Salem Pointe Capital, LLC v. BEP Rarity Bay, LLC

NOT RECOMMENDED FOR PUBLICATION
File Name: 21a0233n.06
Case No. 20-6016
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
FILED
May 10, 2021
SALEM POINTE CAPITAL, LLC, ) DEBORAH S. HUNT, Clerk
)
Plaintiff-Appellee,
)
) ON APPEAL FROM THE UNITED
RARITY BAY PARTNERS, fka Salem Pointe
) STATES DISTRICT COURT FOR
Capital Partners,
) THE EASTERN DISTRICT OF
Movant-Appellant, ) TENNESSEE
)
v. )
) OPINION
BEP RARITY BAY, LLC; BALD EAGLE )
VENTURES, LLC, )
Defendants-Appellees. )
BEFORE: SUHRHEINRICH, GRIFFIN, and DONALD, Circuit Judges.
BERNICE BOUIE DONALD, Circuit Judge. This lawsuit, one which understandably
“vexed” the district court, arose from a fee collection dispute gone awry. At issue on appeal is a
disagreement over the propriety of the settlement between the named parties. Appellant Rarity
Bay Partners (“RBP”)1 appeals the denial of its two motions to intervene and its motion to set aside
a stipulation of voluntary dismissal. In essence, RBP argues the appellees—Salem Pointe Capital,
1
RBP previously did business as Salem Pointe Capital Partners, or SPCP. Between the district
court’s first and second denials of RBP’s motions to intervene, SPCP became RBP. As such—and for
consistency’s sake—when quoting from earlier orders and exhibits, we have changed SPCP to RBP.
Case No. 20-6016, Salem Pointe Capital v. BEP Rarity Bay, et al.
BEP Rarity Bay, and Bald Eagle Ventures2—colluded in their settlement negotiations to exclude
RBP from having a say in those negotiations, despite a written agreement between RBP and SPC
that reserved for RBP the right to accept or reject any settlement SPC made in regard to the
collection of fees and membership dues. The appellees (the named parties, i.e., SPC and the
Defendants), in turn, assert that RBP improperly “waited in the shadows” as the litigation and
settlement negotiations proceeded, coming forward only when it disagreed with the terms of the
settlement, and as such, RBP’s motions to intervene were untimely. The appellees further argue
that (1) once they signed their stipulation of dismissal, the district court lost any jurisdiction to
consider further matters like the motions to intervene, and (2) RBP either lacks standing to bring
a Rule 60(b) motion or that any such motion fails on the merits. Whether SPC breached its contract
with RBP, they argue, is a separate matter properly adjudicated through the pending state court
action on that very issue. For the following reasons, we AFFIRM.
I. BACKGROUND
A. The Underlying Litigation
As described by the district court, Rarity Bay Community is a “much-litigated” community
of 1,400 residential lots in the eastern Tennessee counties of Loudon and Monroe. In 2015, SPC
and RBP jointly acquired assets in the Rarity Bay Community from a court-appointed receiver.
The two agreed to jointly manage the future development of the Rarity Bay Community.
Defendant Bald Eagle Ventures purchased 102 lots and then conveyed those lots to Defendant
BEP Rarity Bay. At issue here are 65 of those lots.
2
Salem Pointe Capital (“SPC”) was the original plaintiff. BEP Rarity Bay and Bald Eagle Ventures
(collectively, “Defendants” or “Bald Eagle”) were the original defendants.
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The Rarity Bay Club, located within the Rarity Bay Community, includes various
amenities which SPC maintains, in part, by the payment of initiation and membership fees from
lot owners in the community. In the underlying lawsuit, SPC alleges that both Bald Eagle and
BEP Rarity Bay failed to pay fees owed to SPC for the 65 lots with covenants requiring such
payments.
In May 2017, SPC and RBP3 entered into an “Agreement and Assignment of BEP Rarity
Bay, LLC Collection Rights” (the “Collections Agreement”). The Collections Agreement set forth
the terms by which SPC and RBP would engage in their collection efforts for the overdue fees.
First, the agreement provided that RBP would both select and manage “external counsel.” RBP
would also be responsible for advancing all costs and expenses incurred by external counsel (50%
of which SPC would repay). Second, the agreement provided that RBP “shall have the authority
to enter into any settlement and/or mediation” negotiations and that “[t]he terms of any final
resolution of settlement will be subject to mutual agreement of both SPC and [RBP].” Finally,
under the terms of the agreement, if SPC and RBP received a cash settlement from BEP as a result
of the collection efforts, SPC and RBP would equally divide any such proceeds, and if the parties
were to obtain title to any properties in the Rarity Bay Community (through either settlement or a
judicial sale), RBP had the right to receive those properties (and pay 50% of the lot’s value to
SPC).
With SPC’s consent, RBP (pursuant to the Collections Agreement assignment to RBP of
the right to hire external counsel) hired Garrett Swartwood to represent SPC in the collections
efforts. Swartwood understood SPC and RBP to be his co-clients. To effectuate those collection
3
The managing partners of each firm—Michael Ayres for SPC and Matthew Daniels for RBP—
signed the Collection Assignment.
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efforts, in August and September 2018, SPC (through Swartwood) filed suits separately in Loudon
County and Monroe County, seeking affirmance of the liens SPC previously placed upon the
allegedly delinquent properties.4 Swartwood alleges in his affidavit that although SPC was the
named plaintiff, RBP actually directed his day-to-day matters and litigation strategy.
In those state-court complaints, SPC alleged that both Defendants (Bald Eagle and BEP
Rarity Bay) failed to pay any membership dues during the time they have owned lots in Rarity
Bay. Defendants then removed both suits to the Eastern District of Tennessee, where they were
consolidated.
In February 2019, SPC filed a motion for summary judgment, claiming that it was
undisputed that Defendants’ deeds contained express covenants (or references to prior covenants)
requiring the payment of club membership dues, and as such, SPC was entitled to the outstanding
dues. In response, Defendants filed both a cross motion for summary judgment and a motion to
amend their answer and counterclaims.5 The district court granted Defendants’ motion to amend
the answer and counterclaim and denied both parties’ cross motions for summary judgment
because with the pleadings still open (given the granting of the motion to amend), the cross motions
for summary judgment were unripe.
B. Settlement Attempts
The above is apparent from the public docket. There was, however, more going on behind
the scenes, including—as RBP alleges—SPC’s secret settlement negotiations with Defendants.
On February 15, 2019, SPC manager, Michael Ayres, received an email from a Bald Eagle affiliate
4
Nowhere in the complaint does SPC address RBP’s role in managing the Rarity Bay, much less
the existence of RBP. Nonetheless, RBP asserts that the state-court complaints named only SPC as a
plaintiff because the liens were recorded in SPC’s name alone.
5
SPC sought to add additional affirmative defenses and to assert counterclaims for declaratory
judgment, quiet title, and slander.
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regarding setting up a time for mediation and estimated amounts owed. Ayres then reached out to
Swartwood, asking, “Do you know why they are reaching out to me on this and when did they
request mediation? Has their attorney been in contact with you [Swartwood]?” Based on this, SPC
claims that Ayres realized RBP (through Swartwood) would “neither consult with SPC about
settlement [nor] discuss settlement with Bald Eagle.” Indeed, in a February email to Defendants’
counsel, Swartwood expressed RBP’s outright unwillingness to settle at the time. Given the
impasse between RBP and Defendants, Ayres himself (on behalf of SPC) then reached out to
counsel for Defendants, discussing what amounts SPC believed it was owed.
Afterwards, RBP alleges that, unknown to it and Swartwood, SPC secretly reached a
settlement with Defendants, one whose terms were unfavorable to RBP. In an email dated March
25, 2019, SPC’s manager, Ayres, confirmed SPC’s agreement to a $500,000 settlement and—
despite the Collections Agreement requiring RBP’s consent to any settlement—explained that
“[o]nce rejected by Daniels [RBP’s managing partner], SPC will accept the settlement and release
the liens.” Defendants allege (though provide no actual evidence) that SPC represented to them
that SPC itself had the full authority to settle the case, i.e., Defendants had no knowledge RBP’s
consent was required.
