Homeward Residential, Inc. v. Sand Canyon Corporation
OPINION & ORDER re: (190 in 1:12-cv-05067-JFK-JLC) MOTION to Intervene filed by LBF International II LLC, LBF International I LLC; (167 in 1:12-cv-07319-JFK-JLC) MOTION to Intervene filed by LBF International II L LC, BDC Credit LLC, LBF International I LLC. For the reasons stated above, Movants' motions to intervene are DENIED. The Clerk of the Court is respectfully directed to close the motions docketed at ECF No. 190 in Case No. 12 Civ. 5067 and ECF No. 167 in Case No. 12 Civ. 7319, and to terminate LBF International I LLC, LBF International II LLC, and BOC Credit LLC as parties to these actions. SO ORDERED. (Signed by Judge John F. Keenan on 2/12/2018) (anc)
Case 1:09-md-02013-PAC Document 57
Filed 09/30/10 Page 1 of 45
DOC #: _________________
DATE FILED: 02/12/2018
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
UNITED STATES DISTRICT COURT :
HOMEWARD RESIDENTIAL, INC.,
solely in its DISTRICT OF NEW YORK
SOUTHERN capacity as
Master Servicer for the Option :
One Mortgage Loan Trust
In re FANNIE MAE 2008 SECURITIES :
08 Civ. 7831 (PAC)
2006-2, for the benefit of the :
09 MD 2013 (PAC)
Trustee and the holders of
Option One Mortgage Loan Trust :
OPINION & ORDER
HONORABLE PAUL A. CROTTY, United States District Judge:
SAND CANYON CORPORATION,
f/k/a Option One Mortgage
No. 12 Civ. which (JFK)
The early years of this decade saw: boom in home financing 5067 was fueled, among
No. 12 Civ. 7319 (JFK)
OPINION & ORDER
other things, by low interest rates and lax credit conditions. New lending instruments, such as
HOMEWARD RESIDENTIAL, INC.,
solely in its capacitycredit risk loans) and Alt-A mortgages (low-documentation loans)
subprime mortgages (high
Master Servicer for the Option :
One Mortgage Loan Trust
kept the boom going. Borrowers played a:
role too; they took on unmanageable risks on the
2006-3, for the benefit of the :
Trustee and thethe market would continue to rise and that refinancing options would always be
assumption that holders of
Option One Mortgage Loan Trust :
2006-3 Certificates,Lending discipline was lacking in the system. Mortgage originators did
available in the future.
Plaintiff, loans. Rather than carry the rising risk on their books, the
not hold these high-risk mortgage
originators sold their loans into the secondary mortgage market, often as securitized packages
SAND CANYON CORPORATION,
known as mortgage-backed securities (“MBSs”). MBS markets grew almost exponentially.
f/k/a Option One Mortgage
But then the housing bubble burst. In 2006, the demand for housing dropped abruptly
and home prices began to fall. In light of the changing housing market, banks modified their
lending practices and became unwilling to refinance home mortgages without refinancing.
FOR PROPOSED INTERVENORS LBF INTERNATIONAL I, LLC,
LBF INTERNATIONAL II, LLC, and BDC CREDIT, LLC
Davidotherwise indicated, all references cited as “(¶ _)” or to the “Complaint” are to the Amended Complaint,
Unless H. Wollmuth
Lyndon22, 2009. For purposes of this Motion, all allegations in the Amended Complaint are taken as true.
dated June M. Tretter
Michael C. Ledley
Ryan A. Kane
John D. Giampolo
WOLLMUTH MAHER & DEUTSCH LLP
FOR DEFENDANT SAND CANYON CORPORATION
Michael L. Calhoon
Richard P. Sobiecki
Douglas W. Henkin
Brian C. Kerr
BAKER BOTTS L.L.P.
James K. Goldfarb
Daniel T. Brown
MURPHY & McGONIGLE, P.C.
JOHN F. KEENAN, United States District Judge:
Before the Court are motions by LBF International I, LLC,
LBF International II, LLC, and BDC Credit, LLC (collectively,
the “Movants”) to intervene in two pending actions.
actions in question, Plaintiff Homeward Residential, Inc.
