Opinion
Civil Action No: 02-3682, Section: "R"(1).
August 17, 2004
ORDER AND REASONS
Before the Court is the unopposed motion of the Law Office of Paul C. Miniclier and Paul C. Miniclier, Esq. to intervene under Federal Rule of Civil Procedure Rule 24(a)(2). For the following reasons, the Court grants Miniclier's motion.
I. Background
Henry's Marine Service, Inc. is a family-owned marine service and boat brokering/chartering business located in Morgan City, Louisiana. Part of Henry's business consists of chartering vessels to others. Henry's chartered several vessels to Tetra Applied Technologies, L.P. Tetra chartered some of the vessels under an oral charter agreement. On March 1, 2000, the parties formalized the oral charter agreement by executing a Master Time Charter Agreement. Since then, Henry's has chartered vessels to Tetra under the Master Agreement. The oral charter agreement and Article 11 of the Master Agreement obliged Henry's to defend, indemnify, and hold Tetra harmless for, among other things, injuries to third parties in connection with the chartered vessels.
When three of Tetra's employees injured themselves in separate and unrelated accidents and sued Tetra in state court, Tetra made demand upon Henry's to assume and to pay for Tetra's defense under the oral charter and Master agreements. Tetra also demanded that Henry's indemnify Tetra for any amounts that it may be required to pay in either judgment or settlement. Henry's eventually agreed to defend and to indemnify Tetra in the underlying state court suits. Henry's retained the services of Paul Miniclier and his law firm to represent Tetra's and its own interests in the underlying state actions.
To protect itself against claims arising from its boating operations, Henry's had a comprehensive book of insurance coverage through defendants Fireman's Fund Insurance Company and New York Maritime and General Insurance Company. Relying on provisions in its insurance contracts with Fireman's Fund and New York Marine, Henry's tendered Tetra's demands to its two insurers. Both Fireman's Fund and New York Marine refused to pay.
Henry's then sued Fireman's Fund and New York Marine in this Court. By order and reasons dated October 22, 2003, the Court granted Henry's motion for summary judgement on the issue of insurance coverage. ( See Rec. Doc. No. 22). After a bench trial on the issue of damages, by order and reasons dated April 8, 2004, the Court awarded defense and indemnity costs to Henry's and dismissed Henry's bad faith claims against Fireman's Fund and New York Marine. ( See Rec. Doc. No. 66). After supplemental briefing by the parties on the issue of Henry's trial counsel's attorneys' fees, the Court partially vacated its prior ruling with respect to its award of attorneys' fees in connection with the insurance coverage litigation and denied Henry's trial counsel's request for fees. ( See Rec. Doc. No. 71). The Court also awarded costs to Henry's. ( See id.).
On May 6, 2004, Fireman's Fund filed a notice of appeal of the Court's order and reasons dated April 8, 2004. On May 26, 2004, Miniclier moved to intervene. Miniclier seeks to intervene under Federal Rule of Civil Procedure 24(a)(2) to protect his interest in the litigation, i.e., his attorneys' fees incurred as a result of defending the underlying state court lawsuits. Two days after Miniclier moved to intervene, the Court issued final judgment. Fireman's Fund filed an amended notice of appeal on July 2, 2004, which appeals the final judgment.
II. Discussion
A. Jurisdiction
Because Fireman's Fund has filed an effective notice of appeal, the Court must first consider whether it has jurisdiction to entertain Miniclier's motion to intervene. It is well-established law that the Court has "a duty to raise the issue of subject-matter jurisdiction sua sponte." American Heritage Life Ins. Co. v. Lang, 321 F.3d 533, 537 (5th Cir. 2003) (quoting HD Tire Automotive-Hardware, Inc. v. Pitney Bowes, Inc., 27 F.3d 326, 328 (5th Cir. 2000)).