Two months later, on May 8, 2019, Bald Eagle’s counsel (John Baxter) sent Swartwood an
email requesting an extension of a briefing deadline because “the principals in the case [were] . . .
hammering out the details of a settlement.” This email surprised Swartwood because he claims he
was not aware of any ongoing negotiations, much less the specific terms of any agreement.
Swartwood understood, per the Collections Agreement, that he would need both SPC and RBP’s
written consent to make any settlement demand or counter-proposal. Swartwood then forwarded
the email to SPC and RBP representatives, expressing his understanding that there were no
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ongoing settlement discussions. He then declined Baxter’s request for the briefing extension,
given that—at least as far as Swartwood knew—no settlement negotiations were actually taking
place. Swartwood also informed Bald Eagle’s counsel that any settlement offer should be
presented to him as counsel of record.
Bald Eagle then did just that. On May 9, Bald Eagle’s counsel sent Swartwood a $500,000
settlement offer, consistent with the March negotiations between SPC and the Defendants.
Swartwood responded on May 23 with a counter-offer of $1.7 million. In response, Bald Eagle’s
counsel rejected that counteroffer, explaining that Bald Eagle’s best and final offer was $500,000,
and that the offer would expire on June 21, 2019. Swartwood neither accepted the offer nor
communicated another counteroffer to Bald Eagle.
Sometime after Bald Eagle’s offer expired, SPC and Defendants continued their separate
(and purportedly secret) attempts to finalize the settlement. A new attorney, Adam Russell, began
working for SPC to manage the settlement negotiations. In August 2019, SPC and Defendants
began circulating a draft stipulation of dismissal; Russell, acting on behalf of SPC, signed that
draft stipulation. Bald Eagle’s counsel, Shane Ramsey, expressed concern that because Russell
was not counsel of record for SPC, the district court would not accept the stipulation. Ramsey
suggested that SPC either change the stipulation of dismissal’s signatory to current counsel
(Swartwood) or if Swartwood was no longer counsel for SPC, Ramsey suggested that Swartwood
should file a motion to withdrawal and Russell file a notice of appearance. Russell confirmed that
he was not counsel of record; Swartwood, he wrote, “is and remains counsel of record.”
Nonetheless, Russell wrote that “I believe we can make this work.” In support, Russell pointed
out that even though he was not SPC’s counsel of record, he has “represented SPC over the last
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couple [of] years in multiple lawsuits,” and “[i]t is through that lens that I am reviewing the
settlement agreement.”
On September 10, RBP became aware that SPC itself was negotiating with Defendants
because SPC told Swartwood on August 28 that Defendants offered $500,000 again to settle. On
September 11, Shannon Van Tol, counsel for RBP alone (in contrast to Swartwood who jointly
represented RBP and SPC), contacted SPC’s attorney, asking that he direct Ayres (SPC’s manager)
to cease settlement communications with Bald Eagle, as the Collections Agreement “does not
allow SPC to interfere with RBP’s collection strategy nor to enter into unilateral settlement
negotiations with Bald Eagle.” The next day, Van Tol explained to SPC’s counsel all of the
reasons that RBP found the $500,000 settlement to be inadequate and not in the best interests of
the parties. On September 30, SPC and Bald Eagle signed a settlement agreement to settle the
case.
On October 2, Swartwood called Bald Eagle’s counsel (John Baxter) to discuss the
deadlines for Bald Eagle to file an amended answer/counterclaim and for SPC to file a response to
the counterclaim.6 During that call, Swartwood claims that Baxter never told him SPC and
Defendants had already reached an agreement such that the discussion of filing deadlines and
further discovery was moot, at best. In that call, Baxter agreed to Swartwood’s requested extension
of time to file a response to Bald Eagle’s counterclaim, not mentioning that later that very night,
the parties intended to file their first stipulation of dismissal.
6
On September 19, 2019—four days before the district court denied the cross motions for summary
judgment and granted Defendants’ motion to amend their answer and counterclaims—SPC (without
Swartwood’s knowledge) signed releases of the liens on the relevant properties.
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C. The First Stipulation of Dismissal and Motion to Intervene
Later that same evening, Russell filed an Agreed Stipulation of Dismissal on behalf of SPC
and Defendants. Russell never filed a notice of appearance, nor did Swartwood select or authorize
him to file that stipulation. That stipulation was signed by Russell (for SPC) and Ramsey and
Baxter (for Defendants). Swartwood claims that Russell emailed him on the evening of October
2 to inform him that SPC and Defendants agreed to a settlement and to dismiss the action.
Swartwood first saw the stipulation on the morning of October 3.7 Swartwood, who expressly told
Bald Eagle’s counsel (Ramsey and Baxter) that all settlement negotiations must come through him,
says that neither of them ever informed him of the settlement discussions, nor did they ever ask
whether Russell or others had the authority to settle the suit.
The same day Swartwood learned of the first stipulation of dismissal, RBP filed its first
motion to set aside the stipulation of dismissal. In that motion, RBP asserted that SPC had no
authority to enter a settlement and dismissal of the claims against Defendants without RBP’s
approval because the Collections Agreement required RBP’s consent. RBP claimed that
Defendants either knew or should have known that SPC lacked that authority, particularly where
counsel of record, Swartwood, did not participate in the signing of the agreement or filing of the
stipulation.
Simultaneously, RBP also filed its first motion to intervene. In that motion, RBP described
the Collections Agreement whereby RBP’s consent was required before any settlement could be
resolved. RBP noted that it promptly filed the motion when an attorney who had not previously
7
Adam Lorry, an agent for Bald Eagle, wrote in an email the morning of October 3: “Its [sic] done.
Hold on to your seat, now we will see RBP’s next move . . . .” To the extent this reveals Bald Eagle’s
knowledge of the contrary interests of RBP, this email contradicts Bald Eagle’s counsel’s statement before
the district court that although Bald Eagle knew of the existence of RBP, Bald Eagle was “unaware of
[RBP’s] legal interest in this case . . . throughout the entirety of this lawsuit.”
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appeared in this case, Russell, signed the stipulation of dismissal without the knowledge or consent
of RBP or Swartwood. RBP asserted that as SPC’s partner and assignee of collections rights and
proceeds, RBP had a substantial legal interest in the resolution of this case, and any such interest
would be impaired without intervention. As such, RBP primarily sought intervention as of right
under Rule 24(a). Alternatively, RBP sought permissive intervention under Rule 24(b) because
RBP has either a claim or defense that shares a common question of law or fact with the underlying
litigation.
At a case management conference on October 8, 2019, Bald Eagle argued that it had no
knowledge of RBP’s interests in this litigation and that it was not Bald Eagle’s burden to know
which attorney had the authority to sign any settlement agreement. The district court, however,
noted that Bald Eagle should have been alerted when an entirely new attorney, Russell, began
acting on behalf of SPC rather than counsel of record, Swartwood. Bald Eagle, however, explained
that it relied on the assurances by Russell that he had the authority to settle and dismiss the case.8
The district court then ruled from the bench, granting RBP’s motion to set aside the stipulation of
dismissal, denying the motion to intervene, disqualifying all counsel of record, and staying the
case for 45 days. The district court also noted that RBP could later refile its motion to intervene
if necessary, although expressed doubt that the court would have jurisdiction over any claims RBP
made against SPC, as both are Tennessee citizens for diversity purposes.
On October 11, the district court entered a written order to the same effect. Considering
RBP’s motion to set aside the dismissal under Rule 60(b), the district court found that RBP had
8
An email from Bald Eagle’s counsel contradicts this assertion. In that email on August 15, 2019,
that counsel (Ramsey) voiced his concern over Russel’s authority to sign the stipulation of dismissal without
being counsel of record. Bald Eagle, then, at least was on notice that Russell’s authority to sign the
stipulation was dubious. We consider below whether this knowledge affects the propriety or validity of the
settlement and stipulation of dismissal.