(“Homeward”) contends that Defendant Sand Canyon Corporation
(“Sand Canyon”) breached representations and warranties made in
connection with transactions that involve the transfer of
thousands of mortgage loans to a pair of residential mortgagebacked securities (“RMBS”) trusts.
Movants seek intervention as
a matter of right pursuant to Federal Rule of Civil Procedure
24(a) (“Rule 24(a)”) or, in the alternative, permissive
intervention under Federal Rule of Civil Procedure 24(b) (“Rule
Sand Canyon opposes the motions.
For the reasons
stated below, the Court denies Movants’ requests to intervene.
Familiarity with this Court’s prior opinions and orders,
and the general structure of RMBS transactions, is presumed.
The Court summarizes the factual background that is relevant to
the instant motions below.
The Court also reviews relevant
allegations that Movants assert in their proposed complaints-inintervention.
A. The Pending Actions
As master servicer for the two RMBS trusts implicated here,
Homeward has commenced two actions, each related to a separate
The first action, docketed as Case No. 12 Civ. 5067,
arises from Sand Canyon’s alleged breaches of representations
and warranties made in the governing agreements related to the
Option One Mortgage Loan Trust 2006-2 (the “2006-2 Action”).
According to Homeward, the trust and its certificateholders
suffered injury due to high rates of loan default and
foreclosure, and Sand Canyon refused to cure or repurchase many
allegedly breaching loans.
Homeward originally filed the 2006-2 Action in the Supreme
Court of the State of New York, New York County on May 31, 2012.
Sand Canyon subsequently removed the 2006-2 Action to this
Court. (Notice of Removal, ECF No. 1 (filed June 28, 2012).)
became Case No. 12 Civ. 5067.
In July 2013, Homeward filed an
amended complaint. (Am. Compl., ECF No. 24 (filed July 19,
This Court and Judge Torres—who initially presided
over both of the actions in which Movants seek to intervene—have
decided various motions related to the 2006-2 Action, including
a motion to dismiss the amended complaint, a motion for
reconsideration, and a motion regarding the admissibility of
statistical sampling testimony.
Fact discovery in the 2006-2
Action closed on November 1, 2017. (See Fifth Amended Civil Case
Management Plan and Scheduling Order, ECF No. 209 (filed Apr.
The second action concerns similar allegations of Sand
Canyon’s breaches of representations and warranties made in the
governing agreements related to another RMBS trust, the Option
One Mortgage Loan Trust 2006-3 (the “2006-3 Action,” and,
together with the 2006-2 Action, the “Actions”).
commenced the 2006-3 Action on September 28, 2012, and filed the
first amended complaint on August 2, 2013.
docketed as Case No. 12 Civ. 7319.
This action is
On September 30, 2016, Judge
Torres granted Homeward leave to file a second amended complaint
(“SAC”), which Homeward did on October 6, 2016. (Order, ECF No.
124 (filed Sept. 30, 2016); Second Am. Compl., ECF No. 126
(filed Oct. 6, 2016).)
As relevant here, the SAC seeks to hold
Sand Canyon accountable for an additional 649 loans that
allegedly breached representations and warranties. (Second Am.
Compl. ¶¶ 9-10.)
This Court has decided various motions in
connection with the 2006-3 Action, including a motion to dismiss
the SAC, a motion for reconsideration of Judge Torres’ order
permitting Homeward to file the SAC, and a motion to certify
Judge Torres’ order for interlocutory appeal under 28 U.S.C. §
1292(b). (Op. & Order, ECF No. 227 (filed Aug. 22, 2017); Op. &
Order, ECF No. 259 (filed Jan. 24, 2018).)
Fact discovery in
the 2006-3 Action also closed on November 1, 2017. (Fifth
Amended Civil Case Management Plan and Scheduling Order, ECF No.
185 (filed Apr. 21, 2017).)
B. Movants and the Proposed Complaints-in-Intervention
Movants sought to intervene in the Actions by motions dated
December 21, 2016. (Mot. to Intervene, Case No. 12 Civ. 5067,
ECF No. 190 (filed Feb. 13, 2017); Mot. to Intervene, Case No.
