Opinion
Civil Action No: 00-3600, Section: "T" (4)
February 8, 2002
On October 09, 2001, Mid America Lift Truck Incorporated ("Mid America") filed a Motion for Leave to File Verified Complaint of Intervention (doc. # 31) seeking to intervene as a matter of right and/or with pennission. The plaintiff, United Rentals, Inc. ("United"), opposes the motion contending that Mid America has failed to prove that it has a significantly protectable interest in the matter and that any interest it does have will not be adequately protected by the parties already involved in the suit.
I. Factual Background
This suit arises out of a claim for damages filed by United against Maritrend. The suit seeks damages for the loss of forklifts which United rented to Maritrend between June and October 1999. On December 17, 1999, Maritrend was transporting the forklifts up the Mississippi River. While under tow, the barge began to sink and eventually listed, and the forklifts fell in the river. The forklifts were eventually recovered from the river and returned to United on January 10, 2000.
After receiving an offer in the amount of $2,000 from Maritrend to purchase them, United attempted to sell the forklifts for salvage. United placed ads in the newspaper and invited potential bidders to bid on the purchase of the forklifts. The bidding was to be closed at the close of business on September 17, 2001. Mid America placed a bid of $5,900 for the purchase of the forklifts. On the morning of September 18, 2001, United informed Mid America that it was the highest bidder and that its bid was accepted. United also told Mid America that the terms of payment and delivery would need to be discussed.
United contacted Mid America on the afternoon of September 18, 2001 and informed them that a local entity offered to purchase the forklifts for $5,900. United later informed Mid America that it had decided to sell the forklifts to the local entity rather than Mid America.
Mid America filed the instant motion and seeks specific performance and/or damages in the amount that Mid America would have realized had it sold the forklifts, or their parts, on the open market. United opposes the motion contending that Mid America's request to intervene is untimely. United also contends that Mid America does not have a direct, substantial, and legally protectable interest in the litigation, Mid America will not be impaired if not allowed to intervene, and Mid America fails to qualify for permissive intervention under Rule 24(b).
The motion was originally heard with oral arguments on October 31, 2001. At the hearing, the undersigned deferred a ruling on the motion until November 7, 2001. The undersigned also ordered the parties to submit additional briefing on the mailer. The parties complied. Having been fully briefed on the issues, the Court may now conduct its analysis.
At the hearing the undersigned ordered the parties to provide briefs on the impact Lombardo v. Deshotel, 647 So.2d 1086 (La. 1994) may have on Mid America's Motion for Leave to Intervene. After having reviewed the briefs, the Court finds chat Lombardo involves a question as to whether state or federal law should be applied. This is a matter to be determined by the District Court Judge and is irrelevant to the Court's analysis of the instant motion.
II. Analysis A. Intervention as of Right
The Federal Rule of Civil Procedure 24(a) governs interventions of right. It states in pertinent part:
Upon timely application anyone shall be permitted to intervene in an action . . . when the applicant claims an interest relating to the property or transaction which is the subject of the action and the applicant is so situated that the 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.
"Federal courts should allow intervention where no one would be hurt and the greater justice could be attained." Sierra Club v. Espy, 18 F.3d 1202, 1205 (5th Cir. 1994). Thus, a party is entitled to an intervention of right if (1) the motion to intervene is timely; (2) the potential intervenor asserts an interest that is related to the property or transaction that forms the basis of the controversy in the case into which she seeks to intervene; (3) the disposition of that case may impair or impede the potential intervenor's ability to protect her interest; and (4) the existing parties do not adequately represent the potential intervenor's interest. Ford v. City of Huntsville, 242 F.3d 235, 239 (5th Cir. 2001). Failure to satisfy even one of these requirements is sufficient to warrant denial of a motion to intervene as a matter of right." Securities and Exchange Commission v. Homa, 2000 WL 1468726, *2 (N.D. Ill. 2000).
