role. See Linton ex rel. Arnold v. Commissioner of Health and Env’t, 973 F.2d 1311, 1319-20 (6th Cir.1992); Saunders, 109 Ariz. at 425-26, 510 P.2d at *391741-42 (city police and firefighters allowed to intervene where the attorney general represented the named officials in the action but was found not to protect their interests); see also Mille Lacs Band of Chippewa Indians v. Minnesota, 989 F.2d 994, 999-1000 (8th Cir.1992).
¶ 41 In my view, all elements of Rule 24 intervention of right — “interest,” “impairment,” and “inadequate representation” — are fully established on this record. The sensible solution would be to remand the ease to the trial court, ordering that the Counties be allowed to intervene as a matter of right under Rule 24, but limiting the issue to the matter of apportionment of the settlement fund. The judgment against the tobacco companies should remain undisturbed, thus achieving desired finality as to the tobacco companies. The sole question for determination would be the apportionment of funds between the Counties and the State.
¶ 42 I point out that while the difference between my approach and that of the majority is narrow, it is of critical importance. The majority would give Counties the option to file a separate action against the State to resolve the apportionment question, whereas I would order intervention as a matter of right in the instant action. This would achieve appropriate and comprehensive resolution of the case before us without the delay and expense of a new action. My approach has the further benefit of fully eliminating the risk that possible defenses — including, among others, the statute of limitations— that are unrelated to the merits of County claims and unavailable to the State and the tobacco companies in the instant case, may be assertable against the Counties in a separate action. My approach is not only preferable, but is required by law and would more quickly and completely resolve this entire controversy.