Court Opinion

ID: 2657319
Source: CourtListenerOpinion
Date Created: 2014-03-20 00:16:05.701462+00
Date Added: 2024-06-11T13:00:23.964919
License: Public Domain

NOT FOR PUBLICATION

                    UNITED STATES COURT OF APPEALS                            FILED
                            FOR THE NINTH CIRCUIT                             MAR 19 2014

                                                                          MOLLY C. DWYER, CLERK
EXECUTIVE RISK SPECIALTY                         No. 12-56862               U.S. COURT OF APPEALS

INSURANCE COMPANY, a Connecticut
corporation,                                     D.C. No. 2:11-cv-04828-GAF-
                                                 FFM
              Plaintiff - Appellee,

  v.                                             MEMORANDUM*

RUTTER HOBBS AND DAVIDOFF,
INC., a California corporation; et al.,

              Defendants - Appellees.,

  V.

J. P. HYAN,

              Intervenor - Appellant.

                   Appeal from the United States District Court
                      for the Central District of California
                    Gary A. Feess, District Judge, Presiding

                     Argued and Submitted February 14, 2014
                              Pasadena, California

Before: FARRIS, N.R. SMITH, and WATFORD, Circuit Judges.

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
      “We review the denial of a motion to intervene as of right de novo.” Citizens

for Balanced Use v. Mont. Wilderness Ass’n, 647 F.3d 893, 896 (9th Cir. 2011).1

However, factual findings made by the district court (in resolving the motion) are

reviewed for clear error. See Ritter v. Morton, 513 F.2d 942, 949 (9th Cir. 1975)

(per curiam) (articulating general standard under Fed. R. Civ. P. 52(a)); accord

Defenders of Wildlife v. Perciasepe, 714 F.3d 1317, 1322 (D.C. Cir. 2013)

(reviewing district court’s factual findings respecting motion to intervene as of

right for clear error); Woolen v. Surtran Taxicabs, Inc., 684 F.2d 324, 334 (5th Cir.

1982) (same). On the other hand, “[p]ermissive intervention is committed to the

broad discretion of the district court and is therefore reviewed by this court for

abuse of discretion.” Orange Cnty. v. Air Cal., 799 F.2d 535, 539 (9th Cir. 1986).

Finally, in reviewing a district court’s order denying a motion to intervene, “we

look at the procedural posture of the case as it existed on that date.” League of

United Latin Am. Citizens v. Wilson, 131 F.3d 1297, 1303 n.2 (9th Cir. 1997).

                                          I.

      Of the four requirements to grant intervention as of right, Fed. R. Civ. P.

24(a), the parties only dispute whether “the existing part[y] may not adequately

      1
        Whether a motion to intervene was timely filed is reviewed for abuse of
discretion. Citizens for Balanced Use, 647 F.3d at 896. Here, the district court
concluded that the motion was timely; no party challenges that holding on appeal.

                                          -2-
represent the applicant’s interest.” Citizens for Balanced Use, 647 F.3d at 897

(internal quotation marks omitted). Adequacy of representation is determined by

considering whether (1) “the interest of a present party is such that it will

undoubtedly make all of a proposed intervenor’s arguments;” (2) “the present party

is capable and willing to make such arguments; and” (3) “a proposed intervenor

would [not] offer any necessary elements to the proceeding that other parties would

neglect.” Arakaki v. Cayetano, 324 F.3d 1078, 1086 (9th Cir. 2003). Further,

“[w]hen an applicant for intervention and an existing party have the same ultimate

objective, a presumption of adequacy of representation arises,” and “a compelling

showing should be required to demonstrate inadequate representation.” Id.

      The district court concluded that Rutter Hobbs & Davidoff (“RHD”)

“adequately protected” Hyan’s interests. Specifically, it found that

      RHD and Hyan share the same ultimate objective: first, to satisfy
      Hyan’s judgment as fully and expediently as possible, and second, to
      satisfy that judgment from the same source of funds—the ERSIC
      insurance proceeds. The Settlement Agreement by its very terms
      obligates RHD to “use its best efforts to obtain the ERSIC Payment”
      on Hyan’s behalf. That RHD is capable and willing to make Hyan’s
      arguments is demonstrated by the fact that the arguments asserted in
      the present overlap in nearly every respect. Indeed, Hyan has not
      described what “necessary elements” he would bring to these
      proceeding[s] that RHD would neglect.

