Crestmark v. Simon Automotive, LLC et al

Filing 18

OPINION AND ORDER granting 12 First Western Trust Bank's Motion to Intervene and setting deadline of 8/10/2020 to file a response to Plaintiff's Motion to Appoint Receiver. Signed by District Judge Robert H. Cleland. (LWag)

Case 3:20-cv-11396-RHC-EAS ECF No. 18 filed 07/27/20

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UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
______________________________________________________________________
CRESTMARK,
Plaintiff,
v.

Case No. 20-11396

SIMON AUTOMOTIVE, LLC,
et al.,
Defendants.
__________________________________/
OPINION AND ORDER GRANTING INTERVENING PLAINTIFF’S MOTION TO
INTERVENE AND SETTING DEADLINE FOR INTERVENING PLAINTIFF TO
RESPOND TO PLAINTIFF’S MOTION TO APPOINT RECIEVER
Plaintiff Crestmark brings this action for breach of contract against Defendants
Simon Automotive, LLC (“S. Auto.”), Simonxpress Pizza, LLC (“S. Pizza”), Simon Stores
Corporation, SE Corporation of Michigan, Simon’s Enterprise Inc. (“SEI”), 643
Telegraph, LLC, Pinkney Petroleum, LLC, Cactus Shell, LLC, Simon Land Development
Group, LLC, and Fawzi Simon. (ECF No. 1, PageID.10-13.) Plaintiff alleges that it
provided two separate loans, one to Defendant S. Auto. and one to Defendant S. Pizza,
for the purchase of business equipment. (Id., PageID.4-5, ¶¶ 16, 19.) Defendants
Simon, Simon Stores Corporation, SE Corporation of Michigan, SEI, 643 Telegraph,
Pinkney Petroleum, Cactus Shell, and Simon Land Development Group allegedly
guaranteed the loans. (Id., PageID.4-5, ¶¶ 17-18, 20-21.) Plaintiff claims Defendants S.
Auto. and S. Pizza entered into default; Plaintiff seeks to foreclose on security interests
it allegedly has in the two companies’ equipment and appoint a receiver over their
businesses. (Id., PageID.13-14.)

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First Western Trust Bank (“First Western”) moves to intervene. (ECF No. 12.)
Neither Plaintiff nor any Defendant has filed a response opposing First Western’s
motion.
“On a 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). Further, “[i]n exercising its discretion, the court must consider
whether the intervention will unduly delay or prejudice the adjudication of the original
parties’ rights.” Fed. R. Civ. P. 24(b)(3). Thus, the proposed intervenor has the burden
to “establish that the motion for intervention is timely and alleges at least one common
question of law or fact.” United States v. Michigan, 424 F.3d 438, 445 (6th Cir. 2005)
(citing Michigan State AFL-CIO v. Miller, 103 F.3d 1240, 1248 (6th Cir. 1997)). “[T]he
district court must then balance undue delay and prejudice to the original parties, if any,
and any other relevant factors to determine, whether, in the court’s discretion,
intervention should be allowed.” Id.
First Western meets the first requirement of setting forth “a common question of
law or fact.” Fed. R. Civ. P. 24(b)(1). First Western presents evidence of two loans it
issued to Defendant S. Pizza. (ECF Nos. 12-1, 12-9.) The bank also attaches an
agreement whereby Defendants Simon and SEI guaranteed Defendant S. Pizza’s
loans. (ECF No. 12-11.) According to First Western, Defendant S. Pizza is indebted to it
in an amount not less than $3,576,526.53 and attaches a demand letter sent to
Defendants S. Pizza, Simon, and SEI. (ECF No. 12, PageID.422; ECF No. 12-13.)
In this action, Plaintiff seeks to recover not less than $204,771.09 from
Defendant S. Pizza; it also asks for the appointment of a receiver over Defendant S.

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Pizza’s assets. (ECF No. 1, PageID.12, 14.) Plaintiff alleges Defendants Simon and SEI
guaranteed loans valued at $460,843.07 for both Defendants S. Pizza and S. Auto. (Id.,
PageID.13.)
First Western has a real legal interest in this litigation which may be adversely
affected by a judgment in favor of Plaintiff or the appointment of a receiver over
Defendant S. Pizza’s business operations. (Id., PageID.12, 14.) Plaintiff and First
Western have competing claims over the same assets. See Reliastar Life Ins. Co. v.
MKP Invs., 565 F. App’x 369, 374-75 (6th Cir. 2014) (affirming a district court’s finding
that two banks lacked common questions of law or fact when they had no interest in a
disputed insurance policy but merely wished to collect the policy’s proceeds once paid).
(ECF No. 1, PageID.12-14; ECF Nos. 12-1, 12-9, 12-11.) The priority of Plaintiff’s and
First Western’s loans and the decision on whether to appoint a receiver are common
questions of law and fact justifying First Western’s intervention. Fed. R. Civ. P. 24(b)(1).
The court also finds that First Western’s motion to intervene is timely and that
intervention will not “unduly delay or prejudice the adjudication of the original parties’
rights.” Fed. R. Civ. P. 24(b)(3); United States v. Michigan, 424 F.3d at 445. First
Western filed its motion at the earliest possible stage of litigation. Plaintiff’s complaint
was filed on June 1, 2020 and First Western moved to intervene on June 28, 2020,
twenty-seven days later. (ECF Nos. 1, 12.) Discovery has not yet opened. Neither
Plaintiff nor Defendants argue First Western’s intervention is untimely or would result in
prejudice. Thus, the court will permit First Western to intervene. 1

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With intervention granted, the court will not address First Western’s claim that it
may intervene as of right due to alleged security interests it has in Defendant S. Pizza’s
assets. (ECF No. 12, PageID.427-31.)
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Plaintiff has filed a motion to appoint a receiver over the business of Defendants
S. Pizza and S. Auto. (ECF No. 6.) Now that First Western has joined this action as an
Intervening Plaintiff, the court will provide it fourteen days from entry of this order to file
a response, if it so chooses, to Plaintiff’s motion to appoint a receiver. Accordingly,
IT IS ORDERED that Intervening Plaintiff First Western’s “Motion to Intervene”
(ECF No. 12) is GRANTED.
IT IS FURTHER ORDERED that Intervening Plaintiff’s deadline to file a response
to Plaintiff’s “Motion to Appoint Receiver” (ECF No. 6) is set for August 10, 2020.
s/Robert H. Cleland
ROBERT H. CLELAND
UNITED STATES DISTRICT JUDGE

/

Dated: July 27, 2020
I hereby certify that a copy of the foregoing document was mailed to counsel of record
on this date, July 27, 2020, by electronic and/or ordinary mail.
s/Lisa Wagner
Case Manager and Deputy Clerk
[phone]
S:\Cleland\Cleland\JUDGE'S DESK\C2 ORDERS\20-11396.CRESTMARK.MotiontoIntervene.RMK.2.docx

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