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standing to bring such a motion because RBP was in privity with SPC, had interests directly
affected by the stipulation of dismissal, and raised a claim of fraud on the court. Under Rule
60(b)(4), the district court found that the stipulation must be set aside for voidness because under
Rule 41(a)(1)(ii), a stipulation must be signed by “all parties to the action.” Russell—SPC’s
signatory—had not, however, appeared in the case and “[u]p until the filing of the stipulation of
dismissal, there was not an iota of indication that Mr. Russell was representing SPC.”
Consequently, the district court found that the stipulation of dismissal “was a nullity from its
inception” and set it aside as void. The district court also found that Rule 60(b)(6)—which applies
to set aside a judgment or order in “exceptional or extraordinary circumstances”—also provided
grounds for setting aside the stipulation. Finding that the stipulation, even if valid was “the fruit
of either confusion or duplicity,” the district court determined that “[p]rinciples of equity mandate
relief.”
In November 2019, RBP, SPC, and Bald Eagle participated in a mediation. The parties
then filed a joint status report with the district court, expressing their desire to continue the stay to
both allow mediation to continue; the parties also wanted to continue the stay because RBP filed
a separate suit in the Knox County Circuit Court on October 11, in which RBP sought to set aside
the settlement between SPC and Defendants.9 (R.69-3, PageID 3304, 3307).
Then, on May 20, 2020, SPC and Defendants filed a second status report with the district
court in which they noted they had engaged in “several meaningful discussions” about the suit and
were considering ways to expeditiously resolve the suit. RBP, now represented by Adrienne
9
Though the record does not appear to include filings from that Knox County lawsuit, RBP claims
that in that suit it does not seek collection of unpaid fees but rather seeks to have the lien releases set aside
so that foreclosures may proceed in this federal action. The parties also note that the settlement funds from
this action (the $500,000) are currently held in escrow in the Knox County Circuit Court, as the parties
await a ruling on their cross motions for summary judgment.
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Anderson, filed a separate status report that same day. In that report, RBP claims that an attorney
for Bald Eagle refused to allow RBP to participate in the May status report. RBP also took issue
with the SPC/Defendants’ status report indicating a desire to settle the lawsuit; as RBP noted in its
status, report, “[e]very party and every attorney knows that the [Collections Agreement] provides
that RBP will have the authority to select external counsel to prosecute the foreclosure of the liens
against [Bald Eagle’s] property . . . and that RBP will have authority to manage and instruct
external counsel.”
D. The Second Stipulation of Dismissal and Motion to Intervene
On May 22, two days after the filing of the two status reports, RBP filed its second motion
to intervene. In that motion, RBP attached an affidavit from Swartwood as well as documents it
discovered through the Knox County action, documents that RBP believes show that SPC and
Defendants “colluded to hide their settlement negotiations from RBP” despite both SPC and
Defendants’ knowledge of RBP’s interests. This time, RBP’s proposed complaint in intervention
made claims only against Defendants, thus avoiding the possible jurisdictional issues with RBP
bringing claims against SPC.
Weeks later, on June 5, SPC and Defendants filed their second stipulation of dismissal and
“request for issuance of final order of dismissal with prejudice.” In that filing, SPC and Defendants
noted that once the parties signed the settlement agreement, “there is nothing left for the court to
do as there is no justiciable case or controversy to adjudicate.” They also asserted that the only
remaining dispute was between SPC and RBP. RBP, the parties noted, “has every right to bring
its claim for breach of contract and seek any and all damages suffered; however this has nothing
to do with the Defendants” in the federal lawsuit.
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Three days after the filing of that second stipulation of dismissal, RBP filed its second
“Motion to Set Aside Joint Stipulation of Dismissal of Lawsuit.” The district court, RBP argued,
“retains jurisdiction of this case for the purpose of exercising its inherent power to prevent
injustice.” RBP reiterated its argument that SPC alone lacked the authority to enter into any
settlement agreement and, as such, any purported agreement is void, results in a grave miscarriage
of justice, and results in a fraud upon the district court.
At bottom, RBP believes that pursuant to the Collections Agreement, it should have had
some say in the settlement between the named parties, SPC and Defendants. Those named parties,
in turn, believe their signatures on the stipulation of dismissal stripped the district court of
jurisdiction to consider RBP’s motions, and that even on the merits, those motions should be
denied because RBP improperly “waited in the shadows,” coming out only once it learned the
settlement was not in RBP’s best interests.
II. ANALYSIS
A. First Motion to Intervene
Rule 24(a)(2) provides for intervention as of right; if timely filed, the district 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 its interest, unless existing parties adequately
represent that interest.” Fed. R. Civ. P. 24(a)(2). To intervene as of right, the movant must
demonstrate “(1) timeliness of the application to intervene, (2) the applicant’s substantial legal
interest in the case, (3) impairment of the applicant’s ability to protect that interest in the absence
of intervention, and (4) inadequate representation of that interest by parties already before the
court.” United States v. Tennessee, 260 F.3d 587, 591-92 (6th Cir. 2001) (citing Mich. State AFL-
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CIO v. Miller, 103 F.3d 1240, 1245 (6th Cir. 1997)). This Court has adopted a bifurcated standard
of review whereby we review the timeliness element for abuse of discretion and the remaining
factors de novo. Id. (citing Grutter v. Bollinger, 188 F.3d 394, 398 (6th Cir. 1999)). Though we
are to “broadly construe[]” this rule in favor of those seeking to intervene, Purnell v. City of Akron,
925 F.2d 941, 950 (6th Cir. 1991), the timeliness determination “is left to the sound discretion of
the trial court.” Creusere v. Bd. of Educ. of Cincinnati, 88 F. App’x 813, 824 (6th Cir. 2003)
(citing Stupak-Thrall v. Glickman, 226 F.3d 467, 472-73 (6th Cir. 2000); Bradley v. Milliken, 828
F.2d 1186, 1191 (6th Cir. 1987)).
Considering RBP’s first motion to intervene, the district court denied it as untimely.10 The
timeliness of a motion to intervene is a threshold issue that we must address before considering
any other elements of Rule 24. Blount-Hill v. Zelman, 636 F.3d 278, 284 (6th Cir. 2011). In
assessing such timeliness, we consider several factors:
(1) the point to which the suit has progressed; (2) the purpose for which intervention
is sought; (3) the length of time preceding the application during which the
proposed intervenor knew or reasonably should have known of his interest in the
case; (4) the prejudice to the original parties due to the proposed intervenor’s
failure, after he or she knew or reasonably should have known of his or her interest
in the case, to apply promptly for intervention; and (5) the existence of unusual
circumstances militating against or in favor of intervention.
Grubbs v. Norris, 870 F.2d 343, 345 (6th Cir. 1989). In general, we look to the totality of the
circumstances when considering timeliness, and no one factor is dispositive. Davis v. Lifetime
10
The district court analyzed at length only intervention as of right under Rule 24(a)(2). This is
because the timeliness factor is common to both intervention as of right and permissive intervention.
Compare Fed. R. Civ. P. 24(a) with 24(b)(1). Thus, if timeliness is lacking as to intervention as of right,
the same is true as to permissive intervention. See NAACP v. New York, 413 U.S. 345, 365 (1973); Stupak-
Thrall, 226 F.3d at 479 (affirming denial of motion to intervene as of right and noting that the same analysis
applies equally to permissive intervention).
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Capital, Inc., 560 F. App’x 477, 490 (6th Cir. 2014) (citing Stupak-Thrall, 226 F.3d at 475);
Blount-Hill, 636 F.3d at 284.
