Atlas Noble, LLC v. Krizman Enterprises et al

Filing 81

Memorandum Opinion and Order: Since Croxton fails to establish the first and second prongs of the four-part test, the Court need not even consider the third and fourth prongs. The motion to intervene filed by Beau Croxton (Doc. No. 75 ) is denied. Judge Sara Lioi on 3/27/2015. (P,J)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION

ATLAS NOBLE, LLC,

PLAINTIFF,
vs.
KRIZMAN ENTERPRISES, et al.,

DEFENDANTS.

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CASE NO. 5:13CV1505

JUDGE SARA LIOI

MEMORANDUM OPINION
AND ORDER

Before the Court is the motion of Beau Croxton (“Croxton”) to intervene pursuant
to Fed. R. Civ. P. 24(a)(2). (Doc. No. 75 [“Motion”].) All current parties oppose the motion.
(Doc. No.79 [“Defs.’ Opp’n”]; Doc. No. 80 [“Pl. Opp’n”].) For the reasons discussed herein, the
motion is denied.
I. BACKGROUND
Plaintiff Atlas Noble, LLC (“plaintiff” or “Atlas”) filed this action on July 11,
2013, setting forth a single-count breach of contract claim against Krizman Enterprises, Wayne
Hammond Enterprises, Inc. and MKE Producing, Inc. (collectively, “defendants”) for their
alleged failure to release to plaintiff certain earnest money being held in escrow. Defendants
filed a three-count counterclaim on September 13, 2013, which they later amended. The dispute
relates to the alleged breach of a 2012 Purchase and Sale Agreement (“PSA”) between plaintiff
and defendants under which plaintiff was to acquire certain mineral rights from defendants,
assuming that defendants could first acquire those rights from numerous third parties prior to an
agreed-upon deadline. Croxton was one of those third parties. Defendants and Croxton failed to

timely close their separate transaction, and this fact, at least in part, was the basis for the PSA
failing to close.
On February 5, 2015, this Court ruled on cross-motions for summary judgment,
determining that defendants are entitled to summary judgment on plaintiff’s breach of contract
claim and on counts I and II of their amended counterclaim. The result of this ruling is that
defendants are entitled to have the relevant escrow funds, plus interest, released to them. (See
Doc. No. 73 [Memorandum Opinion and Order [“MOO”]] at 3280.)
Count III of the amended counterclaim was not addressed by the summary
judgment motions, and, although the Court questioned defendants’ right to proceed with the
claim in light of the summary judgment ruling on the other matters, the claim nonetheless
remains for trial, unless otherwise dismissed. (Id.)
The Court scheduled a telephone conference with counsel for February 18, 2015
at 1:30 p.m. At 1:18 p.m. on that day, Croxton filed his motion to intervene.
The Court proceeded with the telephone conference, and, upon inquiring of
counsel as to the status of the case, learned that plaintiff planned to file a motion for
reconsideration and that defendants were still considering their options with respect to
counterclaim III. The Court also inquired as to whether there was any interest in discussing
resolution of the case, rather than engaging in further proceedings. Upon learning that the parties
would be interested, the Court scheduled a mediation conference for March 30, 2015 and
extended the deadline for any reconsideration motion to April 17, 2015. Thereafter, the Court
patched Croxton’s counsel into the call and set a deadline for any opposition to the motion to
intervene. The March 30, 2015 mediation conference will proceed as scheduled.

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II. DISCUSSION
Croxton seeks to intervene as of right, under Fed. R. Civ. P. 24(a)(2), on the
ground that he “is involved in the transaction that is the subject of the captioned proceedings, and
possesses an interest in any proceeds that would be realized by Defendants[.]” (Motion at 3283.)
He claims that “[n]o other party in these proceedings has shown any willingness to protect [his]
obvious claims.” (Id. at 3285.) He further asserts that there is “a common question of law or fact
in that, to the extent it has or will be determined that Atlas is indebted to [defendants], [he] by
virtue of his contract for the lease of a part of the subject oil and gas rights, is entitled to attach
those funds.” (Id. at 3286.) He argues that “intervention would not cause undue delay or
prejudice to the parties in this action, as there has been no trial date set by the Court.” (Id.)
Rule 24(a)(2) provides that a court must permit anyone to intervene who:
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 his interest, unless existing
parties adequately represent that interest.
The Sixth Circuit Court of Appeals requires a proposed intervenor to satisfy four
factors before being entitled to intervene:
(1)

the motion to intervene is timely;

(2)

the proposed intervenor has a substantial legal interest in the subject
matter of the case;

(3)

the proposed intervenor’s ability to protect their interest may be impaired
in the absence of intervention; and

(4)

the parties already before the court cannot adequately protect the proposed
intervenor’s interest.

