Consolidated Grain & Barge, Inc. v. Anny et al

Filing 511

ORDER AND REASONS: IT IS ORDERED that 507 motion to intervene IS GRANTED, as set forth in document. The proposed pleading (Rec. Doc. 507-4) attached to the motion shall be filed into the record. IT IS FURTHER ORDERED that a hearing to resolve the competing claims to the garnished funds be held on Wednesday, 5/16/2018 at 9:00 a.m. IT IS FURTHER ORDERED that ARTCO, Randy Anny, and Applicants shall file memoranda of law on the questions of sanctions for failures by Applicants and Judgment Debtors to comply with production orders, and whether Applicants are the alter egos of Judgment Debtor Randy Anny by 5/9/2018. Signed by Judge Ivan L.R. Lemelle on 4/23/2018.(Reference: 11-2615, 13-5827)(jls)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
CONSOLIDATED GRAIN & BARGE, INC.

CIVIL ACTION

VERSUS

NO. 11-2204
REFERS TO:
11-2615 and
13-5827

RANDY ANNY, ET AL.

SECTION "B"(1)
ORDER AND REASONS

Ainey’s, LLC and Anny’s, Inc. (“Applicants”) filed a motion
to

intervene.

Rec.

Doc.

507.

Plaintiff

American

River

Transportation Company (ARTCO) timely filed an opposition. Rec.
Doc. 510.
For the reasons discussed below,
IT IS ORDERED that motion to intervene (Rec. Doc. 507) is
GRANTED. The proposed pleading (Rec. Doc. 507-4) attached to the
motion shall be filed into the record.
IT IS FURTHER ORDERED that a hearing to resolve the competing
claims to the garnished funds be held on Wednesday, May 16, 2018,
at 9:00 a.m.
IT IS FURTHER ORDERED that ARTCO, Randy Anny, and Applicants
shall file memoranda of law on the questions of sanctions for
failures

by

Applicants

and

Judgment

Debtors

to

comply

with

production orders, and whether Applicants are the alter egos of
Judgment Debtor Randy Anny by May 9, 2018.

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FACTUAL BACKGROUND AND PROCEDURAL HISTORY
The

instant

motion

to

intervene

arises

as

part

of

a

garnishment proceeding. Plaintiff and Judgment Creditor American
River

Transportation

Company

(ARTCO)

initiated

a

garnishment

proceeding in November 2017 as part of its efforts to enforce the
Judgment (Rec. Doc. 397) against, inter alia, Judgment Debtor Randy
Anny. See Rec. Doc. 468. Garnishee Consolidated Grain & Barge (CGB)
first indicated that it possessed funds owed to Randy Anny in
December

2017.

See

Rec.

Doc.

478.

But

in

January

2018,

CGB

indicated that Ainey’s, LLC and Anny’s, Inc. (“Applicants”) also
claimed ownership to the garnished funds. See Rec. Doc. 499. The
funds at issue derive from a contract between CGB, Randy Anny,
Ainey’s, LLC, and Anny’s, Inc. that provides for the lease by CGB
of certain land along the Mississippi River. See Rec. Doc. 502-1.
The parties were unable to resolve the competing claims to the
garnished funds, which were ultimately ordered deposited into the
registry of the court. See Rec. Doc. 506. The funds currently at
issue amount to $102,482.00. See id.
In March 2018, the Court provided Applicants fourteen days to
file a motion to intervene to assert their claims to the garnished
funds within the context of the instant garnishment proceeding.
See Rec. Doc. 506. The Applicants then filed the instant motion to
intervene to assert their contractual claim to a portion of the

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garnished funds. See Rec. Doc. 507. ARTCO filed an opposition. See
Rec. Doc. 510.
LAW AND ANALYSIS
Federal Rule of Civil Procedure 24 provides two avenues for
intervention. The first is mandatory and applies when a movant
“claims an interest relating to the property or transaction that
is the subject of the action, and is so situated that disposing of
the action may as a practical matter impair or impede the movant’s
ability