Point to which the suit has progressed. The district court did not abuse its discretion in
finding the first motion to intervene untimely. Consider when RBP filed its first motion to
intervene: nearly a year after the case was removed to the Eastern District of Tennessee. Although
“[t]he absolute measure of time between the filing of the complaint and the motion to intervene is
one of the least importance of these circumstances” in considering this first factor, what does
matter is “what steps occurred along the litigation continuum during this period of time.” Stupak-
Thrall, 226 F.3d at 475. Here, the district court found this factor counseled against intervention
because in that year, “there has been extensive progress and substantial motion practice and
discovery, including cross-motions for summary judgment.” Other motions include SPC’s motion
to dismiss Defendants’ counterclaims, Defendants’ motion to consolidate, SPC’s first motion for
summary judgment, Defendants’ motion to amend and file a countercomplaint, and SPC’s motion
to strike or defer ruling on Defendants’ cross-motion for summary judgment.11
The district court did not abuse its discretion in deeming this “extensive” or “substantial”
progress in the lawsuit. See Blount-Hill, 636 F.3d at 285 (affirming denial of motion to intervene
as untimely based, in part, on: filing of and granting a motion to dismiss, completion of pretrial
conference and issuance of a scheduling order, exchange of discovery, filing of third amended
complaint, and filing of a second motion to dismiss). RBP’s argument that no discovery had yet
11
Prior to the relevant order on the motion to intervene, the district court entered an omnibus order
granting Defendants’ motion to amend and file a counter-complaint, denying the cross-motions for
summary judgment with leave to refile, and denying as moot SPC’s motion to strike Defendants’ cross-
motion for summary judgment. In that order, the district court first described the “extensive motion
practice” that had already taken place before the filing of the motion to intervene. The district court denied
the cross-motions for summary judgment as unripe because in that same order, the district court granted
Defendants’ motion to file an amended answer and counterclaim, and SPC had not yet had the chance to
respond to those.
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taken place is unavailing because this action was premised on purely legal questions regarding the
validity and enforceability of the relevant deed provisions and whether those provisions ran with
the land or applied only to the original grantor. These questions necessitated little to no discovery;
each side was looking at the same deed provisions (which each party, as signatories, presumably
already had in their possession) and asking the district court to interpret them in their preferred
way. Further, that the named parties had already filed cross-motions for summary judgment
indicates that the parties foresaw little need for discovery and were prepared to dispose of this
action without such discovery. We cannot, then, use the lack of discovery as a factor in favor of
intervention and, as such, those cases finding timeliness based on a lack of discovery are not
directly applicable.12 In short, the district court did not abuse its discretion in finding this first
factor favored denying intervention.
Purpose for which intervention is sought. The second timeliness factor is the purpose for
which intervention is sought. Blount-Hill, 636 F.3d at 285. In considering this factor, district
courts should look to the “importance of the legal interests asserted.” Davis, 560 F. App’x at 491
(quotation omitted). The district court here said only that RBP “intervened because SPC no longer
wished to perpetuate the case and sought to settle the case behind [RBP’s] figurative back.” RBP,
in turn, claims that it sought to intervene to protect its “significant legal property interests” in the
12
There are several cases in which this Court found untimeliness based on more progress than that
in this lawsuit. See, e.g., Stupak-Thrall, 226 F.3d at 475 (finding lack of timeliness based on the case being
over seven months old; discovery closing ten months prior to filing of motion to intervene; the identification
of all witnesses, including experts; the production of expert reports; and the dispositive motion deadline
was only seven weeks away); Creusere, 88 F. App’x at 825 (noting that case was three years old, discovery
was complete, the dispositive motion deadline had passed, and trial was only a month away); Johnson v.
City of Memphis, 73 F. App’x 123, 132 (6th Cir. 2003) (noting that case was over a year old when motion
to intervene was filed, all witnesses were identified, expert witnesses had submitted reports and testimony,
depositions were completed, and a motion for partial summary judgment was granted). Though these cases
do not necessarily set the lower end by which this Court may find untimeliness under the first factor, they
do support our finding here that the district court did not abuse its discretion in deciding this first timeliness
factor counseled against intervention.
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claims against Defendants. Additionally, RBP’s first motion to intervene sought to add a claim
against Defendants as well as against SPC (for breach of the Collections Agreement).
We find that RBP’s stated purposes for intervening were legitimate. In Stupak-Thrall, the
proposed intervenors proffered a similar interest as to RBP: ensuring their interests were protected
in the event of a settlement. Stupak-Thrall, 226 F.3d at 475. There, this Court found that this
purported interest was “unrealistic” because of the “exceedingly small” likelihood that the parties
would settle. Id. at 476-77. This case, of course, is markedly different insofar as it was clear the
named parties intended to settle; after all, the proposed settlement is what led RBP to file its motion
to intervene. RBP’s interest was clear and legitimate: it believed that SPC was not adequately
representing its interests in SPC’s settlement negotiations with Defendants, and it further believed
that SPC was breaching the Collections Agreement by not consulting with and gaining the
approval of RBP before reaching any settlement. These interests are legitimate and thus weigh in
RBP’s favor.13
Time in which appellants knew of their interest in the case. Much of the dispute centers
on the third factor, i.e., the length of time between when RBP “should have known of [its] interest
in the case” and when it filed its motion to intervene. Grubbs, 870 F.2d at 345. The parties dispute
the triggering point: is it when the proposed intervenor knew or should have known of its interest
in the case? Or is it when the proposed intervenor knew or should have known that its interests
were not being adequately represented by the named parties? Though our precedent seemingly
favors the latter, even under that more relaxed standard, the record reveals that RBP should have
known in at least May 2019 that SPC was not adequately representing its interests.
13
In Johnson, this Court summarily found that the stated purposes for intervention were “legitimate
under the circumstances of this action” but nonetheless affirmed the denial of the motion to intervene based
on the other timeliness factors. Johnson, 73 F. App’x at 132. This reiterates that no single factor is
dispositive in our timeliness analysis. Davis, 560 F. App’x at 490.
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Case No. 20-6016, Salem Pointe Capital v. BEP Rarity Bay, et al.
Considering this third factor, the district court found that RBP “was not unaware of the
progress of the case or its interest in it,” but decided to “play the role of shadow plaintiff.” The
district court explained that an “entity that is aware that its interests may be impaired by the
outcome of the litigation is obligated to seek intervention as soon as it is reasonably apparent that
it is entitled to intervene.” In essence, the district court faulted RBP for what it deemed to be a
“wait-and-see” approach. RBP, in turn, argues on appeal that the controlling inquiry should have
been not when RBP knew of its interest in the case but rather “whether RBP unreasonably delayed
filing for intervention after it had reason to believe its interests were not being adequately
represented by SPC.”
In Stotts, this Court noted that a “party must have been aware of the risk that his interest
may be affected by the litigation and that his interest may not be fully protected by the existing
litigants.” Stotts, 679 F.2d at 583 (citing Mich. Ass’n for Retarded Citizens v. Smith, 657 F.2d 102,
105 (6th Cir. 1981) and United Airlines, Inc. v. McDonald, 432 U.S. 385, 394 (1977)). Similarly,
in Jansen, we reversed and found the proposed intervenors’ motion was timely when “the proposed
intervenors proceeded with haste from the time that they became aware that the City’s interest
differed from their interest.” Jansen v. City of Cincinnati, 904 F.2d 336, 341 (6th Cir. 1990).
“From the outset of the litigation,” we noted, “the proposed intervenors knew their interest would
be affected. They were not aware, however, that their interest was inadequately represented by
the City until the City responded to the plaintiffs’ summary judgment motion.” Id.; see also
Midwest Realty Mgmt. Co. v. City of Beavercreek, 93 F. App’x 782, 787-88 (6th Cir. 2004) (“[I]t
was not until there was reason to believe [the proposed intervenors’] interests were not being
adequately represented by the City that they would have been alerted to the need to seek
intervention. . . . The mere pendency of settlement negotiations cannot be deemed to trigger such
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Case No. 20-6016, Salem Pointe Capital v. BEP Rarity Bay, et al.
awareness. Only notice of objectionable terms in a proposed settlement will ordinarily suffice.”