Although Fireman's Fund filed its notice of appeal on May 6, 2004, the Court finds that the notice became effective on May 28, 2004, two days after Miniclier moved to intervene. Under Federal Rule of Appellate Procedure 4, "[a] notice of appeal filed after the court announces a decision or order — but before the entry of judgment or order — is treated as filed on the date of and after the entry." FED. R. APP. P. 4(a)(2). A notice of appeal filed after a district court enters a final order but before final judgment therefore becomes effective on the date that the district court enters final judgment. See, e.g., United States v. Muick, 167 F.3d 1162, 1165 n. 3 (7th Cir. 1999) (quoting United States v. City of Milwaukee, 144 F.3d 524, 530 (7th Cir. 1998) ("Under Federal Rule of Appellate Procedure 4(a)(2), a notice of appeal filed after the court announces its decision but before final judgment is treated as filed on the date final judgment is entered."); Sanko Steamship Co., Ltd. v. Galin, 835 F.2d 51, 53 (2d Cir. 1987) (same). Under Rule 4(a)(2), Fireman's Fund's notice of appeal became effective on May 28, 2004, the date on which this Court entered final judgment.
In general, the filing of an effective notice of appeal divests a district court of jurisdiction over those issues involved in the appeal. Griggs v. Provident Consumer Discount Co., 459 U.S. 56, 58-59 (1982). Thus, Fireman's Fund's notice of appeal divested this Court of jurisdiction on May 28, 2004 (two days after Miniclier moved to intervene) to entertain motions that treat the issues on appeal. The general rule does not deprive the court of jurisdiction, however, to entertain motions that treat issues collateral to those on appeal. See Mahone v. Ray, 326 F.3d 1176, 1179 (11th Cir. 2003); Lancaster v. Independent School Dist. No. 5, 149 F.3d 1228, 1237 (10th Cir. 1998); Thomas v. Capital Sec. Servs., Inc., 812 F.2d 984, 987 (5th Cir. 1987). The Court may therefore consider an application for attorneys' fees because it is collateral to the merits of the action on appeal. See Mahone, 326 F.3d at 1179; Lancaster, 149 F.3d at 1237; Thomas, 812 F.2d at 987.
The complicating factor here is that Miniclier asks for attorneys' fees through a motion to intervene. The Fifth Circuit has explicitly held that once a party files an effective notice of appeal, jurisdiction over the matter transfers to the court of appeals, and the district court may not entertain a motion to intervene. See Avoyelles Sportsmen's League v. Marsh, 715 F.2d 897, 928-29 (5th Cir. 1983) ("[W]e adhere to the rule that the filing of a valid appeal deprives the district court of jurisdiction to hear a motion to intervene.").
Nevertheless, the motion to intervene here treats a matter collateral to those on appeal, and the overwhelming weight of authority holds that a district court may consider awards of attorneys' fees after a party files an effective notice of appeal. See Mahone, 326 F.3d at 1179; Lancaster, 149 F.3d at 1237; Thomas, 812 F.2d at 987. Indeed, the motion to intervene that the Fifth Circuit treated in Avoyelles concerned the proper party to represent the State of Louisiana on appeal. 715 F.2d at 927-28. Unlike the motion here, it did not concern a collateral issue. See id. The Court also notes that a ruling on Miniclier's motion to intervene does not bear on Fireman's Fund's appeal on the merits. For these reasons, the Court finds that it has jurisdiction to entertain Miniclier's motion to intervene.
B. Intervention of Right
Federal Rule of Civil Procedure 24 provides that
[u]pon timely application anyone shall be permitted to intervene in an action: . . . (2) when the applicant claims an interest relating to the property or transaction which is the subject of the action and the applicant is so situated that the 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.