to

protect

its

interest,

unless

existing

parties

adequately represent that interest.” Fed. R. Civ. P. 24(a). The
second is permissive and applies when a movant has “a claim or
defense that shares with the main action a common question of law
or fact.” Fed. R. Civ. P. 24(b). Regardless of which avenue a
movant pursues, a motion to intervene must be timely. See Fed. R.
Civ. P. 24. The instant motion appears to rely on mandatory
intervention under Rule 24(a) because it focuses on the Applicants’
claim to the garnished funds, which is the “property . . . that is
the subject of the action . . . .” See Rec. Doc. 507.
To satisfy the requirements for mandatory intervention, an
applicant must establish the following: (1) timeliness; (2) “an
interest relating to the property or transaction which is the
subject of the action;” (3) that the applicant is “so situated
that the disposition of the action may, as a practical matter,
impair or impede his ability to protect that interest;” and (4)
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that the applicant’s interest is “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).
A court determines the timeliness of a motion to intervene by
weighing four factors:
(1) [t]he length of time during which the would-be
intervenor actually knew or reasonably should have known
of its interest in the case before it petitioned for
leave to intervene; (2) the extent of the prejudice that
the existing parties to the litigation may suffer as a
result of the would-be intervenor’s failure to apply for
intervention as soon as it knew or reasonably should
have known of its interest in the case; (3) the extent
of the prejudice that the would-be intervenor may suffer
if intervention is denied; and (4) the existence of
unusual circumstances militating either for or against
a determination that the application is timely.
Sommers v. Bank of America, 835 F.3d 509, 512-13 (5th Cir. 2016).
The factors here indicate that the instant motion was timely.
CGB first indicated that it possessed the funds at issue on
January 2, 2018. See Rec. Doc. 494. CGB clarified the nature of
those funds, and the various claims to the funds, on January 25,
2018. See Rec. Doc. 502. The Court ordered Applicants to file a
motion to intervene on March 2, 2018. See Rec. Doc. 506. Applicants
filed the instant motion to intervene on March 20, 2018. See Rec.
Doc. 507. The gap of less than three months between receiving
notice of CGB’s garnishment answer and filing a motion to intervene
does not indicate that the motion was untimely because courts have,
in certain cases, allowed intervention more than a year after a

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case began. See, e.g., Smith Petroleum Serv., Inc. v. Monsanto
Chem. Co., 420 F.2d 1103, 1115-16 (5th Cir. 1970). Although ARTCO
may experience some prejudice from the intervention—a delay in
receiving the garnished funds—this is no greater than the prejudice
that Applicants would face if money they are entitled to is paid
to a third party. Moreover, allowing intervention at this point in
the proceedings will likely diminish future litigation over these
funds. Therefore, upon consideration of the relevant factors, the
application for intervention is timely. See Wal-Mart Stores, Inc.
v. Tex. Alcoholic Beverage Comm’n, 834 F.3d 562, 565-66 (5th Cir.
2016)

(“Because

the

[applicant]

sought

intervention

before

discovery progressed and because it did not seek to delay or
reconsider phases of the litigation that had already concluded,
the [applicant’s] motion was timely.).
The second requirement, that the applicant has an interest in
the property that is the subject of the action, is also satisfied.
To meet the second requirement, an applicant “must show that it
has a direct, substantial, legally protectable interest in the
action, meaning that the interest be one which the substantive law
recognizes as belonging to or being owned by the applicant.” In re
Lease Oil Antitrust Litig., 570 F.3d 244, 250 (5th Cir. 2009).
Anny’s, Inc. and Ainey’s, LLC seek to assert a contractual right
to a portion of the garnished funds. See Rec. Doc. 507. An
applicant for intervention who alleges that a pending lawsuit
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threatens a contractual right satisfies the second element of the
test for mandatory intervention. See Sierra Club v. Glickman, 82
F.3d 106, 109 (5th Cir. 1996) (per curiam).
The third requirement, that the disposition of the matter may
impair or impede the applicant’s ability to protect its interest,
is similarly met. If intervention is denied and the garnished funds
are distributed to ARTCO, the Applicants would need to institute
separate legal proceedings against CGB or ARTCO to attempt to
recoup their interest. The need to “institute another action” to
assert a contractual interest sufficiently impedes an applicant’s
ability to protect its interest to warrant intervention. See Swann
v. City of Dallas, 172 F.R.D. 211, 214 (N.D. Tex. 1997).
The fourth requirement, that the applicants’ interests are
not adequately represented by the existing parties to the suit,
also weighs in favor of permitting intervention. The “minimal”
burden of meeting this requirement lies with the applicant and “is
satisfied