(internal citation omitted)). Under this precedent, then, the district court seemingly considered the
wrong point by which RBP was obligated to intervene.
However, we need not decide here whether RBP or SPC and the Defendants are correct as
to the appropriate triggering point, as RBP would fail under either. Even giving RBP the benefit
of the more lenient test, then RBP should have moved to intervene—or at least alerted the district
court to its divergent interests—when Swartwood learned that settlement discussions were taking
place behind his back in May 2019. On May 8, Swartwood received an email from Bald Eagle’s
counsel (Baxter) informing Swartwood that “the principals in the case [were] . . . hammering out
the details of a settlement that could resolve this matter.” Swartwood noted that this surprised him
because he was not aware of any ongoing negotiations. RBP, however, did not move to intervene
for nearly five months after learning that those SPC-Defendants settlement negotiations were
taking place; instead, it seems RBP only moved to intervene when it learned that (1) SPC was
breaching the Collections Agreement by not obtaining RBP’s approval and (2) that the settlement
was not as substantial as RBP desired.
It is thus likely that by May 9, 2019, Swartwood at least had constructive, if not actual,
knowledge of the divergence of interests and settlement demands, and such constructive
knowledge suffices for this third timeliness factor. Stotts, 679 F.2d at 583 (finding publication of
newspaper article about litigation sufficed for knowledge of proposed intervenor’s interest in the
case); see also Johnson, 73 F. App’x at 132-33 (same); Davis, 560 F. App’x at 492 (“Actual notice
is not required.”). Given the notice that previously-unknown settlement discussions were taking
place, and presumably knowledge that SPC and RBP were demanding different settlement
amounts, “it would not have required unusual prescience on the part of [RBP] to recognize that
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[its] interests were implicated[.]” Cuyahoga Valley Ry. Co. v. Tracy, 6 F.3d 389, 396 (6th Cir.
1993) (finding that although intervenors were entitled to rely upon the state attorney general’s
efforts to protect their interests, they were “not, however, entitled to then enter the proceedings
after the case has been fully resolved, in an attempt to achieve a more satisfactory resolution”).
In sum, under this third timeliness factor, even if RBP was not obligated to intervene until
it should have known that its interests were not being properly represented by the named parties,
RBP should have known (or did know) in May of 2019 that SPC was not adequately representing
its interests. Because RBP did not move to intervene for five months after that, the district court
did not abuse its discretion in finding this third factor weighed against intervention.
Prejudice to the original parties. The fourth timeliness factor asks district courts to
consider the prejudice to the named parties due to the failure to intervene at an earlier point. Stotts,
679 F.2d at 584. The district court here found that permitting RBP “to intervene at this late stage
would prove prejudicial to the parties and the public,” as both “have an interest in the expeditious
and efficient disposition of litigation.” The district court found that allowing RBP to intervene
“would only result in further undue delay.” RBP takes issue with the district court’s consideration
of prejudice, asserting that the district court wrongly considered prejudice from the intervention
itself rather than the incremental prejudice from the delayed intervention. See Davis, 560 F. App’x
at 493 (“The only prejudice relevant to the timeliness determination is incremental prejudice from
a would-be intervenor’s delay in intervening, not prejudice from the intervention in and of itself.”);
see also Stotts, 679 F.2d at 584 (describing this factor as the “prejudice to the original parties due
to the failure to intervene after the proposed intervenors knew or reasonably should have known
of their interest in the case”).
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Case No. 20-6016, Salem Pointe Capital v. BEP Rarity Bay, et al.
RBP is correct that the relevant prejudice is that incremental prejudice—the prejudice from
having not intervened earlier rather than the general prejudice resulting from the intervention—
but the district court’s analysis here, though not lengthy, was that “permitting [RBP] to intervene
at this late stage” would prove prejudicial to the parties and the public.” However, the district
court’s reference to case’s posture makes clear it considered not the general prejudice resulting
from intervention, but rather the incremental prejudice resulting from the timing of the
intervention.
That purported error aside, the prejudice to allowing intervention at this stage weighs
heavily in the Appellees favor. RBP filed the motion to intervene after the named parties filed
their first stipulation of dismissal and, as the district court described, after “extensive progress and
substantial motion practice and discovery, including cross-motions for summary judgment.” This
fourth factor largely ties into the first factor—the progress of the suit—because when “extensive
litigation … has occurred[,] intervention at this late stage would cause prejudice in the form of
undue delay.” See Blount-Hill, 636 F.3d at 286 (considering same factors under progress and
prejudice prongs). Along with its motion to intervene, RBP filed its proposed amended complaint
in which it added a claim against SPC for breach of the Collections Agreement. This would “force
the parties into collateral litigation” over issues that are beyond the scope of the original action.
See Tennessee, 260 F.3d at 594 (denying intervention as untimely based, in part, because the
original parties would be prejudiced by the proposed intervenors’ attempt to add a “complicated
issue to the litigation” that was “beyond the scope of the suit’s initial focus”).
This is not like Jansen where we held that the district court erred in finding prejudice in its
denial of a motion to intervene. There, one factor counseling against a finding of prejudice was
that “the original parties’ interests are better served by having all relevant interests represented
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Case No. 20-6016, Salem Pointe Capital v. BEP Rarity Bay, et al.
prior to the summary judgment motion’s disposition because piecemeal litigation is likely to be
avoided.” Jansen, 904 F.2d at 341. Here, RBP’s claim against SPC is not one “piece” of the same
litigation; rather, the claim that SPC breached the Collections Agreement is an entirely separate
matter appropriately brought in a separate action. And RBP did just that, bringing its separate
state-court action against SPC for breach of that agreement.
Unusual circumstances. The fifth and final timeliness factor is the “existence of unusual
circumstances militating against or in favor of intervention.” Stotts, 679 F.2d at 582. This Court
“does not have an established list of additional factors that it considers in every timeliness analysis”
under this fifth factor. Davis, 560 F. App’x at 494. The district court here did not mince words,
explaining that RBP’s “behavior in relation to this litigation militates against intervention” because
“[s]hadows and subterfuge find their proper place in spy novels, not litigation.” RBP takes issue
with this finding, asserting that the district court merely “adopted defense counsel’s rhetoric,” but
it is not an abuse of discretion for the district court to agree with (and adopt the rhetoric or tone of)
a party’s arguments.
RBP’s other argument under this fifth factor is to reiterate its claim that SPC’s collusive
negotiations with Defendants is an “unusual circumstance” meriting intervention. At bottom,
however, it appears that SPC was simply willing to accept a breach of contract claim—one that
RBP has already separately brought in state court—so that SPC and Defendants could end this
federal matter. Whatever SPC’s internal calculus in making that decision, as Defendants note,
“[i]f there is a violation of a collateral agreement, such as the Collections Agreement, that is
between SPC and RBP elsewhere and does not involve [Defendants].”
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Case No. 20-6016, Salem Pointe Capital v. BEP Rarity Bay, et al.
B. RBP’s Rule 60(b) Motion to Set Aside the Stipulation of Dismissal
RBP’s first motion to set aside the first stipulation is not at issue here; the district court
granted that motion, first finding that RBP had standing to bring it, and second finding that the
first stipulation of dismissal was void in that it was not signed by SPC’s attorney of record. RBP,
however, appeals the denial of its second motion to set aside the stipulation. As the district court
did, we consider that motion here before the second motion to intervene because the district court’s
denial of that Rule 60(b) motion (along with the filing of the stipulation of dismissal) divested the
district court of jurisdiction to consider the second motion to intervene, i.e., the stipulation of
dismissal mooted the motion to intervene. In other words, if the district court did not abuse its
discretion in denying RBP’s second Rule 60(b) motion to set aside the stipulation of dismissal,
then consideration of the second motion to intervene is unnecessary.