Intervention is therefore of right when the applicant meets the following four requirements:
(1) the application for intervention must be timely; (2) the applicant must have an interest relating to the property or transaction which 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 his ability to protect that interest; (4) the applicant's interest must be inadequately represented by the existing parties to the suit.Ford v. City of Huntsville, 242 F.3d 235, 239 (5th Cir. 2001); Edwards v. City of Houston, 78 F.3d 983, 999 (5th Cir. 1996). Failure to satisfy any one of the requirements precludes intervention of right. Edwards, 78 F.3d at 999 (citing Sierra Club v. Espy, 18 F.3d 1202, 1205 (5th Cir. 1994)); Kneeland v. NCAA, 806 F.2d 1285, 1287 (5th Cir.), cert. denied, 484 U.S. 817, 108 S.Ct. 72 (1987). The inquiry under Rule 24(a)(2) is a flexible one, and it "must be measured by a practical rather than technical yardstick." Edwards, 78 F.3d at 999 (quoting United States v. Texas E. Transmission Corp., 923 F.2d 410, 413 (5th Cir. 1991)). Furthermore, "[f]ederal courts should allow intervention where no one would be hurt and greater justice could be attained." Espy, 18 F.3d at 1205; see also Texas E. Transmission Corp., 923 F.2d at 413. With this background in mind, the Court now considers each factor for intervention of right.
a. Timeliness
The party who seeks to intervene must first timely move to do so. This is a discretionary determination for the district court. See Smith Petroleum Service, Inc. v. Monsanto Chemical Company, et al., 420 F.2d 1103, 1115 (5th Cir. 1970). To determine whether a motion to intervene is timely, the Court may consider:
(1) the length of time during which the would-be intervenor actually knew or reasonably should have known of its interest in the case before it petitioned for leave to intervene; (2) the extent of the prejudice that the existing parties to the litigation may suffer as a result of the would-be intervenor's failure to apply for intervention as soon as it knew or reasonably should have known of its interest in the case; (3) the extent of the prejudice that the would-be intervenor may suffer if intervention is denied; and (4) the existence of unusual circumstances militating either for or against a determination that the application is timely.Ford, 242 F.3d at 239 (citing Sierra Club, 18 F.3d at 1205). The timeliness factors are not a strict mathematical formula to determine timeliness, but merely a guide to aid the district court in its determination. See Edwards, 78 F.3d at 1004.
The Court finds the first factor to be neutral. Because no party has filed an opposition to Miniclier's motion, and because Miniclier fails to address the factor, the Court cannot tell from the record alone when Miniclier knew or should have known of his interest in this matter. With regard to the second factor, the Court does not find that the existing parties will suffer prejudice if the Court allows Miniclier to intervene. Indeed, none of the parties provides a reason that it would suffer prejudice. Moreover, given that the Court has held that Henry's is entitled to reimbursement for those attorneys' fees that Miniclier incurred as a result of defending the underlying state suits, the Court does not find that any of the parties to the suit will suffer prejudice if Miniclier is now allowed to intervene to protect that recognized interest. Indeed, the Court finds that Miniclier will suffer prejudice if the Court does not grant him leave to intervene. If the Court does not do so, Miniclier may not be paid for legal services that he has already rendered.
The limited purpose of Miniclier's motion is to ensure that he receives payment for the legal services that he rendered when he represented Henry's and Tetra's interests in the underlying state lawsuits. As Miniclier states in his memorandum, he does not ask the Court to "make any additional substantive rulings, reconsider any of its previous rulings, or cast defendants in judgment for any greater amounts than previously awarded." Given the limited purpose of Miniclier's motion, that he did not file it until two days before final judgment does not bar intervention here. See, e.g., McDonald v. E.J. Lavino Co., 430 F.2d 1065, 1071 (5th Cir. 1970) (finding that district court abused its discretion when it did not allow insurance carrier to intervene one day after district court entered final judgment when insurance carrier attempted to stake a claim to portion of judgment proceeds only).
Mem. Supp. Mot. Intervene, at 4.
b. Interest
The applicant for intervention must also prove that he has an interest in the property or transaction that is the subject of the litigation. See Ford, 242 F.3d at 239. The Fifth Circuit has held that the would-be intervenor must have a "direct, substantial, legally protectable interest in the proceedings." New Orleans Pub. Serv., Inc. v. United Gas Pipe Line Co., 732 F.2d 452, 463 (5th Cir. 1984) ( quoting Diaz v. Southern Drilling Corp., 427 F.2d 1118, 1124 (5th Cir. 1970)). A "legally protectable" interest is one that substantive law recognizes as belonging to or being owned by the applicant. See Edwards, 78 F.3d at 1004; see also id. at 464. The Court finds that Miniclier's interest in the recovery of his attorneys' fees meets this requirement.