12 Civ. 7319, ECF No. 167 (filed Feb. 13, 2017).)
filed a proposed complaint-in-intervention in each of the
Actions, which would join Movants as plaintiffs and add a cause
of action for declaratory judgment against a new defendant, H&R
Block, Inc. (“Block”), on a corporate veil-piercing theory. (See
Decl. of Lyndon M. Tretter, Case No. 12 Civ. 5067, ECF No. 192
Ex. A (filed Feb. 13, 2017) [the “2006-2 Action Proposed
Complaint”]; Decl. of Lyndon M. Tretter, Case No. 12 Civ. 7319,
ECF No. 169 Ex. B (filed Feb. 13, 2017) [the “2006-3 Action
Movants were “until recently” beneficial holders of a
minority interest of the voting rights in each trust.1 (2006-2
Action Proposed Complaint ¶ 21; 2006-3 Action Proposed Complaint
In October 2016, Movants contributed their certificates
to a separate trust vehicle, which then gave Movants a power of
attorney to pursue claims related to the certificates. (Id.)
Movants’ assert that they “represent certificateholders whose
interests are related to . . . the ‘Group II’ loans” in each of
the trusts. (Movants’ Mem. at 13, Case No. 12 Civ. 5067, ECF No.
191 (filed Feb. 13, 2017).)
Movants suggest that the rights
associated with “Group II” loans differ from those of “Group I”
loans. (Id. at 13 n.12.)
Block purchased Sand Canyon’s predecessor, Option One
Mortgage Corporation, in 1998.
Movants argue that Block
dominated and controlled Sand Canyon, and that it is liable for
Sand Canyon’s obligations (if any) in these Actions. (2006-2
Action Proposed Complaint ¶¶ 107-114; 2006-3 Action Proposed
Complaint ¶¶ 84-91.)
In support, Movants rely on a complaint
filed by the Massachusetts Attorney General in 2008 as well as a
complaint filed by the Securities and Exchange Commission
(“SEC”) in 2012 in other litigation. (See 2006-2 Action Proposed
LBF International I, LLC and LBF International II, LLC seek to
intervene in both Actions, whereas BDC Credit, LLC seeks to
intervene in the 2006-3 Action only. (Movants’ Mem. at 1, Case
No. 12 Civ. 5067, ECF No. 191 (filed Feb. 13, 2017).)
Complaint ¶¶ 78-79; 2006-3 Action Proposed Complaint ¶¶ 72-73;
see also Movants’ Mem. at 7-8.)
Additionally, in their briefs,
Movants emphasize a May 2016 proceeding in Minnesota state court
(the “Minnesota Proceeding”) in which “an entity known as the
‘Separate Trustee’ for the 2006-3 Trust filed [a] Petition . . .
for court approval of a proposed $1 million settlement with Sand
Canyon relating to many ‘Group 1’ loans over which Homeward has
been litigating in this Court.” (Movants’ Mem. at 16.)
contend that the “paucity” of a $1 million settlement “compared
to Sand Canyon’s potential exposure” there illustrates “the
threat to Group 2 certificateholders” here. (Id.)
Movants are “concerned” about “what they consider to be the
extremely low settlement under review in Minnesota courts
relating to Group 1 loans in the 2006-3 Trust,” Movants admit
that they “are not directly affected by” the Minnesota
Proceeding. (Id. at 5-6.)
The Court heard oral argument on the motions on August 10,
II. Applicable Law
A. Rule 24(a)
A movant seeking to intervene in an action pursuant to Rule
24(a) must show that:
“(1) the application is timely; (2) the
applicant claims an interest relating to the property or
transaction which is the subject matter of the action; (3) the
protection of the interest may as a practical matter be impaired
by the disposition of the action; and (4) the interest is not
adequately protected by an existing party.” St. John’s Univ.,
N.Y. v. Bolton, 450 F. App’x 81, 83 (2d Cir. 2011) (quoting
Restor-A-Dent Dental Labs, Inc. v. Certified Alloy Prods., Inc.,
725 F.2d 871, 874 (2d Cir. 1984)).
“Failure to satisfy any one
of these [four] requirements is a sufficient ground to deny the
application.” R Best Produce, Inc. v. Shulman-Rabin Mktg. Corp.,
467 F.3d 238, 241 (2d Cir. 2006) (emphasis and alteration in
original) (internal quotation marks omitted).