Standing. First, RBP had standing to invoke Rule 60(b), despite Defendants’ arguments
on appeal to the contrary. Twice the district court determined that RBP had such standing, finding
that (1) RBP was in privity with SPC, (2) RBP’s interests were directly affected by the stipulation
of dismissal, and (3) RBP raised a claim of fraud on the court. Fed. R. Civ. P. 60(b) permits a
“party or its legal representative” to move for relief from a final judgment, or proceeding for
various reasons include—as relevant here—fraud, a void judgment, or “any other reason that
justifies relief.” Fed. R. Civ. P. 60(b).14 Relief under this rule is “circumscribed by public policy
favoring finality of judgments and termination of litigation,” and as such, the party seeking relief
“bears the burden of establishing the grounds for such relief by clear and convincing evidence.”
Info-Hold v. Sound Merch., Inc., 538 F.3d 448, 454 (6th Cir. 2008) (citations omitted).
14
We generally review denials of Rule 60(b) motions for abuse of discretion but review de novo
denials of Rule 60(b)(5) motions alleging voidness. Bridgeport, 714 F.3d at 939 (citations omitted).
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Case No. 20-6016, Salem Pointe Capital v. BEP Rarity Bay, et al.
As is clear from the rule’s text, the “general rule is that one must either be a party or a
party’s legal representative in order to have standing to bring any Rule 60(b) motion.” Bridgeport
Music, Inc. v. Smith, 714 F.3d 932, 940 (6th Cir. 2013) (quotation omitted). Nonetheless, this
Court has at least recognized that other courts have found exceptions to that general rule. Id. at
940-42 (collecting cases) (“[S]everal courts have allowed relief where the nonparty is in some
form of privity” or where the nonparty’s “interests were directly or strongly affected by the
judgment”). For example, in Dunlop v. Pan American World Airways, Inc., 672 F.2d 1044 (2d
Cir. 1982), the Second Circuit found that “the principles governing standing to invoke Rule 60 are
sufficiently flexible to permit a finding of standing” when the non-party movants were prohibited
from bringing a new discrimination action because of a prior federal judgment to which they were
not a party. Id. at 1047, 1051. Thus, the Second Circuit found that the movants “were sufficiently
connected and identified with the [original plaintiff]’s suit to entitle them to standing to invoke
Rule 60(b)(6).” Id. at 1052; see also Southerland v. Irons, 628 F.2d 978, 980 (6th Cir. 1980) (per
curiam) (holding that nonparty had standing to bring Rule 60(b) motion alleging fraud because
“Rule 60(b) by its own terms does not limit the court’s power to set aside a judgment induced by
fraud” and noting that “a claim of fraud on the court may be raised by a non-party”).
In Bridgeport, this Court did not definitively adopt those exceptions because even if they
applied in that case, the movant’s motion would still fail. Id. at 941. The same is true here because
as described below for each subsection RBP raises, its arguments are without merit. As such, we
need not definitively say whether this Court adopts any exception, other than that recognized in
Southerland, to the general principles of Rule 60(b) standing.
Rule 60(b)(3). Fed. R. Civ. P. 60(b)(3) permits relief in cases of “fraud (whether previously
called intrinsic or extrinsic), misrepresentation, or misconduct by an opposing party.” Fed. R. Civ.
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Case No. 20-6016, Salem Pointe Capital v. BEP Rarity Bay, et al.
P. 60(b)(3). These are situations in which an “adverse party committed a deliberate act that
adversely impacted the fairness of the relevant legal proceeding [in] question.” Info-Hold, 538
F.3d at 455 (alteration in original). This Court has defined such fraud as “the knowing
misrepresentation of a material fact, or concealment of the same when there is a duty to disclose,
done to induce another to act to his or her detriment.” Id. at 456 (quoting BLACK’S LAW
DICTIONARY 685 (8th ed. 2004)).
The district court here considered RBP’s two separate allegations under Rule 60(b)(3).
First, RBP alleges that in their stipulation, the named parties fraudulently claimed that:
After nearly a year of litigation, and following this Court’s September 23, 2019,
Order granting Defendants’ Motion to Amend the Answer and Counter-Complaint
and denying the Parties’ competing Motions for Summary Judgment, the Parties
engaged in meaningful alternative dispute resolution in an effort to resolve the
disputes in controversy between them.
RBP’s argument is essentially that the district court’s September 23 order did not itself cause the
parties to “engage[] in meaningful alternative dispute resolution” because, according to the record,
the named parties had long before been discussing the settlement. This fails to show clear and
convincing evidence of fraud for three reasons. First, under a literal reading of the stipulation, the
stipulation does not suggest that the district court’s September order itself or alone led to the
dispute resolution; the stipulation also references the “year of litigation.” Second, the March 2019
emails between SPC and Defendants discussed terms of an agreement but did not definitively settle
the dispute. Third and finally, the parties did not sign their settlement agreement until September
30, which is consistent with the stipulation’s statement that the September 23 order led to the
dispute’s resolution. Accordingly, the timeline and a literal reading of the stipulation belies RBP’s
assertion that the “record in this matter demonstrates beyond any doubt that the settlement between
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Case No. 20-6016, Salem Pointe Capital v. BEP Rarity Bay, et al.
SPC and Bald Eagle was not the result of meaningful alternative dispute resolution that occurred
after the court’s September 23, 2019 Order.”
The second argument under Rule 60(b)(3) is a more general allegation of misconduct: the
named parties’ conduct amounted to fraud through their allegedly collusive negotiations. The
district court considered the timeline of events and the allegations of collusion and duplicity,
explaining that it was “greatly displeased by the conduct of nearly everyone involved in this case.”
However, the district court then concluded that “it will not set aside the stipulation of dismissal
because of [SPC and the Defendants’ misconduct] to save RBP from the fruits of its own conduct.
In other words, RBP made a bed of duplicity and must lay in it.” We agree with the district court
that any misconduct regarding the settlement, including assertions in the stipulation as to who had
the authority to sign the settlement, are “issues to be resolved in the state court action and do not
provide a basis for setting aside the stipulation of dismissal.” In sum, the district court did not
abuse its discretion in denying relief under Rule 60(b)(3).
Rule 60(b)(4). Next, Rule 60(b)(4) allows for relief if “the judgment is void.” Fed. R. Civ
P. 60(b)(4). In United Student Aid Funds, Inc. v. Espinosa, the Supreme Court explained just how
limited Rule 60(b)(4) is; courts considering Rule 60(b)(4) motions “generally have reserved relief
only for the exceptional case in which the court that rendered judgment lacked even an ‘arguable
basis’ for jurisdiction.” 559 U.S. 260, 271 (2010) (quoting Nemaizer v. Baker, 793 F.2d 58, 65
(2d Cir. 1986)). Void judgments are those that are “so affected by a fundamental infirmity that
the infirmity may be raised even after the judgment becomes final,” and “[t]he list of such
infirmities is exceedingly short.” Id. at 270.
In considering Rule 60(b)(4), it is important to compare the first and second motions to set
aside the stipulations of dismissal. Ruling on the first motion, the district court found that the first
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Case No. 20-6016, Salem Pointe Capital v. BEP Rarity Bay, et al.
stipulation was a “nullity from its inception” because it was signed by Adam Russell, an attorney
not of record. Regarding the second stipulation, however, the district court explained that “unlike
before, the [second] stipulation of dismissal is neither facially nor fatally deficient.” Both the
district court and the Appellees rely upon a persuasive Seventh Circuit case to highlight the
foundational problem with RBP’s argument here. There, the appellant filed a motion under Rule
60(b), arguing that “the judgment was void because the settlement agreement was void.” Tsironis
v. Bismarck Hotel, 74 F.3d 1242, at *2 (7th Cir. 1996) (table). This sort of argument, as the district
court noted below, “rests on the ‘rather odd proposition’ that the underlying settlement is void and
‘the settlement agreement and the judgment are somehow proxies for each other.’” R. 78, PageID
#3370 (quoting Tsironis, 74 F.3d at *2).