                                          -3-
These factual findings created a presumption of adequacy, which Hyan failed to

rebut. Contemporaneous with Hyan’s motion to intervene, RHD moved to disperse

the interpleaded funds to Hyan. Their motions included arguments before the

district court that “overlap[ped] in nearly every respect,” answering the Arakaki

factors in favor of denying intervention. Not only was RHD capable and willing to

make Hyan’s arguments, but RHD “undoubtedly” did make all of Hyan’s

arguments. The district court also found that Hyan would not add any “necessary

elements” to the proceeding. Hyan has failed to rebut these findings, which are not

clearly erroneous. Therefore, RHD did adequately represent Hyan when he moved

to intervene, and Hyan failed to meet all four requirements necessary to intervene

as of right.2

       To overcome this conclusion, Hyan requests that we consider events

following the district court’s denial of its motion to intervene. However, we must

consider the motion to intervene under “the procedural posture of the case as it

existed” on the date the district court considered the motion. League of United

       2
         Although the dissent articulates a plausible alternative view of the
settlement agreement, it is no more plausible than the district court’s view. As a
result, the district court’s view “cannot be clearly erroneous.” Anderson v. City of
Bessemer, 470 U.S. 564, 574 (1985) (“Where there are two permissible views of
the evidence, the factfinder’s choice between them cannot be clearly erroneous.”).

                                         -4-
Latin Am. Citizens, 131 F.3d at 1303 n.2.3 If there has been a change of

circumstances, Hyan may bring his motion to intervene again. However, this court

should not consider those circumstances before giving the district court the

opportunity to do so.

                                          II.

      The Federal Rules of Civil Procedure vest discretion in a district court to

permit intervention: “On timely motion, the court may permit anyone to intervene

who . . . has a claim or defense that shares with the main action a common question

of law or fact.” Fed. R. Civ. P. 24(b)(1)(B). The court must also have “an

independent basis for jurisdiction over the applicant’s claims.” Donnelly v.

Glickman, 159 F.3d 405, 412 (9th Cir. 1998). However, even if these requirements

are met, “the district court has discretion to deny permissive intervention.” Id.

      The district court did not abuse its discretion in denying Hyan’s motion to

intervene under Rule 24(b)(1)(B), because, as concluded by the district court,

Hyan’s “participation [would] not contribute to the development of the underlying

factual issues or the equitable adjudication of the legal issues involved”; “Hyan’s

      3
        The dissent’s citation to United States v. Washington, 86 F.3d 1499, 1505
(9th Cir. 1996), is unpersuasive. See dissent op. at 2. The purported intervenor in
Washington sought, for the first time on appeal, “limited intervention” to appeal.
Id. at 1505. This new attempt at intervention put the purported intervenor’s
conduct following the district court’s decision at issue. Such is not the case here.

                                         -5-
intervention would [only] add . . . emphasis to the position taken by RHD”; and

“Hyan’s interests are adequately protected by RHD.” These reasons suffice. See,

e.g., Dep’t of Fair Emp’t & Hous. v. Lucent Techs. Inc., 642 F.3d 728, 742 (9th

Cir. 2011) (permitting a district court to preclude intervention on issues where

intervenor-in-part was adequately represented by another party); Perry v.

Schwarzenegger, 630 F.3d 898, 906 (9th Cir. 2011) (per curiam) (finding no abuse

of discretion where district court denied permissive intervention because purported

intervenors had no new arguments or evidence to contribute); Donnelly, 159 F.3d

at 412 (upholding denial of permissive intervention where “allowing intervention

would only serve to undermine the efficiency of the litigation process” (internal

quotation marks omitted)).4

      AFFIRMED.

      4
        Hyan also argued below and now argues on appeal (primarily in his Reply
Brief) that Federal Rule of Civil Procedure 19 also necessitates his intervention.
However, no party has sought Hyan’s joinder under Rule 19, and the district court
has made no decision under Rule 19. As a result, we do not consider Hyan’s
arguments citing Rule 19. Smith v. Marsh, 194 F.3d 1045, 1052 (9th Cir. 1999).