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Coalition to Defend Affirmative Action v. Granholm, 501 F.3d 775, 779 (6th Cir. 2007) (citation
omitted). “[F]ailure to satisfy any of the four prongs prevents the applicant from intervening as
of right.” Johnson v. City of Memphis, 73 F. App’x 123, 131 (6th Cir. 2003) (citation omitted).
Croxton’s motion makes no attempt to show how he satisfies any of the four
factors, relying entirely on a vague notion of “judicial economy.” Both plaintiff and defendants,
in opposition to the motion, assert that he fails in all respects to establish a right to intervene and,
further, that this Court should not allow permissive intervention under Rule 24 (b).1 The parties
have it right.
First, no reasonable person would conclude that this motion was timely filed. The
question of timeliness is considered with regard to five factors: (1) the procedural posture of the
case at the time intervention is sought; (2) the purpose for the intervention; (3) how much time
passed after the proposed intervenor knew or reasonably should have known of his interest in the
case; (4) any prejudice to the original parties; and (5) the existence of unusual circumstances
militating against or in favor of intervention. Jordan v. Michigan Conference of Teamsters
Welfare Fund, 207 F.3d 854, 862 (6th Cir. 2000) (citation omitted). This case has been pending
since July of 2013 and Croxton was aware of the lawsuit from its inception. In fact, he was twice
invited to join, but declined. (Pl. Opp’n at 3328.) He participated in the discovery process and
was represented by counsel the entire time; he admitted that he had evaluated his potential claims
and made a decision as of July 15, 2014 not to intervene. (See Defs.’ Opp’n at 3317-18.) The
Court has already ruled on summary judgment, and the parties are on the verge of engaging in

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Although the parties oppose both mandatory and permissive intervention, except for passing mention in his motion
of the existence of “a common question of law or fact,” one of the grounds for permissive intervention, see Fed. R.
Civ. P. 24(b)(1)(B), Croxton’s motion actually cites and relies upon only Rule 24(a)(2). The Court need not address
permissive intervention and, in any event, balancing undue delay and prejudice to the parties, would not permit it
under the circumstances – primarily due to Croxton’s failure to file a “timely motion,” Fed. R. Civ. P. 24(b)(1).

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settlement discussions. It is entirely disingenuous for Croxton to argue that there would be no
prejudice because no trial date has been set. If the Court were to permit Croxton’s very late
intervention, the litigation would essentially start over.
Second, even though the Sixth Circuit “ha[s] adopted ‘a rather expansive notion
of the interest sufficient to invoke intervention of right[,]’” Providence Baptist Church v.
Hillandale Comm., Ltd., 425 F.3d 309, 315 (6th Cir. 2005) (quoting Michigan State AFL-CIO v.
Miller, 103 F.3d 1240, 1245 (6th Cir. 1997)), the “requirement that the proposed intervenor[]
possess[es] ‘a significant legal interest in the subject matter of the litigation’ is not without
meaning.” Reliastar Life Ins. Co. v. MKP Invs., 565 F. App’x 369, 371-72 (6th Cir. 2014)
(citation omitted). “[T]he applicant for intervention ‘must have a direct and substantial interest in
the litigation,’ such that it is a ‘real party in interest in the transaction which is the subject of the
proceeding.’” Id. (quoting Grubbs v. Norris, 870 F.2d 343, 346 (6th Cir. 1989); Providence
Baptist Church, 425 F.3d at 317). Croxton (who is not a party to the PSA) has, at best, only a
peripheral interest in this litigation by virtue of the fact that he may have an interest in a portion
of the judgment proceeds that defendants will enjoy as a result of the Court’s summary judgment
ruling.2 That, however, remains to be proven, and denial of intervention will in no way prejudice
Croxton’s ability to pursue any such claim in a different lawsuit.

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As noted by plaintiff, “[t]he only connection Mr. Croxton has with this action is the fact that he failed to
consummate a separate and distinct transaction with the Defendants, which said transaction was a condition
precedent to Plaintiff and Defendants closing on their contemplated transaction.” (Pl. Opp’n at 3329.) Croxton’s
claim, if any, arises under a wholly separate contract with defendants Krizman Enterprise and Wayne Hammond
Enterprises, Inc.

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III. CONCLUSION
Since Croxton fails to establish the first and second prongs of the four-part test,
the Court need not even consider the third and fourth prongs. The motion to intervene filed by
Beau Croxton (Doc. No. 75) is DENIED.

IT IS SO ORDERED.

Dated: March 27, 2015
HONORABLE SARA LIOI
UNITED STATES DISTRICT JUDGE

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