United States Court of Appeals
For the First Circuit
No. 04-2620
LARRY EWERS,
Plaintiff, Appellee,
HOWARD EUGENE LINER; CREDITORS COMMITTEE OF THE
BANKRUPTCY ESTATE OF CHRISTOPHER PATRICK HERON;
AH PING BAN; FLAMECREST ENTERPRISES LIMITED TRUST;
BALZ RUDOLPH WOLFENSBERGER TRUST,
Movants, Appellants,
v.
CHRISTOPHER PATRICK HERON; CORPORATION OF THE
BANKHOUSE, INC.; SOCIETE BANKHOUSE; JAMES F. POMEROY, II,
Defendants.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Rya W. Zobel, U.S. District Judge]
Before
Torruella, Lynch, and Lipez,
Circuit Judges.
Alan M. Spiro with whom Edwards & Angell, LLP was on brief,
for Appellee.
Isaac H. Peres for Appellants.
August 11, 2005
LYNCH, Circuit Judge. A series of complicated
litigations worldwide has several claimants seeking a sum of over
$1.6 billion from Christopher Patrick Heron and his associated
entities. Our issue can be stripped to its essence without
recounting the details of the drama.
The district court denied a motion to intervene as of
right brought by Liner and other claimants in a lawsuit which had
been brought in Massachusetts federal court against Heron (and
others) by another claimant, Ewers. The reason given for the
purported intervention was that if Ewers received the funds he
would pocket them and disappear, to the claimants' detriment. All
of the claimants purport to have an interest in any money recovered
from Heron (as does Ewers). One of the claimants, Liner, admitted
he had at one point given Ewers a power of attorney to seek the
funds on Liner's behalf, and Ewers argues that under a Compensation
Agreement with Liner, Liner agreed to split 50/50 any recovery that
Ewers made from Heron on Liner's behalf. But Liner has said he
later cancelled these agreements when Ewers proved to be sneaky and
untrustworthy. Ewers has equally unattractive things to say about
Liner. As for the other claimants, they allege that Ewers entered
into an agreement with Alexander Pladott, their representative, to
distribute any money recovered from Heron amongst all of the
claimants.
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The claimants attempted to intervene, some seven months
after Ewers had initiated the Massachusetts lawsuit. At that
point, the defendant Heron had defaulted, but no final judgment had
yet entered.
The district court held a hearing on the motion to
intervene, and ascertained the claimants' interest in the case.
The court was also told that there were two separate lawsuits
pending in Texas, one testing the relative rights between Ewers and
Liner under their agreements and the other testing the relative
rights of Ewers and the other claimants, as represented by Pladott,
to whatever money Ewers recovered from Heron.
Cutting to the chase, the court asked why, if Liner was
"concerned that Ewers is going to somehow dissipate these assets,
. . . we can't deal with that . . . by making an order that says
that there needs to be prior approval of the court of any
disbursements of anything that is recovered." To this eminently
practical suggestion, the claimants responded in essence that they
had a right to intervene under Fed. R. Civ. P. 24(a)(2) and that
they were concerned that given what they described as Ewers'
propensity to lie, he would secrete any money recovered. The court
noted that the Massachusetts suit was virtually over. The
claimants' response was that it would not do any harm to let them
intervene.
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Ewers, in turn, agreed to the proposed order, and said
that the claimants were really trying to take over and free ride in
the litigation, which he had fully funded. He also said that the
claimants' motion was interfering with his effort to get a
judgment. Ewers finally argued that the motion to intervene was
not timely and that allowing intervention would prejudice him.
The court, noting that it seemed to be in the interests
of the claimants and Ewers to actually collect a judgment as soon
as possible, and then to let the question of appropriate shares be
decided in Texas, denied the motion to intervene. It also entered
this order:
Counsel shall submit a form of default
judgment against all existing defendants that
shall include a clause prohibiting plaintiff
from disbursing any funds collected without
notice to the proposed intervenors and
approv[al] by the court.
That default judgment was never entered. The parties
tell us this is because the claimants took this appeal. The appeal
is without merit.
The legal standards are familiar. Denials of
intervention of right are subject to interlocutory appeal. Rhode
Island v. United States EPA, 378 F.3d 19, 26 (1st Cir. 2004). Our
review of denial of intervention is only for abuse of discretion,
with closer review when the intervention is of right. Int'l Paper
Co. v. Town of Jay, 887 F.2d 338, 344 (1st Cir. 1989); see also
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Maine v. Dir., United States Fish & Wildlife Serv., 262 F.3d 13, 17
(1st Cir. 2001).
One way to show such an abuse of discretion is to show
that the district court ignored the four pertinent legal criteria
that one must meet in order to intervene under Fed. R. Civ. P.
24(a)(2):
(1) the party must claim an interest in the
property; (2) disposition of the case without
intervention, would, as a practical matter,
impair or impede the party's ability to
protect that interest; (3) the party's
interest is inadequately represented by the
existing parties; and (4) the motion for
intervention is timely made.
United States v. 116 Emerson St., 942 F.2d 74, 77 (1st Cir. 1991)
(internal quotation marks and alteration omitted). The transcript
of the hearing on the motion to intervene shows the district court
adhered to the criteria.
Another way to show abuse of discretion is to show the
court was just wrong -- it committed clear error in the facts it
found or was entirely unreasonable in its judgment about applying
the four criteria to the facts. This doctrine gives the claimants
no assistance here.
The motion to intervene was inherently weak on all four
grounds. Nonetheless, the district court fashioned an admirable
order protecting the claimants should there be mischief, thus
efficiently accomplishing much of what the claimants sought. An
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eminently wise order is not an abuse of discretion. The district
court order denying intervention is affirmed.
Costs are allowed to Ewers.
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