                                         -6-
                                                                                FILED
Executive Risk Specialty Insurance Co. v. Hyan, No. 12-56862                    MAR 19 2014

                                                                           MOLLY C. DWYER, CLERK
WATFORD, Circuit Judge, dissenting:                                           U.S. COURT OF APPEALS

      In my view, the district court erred in concluding that J. P. Hyan and Rutter

Hobbs and Davidoff (“RHD”) share the same ultimate objective as a result of their

settlement agreement. It’s true that both RHD and Hyan want the interpleaded

funds paid to Hyan, but their interests are not identical. Under the settlement

agreement, RHD is obligated to use its “best efforts” to secure payment of the

funds to Hyan, but if those efforts prove unsuccessful, RHD will not have to pay

Hyan any portion of the $5 million at issue. RHD has no direct claim of its own to

the $5 million res, but Hyan does. If the $5 million res is depleted by the

competing claims of Hummer and Peterson, only Hyan will be injured, not RHD.

Thus, RHD and Hyan do not share the same ultimate objective—RHD’s interest is

limited to complying with its obligations under the settlement agreement, while

Hyan’s ultimate interest is actual receipt of the res. Under these circumstances, I

would hold that the district court erred by applying a presumption of adequate

representation and requiring Hyan to make a compelling showing that RHD’s

representation was inadequate.

      Since there’s no dispute that Hyan meets the other requirements of

Rule 24(a)(2), absent the presumption of adequate representation, Hyan is entitled

to intervene if he can show that RHD’s representation of his interests “may be”
                                                                           Page 2 of 3
inadequate. Arakaki v. Cayetano, 324 F.3d 1078, 1086 (9th Cir. 2003). I would

hold that Hyan has made this “minimal” showing here. Id. Adequate

representation requires, among other things, that the representative “will

undoubtedly make all of a proposed intervenor’s arguments,” and that the

representative is “capable and willing to make such arguments.” Id. The

divergence between RHD’s and Hyan’s interests created by the settlement

agreement raises the potential that RHD may not make all of Hyan’s arguments.

      Events following the district court’s ruling on Hyan’s intervention motion

confirm this to be the case. (Even though these events occurred after the district

court’s ruling, they are the proper subject of judicial notice and are relevant to our

de novo assessment of Hyan’s right to intervene. See United States v. Washington,

86 F.3d 1499, 1505 (9th Cir. 1996) (considering effect of appeal taken after district

court’s ruling on motion to intervene); 21B Charles Alan Wright & Kenneth W.

Graham, Jr., Federal Practice and Procedure § 5106.4, at 244–45 (2d ed. 2005).)

The district court granted a stay of the interpleader action pending the outcome of

state-court litigation against Hummer and Peterson stemming from their work at

RHD. This ruling may result in the depletion of the $5 million res before the

parties’ competing claims to the funds are resolved in the interpleader action.

Despite this clear potential for impairment of Hyan’s interest in the res, RHD did
                                                                            Page 3 of 3
not appeal the ruling. Hyan contends that, had he been a party to the interpleader

action, he would have sought appellate review of the district court’s ruling granting

the stay.

      Because intervention is justified when the representative party doesn’t make

all of a proposed intervenor’s arguments, it follows that failure to appeal a ruling

adverse to the would-be intervenor’s interest may constitute inadequate

representation. See Pellegrino v. Nesbit, 203 F.2d 463, 468 (9th Cir. 1953)

(shareholder entitled to intervene in securities action against directors after

corporation decided not to appeal); see also Americans United for Separation of

Church and State v. City of Grand Rapids, 922 F.2d 303, 306 (6th Cir. 1990);

7C Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure

§ 1909, at 438–39 (3d ed. 2007). In Spangler v. Pasadena City Bd. of Ed., 427

F.2d 1352 (9th Cir. 1970), we held that failure to appeal did not amount to

inadequate representation, but in that case the decision not to appeal was made by

an elected school board representing the proposed intervenor. Id. at 1354.

Because RHD’s failure to appeal the district court’s order staying the case

demonstrated that RHD was not, in fact, capable and willing to make all of Hyan’s

arguments, I believe its representation was inadequate.