Settlement agreements are not orders or judgments; they are contracts. Any purported
invalidity or voidness in the settlement agreement between SPC and Defendants does not thereby
render invalid or void the district court’s judgment. If RBP believes that SPC breached the contract
between SPC and RBP, that matter is properly before the Knox County Circuit Court. The district
court did not err in refusing to set aside the stipulation of dismissal under Rule 60(b)(4).
Rule 60(b)(6). Finally, under Rule 60(b)(6), a catchall provision, a district court may set
aside a judgment for “any other reason that justifies relief.” Fed. R. Civ. P. 60(b)(6). As explained
above, relief under Rule 60(b) is circumscribed by public policy favoring finality, and “[t]his is
especially true in an application of subsection (6) of Rule 60(b), which applies ‘only in exceptional
or extraordinary circumstances which are not addressed by the first five numbered clauses of the
Rule.’” Blue Diamond Coal Co. v. Trs. of UMWA Combined Benefit Fund, 249 F.3d 519, 524 (6th
Cir. 2001) (quoting Olle v. Henry & Wright Corp., 910 F.2d 357, 365 (6th Cir. 1990)). As a result,
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courts must grant relief under Rule 60(b)(6) only in “unusual and extreme situations where
principles of equity mandate relief.” Olle, 910 F.2d at 365.15
RBP argues that because it never selected or consented to SPC’s new attorney, Tom Hale,
Hale lacked the authority to stipulate to the dismissal. In considering Rule 60(b)(6), the district
court conceded that “these circumstances are certainly unusual and extreme, but principles of
equity do not mandate relief.” Rule 60(b)(6), the district court noted, is “equitable in character,”
and in this case, the district court found it “difficult to find an innocent party.” Even assuming
SPC breached the Collections Agreement by selecting its own counsel without RBP’s consent,
“that breach would not provide a basis to grant RBP relief” under Rule 60(b)(6) as “the propriety
of that action is properly left in the capable hands of the Knox County Circuit Court.” The district
court did not abuse its discretion in making that finding; when a named party hires an attorney,
that attorney signs a stipulation of dismissal, and the court grants that stipulation—a matter of
common course—we cannot say that that scenario is “unusual and extreme” or that it “mandates
relief” under principles of equity. Olle, 910 F.2d at 365. Whether that attorney and the named
party breached a separate private agreement—one between SPC and RBP—that matter is, as the
district court duly noted, properly before the Knox County Circuit Court. That RBP was able to
bring a separate suit against SPC for breach of the Collections Agreement further supports the
finding that equity does not mandate relief here; RBP is not without recourse.
RBP’s sole authority supporting its Rule 60(b)(6) arguments is United States v. 32.40 Acres
of Land, More or Less, Situated in Leelanau Cty., 614 F.2d 108 (6th Cir. 1980). In that case, the
15
See also Stokes v. Williams, 475 F.3d 732, 735 (6th Cir. 2007) (“Even stricter standards are
routinely applied to motions under subsection (6) of Rule 60(b) than to motions made under other provisions
of the rule.”). The standard under Rule 60(b)(6) is stricter than the previous five subsections because those
first five already “cover almost every conceivable ground for relief.” Ford Motor Co. v. Mustangs
Unlimited, Inc., 487 F.3d 465, 469 (6th Cir. 2007) (quoting Pruzinsky v. Gianetti (In re Walter), 282 F.3d
434, 440 (6th Cir. 2002)).
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United States argued that a previous settlement was invalid because the Assistant United States
Attorney who agreed to the settlement amount did not comply with federal regulations requiring
approval by the proper representative of the Department of Justice. Id. at 110. The district court
rightfully distinguished this case as involving the United States government and applicable federal
regulations mandating DOJ approval. In that case, this Court noted that the defendants’ (private
landowners) arguments against invalidating the settlement would “almost certainly prevail” if the
negotiations were between two private parties. Id. at 113. Even if the case were applicable more
generally—for the proposition that an invalid settlement can provide relief under Rule 60(b)(6)—
that is inapplicable here; the stipulation of dismissal and settlement agreement were valid because
the attorneys-of-record for each side signed them. In other words, SPC, as the named party, had
every right under Rule 41(a)(1)(A)(ii) to stipulate to the dismissal. Whether that action (signing
the stipulation) constituted a breach of a private contract does not affect the validity of the
stipulation, and as such, it does not mandate relief under Rule 60(b)(6). Therefore, the district
court did not abuse its discretion in denying relief under Rule 60(b)(6).
C. Second Motion to Intervene
That leaves us with RBP’s second motion to intervene. Because the Rule 41(a)(1)(A)(ii)
stipulation of dismissal was valid (as this time, it was signed by all parties who had appeared), and
because RBP’s Rule 60(b) motions failed for the reasons explained above, the district court found
that RBP’s second motion to intervene was moot. The district court did not abuse its discretion in
denying the second motion to intervene for two reasons: (1) the valid stipulation of dismissal was
self-executing and thereby mooted the motion to intervene, and (2) even if the motion to intervene
were not mooted, the motion was untimely for the same reasons as the first motion to intervene.
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Case No. 20-6016, Salem Pointe Capital v. BEP Rarity Bay, et al.
Fed. R. Civ. P. 41(a)(1)(A)(ii) provides that a “plaintiff may dismiss an action without a
court order by filing . . . a stipulation of dismissal signed by all parties who have appeared.” That
is precisely what happened here when SPC and Defendants—the only named parties—filed their
signed stipulation on June 5, 2020. That stipulation was clear and unconditional; the parties
explained that “Plaintiff wants nothing more from Defendants, and vice versa.” As is clear from
the text of the rule, the dismissal resulting from that stipulation required no court order to effectuate
the dismissal; such notices are “self-effectuating.” Aamot v. Kassel, 1 F.3d 441, 445 (6th Cir.
1993). The dismissal resulting from a stipulation under this rule “terminate[s] the district court’s
jurisdiction except for the limited purpose of reopening and setting aside the judgment of dismissal
within the scope allowed by Rule 60(b).” Hinsdale v. Farmers Nat’l Bank & Tr. Co., 823 F.2d
993, 995-96 (6th Cir. 1987) (internal quotation marks and citation omitted); see also Warfield v.
AlliedSignal TBS Holdings, Inc., 267 F.3d 538, 541-42 (6th Cir. 2001) (“[T]he plaintiff’s
stipulation is the legally operative act of dismissal and there is nothing left for the court to do.”).
Thus, the district court was correct in finding that because the motion to intervene did not fall
within the limited scope of jurisdiction concerning a Rule 60(b) motion,16 the stipulation of
dismissal mooted the motion to intervene.
The fact that a motion to intervene was pending before the district court before the named
parties filed their stipulation of dismissal does not change the district court’s mootness analysis.
See, e.g., United States v. Ford, 650 F.2d 1141, 1143 (9th Cir. 1981) (“Since there is no longer any
action in which appellants can intervene, judicial consideration of the [motion to intervene] would
be fruitless.”). In Mutual Produce, the district court considered similar facts wherein a group of
16
Nor did it fall within the district court’s continuing jurisdiction over “collateral issues” such as
costs, attorneys’ fees, contempt charges, or sanctions. See Cooter & Gell v. Hartmarx Corp., 496 U.S. 384,
395-96 (1990).