B. Rule 24(b)
Under Rule 24(b), a court may allow intervention if the
movant makes a timely application and “has a claim or defense
that shares with the main action a common question of law or
Whether to permit intervention under Rule 24(b) is
“wholly discretionary with the trial court” and the trial
court’s discretion is “very broad[.]” United States Postal Serv.
v. Brennan, 579 F.2d 188, 191-92 (2d Cir. 1978).
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).
(1) the nature and extent of the movant’s
interests; (2) whether the existing parties adequately represent
those interests; and (3) whether allowing intervention would
significantly contribute to the full development of the
underlying factual issues in the suit and to the just and
equitable adjudication of the legal questions presented. See
Tymoshenko v. Firtash, No. 11 Civ. 2794(RJS), 2011 WL 5059180,
at *3 (S.D.N.Y. Oct. 19, 2011) (quoting United States Postal
Serv., 579 F.2d at 191-92).
A. Intervention in the 2006-2 Action
With respect to the 2006-2 Action, the Court denies the
motion to intervene pursuant to Rule 24(a) as untimely.
determining whether a motion to intervene is timely, courts
“(1) how long the applicant had notice of the
interest before it made the motion to intervene; (2) prejudice
to existing parties resulting from any delay; (3) prejudice to
the applicant if the motion is denied; and (4) any unusual
circumstances militating for or against a finding of
timeliness.” United States v. Pitney Bowes, Inc., 25 F.3d 66, 70
(2d Cir. 1994).
Here, the Court finds that Movants had notice
of their interest in the 2006-2 Action for at least three years
before making their motion to intervene.
“Among the most important factors in a timeliness decision
is ‘the length of time the applicant knew or should have known
of his interest before making the motion.’” Catanzano v. Wing,
103 F.3d 223, 232 (2d Cir. 1996) (quoting Farmland Dairies v.
Comm’r of N.Y. State Dep’t of Agric. & Mkts., 847 F.2d 1038,
1044 (2d Cir. 1988)).
“Numerous courts have found that . . .
the initiation of a lawsuit where the complaint addresses the
would-be intervenors’ interests may trigger constructive
notice.” Floyd v. City of New York, 302 F.R.D. 69, 89 (S.D.N.Y.
2014); see also Kamdem-Ouaffo v. Pepsico, Inc., 314 F.R.D. 130,
134-35 (S.D.N.Y. 2016) (denying Rule 24(a) motion where lawsuit
was brought in December 2013, giving would-be intervenor
constructive notice, and would-be intervenor did not move to
intervene until July 2015).
Here, the original and amended
complaints each contain allegations and seek relief that should
have put Movants on notice of their interest in the 2006-2
Action. (See Notice of Removal Ex. A ¶ 89, ECF No. 1 (filed June
28, 2012) (seeking “damages sufficient to compensate the Trust
and its Certificateholders for their losses” stemming from Sand
Canyon’s alleged breaches of representations and warranties and
failure to repurchase breaching loans); see also Am. Compl. ¶
91, ECF No. 24 (filed July 19, 2013) (same)).
Movants do not
Thus, Movants had constructive notice of their
interest by July 2013, when Homeward filed the amended
complaint, at the latest.
Movants’ extensive delay between having notice and seeking
intervention—at a minimum, more than three years—exceeds the
relevant period in various cases where a Rule 24 motion was
found to be untimely. See, e.g., Butler, Fitzgerald & Potter v.
Sequa Corp., 250 F.3d 171, 182-83 (2d Cir. 2001) (delay of
nearly one year was untimely); Catanzano, 103 F.3d at 232-34
(delay of eighteen months was untimely).
Even delays of less
than one year may be untimely. See, e.g., MasterCard Int’l Inc.
v. Visa Int’l Serv. Ass’n, Inc., 471 F.3d 377, 390-91 (2d Cir.
2006) (delay of three to five months was untimely); In re
Holocaust Victim Assets Litig., 225 F.3d 191, 198-99 (2d Cir.
2000) (delay of eight months was untimely).
conclusion that Movants’ request to intervene is untimely
therefore finds much support in case law.
