Court Opinion

ID: 219127
Source: CourtListenerOpinion
Date Created: 2011-06-20 17:28:49+00
Date Added: 2024-06-11T17:28:39.499345
License: Public Domain

Case: 10-10387     Document: 00511513658          Page: 1    Date Filed: 06/20/2011

            IN THE UNITED STATES COURT OF APPEALS
                     FOR THE FIFTH CIRCUIT  United States Court of Appeals
                                                     Fifth Circuit

                                                  FILED
                                                                            June 20, 2011

                                       No. 10-10387                         Lyle W. Cayce
                                                                                 Clerk

SECURITIES AND EXCHANGE COMMISSION,

                                                   Plaintiff - Appellee

RALPH S. JANVEY,

                                                   Appellee

v.

STANFORD INTERNATIONAL BANK, LTD.; ET AL,

                                                   Defendants
v.

STANFORD CONDOMINIUM OWNERS ASSOCIATION,

                                                   Movant - Appellant

                    Appeal from the United States District Court
                         for the Northern District of Texas
                               USDC No. 3:09-CV-298

Before REAVLEY, GARZA, and SOUTHWICK, Circuit Judges.
PER CURIAM:*

        *
         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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .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. 47.5.4.
   Case: 10-10387    Document: 00511513658       Page: 2   Date Filed: 06/20/2011

                                   No. 10-10387

      In 2007, the Stanford Condominium Owners Association brought suit in
Texas state court for faulty construction against the Stanford Development
Corporation. Arbitration between the parties was stayed after the Securities
and Exchange Commission sued Allen Stanford and all Stanford entities for an
allegedly fraudulent scheme. The Condominium Association moved to intervene
in the receivership litigation or, alternatively, to proceed with arbitration. The
district court denied the motions. We AFFIRM.
      The Stanford Development Corporation was the developer and general
contractor of a condominium project in Houston, Texas called The Stanford. The
Stanford Condominium Owners Association consists of approximately 40 owners
of condominiums at The Stanford. The Condominium Association’s lawsuit
against the Development Corporation reached the Texas First Court of Appeals,
which in January 2009 ruled that the parties should arbitrate their dispute.
      In February 2009, the Securities and Exchange Commission filed suit
against Allen Stanford and related entities based on an alleged Ponzi scheme.
The district court appointed a Receiver, Ralph S. Janvey, to marshal, conserve,
hold, manage, and preserve the value of the receivership estate. Additionally,
the district court enjoined all judicial, administrative, or other proceedings
against any Stanford entities. The Condominium Association’s arbitration with
the Development Corporation was subject to the stay.
      In April 2009, the Condominium Association moved to intervene in the
Stanford litigation or, alternatively, for a stay of the district court’s order so it
could proceed with the arbitration. The district court denied the motions in
March 2010. The Condominium Association timely appealed.
      We have jurisdiction under 28 U.S.C. § 1292(a)(1) to review a district
court’s order refusing to modify an injunction. “We review the district court’s
actions pursuant to the injunction it issued for an abuse of discretion.” Newby
v. Enron Corp., 542 F.3d 463, 468 (5th Cir. 2008) (citation omitted).            “In

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                                  No. 10-10387

performing that review, findings of fact that support the district court’s decision
are examined for clear error, whereas conclusions of law are reviewed de novo.”
Affiliated Prof’l Home Health Care Agency v. Shalala, 164 F.3d 282, 284-85 (5th
Cir. 1999) (citation omitted).
      District courts have broad equitable powers to preserve a receiver’s ability
to operate without interference. See Schauss v. Metals Depository Corp., 757
F.2d 649, 654 (5th Cir. 1985); SEC v. Safety Fin. Serv., Inc., 674 F.2d 368, 372
(5th Cir. 1982). When considering whether a stay of proceedings involving a
receiver ought to be lifted, the Ninth Circuit has concluded that a district court
should consider the following factors:
      (1) whether refusing to lift the stay genuinely preserves the status
      quo or whether the moving party will suffer substantial injury if not
      permitted to proceed; (2) the time in the course of the receivership
      at which the motion for relief from the stay is made; and (3) the
      merit of the moving party’s underlying claim.
SEC v. Wencke, 742 F.2d 1230, 1231 (9th Cir. 1984) (citation omitted). These
factors are a useful set of considerations.
      The district court applied these factors and determined that the first two
favored leaving the stay in place. The court did not analyze the third factor. At
this point in the proceedings, we find no clear error in the continuation of the
stay. As the receivership continues, the weight of the possible merit of the
Condominium Association’s claims will also potentially grow. SEC v. Universal
Fin., 760 F.2d 1034, 1038-39 (9th Cir. 1985).
      The Condominium Association also seeks our review of the district court’s
denial of its motions to intervene as a matter of right under Federal Rule of Civil
Procedure 24(a)(2) and for permissive intervention under Rule 24(b). The denial
of a motion to intervene as a matter of right is a final order that we review
pursuant to 28 U.S.C. § 1291. Edwards v. City of Hous., 78 F.3d 983, 992 (5th
Cir. 1996) (en banc). We have explained:

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                                  No. 10-10387

      When determining the appealability of orders denying permissive
      intervention, however, this Circuit operates under an “anomalous
      rule,” in that we have only provisional jurisdiction to determine
      whether the district court erroneously denied such motions. If the
      district court’s denial of permissive intervention does not constitute
      an abuse of discretion, we must dismiss the appeal for lack of
      jurisdiction.
Id. (citations omitted).
      We give de novo review to the denial of an intervention alleged to be of
right; denial of permissive intervention receives review for a clear abuse of
discretion. Id. at 995 (citations omitted).
      In order to intervene as a matter of right pursuant to Rule 24(a)(2), a
movant must meet the following requirements:
      (1) the application for intervention must be timely; (2) the applicant
      must have an interest relating to the property or transaction which
      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 his ability to protect that interest; (4) the applicant’s
      interest must be inadequately represented by the existing parties to
      the suit.
Haspel & Davis Milling & Planting Co. v. Bd. of Levee Comm’rs, 493 F.3d 570,
578 (5th Cir. 2007) (citations omitted). “Failure to satisfy any one requirement
precludes intervention of right.” Id. (citation omitted).
      In order for an interest to meet the second requirement, it must be “a
direct, substantial, legally protectable interest in the proceedings.” New Orleans
Pub. Serv., Inc. v. United Gas Pipe Line Co., 732 F.2d 452, 463 (5th Cir. 1984)
(en banc) (quotation marks and citation omitted). It must be a right “which the
substantive law recognizes as belonging to or being owned by the” movant. Id.
at 464. The Condominium Association’s interest in the proceedings before the
district court relate solely to the Development Corporation’s ability to satisfy a
judgment for claims that are not related to the case before the district court.
Because the Condominium Association’s interest does not relate to the property

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                                  No. 10-10387

or transactions subject to the receivership, there was no entitlement to intervene
as a matter of right.
      A court may allow permissive intervention if the movant can demonstrate
that it “has a claim or defense that shares with the main action a common
question of law or fact” and that it will not “unduly delay or prejudice the
adjudication of the original parties’ rights.” Fed. R. Civ. P. 24(b). “Permissive
intervention is wholly discretionary with the district court even though there is
a common question of law or fact, or the requirements of Rule 24(b) are
otherwise satisfied.” Kneeland v. Nat’l Collegiate Athletic Ass’n, 806 F.2d 1285,
1289 (5th Cir. 1987) (quotation marks, alterations, ellipses, and citations
omitted). Reversal of a denial of permissive intervention “is so unusual as to be
almost unique.” Id. at 1290 (quotation marks and citation omitted).
      The district court found that allowing the Condominium Association to
intervene would cause undue delay. The district court also found that the
Receiver had already been unduly delayed by responding to the numerous
motions filed by creditors and investors, without adding another layer of
litigation on the issue of construction flaws. This determination is reasonable.
      On appeal, the Condominium Association asserts there is insurance
available for their claims that would prevent any interference with the
Receivership. Issues regarding insurance were not properly presented to the
district court. We do not consider matters not meaningfully presented to the
district court. In re Fairchild Aircraft Corp., 6 F.3d 1119, 1128 (5th Cir. 1993).
      AFFIRMED.

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