if

the

applicant

shows

that

representation

of

his

interest ‘may be’ inadequate.” Haspel, 493 F.3d at 570. Here, the
only parties to the garnishment proceeding are ARTCO and CGB. ARTCO
argues that it is entitled to all of the garnished funds. CGB does
not assert any claim to the garnished funds. Neither ARTCO nor CGB
have an interest in protecting the Applicants’ claims to the funds.
Furthermore, judgment debtor Randy Anny has no claim to the funds
because any funds originally owed to him are actually due to ARTCO.
6

See La. Code Civ. Proc. art. 2415. Therefore, no existing party to
the garnishment proceeding will adequately protect the Applicants’
interests. See Wal-Mart Stores, 834 F.3d at 569 (reasoning that
applicant for intervention had met its burden to show inadequate
representation because its interests were adverse to the parties’
interests and the Fifth Circuit has a “broad policy favoring
intervention”). Because Applicants meet all four requirements
under Rule 24(a)(2), intervention is required.
That being said, the Order instructing Applicants to file a
motion to intervene also instructed Applicants to include “sworn
documentary evidence of their ownership, control, and related
claim over funds at issue.” Rec. Doc. 506 at 4. Applicants only
attached a declaration from Randy Anny. See Rec. Doc. 507-1. This
declaration does not comply with the Court’s prior order (Rec.
Doc. 506) because it offers the conclusory statements of an
interested party (Judgment Debtor Randy Anny no less) instead of
the underlying documents that purportedly substantiate Applicants’
claims to the garnished funds. This follows the repeated and
continuing refusals by Judgment Debtors Randy Anny and Barbara
Falgoust

to

managerial

provide
control

documentation
over

of

Applicants.

their

ownership

Compare

Rec.

of

and

Doc.

508

(recently filed declaration) with Rec. Doc. 506 at 3-4 (ordering
production of “sworn documentary evidence, including evidence (1)
of who owns Ainey’s LLC and Anny’s Inc. and (2) that Ainey’s LLC
7

and Anny’s Inc. truly in fact and law fully and actively observe
corporate formalities”) and Rec. Doc. 506 at 4 n.2 (listing the
various documents that were ordered produced eighteen months ago).
As the Court has explained, this information is highly relevant to
the

instant

garnishment

proceeding

because

ARTCO

has

offered

evidence that Applicants “are simply alter egos for Judgment
Debtors Randy Anny and Barbara Falgoust . . . .” Rec. Doc. 506
at 2.
The refusal to provide relevant documents in that face of a
clear court order is sanctionable conduct, especially when it
serves to unnecessarily prolong the proceedings. See Fed. R. Civ.
P. 11(c)(3), 16(f), 37(b)(2). One sanction potentially available
to the Court is “directing that the matters embraced in the order
or other designated facts be taken as established for purposes of
the action, as the prevailing party claims[.]” Fed. R. Civ. P.
37(b)(2)(A)(i). Such a sanction would be highly appropriate in the
instant matter because the documents needed to analyze whether
Applicants are alter egos of Judgment Debtors are entirely within
the control of Applicants and Judgment Debtors. See Riddle v.
Simmons, 40,000, p.15-18 (La. App. 2 Ci. 2/16/06); 922 So. 2d 1267,
1279-80; Hamilton v. AAI Ventures, L.L.C., 1999-1849, p.5-6 (La.
App. 1 Cir. 9/22/00); 768 So. 2d 298, 302. Applicants and Judgment
Debtors cannot refuse to disclose documents at the same time that
they attempt to rely on those same documents to assert claims to
8

the garnished funds. See Chilcutt v. United States, 4 F.3d 1313,
1319-25 (5th Cir. 1993) (affirming imposition of sanctions when
court concluded that defendant refused to produce information that
would have strengthened plaintiff’s claims). ARTCO, Randy Anny,
and Applicants should address the appropriateness of imposing
sanctions in their memoranda concerning whether Applicants are the
alter egos of Judgment Debtor Randy Anny.
New Orleans, Louisiana, this 23rd day of April, 2018.

___________________________________
SENIOR UNITED STATES DISTRICT JUDGE

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