Movants do not offer any persuasive reason for their delay
in moving to intervene in the 2006-2 Action.2
filed by the Massachusetts Attorney General and SEC, upon which
Movants rely to support their veil-piercing claim, date back to
2012 or earlier.
Furthermore, Movants cannot claim, as they try
to do with respect to the 2006-3 Action, that recent activity by
Homeward has had any effect on their interest here. (See
Movants’ Mem. at 13-14 (“Homeward’s recent amendment to the
Movants’ argument that the Court should allow intervention in
the 2006-2 Action because “the 2006-3 Movants’ intervention
Motion is undeniably timely and the 2006-2 Movants’ motion and
declaratory judgment claims are identical” clearly ignores the
“timely motion” requirement of Rule 24(a). (Movants’ Reply at 6,
ECF No. 195 (filed Feb. 13, 2017); Tr. of Hr’g at 10-11, Case
No. 12 Civ. 5067, ECF No. 255 (filed Aug. 24, 2017).)
2006-3 Complaint renders even more pressing the need . . . to
establish vicarious liability against Block[.]”).)
Homeward filed the amended complaint in 2013, the only event
that Movants identify as bearing on their interest in the 2006-2
Action is the Minnesota Proceeding, which, according to Movants,
is noteworthy because it demonstrates the potential risk of an
inadequate recovery. (Id. at 5-6.)
Such a risk, however, does
not transform Movants’ stated interest in the underlying “loans
sold by Sand Canyon to each Trust” or “the sale of each Trust’s
certificates based on representations and warranties as to the
qualities of those loans,” which Movants have possessed from the
start. (See Movants’ Reply at 3-4 (identifying property and
transactions that are the subject matter of the 2006-2 Action
and arguing that “Movants are advancing legally-protectable
‘interests’ for intervention purposes of Rule 24(a)(2).”).)
Additionally, to whatever extent the Minnesota Proceeding
illustrates the risk of an inadequate recovery in the 2006-2
Action, Movants acknowledge that they have faced such a risk
since the outset of this litigation.3
Movants cite an article published in October 2010—well before
the 2006-2 Action was commenced—reporting that “Sand Canyon had
reserved only $188 million to cover its exposure in RMBS
litigation[.]” (Movants’ Mem. at 5 & n.5.)
The Court also observes that the 2006-2 Action was
commenced in 2012 and fact discovery has closed. (See Fifth
Amended Civil Case Management Plan Case Management Plan and
Scheduling Order, ECF No. 209 (filed Apr. 21, 2017).)
Movants themselves argue that the applicable statute of
limitations does not preclude the relief that they seek.4
(Movants’ Mem. at 14 n.13.)
Movants remain free to file a
separate action. See In re Holocaust Victim Assets Litig., 225
F.3d at 199 (“Because [the would-be intervenors] remain free to
file a separate action, they have not established that they will
be prejudiced if their motion to intervene is denied.”).
Movants fail to satisfy the threshold requirement of timeliness
and are not entitled to intervention as a matter of right under
Additionally, the Court declines to exercise its discretion
to permit intervention under Rule 24(b) because, as explained
above, the motion is untimely. See Catanzano, 103 F.3d at 234
(“A motion for permissive intervention, like one for
intervention of right, must be timely.”).
There is some authority for Movants’ position. See In re
Holborn Oil Trading Ltd., 774 F. Supp. 840, 847 (S.D.N.Y. 1991)
(“[A]n action to pierce the corporate veil is most closely
analogous to an action to recover on a judgment, which bears a
twenty year statute of limitations under New York law.”); see
also JSC Foreign Econ. Ass’n Technostroyexport v. Int’l Dev. &
Trade Servs., Inc., 295 F. Supp. 2d 366, 376-77 (S.D.N.Y. 2003).
B. Intervention in the 2006-3 Action
With respect to the 2006-3 Action, Movants claim that their
motion is timely because Homeward filed the SAC, which “‘put
back’ hundreds of defective Group II loans to Sand Canyon,” in
October 2016. (Movants’ Mem. at 13-14; Tr. of Hr’g at 10.)
According to Movants, the SAC motivated them to seek
intervention in the 2006-3 Action because:
(1) the addition of
649 loans “materially change[d]” Movants’ interest in the 2006-3
Action, and (2) Movants did not have standing “to add hundreds
of Group 2 loans to the 2006-3 Action before Homeward itself
decided to do so.” (Movants’ Reply at 5.)
