CPWH Residential Ltd. v. Union Planters Bank, NA (In Re CPWH Residential Ltd.)

United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT December 10, 2004
_____________________
Charles R. Fulbruge III
No. 04-50368 Clerk
Summary Calendar
_____________________
In the Matter of: CPWH RESIDENTIAL LTD,
Debtor,
CPWH RESIDENTIAL LTD; HUBER CONTRACTING LTD;
UNITED STATES FIRE INSURANCE COMPANY; EDWARD P. POTTER COMPANY;
MANGOLD ROOFING & SHEET METAL INC.;
POTTER AIR CONDITIONING COMPANY INC.;
WTH CORPORATION, doing business as Direct-Flo Heating and Air,
Appellees,
versus
UNION PLANTERS BANK, NA,
Appellant.
_________________________________________________________________
Appeal from the United States District Court
for the Western District of Texas, San Antonio
District Court Cause Nos. SA-03-CV-1046,
SA-03-CV-1047 & SA-03-CV-1195
_________________________________________________________________
Before JONES, BARKSDALE and PRADO, Circuit Judges.1
PRADO, Circuit Judge.
In this appeal, Appellant Union Planters Bank (UPB)
challenges the denial of its motion to intervene as a matter of
right. After considering UPB’s appeal, this court affirms the
1
Pursuant to 5TH CIRCUIT RULE 47.5, this Court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIRCUIT
RULE 47.5.4.
1
district court’s order.
The facts relevant to this appeal are as follows. Under the
terms of a lending agreement, UPB obtained a security interest in
the real property for a construction project under development by
Appellee CPWH Residential, Ltd. (CPWH). CPWH eventually became
the subject of a bankruptcy proceeding. Nineteen months after
the bankruptcy case began, UPB sought to intervene in an
adversary proceeding filed by special counsel for CPWH’s
creditors to recover CPWH’s alleged damages from some of the
contractors working on the construction project. The district
court determined that UPB did not meet the requirements for
intervening as a matter of right and denied the motion. In
particular, the district court determined that UPB’s motion was
untimely.
An order denying a motion to intervene as a matter of right
is an appealable final order2 which this court generally reviews
de novo.3 The court, however, reviews the district court's
ruling on the timeliness of the motion for an abuse of discretion
so long as the district court specifies why the motion was
2
See Edwards v. City of Houston, 78 F.3d 983, 992 (5th Cir.
1996).
3
See Trans Chem. Ltd. v. China Nat’l Mach. Imp. and Exp.
Corp., 332 F.3d 815, 822 (5th Cir. 2003); Heaton v. Monogram
Credit Card Bank of Ga., 297 F.3d 416, 422 (5th Cir. 2002).
2
untimely.4 Because the district court here specified a reason
for its untimeliness determination, this court reviews the
district court’s ruling for an abuse of discretion.
An applicant may intervene in a lawsuit as a matter of right
“when the applicant claims an interest relating to the property
or transaction which is the subject of the action and . . .
disposition of the action may as a practical matter impair or
impede the applicant's ability to protect that interest, unless
the applicant's interest is adequately represented by existing
parties.”5 A party seeking to intervene as of right must satisfy
four requirements:
(1) [t]he application must be timely; (2) the
applicant must have an interest relating to the
property or transaction that is the subject of the
action; (3) the applicant must be so situated that the
disposition of the action may, as a practical matter,
impair or impede its ability to protect its interest;
and (4) the applicant's interest must be inadequately
represented by the existing parties to the suit.6
“If a party seeking to intervene fails to meet any one of those
requirements, it cannot intervene as a matter of right.”7
When determining whether a motion to intervene is timely, a
4
See Heaton, 297 F.3d at 422; John Doe No. 1 v. Glickman,
256 F.3d 371, 376 (5th Cir. 2001). If the district court fails
to specify a reason, the court of appeals reviews the timeliness
ruling de novo. See Glickman, 256 F.3d at 376.
5
FED. R. CIV. P. 24(a).
6
Sierra Club v. Espy, 18 F.3d 1202, 1204-05 (5th Cir. 1994).
7
Sierra Club, 18 F.3d at 1205.
3
court must consider the following four factors:
(1) how long the potential intervener knew or
reasonably should have known of her stake in the case
into which she seeks to intervene; (2) the prejudice,
if any, the existing parties may suffer because the
potential intervener failed to intervene when she knew
or reasonably should have known of her stake in that
case; (3) the prejudice, if any, the potential
intervener may suffer if the court does not let her
intervene; and (4) any unusual circumstances that weigh
in favor of or against a finding of timeliness.8
After applying these factors to this appeal, it is evident that
the district court did not abuse its discretion.
The district court’s order denying UPB’s motion to intervene
clearly demonstrates that the district court considered each of
the applicable factors for determining whether a motion to
intervene is timely. In the order, the district court stated,
UPB’s motion is not timely. In the unique circumstances
of this bankruptcy case, this Motion should have been
filed sooner. It was filed after approval of special
litigation counsel for this matter. UPB filed no
objection nor asked to be included. It was filed after
appointment of a Trustee. This Court will not place
additional burdens on a bankrupt [sic] estate at this
stage in the litigation.
Thus, the order indicates that: (1) UPB knew about its purported
interest in the underlying lawsuit well before it sought to
intervene, (2) the district court considered the prejudicial
effect that intervention would have on the existing parties to
the lawsuit, (3) the district court considered the role of the
bankruptcy Trustee in alleviating any prejudice UPB might incur,
8
Glickman, 256 F.3d at 376.
4
and (4) the district court was concerned that intervention would
place additional burdens on the bankruptcy estate.
The record supports the district court’s determinations.
The record indicates that UPB knew or should have known about its
purported interest in CPWH’s causes of action as early as
November 14, 2002—the date on which UPB filed its proof of claim
in the bankruptcy proceeding. If not then, UPB knew or should
have known that CPWH was alleging causes of action as early as
April 16, 2003—the day when CPWH filed its initial complaint
against certain construction defendants in the bankruptcy
proceeding. Although UPB should have known about its purported
stake in the case by April 16, 2003, UPB did not seek to
intervene until February 20, 2004. By that time, the parties to
the lawsuit had undoubtedly developed their trial strategy.
UPB’s intervention at that point would have prejudiced the
existing parties because it would have required them to inject
UPB into established trial strategy and delayed the litigation.
But even though intervention would prejudice existing parties,
there is no indication that UPB would be prejudiced if it was not
permitted to intervene because the bankruptcy Trustee and the
bankruptcy court are charged with protecting creditors’
interests. Under these circumstances, the district court did not
abuse its discretion by determining that UPB’s motion was
untimely.
Because the motion was untimely, UPB failed to satisfy each
5
of the requirements for intervening as a matter of right.9 As a
result, the district court did not err by denying UPB’s motion to
intervene. Consequently, the court AFFIRMS the district court’s
order. Having reached this determination, the court need not
reach UPB’s other arguments.
AFFIRMED.
9
Sierra Club, 18 F.3d at 1205.
6