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owners and freight claims agents brought a motion to intervene, after which the named plaintiffs
and defendants filed stipulations voluntarily dismissing the action. Mut. Produce, Inc. v. Penn
Cent. Transp. Co., 119 F.R.D. 619, 619-20 (D. Mass. 1988). As here, the proposed intervenors
there did not move for a restraining order seeking a stay of those stipulations of dismissal. Id. at
620. Because such motions to intervene “are not granted automatically, nor does their filing
constitute an automatic stay,” the district court found that when the stipulations of dismissal were
filed and effectuated, “there [was] no action in which to intervene and the motions to intervene
[were] moot.” Id. at 620-2117; see also Dukes v. Wal-Mart Stores, Inc., No. 01-cv-02252-CRB,
2016 WL 4269093, at *2 (N.D. Cal. Aug. 15, 2016) (“That the Proposed Intervenors filed their
Motion [to Intervene] before the Rule 41(a)(1) dismissal is irrelevant” because a “Rule 41(a)(1)
dismissal[] divests[s] the Court of its jurisdiction to hear motions to intervene that were filed prior
to the Rule 41(a)(1) dismissal.” (emphasis added)); In re Irish Bank Resol. Corp., 2014 WL
1884916, at *3 (Bankr. D. Del. May 12, 2014) (“A stipulation [under Fed. R. Civ. P. 41(a)(1)(ii)]
filed during the pendency of a motion to intervene is effective to dismiss the action, since the
proposed intervenors do not become parties within the meaning of the Rule until their motion is
granted.”) (quoting 8 James Wm. Moore, et al., Moore’s Federal Practice § 41.34[4][b], 41-116
(3d ed. 2013)).18
17
RBP’s only real arguments against Mutual Produce are that its “reasoning is flawed” and that it
involved “unique procedural circumstances” in which the proposed intervenors moved to intervene in 600
cases, four days after which the original parties voluntarily dismissed the action. We see no flaw in that
court’s reasoning, nor are the circumstances there unique. In fact, they are remarkably similar: a proposed
intervenor filed a motion to intervene, after which the original parties filed a valid stipulation of dismissal.
18
See also Roddy v. Dendy, 141 F.R.D. 261, 262 (S.D. Miss. 1992) (finding that notice of voluntary
dismissal mooted prior-filed motion to dismiss); Reagan v. Fox Navigation, LLC, Civ. A. 302-CV-627,
2005 WL 2001177, at *1 (D. Conn. Aug. 17, 2005) (“[C]ourts have ruled that once the parties have filed a
Rule 41(a)(1)(ii) stipulation of dismissal, there is no longer a pending case or controversy into which a non-
party may intervene.”). RBP argues that mooting the motion to intervene would encourage some sort of
gamesmanship because “the named parties . . . can dismiss the case before the court ever decides whether
he should be allowed to intervene.” But voluntary dismissals frequently moot prior-filed motions. See,
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Case No. 20-6016, Salem Pointe Capital v. BEP Rarity Bay, et al.
RBP’s reliance on Midwest Realty is unpersuasive. In that case, the named plaintiff and
defendant settled their claims related to a city zoning ordinance. Midwest Realty, 93 F. App’x at
783-84. The district court then entered a conditional dismissal order in which it retained
jurisdiction to enforce the settlement agreement. Id. at 784. Several city residents then filed a
motion to intervene, as they saw the proposed settlement as contrary to their interests. Id. The
district court denied the motion to intervene because, in part, it found that it had no jurisdiction to
consider that motion in light of the narrowness of its conditional dismissal order. Id. at 785. This
Court reversed, explaining that the “district court’s ruling is based on a misapprehension of the
effect of its conditional dismissal order.” Id. Such conditional dismissal orders, we explained, are
“not final until the time to satisfy the condition expires.” Id. Because the settlement was not yet
consummated at the time the residents filed their motions to intervene, the district court erred in
finding it had no jurisdiction. Id. Such is not the case here, where there was no conditional
dismissal order; there was no condition subsequent that had to occur for the settlement to be
consummated.
Finally, even if the district court did have the jurisdiction necessary to consider the motion
to intervene, that motion would be untimely for the same reasons as the first motion to intervene.
See supra, Part II.A. Thus, RBP’s argument that the district court “should have granted RBP’s
Second Motion to Intervene for the same reasons it should have granted RBP’s First Motion to
Intervene” necessarily fails given our holding above affirming the district court’s timeliness
analysis. Nothing in the interim changed the timeliness analysis, despite RBP’s argument to the
contrary. RBP asserts that in its second motion to intervene, RBP “presented newly discovered
e.g., Am. Modern Home Ins. v. Insured Accounts Co., 704 F. Supp. 128, 131 (S.D. Ohio 1988) (finding
notice of voluntary dismissal mooted earlier motion to dismiss). To the extent RBP is raising a fairness
argument, we reiterate that RBP is not without recourse. In fact, it has already utilized that recourse through
filing its breach of contract claim in state court.
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Case No. 20-6016, Salem Pointe Capital v. BEP Rarity Bay, et al.
evidence” as to the alleged collusion between SPC and Defendants. This new evidence included,
for example, a March 25, 2019 email in which Defendants and SPC appear to have agreed to the
material terms of the settlement. That new evidence, however, does not change the timeliness
analysis. It still remains true that as of May 2019, Swartwood should have known that the interests
of RBP and SPC had diverged and that SPC was not adequately representing RBP’s interests in its
settlement negotiations. In other words, the newly discovered evidence hints at collusion, i.e.,
secret settlement negotiations between SPC and Defendants. But RBP (through Swartwood)
already had before it evidence of those secret negotiations. The new evidence merely supports the
argument that SPC and the Defendants went behind RBP’s back to settle this case, but that was
already before the district court in considering the first motion to intervene. That new evidence
may prove useful in RBP’s breach of contract action against SPC, but it does not affect the analysis
of whether RBP’s second motion to intervene was timely.
In sum, the Rule 41(a)(1)(ii) stipulation of dismissal divested the district court of
jurisdiction to consider RBP’s second motion to intervene. The district court thus appropriately
found the motion to intervene to be moot by virtue of that stipulation. Further, even if the notice
of dismissal did not moot the motion to intervene, RBP’s second motion to intervene was untimely
for the same reasons the district court found the first motion to intervene to be untimely. The
allegedly newly-discovered evidence that RBP brought with its second motion to intervene does
not alter this outcome; it merely supports the assertion that SPC and Defendants were secretly
negotiating without RBP’s required consent. The evidence before the district court at the time of
the first motion to intervene already included the allegation (with evidentiary support) of that
alleged collusion. The new evidence does not change the conclusion that RBP and Swartwood
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Case No. 20-6016, Salem Pointe Capital v. BEP Rarity Bay, et al.
should have realized earlier that SPC (1) did not represent RBP’s interests and (2) did not include
RBP in its negotiations with Defendants.19
III. CONCLUSION
In sum, we first hold that the district court did not abuse its discretion in denying the first
motion to intervene as untimely because there had already been extensive progress in the lawsuit,
intervention after five-month delay would have prejudiced the named parties, and RBP should
have intervened when it first learned that SPC was not representing RBP’s interests and was
negotiating behind RBP’s back. Second, even if RBP had standing to bring its Rule 60(b) motion
to set aside the second stipulation of dismissal, the district court did not abuse its discretion in
denying that motion under Rule 60(b)(3), 60(b)(4), or 60(b)(6). Finally, the district court did not
abuse its discretion in denying the second motion to intervene because (a) the valid second
stipulation of dismissal deprived the district court of jurisdiction to consider the motion to
intervene, thereby rending that motion moot, and (b) even if the district court had considered the
motion to intervene on the merits, that motion to intervene was untimely for the same reasons as
the first. We therefore AFFIRM.
19
RBP makes one final argument, asserting that “[t]o the extent the Second Stipulation of Dismissal
[was] a motion requesting the [district court] to enter an order dismissing the action with prejudice under
Rule 41(a)(2),” the district court’s decision to grant that “motion” was an abuse of discretion. But the
stipulation of dismissal was not a motion. As explained above, such Rule 41 notices of voluntary dismissal
are self-effectuating and require nothing from the district court. Aamot, 1 F.3d at 445.
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