Despite Movants’ claim that the SAC “materially change[d]”
their interest in the 2006-3 Action, they evidently concede
that, prior to amendment, at least several relevant loans were
already at issue. (See Movants’ Reply at 4-5 (“Movants did not
have a sufficient interest in the 2006-3 Action on which they
had standing to intervene until October 6, 2016 when Homeward
succeeded in adding the 649 ‘Group 2’ loans to its complaint,
which previously involved fewer than 10 such loans.”).)
offer no authority for the proposition that an increased
interest in an action is tantamount to a new interest for the
purpose of satisfying Rule 24’s timeliness requirement.
In any event, “the Second Circuit has repeatedly explained
that the date on which the proposed intervenor learns of his or
her interest in the litigation is of primary importance in the
timeliness inquiry.” Hnot v. Willis Grp. Holdings Ltd., No. 01
Civ. 6558(GEL), 2006 WL 3476746, at *3 (S.D.N.Y. Nov. 30, 2006)
(emphasis in original).
As explained above, the commencement of
an action “where the complaint addresses the would-be
intervenors’ interests may trigger constructive notice.” Floyd,
302 F.R.D. at 89.
Thus, it is appropriate to measure the
timeliness of Movants’ motion from the date they received notice
of their interest in the 2006-3 Action.
The first amended
complaint—which, as Movants admit, involved several loans in
which Movants have an interest—was filed in August 2013.
that time, more than three years passed before Movants attempted
As noted above, such an interval exceeds the
relevant period in other cases where a Rule 24 motion was found
to be untimely. See, e.g., Butler, 250 F.3d at 182-83; In re
Holocaust Victim Assets Litig., 225 F.3d at 198-99.
Even assuming that Movants’ motion with respect to the
2006-3 Action is timely, however, Movants do not satisfy the
remaining criteria of Rule 24(a).
Movants contend that, if the
motion is denied, their interest may be impaired by disposition
of the action. (Movants’ Mem. at 16.)
Movants’ request differs
from the usual case, though, in seeking to add not just
themselves to the 2006-3 Action, but also a new defendant, i.e.,
Movants offer no authority for the proposition
that a putative intervenor’s interest in a pending action may be
impaired if another party (that is, other than the putative
intervenor) is not also joined under a new theory of liability.
(See Tr. of Hr’g at 5.)
Such a notion appears to be at odds
with statements by the Second Circuit regarding the proper
function and scope of intervention. See Wash. Elec. Coop., Inc.,
v. Mass. Mun. Wholesale Elec. Co., 922 F.2d 92, 97 (2d Cir.
1990) (Rule 24(a) “is not intended to allow for the creation of
whole new suits by intervenors”); see also New York News, Inc.
v. Kheel, 972 F.2d 482, 486 (2d Cir. 1992) (“Intervention under
Rule 24(a)(2) . . . cannot be used as a means to inject
collateral issues into an existing action.” (internal quotation
The Court also is not persuaded that Movants’ interest “is
not adequately protected” by Homeward. (Movants’ Mem. at 2, 17.)
“While the burden to demonstrate inadequacy of representation is
generally speaking minimal, we have demanded a more rigorous
showing of inadequacy in cases where the putative intervenor and
a named party have the same ultimate objective.” Butler, 250
F.3d at 179 (internal quotation marks and citation omitted).
“Where there is an identity of interest . . . the movant to
intervene must rebut the presumption of adequate representation
by the party already in the action.” Id. at 179-80.
“‘presumption of adequate representation’ attaches in the
absence of ‘evidence of collusion, adversity of interest,
nonfeasance, or incompetence.’” St. John’s Univ., 450 F. App’x
at 84 (quoting Butler, 250 F.3d at 180).
