Friends of Tuhaye, LLC v. Tuhaye Homeowners Association

Filing 46

MEMORANDUM DECISION AND ORDER granting JRAT Investments' 42 Motion to Intervene. COUNSEL PLEASE NOTE: The Intervenor Complaint must be filed conventionally. Please include a disk with the complaint and any exhibits in PDF format. Signed by Judge David Nuffer on 9/15/16 (alt)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION
FRIENDS OF TUHAYE, LLC, a Delaware
limited liability company,

MEMORANDUM DECISION and ORDER
GRANTING MOTION TO INTERVENE

Plaintiff,
v.

Case No. 2:14-cv-00901-DN

TUHAYE HOMEOWNERS ASSOCIATION,
a Utah non-profit organization,

District Judge David Nuffer

Defendant.
JRAT Investments, LLC (“JRAT”) moves to intervene 1 claiming intervention is
necessary to protect its interests related to the property at issue. 2 Plaintiff Friends of Tuhaye,
LLC (“FOT”) opposes JRAT’s motion to intervene and denies that JRAT has an interest in the
property. 3 Defendant Tuhaye Homeowners Association (“HOA”) did not respond to the Motion
to Intervene. Because JRAT has an interest in the property, and for the reasons set forth below,
JRAT’s Motion to Intervene is GRANTED.
BACKGROUND
In July 2005, FOT started developing Christopher Homes at Tuhaye (“CH Tuhaye”), a
luxury residential community. 4 Although FOT built and sold numerous homes in CH Tuhaye,
the development was not completed. 5 FOT poured and constructed foundations on eight

1

JRAT Investments, LLC’S Motion to Intervene as of Right or in the Alternative for Permissive Intervention,
(“Motion to Intervene”), docket no. 42, filed July 5, 2016.
2

Id. at 2.

3

Plaintiff’s Opposition to JRAT Investments, LLC’s Motion to Intervene as of Right or in the Alternative for
Permissive Intervention (“Memorandum in Opposition”) at 2, docket no. 43, filed July 29, 2016.

4

Id. at 3.

5

Id.

residential lots in 2007 and 2008. 6 The bank funding the project failed near the end of 2008 and
the Federal Deposit Insurance Corporation (“FDIC”) took control of the bank and froze the
bank’s assets, including the eight unfinished lots. 7 In early 2012, the freeze on the eight lots was
lifted. 8 Defendant HOA backfilled the foundations on the eight lots around the end of 2012 or in
the beginning of 2013. 9 In 2014, JRAT negotiated to buy six of the eight lots from FOT, and
FOT retained ownership of the two remaining lots. 10 This transaction closed August 21, 2014. 11
At the closing, $166,620 was escrowed and held to clear the HOA liens/claims. 12
Prior to the JRAT transaction closing, on August 12, 2014, while FOT still held title to
the eight lots, FOT filed this suit against the HOA. 13 The trespass and injunctive claims require
the court to determine whether the HOA, under the Tuhaye master covenants, codes, and
restrictions (“CCRs”), had the authority to backfill the foundations 14 and whether the
foundations were damaged as a result of the backfilling done by the HOA. 15 JRAT seeks to
intervene to assert breach of contract and fraud claims, alleging that FOT misrepresented or
failed to disclose the condition of the foundations or the outstanding liens during the FOT-JRAT
negotiations. 16

6

Id.

7

Id. Presumably the lien interest on the lots was frozen, resulting in a freeze of any action on the lots.

8

Id.

9

Id.

10

Id. at 3-4.

11

Id. at 4.

12

Motion to Intervene at 7.

13

Complaint, docket no. 1, filed August 12, 2014.

14

Id. at 3-6.

15

Id.

16

Motion to Intervene at 10.

2

ANALYSIS
Intervention must be permitted to anyone 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 its interest, unless existing
parties adequately represent that interest.” 17 The Tenth Circuit “follows a somewhat liberal line
in allowing intervention” 18 and has stated that intervention is appropriate where: 1) the motion is
timely; 2) the movant has an interest in the property at issue in the suit; 3) that interest may be
impaired absent intervention; and 4) the movant is not adequately represented by existing
parties. 19 Because JRAT satisfies the necessary requirements, intervention is appropriate.
The Motion is Timely
“[T]imeliness of a motion to intervene is assessed in light of all the circumstances, . . .
[t]he analysis is contextual; absolute measures of timeliness should be ignored.” 20 The timeliness
requirement is “not a tool of retribution to punish the would-be intervenor, but rather a guard
against prejudicing the original parties by the failure to apply sooner. Federal courts should allow
intervention where no one would be hurt and greater justice could be attained.” 21 Although the
original complaint in this action was filed in August 2014, 22 it was filed in another district and
transferred to this court in December 2014. The case has been rescheduled numerous times at the

17

Fed. R. Civ. P. 24(a)(2).

18

Utah Ass’n of Counties v. Clinton, 255 F.3d 1246, 1249 (10th Cir. 2001) (internal quotation marks and citation
omitted).

19

United States v. Albert Inv. Co., Inc., 585 F.3d 1386, 1391 (10th Cir. 2009) (internal citations omitted).

20

Clinton, 255 F.3d at 1250 (internal quotations marks and citations omitted).

21

Id.

22

Complaint, docket no. 1, filed August 12, 2014.