Miniclier has an interest in the proceedings that is direct and substantial. First, by order and reasons dated April 8, 2004, the Court held that Henry's is entitled to reimbursement of $25,008.43 in legal fees that Miniclier incurred in defense of the underlying lawsuits, an amount factored into the final judgment of $378,371.92 that the Court awarded on May 28, 2004. ( See Rec. Doc. No. 66). Additionally, Miniclier has secured this debt by means of a promissory note and UCC-1 statement that he filed in the appropriate parish offices. The promissory note, executed by Henry's principal Barry Henry, creates a security interest in the proceeds of this lawsuit to compensate Miniclier for the legal services that he rendered. The Court's award of legal fees for Miniclier's services and his established security interest in the proceeds of the Court's judgment are sufficient to establish that Miniclier has a direct and substantial interest in these proceedings. Indeed, in similar situations, the Fifth Circuit has held that a discharged attorney with a contingency fee contract with his client has a direct and substantial interest in litigation for purposes of intervention of right. See Valley Ranch Dev. Co. v. FDIC, 960 F.2d 550, 556 (5th Cir. 1992). For these reasons, the Court finds that Miniclier has satisfied the second requirement.
See Mem. Supp. Mot. Intervene, Ex.1.
c. Miniclier's Ability to Protect His Interests
The third requirement for intervention of right is that the claimant is so situated that "the disposition of the action may, as a practical matter, impair his ability to protect his interests." See Ford, 242 F.3d at 239. Miniclier alleges that, if the Court does not grant him leave to intervene, he will be unable to recover his legal fees from Henry's despite his established security interest. Miniclier states that this matter has caused Henry's financial hardship and has caused "several of Henry's Marine's creditors to seek payments of debts owed." If Henry's has amassed significant debt to other creditors during the course of this litigation, the current disposition of this action may well impede Miniclier's ability to protect his interest in the judgment proceeds. No party disputes Miniclier's allegations that Henry's financial hardship may affect his ability to protect his interest.
Mem. Supp. Mot. Intervene, at 7.
In addition, although the Court recognizes that Miniclier could initiate an independent suit to enforce the promissory note against Henry's and thereby protect his interest, the Court finds that forcing Miniclier to file a subsequent suit for an interest that the Court has already recognized would be no more than a waste of judicial resources. See, e.g., United States v. Texas E. Transmission Corp., 923 F.2d 410, 415-16 (1970) (discussing when the burden of additional litigation justifies intervention for purposes of third intervention of right requirement). Miniclier has satisfied the third requirement.
d. Adequate Representation
The final requirement under Rule 24(a)(2) is that the existing parties to the litigation do not adequately represent the interests of the would-be intervenor. The burden of demonstrating inadequate representation is on the claimant, but this burden is "minimal." See Espy, 18 F.3d at 1207 ( quoting Tribovich v. United Mine Workers, 404 U.S. 528, 538 n. 10 (1972)). A claimant must merely show that the existing representation "may be" inadequate. See id.
The Court finds that the existing parties do not adequately represent Miniclier's interest. The only party that could feasibly represent Miniclier's interest is Henry's, and Henry's can disburse any defense and indemnity award that it receives as it sees fit. Indeed, there is no indication that either party is concerned with protecting Miniclier's interest here. This is sufficient to satisfy Miniclier's "minimal" burden of showing that representation of his interests "may be inadequate." Edwards, 78 F.3d at 1005.
III. Conclusion
For the foregoing reasons, the Court finds that Miniclier satisfies the requirements for intervention of right under Federal Rule of Civil Procedure 24(a)(2). The Court therefore grants Miniclier's motion to intervene.