1. Timeliness
When determining whether a motion to intervene is timely, a 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. Ford, 242 F.3d at 239.
"The requirement of timeliness is not a tool of retribution to punish the tardy would-be intervenor, but rather a guard against prejudicing the original parties by the failure to apply sooner." Sierra Club v. Espy, 18 F.3d 1202, 1205 (5th Cir. 1994). "A motion to intervene's timeliness is to be determined from all the circumstances." Doe v. Glickman, 256 F.3d 371, 376 (5th Cir. 2001). "This analysis is contextual; absolute measures of timeliness should be ignored." Id. A court should ignore "[h]ow far the litigation has progressed when intervention is sought, . . . the amount of time that may have elapsed since the institution of the action . . . . and the likelihood that intervention may interfere with orderly judicial processes." Id.
In the instant case, District Court Judge G. Thomas Porteous Jr. initially established a scheduling order which set the pleadings deadline at June 22, 2001 and the trial date at January 28, 2002. On November 26, 2001, Judge Porteous continued the trial until July 29, 2002 and extended the pleadings deadline to January 10, 2002. Mid America filed its Motion to Intervene on October 9, 2001, well before the January 10, 2002 deadline. Further, all parties should be able to complete any discovery required as a result of Mid Americas s intervention. Thus, Mid America's motion is timely.
See Rec. doc. #17.
See Rev. doc. #64.
2. Mid America's Interest in the Forklifts
Mid America contends that their claim will be irreparably prejudiced if the value of the forklifts is judicially determined by the trial court in United's claim against Maritrend without their having an opportunity to address the issue. United contends however that Mid America intends to involve a contractual claim in a suit that merely involves a recovery for damages. United further contends that a determination of value by the trial Court as to "replacement list value" will have no res judicata effect and will not affect Mid America's claim against United for its failure to sell the forklifts to them.
A potential intervener asserts an interest that is related to the property or transaction that forms the basis of the controversy in the case into which she seeks to intervene, if the potential intervener has a "direct, substantial, and legally protectable" interest in the property or transaction that forms the basis of the controversy in the case into which she seeks to intervene. Id.at 379. An economic interest alone is insufficient to fulfill this requirement. New Orleans Public Service, Inc. v. United Gas Pipeline Co., 732 F.2d 452, 464 (5th Cir.) (en banc), cert. denied, 469 U.S. 1019 (1984). The interest must be one which the substantive law recognizes as belonging to or owned by the applicant. Id. The claim that the applicant seeks to assert through the intervention must be a claim as to which the applicant is the real party in interest; the real party in interest requirement in Rule 17(a) of the Federal Rules of Civil Procedure "applies to intervenors as well as plaintiffs." Id.
The "interest in the property" in United's case against Maritrend is the value of the forklifts after the incident. This issue also forms the basis of the intervention sought by Mid America. In the context of intervention, the Fifth Circuit has warned against defining "property or transaction" too narrowly. Ford v. City of Huntsville, 242 F.3d 235, 240 (5th Cir. 2001). Since the interest test is primarily a practical guide to disposing of lawsuits by involving as many apparently concerned persons as is compatible with efficiency and due process," Doe, 256 F.3d at 379, Mid America has asserted an interest related to the transaction that forms the basis of the controversy in United's lawsuit.
3. Impairment of Ability to Protect Interest
The potential intervenor must be situated so that the disposition of the case into which she seeks to intervene may impair or impede her ability to protect her interest. See id at 379. In 1966 the Supreme Court had amended the rule to eliminate a requirement that the proposed intervenor "is or may be bound by the judgment in the action" in favor of the requirement that "the disposition of the action may as a practical matter impair or impede the applicant's ability to protect [its] interest." Kansas Pub. Employees Retirement Sys. v. Reimer Koger Associates, Inc., 60 F.3d 1304, 1307 (8th Cir. 1995). The applicant "need not show that, but for its intervention, its interest `would be' impaired by the operation of res judicata, collateral estoppel, or stare decisis, but rather only that its interest `may be' so impaired." Id.