Various courts in this District have determined that a
named plaintiff and a putative intervenor share the same
“ultimate objective” when, as here, both seek to obtain the
maximum recovery arising from a contractual dispute. See MASTR
Adjustable Rate Mortgages Trust 2006-OA3 v. UBS Real Estate
Sec., Inc., No. 12 Civ. 7322(HB), 2013 WL 139636, at *3
(S.D.N.Y. Jan. 11, 2013) (“Proposed Intervenors share the same
‘ultimate objective’ against Defendant in this litigation:
obtain maximum recovery for all certificate holders by
demonstrating that Defendant breached its representations and
repurchase obligations under the PSAs.”); see also Wells Fargo
Bank, N.A. v. Wales LLC, No. 13 Civ. 6781(PGG), 2014 WL 4672395,
at *4 (S.D.N.Y. Sept. 19, 2014); Mitchell v. Faulkner, No. 07
Civ. 2318(DAB), 2009 WL 585882, at *5 (S.D.N.Y. Mar. 5, 2009).
Because Movants and Homeward share the same ultimate objective
of obtaining the maximum recovery for Sand Canyon’s alleged
contractual breaches, Movants must rebut the presumption that
Homeward’s representation is adequate.
That Movants would choose an alternative strategy in
pursuing a recovery is not sufficient. See Butler, 250 F.3d at
181 (“If disagreement with an existing party over trial strategy
qualified as inadequate representation, the requirement of Rule
24 would have no meaning.”).
Nor is the argument that Movants
and Homeward may have different reasons for litigating. See
Natural Res. Def. Council v. N.Y. State Dep’t of Envtl.
Conservation, 834 F.2d 60, 61-62 (2d Cir. 1987) (“A putative
intervenor does not have an interest not adequately represented
by a party to a lawsuit simply because it has a motive to
litigate that is different from the motive of an existing
Furthermore, there can be no doubt that Homeward has
vigorously prosecuted these actions:
it has filed amended
complaints (one in the 2006-2 Action and two in the 2006-3
Action) and engaged in motion practice related to discovery and
the admissibility of statistical sampling evidence.
“So long as
the party has demonstrated sufficient motivation to litigate
vigorously and to present all colorable contentions, a district
judge does not exceed the bounds of discretion by concluding
that the interests of the intervenor are adequately
represented.” Id. at 62.
Accordingly, Movants have not rebutted
the presumption that Homeward’s representation is adequate.
The Court again declines to exercise its discretion to
permit intervention under Rule 24(b).
Movants concede that the
claims they wish to press are “legally distinct” from Homeward’s
claims for breach of contract. (Movants’ Mem. at 10.)
assuming the veracity of Movants’ assertion that their proposed
claims and Homeward’s existing claims share common questions of
fact, (id. at 2-3), the Court is not persuaded that permissive
intervention is warranted.
Intervention would require the
reopening of fact discovery and would delay this matter, which
was originally filed in 2012. See John Wiley & Sons, Inc. v.
Book Dog Books, LLC, 315 F.R.D. 169, 174 (S.D.N.Y. 2016)
(finding prejudice to original parties and denying Rule 24(b)
motion where “intervention would require the reopening of
discovery and further delay in this three-year-old case”); see
also Compagnie Noga D’Importation Et D’Exportation S.A. v.
Russian Fed’n, No. 00 Civ. 0632WHP, 2005 WL 1690537, at *6
(S.D.N.Y. July 20, 2005) (denying Rule 24(b) motion where
putative intervenor’s involvement would “substantially delay a
litigation that already bears a protracted history”).
Additionally, permitting Movants to intervene would “introduce
new issues of law while not contributing to the development of
the factual record related to the current parties’ dispute.”
Tymoshenko, 2011 WL 5059180, at *3.
It is not clear how the
evidence that Movants would marshal in support of their veilpiercing claim would contribute to or advance Homeward’s claims
for breach of contract, and there is a significant risk that
Movants' involvement would further complicate an already
Accordingly, Movants' request to intervene in the 2006-3
For the reasons stated above, Movants' motions to intervene
The Clerk of the Court is respectfully directed to
close the motions docketed at ECF No. 190 in Case No. 12 Civ.
5067 and ECF No. 167 in Case No. 12 Civ. 7319, and to terminate
LBF International I LLC, LBF International II LLC, and BOC
Credit LLC as parties to these actions.
New York, New York
United States District Judge
s These considerations apply with equal force to Movants' Rule
24(b) request to intervene in the 2006-2 Action, which, as the
Court explained earlier, also suffers from a lack of timeliness.
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?