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request of the parties. 23 The amended complaint was filed in February 2016, 24 and the answer
was filed in March. 25 The motion to intervene was filed prior to the close of discovery 26 and
JRAT has indicated that the discovery already completed is both “relevant and significant,” to its
claims and that intervention “will not substantially delay the progress of this litigation.” 27 Under
these circumstances, JRAT’s motion to intervene is considered timely.
JRAT Has an Interest in the Property at Issue
Evaluating whether a party has an interest sufficient to intervene is not a mechanical
process, but requires “courts to exercise judgment based on the specific circumstances of the
case.” 28 The applicant should at least “have an interest that could be adversely affected by the
litigation[,] . . . [and] practical judgement must be applied in determining whether the strength of
the interest and the potential risk of injury to that interest justify intervention.” 29 Potential
economic injury certainly satisfies the interest requirement. 30
FOT asserts that JRAT does not have an interest in the property at issue because,
according to FOT, the only property at issue is the remaining two lots owned by FOT. 31 Yet,
because FIT filed its complaint before the JRAT closing, FOT has included JRAT’s six lots in

23

Scheduling Order, docket no. 12, filed November 24, 2014; Joint Motion and Stipulation to Amend Scheduling
order, docket no. 25, filed February 12, 2015; Second Amended Scheduling Order, docket no. 29, filed August 25,
2015; Scheduling Order and Order Vacating Hearing, docket no. 40, filed May 23, 2016.
24

Amended Complaint, docket no. 33, filed February 16, 2016.

25

Amended Answer to First Amended Complaint and Counterclaim, docket no. 35, filed March 8, 2016.

26

Scheduling Order and Order Vacating Hearing at 4, docket no. 40, filed May 23, 2016.

27

Reply Memorandum to Friends of Tuhaye, LLC’s Opposition to JRAT’s motion to Intervene as of Right or in the
Alternative for Permissive Intervention (“Reply”)at 3, docket no. 44, Filed August 17, 2016.
28

Albert Inv. Co., 585 F.3d at 1392 (citation omitted).

29

Id. at 1392 (quoting San Juan County v. United States, 503 F.3d 1163, 1199 (10th Cir. 2007)).

30

Id. at 1393.

31

Memorandum in Opposition at 7-9.

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the “Subject Properties” of its complaint. 32 FOT has included claims based on damage to these
six lots and accompanying discounted sales prices alleging that, “[i]n light of the damage,
repairs, and necessary excavation caused and necessitated by the existing backfilled foundations,
FOT was forced to substantially discount the [properties’] sales price.” 33 FOT also references the
HOA’s allegedly illegal liens which are holding up funds from the sales transaction between
FOT and JRAT. 34 JRAT’s claims involve alleged misrepresentations made during negotiations
with FOT about the condition of the six properties it purchased 35— the same properties that FOT
alleges were sold at a discount due to damage. Separate adjudication of these claims could lead
to inconsistent results. “The interest of the intervenor is not measured by the particular issue
before the court but is instead measured by whether the interest the intervenor claims is related
to the property that is the subject of the action.” 36 JRAT has an interest in the six lots that FOT
included as subject properties in its complaint. Consequently, JRAT’s claims are related to the
property that is the subject of this action, satisfying the requirement for intervention.
JRAT’s Interest May Be Impaired Absent Intervention
Intervention is appropriate when disposition of an action will, “as a practical matter
impair or impede the movant’s ability to protect its interest.” 37 Because the impairment analysis
is a practical matter, “the court is not limited to consequences of a strictly legal nature.” 38 The
burden of this requirement is minimal and only requires showing that impairment is possible. 39
32

Amended Complaint at 3.

33

Id. at 5-6.

34

Id. at 7.

35

Motion to Intervene at 10.

36

Clinton, 255 F.3d at 1252 (emphasis in original).

37

Fed. R. Civ. P 24(a)(2).

38

Clinton, 255 F.3d at 1253 (citation omitted).

39

Id.

5

JRAT alleges that the outcome of this action could affect whether the six lots JRAT purchased
from FOT will be foreclosed by the HOA liens on the property and whether JRAT will be able to
recover from FOT for alleged misrepresentations. 40 The practical effects of the outcome of this
action may impair JRAT’s interests and therefore intervention is appropriate.
Neither FOT nor the HOA Adequately Represent JRAT’s Interests
The requirement to show that the movant is not adequately represented by existing parties
only requires that the movant, “shows that representation of his interest may be inadequate—a
minimal showing.” 41 This showing can be made by showing that the existing parties have
“interest[s] adverse to the applicant.” 42 Although FOT and JRAT are both interested in the
condition of the foundations, 43 JRAT alleges that FOT misrepresented the condition of the
foundations of the properties at issue in this suit.44 FOT has no interest in showing that FOT had
knowledge of foundation damage that it failed to disclose to JRAT. The HOA likewise does not
represent JRAT’s interests. The HOA has no interest in the representations FOT made to JRAT
about the condition of the foundations or the liens; the HOA is more interested in showing that
the HOA had authority to backfill the foundations and file its liens. JRAT’s interests are not
adequately represented by the existing parties, making intervention appropriate.

40

Reply at 4.

41

Tri-State Generation and Transmission Ass’n Inc. v. N.M. Pub. Regulation Corp., 787 F.3d 1068, 1072 (10th Cir.
2015) (internal quotation marks and citation omitted).
42

Id. at 1073 (internal quotations and citation omitted).

43

Memorandum in Opposition at 9-10.

44

Motion to Intervene at 10.

6

ORDER
IT IS HEREBY ORDERED, that the Motion to Intervene 45 is GRANTED.
IT IS FURTHER ORDERED that JRAT is permitted leave to file its complaint in
intervention within fourteen days of this order.

Signed September 15, 2016.
BY THE COURT

________________________________________
District Judge David Nuffer

45

Docket no. 42.

7