Mid America contends that if the value of the forklifts are judicially determined in United's claim against Maritrend, without its having an opportunity to address the issue and to set forth its claim, it will be irreparably prejudiced. Mid America contends that a determiniation of the post-incident value of the forklifts in United's claim against Maritrend will impact Mid America in a subsequent proceeding regarding that value. Specifically, Mid America is concerned that such a determination will have res judicata effect or will subject it to issue preclusion.
a. Res Judicata
Federal law determines the res judicata effect of a prior federal court judgment. Russell v. SunAmerica Securities, Inc., 962 F.2d 1169, 1172 (5th Cir. 1992). In order for res judicata to apply, four requirements must be met. First, the parties in the instant action must be the same as or in privity with the parties in the prior action in question. Ellis v. AMEX Life Ins. Co., 211 F.3d 935, 937 (5th Cir. 2000). Second, the court that rendered the prior judgment must have been a court of competent jurisdiction. Id. Third, the prior action must have terminated with a final judgment on the merits. Id. Fourth, the same claim or cause of action must be involved in both suits. Id.
In the instant case, the first requirement has not been met. A non-party . . . is in privity and is adequately represented where a party in the prior suit is so closely aligned to her interests as to be her virtual representative. Gulf Island-IV. Inc. v. Blue Streak-Gulf IS OPS, 24 F.3d 743, 747 (5th Cir. 1994). This requires more than a showing of parallel interests — it is not enough that the non-party may be interested in the same questions or proving the same facts. Id. Virtual representation requires an express or implied legal relationship in which parties to the first suit are accountable to non-parties who file a subsequent suit. See Royal Insurance Co. of America v. Quinn-L Capital Corp., 960 F.2d 1286, 1297 (5th Cir. 1992).
The Court has found no evidence, nor has Mid America suggested, that such a relationship exists between it and United or Maritrend. Thus, Mid America has not met the identity of parties requirement of res judicata. Because Mid America has not met the first requirement of res judicata, it is unnecessary to address the remaining requirements.
b. Issue Preclusion
Issue preclusion, like the related doctrine of res judicata, has the dual purpose of protecting litigants from the burden of relitigating an identical issue with the same party or his privy and of promoting judicial economy by preventing needless litigation. Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 (1979). Issue preclusion promotes the interests of judicial economy by treating certain issues of fact or law that are validly and necessarily determined between two parties as final and conclusive. U.S. v. Shanbaum, 10 F.3d 305, 311 (5th Cir. 1994). It applies "if another court has already furnished a trustworthy determination of a given issue of fact or law because a party that has already litigated that issue should not be allowed to attack that determination in a second action." Id. District courts have broad discretion in determining when issue preclusion should be applied to preclude relitigation of matters that have already been decided by other courts. Copeland v. Merrill Lynch, 47 F.3d 1415, 1423 (5th Cir. 1995).
In order for issue preclusion to apply, four elements must be met. Shanbaum, 10 F.3d at 311. (citing Universal American Barge Corp. v. J- Chem, Inc., 946 F.2d 1131, 1136 (5th Cir. 1991)). First, the issue at stake must be identical to the one involved in the prior action. Id. Second, the issue must have been actually litigated in the prior action. Id. Third, the determination of the issue in the prior action must have been a part of the judgment in that earlier action. Southmark Corp. v. Coopers Lybrand, 163 F.3d 925, 932 (5th Cir. 1999). Fourth, there must be no special circumstances that would render issue preclusion inappropriate or unfair. Shanbaum, 10 F.3d at 311.
