Summary
finding intervention untimely when proposed intervenors had actual knowledge of the action for nearly nine months
Summary of this case from Carlyle Inv. Mgmt. L.L.C. v. Moonmouth Co. S.A.Opinion
C.A. No. 19714.
October 3, 2003.
David E. Wilks, Esquire, Buchanan Ingersoll, Wilmington, DE.
Neal Belgam, Esquire, Blank, Rome, Comisky McCauley LLP, Wilmington, DE.
Philip J. Facciolo, Jr., Esquire, Fighola Facciolo, Wilmington, DE.
Dear Counsel:
This case involves a dispute between the plaintiff, Great America Leasing Corporation ("GALC"), and the defendant, Republic Bank ("Republic"), over the kitchen equipment of bankrupt Wilmington Hospitality LLC ("Hospitality"). GALC wants to retrieve the kitchen equipment it leased to Hospitality. Republic, which purchased the assets of Hospitality in a bankruptcy sale, claims that GALC forfeited the equipment by failing to retrieve it within the time specified in the lease.
Joseph Capano and Albert Vietri were Hospitality's principals and personally guaranteed the kitchen equipment lease. The Superior Court of New Jersey has already held them liable to GALC on their guarantees and entered a judgment in favor of GALC ("New Jersey Judgment"). GALC transferred that judgment to courts of Pennsylvania and to the Delaware Superior Court.
Chancery Court Rule 24(a) provides, in pertinent part, that a person who makes timely application shall be permitted to intervene in an action as of right if he claims an interest in the property which is the subject of the action, and he is so situated that denial of intervention may as a practical matter impair or impede his ability to protect that interest. Capano and Vietri claim a right to intervene in order to establish the value of the equipment. They base this claimed right on the New Jersey Judgment, arguing that any damages awarded GALC here should reduce their liability on that judgment. Capano and Vietri fear that GALC may settle with Republic for a sum lower than the true value of the equipment, leaving them liable for the remainder.
This motion is untimely because the delay be Capano and Vietri in filing is inexcusable and will prejudice Republic. Capano and Vietri had actual notice of this action at least 9 months before they moved to intervene. They offer no explanation for the delay. Timeliness is a fact specific analysis that rests in the sound discretion of the trial court. The court should consider two factors on a sliding scale: the inexcusableness of the delay and the prejudice to existing parties.
Intervenors do not dispute that Capano and his Philadelphia counsel were served on October 7, 2002 when it moved to stay the sheriffs sale that started this litigation. Capano and Vietri did not move to intervene until June 26, 2003.
See e.g. Diaz v. Southern Drilling, 427 F.2d 1118. (5th Cir. 1970)
The court will ordinarily consider several factors in deciding whether a delay is inexcusable. A key factor is whether the potential intervenor "was in a position to seek intervention at an earlier stage in the case." "[C]ourts have generally been reluctant to allow intervention when the applicant appears to have been aware of the litigation but has delayed unduly in seeking to intervene." In this case, Capano and Vietri waited 9 months before filing their motion, without offering any justification for their delay.
Wright, Miller Kane, FEDERAL PRACTICE AND PROCEDURE: Civil 2d § 1916 at 428.
Id. at 430.
"The most important consideration in deciding whether a motion for intervention is untimely is whether the delay in moving for intervention will prejudice the existing parties to the case." Republic claims it will be prejudiced by intervention because it would further delay oral argument on its motion for summary judgment, now scheduled for October 16. Given the lengthy and unexplained delay, the court concludes that this prejudice is sufficient to support a conclusion that the motion to intervene is untimely. Courts routinely deny intervention when "trial has begun or is about to begin." If the delay is inexcusable, disruption to the schedule is reason enough to deny intervention.
Id. at 435.
Id. at 440.
See CAPM Corp. Advisors AB v. Protegrity, Inc., C.A. No. 18676, 2001 WL 1360122, at *11, Noble, V.C. (Del.Ch. Oct. 30, 2001) (finding a 4 month delay unreasonable when the motion to intervene came the same day as oral argument for summary judgment).
Even if they had made a timely application, Capano and Vietri do not appear to have any substantial interest in the property that is the subject of this case, and certainly have no interest not already adequately represented by the existing parties. Their primary claimed interest is that, if GALC succeeds in obtaining any value for the equipment, that recovery might mitigate the amount they are obligated to pay on the New Jersey Judgment. Additionally, they suggest that, if Republic prevails on its argument that GALC forfeited its right to the equipment, they will be able to collaterally attack the New Jersey Judgment. These remote and indirect interests are insufficient to support the motion to intervene as of right pursuant to Rule 24(a).
See e.g. Shipley v. Shipley, C.A. No. 1064-K, 1991 WL 189000, Allen, C. (Del.Ch. Sept. 3, 1991) (finding the interest of the defendant's heir, who might inherit the property under dispute, too remote to serve as basis for right to intervene).
Even if the proposed intervenors had a sufficient interest in the subject matter of this action, that interest could be amply represented by the parties already before the court. GALC will argue a high value for the equipment because it wants to force Republic to pay for it. Republic will claim that GALC forfeited the equipment. Both of the proposed intervenors' arguments are, therefore, adequately represented. The mere possibility that the case might settle seems an insufficient reason to join an otherwise superfluous party.
For all the foregoing reasons, the motion to intervene will be denied. IT IS SO ORDERED. The court need not reach the other issues raised by Republic in opposition to the motion.