Court Opinion

ID: 6082967
Source: CourtListenerOpinion
Date Created: 2022-01-13 19:00:34.353287+00
Date Added: 2024-06-11T08:53:08.762853
License: Public Domain

Case: 20-40240    Document: 00516165396        Page: 1   Date Filed: 01/13/2022

          United States Court of Appeals
               for the Fifth Circuit                             United States Court of Appeals
                                                                          Fifth Circuit

                                                                        FILED
                                                                  January 13, 2022
                                No. 20-40240
                                                                   Lyle W. Cayce
                                                                        Clerk
   Marcus Helt, Receiver,

                                                                   Appellee,

   Securities and Exchange Commission,

                                                         Plaintiff—Appellee,

                                    versus

   Sethi Petroleum, L.L.C.,

                                                                 Defendant,
                                    versus

   Shahnaz Sethi,

                                                         Movant—Appellant.

                 Appeal from the United States District Court
                      for the Eastern District of Texas
                           USDC No. 4:15-CV-338

   Before Jolly, Elrod, and Oldham, Circuit Judges.
Case: 20-40240     Document: 00516165396          Page: 2    Date Filed: 01/13/2022

                                   No. 20-40240

   Per Curiam:*
          The question presented is whether Shahnaz Sethi (“Shahnaz”) had
   the right to intervene in a receivership litigation involving her son Sameer
   Sethi (“Sameer”). The district court said no. We affirm.
          In May 2015, the Securities and Exchange Commission (“SEC”)
   brought an action against Sameer for perpetuating a fraudulent scheme
   through his company Sethi Petroleum LLC. On the SEC’s motion, the
   district court appointed a receiver (Marcus Helt, “Receiver”) and placed
   Sameer’s assets in receivership. That gave the Receiver full control,
   possession, and custody over Sameer’s assets. Those assets included an
   entity called Sethi Financial Group, Inc., which was later renamed Elkwood
   Capital, Inc. (“Elkwood”).
          Notwithstanding the receivership, Sameer and his wife Julissa
   Martinez (“Martinez”) continued perpetuating their fraudulent scheme
   through Elkwood. The Receiver and the SEC then asked the district court to
   confirm that the receivership included Elkwood’s assets. The district court
   agreed. The Receiver and the SEC then entered Elkwood’s offices, seized its
   assets, and included them in the receivership estate.
          Martinez moved to intervene as of right in the underlying receivership
   litigation. She argued that Elkwood was an independent business, so it and its
   assets did not belong in the receivership estate. Shahnaz also moved to
   intervene as of right because she allegedly loaned Martinez $100,000 to fund
   Elkwood’s operations. The district court granted Martinez intervention as of
   right, thus allowing her to participate as a party and contest whether the
   Receiver properly seized Elkwood’s assets. The court, however, denied
   Shahnaz’s motion to intervene as of right.

          *
            Pursuant to 5th Circuit Rule 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 Circuit Rule 47.5.4.

                                         2
Case: 20-40240     Document: 00516165396             Page: 3   Date Filed: 01/13/2022

                                      No. 20-40240

          Shahnaz timely appealed. Because the complete denial of a motion to
   intervene as of right is an immediately appealable final decision, we have
   jurisdiction under 28 U.S.C. § 1291. See Edwards v. City of Houston, 78 F.3d
   983, 992 (5th Cir. 1996) (en banc). Our review is de novo. Texas v. United
   States, 805 F.3d 653, 656 (5th Cir. 2015).
          Under Federal Rule of Civil Procedure 24(a)(2), a would-be
   intervenor must show, among other things, that “existing parties [do not]
   adequately represent [the movant’s] interest.” Fed. R. Civ. P. 24(a)(2);
   see also Texas, 805 F.3d at 661–64. “The burden of establishing inadequate
   representation is on the applicant for intervention.” Edwards, 78 F.3d at
   1005. And our precedent creates a presumption of adequate representation
   “when the would-be intervenor has the same ultimate objective as a party to
   the lawsuit.” Texas, 805 F.3d at 661 (internal quotation marks omitted). “If
   the same ultimate objective presumption applies, the applicant for
   intervention must show adversity of interest, collusion, or nonfeasance on
   the part of the existing party to overcome the presumption.” Id. at 661–62
   (internal quotation marks omitted). Such adversity, collusion, or nonfeasance
   must be more than merely theoretical; there must be a “serious probability”
   that the existing party and the movant may not share the same ultimate
   objective. 7C Charles Alan Wright & Arthur R. Miller,
   Federal Practice and Procedure § 1909 (3d ed.); see also Texas,
   805 F.3d at 661 (citing § 1909).
          The district court concluded that Shahnaz and Martinez have the
   same ultimate objective—removing Elkwood and its assets from the
   receivership—thus triggering the presumption of adequate representation.
   Then the district court concluded that Shahnaz failed to overcome that
   presumption by pointing to adversity of interest, collusion, or nonfeasance
   on the part of the existing party, Martinez.

                                           3
Case: 20-40240      Document: 00516165396          Page: 4    Date Filed: 01/13/2022

                                    No. 20-40240

          We have carefully considered Shahnaz’s arguments, and we hold that
   there was no reversible error in the district court’s decision.
          AFFIRMED.

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