Generally, it is true that issue preclusion cannot apply against nonparties. See Terrell v. DeConna, 877 F.2d 1267, 1270 (5th Cir. 1989) (stating "[t]he imposition of a preclusive bar against a non-party to the original adjudication is limited for obvious reasons: a non-party has had no day in court"). However, there are exceptions to this general rule. Courts should bind nonparties to issues which have been conclusively settled in previous suits when the nonparties interests were adequately represented in that suit. Freeman v. Lester Coggins Trucking Inc., 771 F.2d 860, 864 (5th Cir. 1985) (quoting Southwest Airlines v. Texas Int'l Airlines, 546 F.2d 84, 95 (5th Cir. 1977). Moreover, "a person may be bound by a judgment even though not a party if one of the parties to the suit is so closely aligned with his interests as to be his `virtual representative.'" Metraheal Insurance Company v. Drake, 68 F. Supp.2d 752, 758 (E.D.Tex. 1999).
A non-party is adequately represented by a party in a prior suit whose interests were so closely aligned to her interests as to be her "virtual representative." See Eubanks v. FDIC, 977 F.2d 166, 170 (5th Cir. 1992). As discussed supra, virtual representation is a narrow doctrine. To establish the necessary alignment of interests, it is insufficient to show that the parties have parallel interests, that the first suit was competently litigated, or even that the same attorney was used in both suits. See Benson and Ford, Inc. v. Wanda Petroleum Co., 833 F.2d 1172, 1175 (5th Cir. 1987). Virtual representation requires an express or implied legal relationship in which parties to the first suit are accountable to non-parties who file a subsequent suit. See Royal Insurance Co. of America v. Quinn-L Capital Corp., 960 F.2d 1286, 1297 (5th Cir. 1992). Whether such a legal relationship exists is a question of fact for the trial court. Meador v. ORYX Energy Co., 87 F. Supp.2d 658, 665 (E.D. Tex 2000).
Here, because there is no express or implied relationship or accountability between Maritrend and Mid America, Maritrend is not a virtual representatives of Mid America. Further, there is no showing in the record that Maritrend adequately represents Mid America's interests. Thus, Mid America will not be precluded from pursuing its claims against United.
Mid America's claim of issue preclusion fails for lack of sufficient identity between the parties. Also, the disposition of United's claim against Maritrend will not impair or impede Mid America's ability to protect its own interests. Because, Mid America has failed to satisfy the third requirement for intervention as of right, it is unnecessary to address the fourth. Accordingly, Mid Americas s request for intervention as of right is denied.
B. Permissive Intervention
Federal Rule of Civil Procedure 24(b) governs permissive intervention and provides in pertinent part:
Upon timely application anyone may be permitted to intervene in an action: . . . (2) when an applicant's claim or defense and the main action have a question of law and fact in common. In exercising its discretion the court shall consider whether the intervention will unduly delay or prejudice the adjudication of the rights of the original parties.
When acting on a request for permissive intervention, a district court should consider, among other factors, whether the intervenors are adequately represented by other parties and whether they are likely to contribute significantly to the development of the underlying factual issues. League of United Latin American Citizens, Council #4434 v. Clements, 884 F.2d 185 (5th Cir. 1989). Further, while the decision to permit intervention pursuant to Rule 24(b) is left to the sound discretion of the district court — even when the court finds a common question of fact of law, the court should consider the possibility of undue delay or prejudice that the original parties might incur as a result of intervention. Bush v. Viterna, 740 F.2d 350, 359 (5th Cir. 1984).
In the instant case, the two claims do not involve common questions of fact and law sufficient to allow Mid America permissive intervention. United's claim against Maritrend involves the interpretation and breach of their rental agreement. Mid America's claim against United on the other hand, involves a separate agreement between Mid America and United and the damages resulting from the breach of that agreement. Also, the intervention of Mid America into this litigation would do little more than needlessly increase costs and delay disposition of the case. Thus, Mid America is not allowed permissive intervention. Accordingly,
IT IS ORDERED that the Motion for Leave to File Verified Complaint of Intervention (doc. # 31) is DENIED.