United States Court of Appeals
Fifth Circuit
F I L E D
May 29, 2003
UNITED STATES COURT OF APPEALS
for the Fifth Circuit Charles R. Fulbruge III
Clerk
NO. 02-20461
TRANS CHEMICAL LTD; ET AL
Plaintiffs
TRANS CHEMICAL LTD
Plaintiff-Appellee
SARDAR A DAUD KHAN; SHAHWAR DUAD KHAN
Intervenor Plaintiffs-Appellants
VERSUS
CHINA NATIONAL MACHINERY IMPORT AND EXPORT CORPORATION; ET AL
DEFENDANTS
CHINA NATIONAL MACHINERY IMPORT AND EXPORT CORPORATION
Defendant-Appellee
Appeal from the United States District Court
for the Southern District of Texas
Before DeMOSS, STEWART, Circuit Judges, and FALLON,1 District Judge.
FALLON, District Judge:
Before the Court is the appeal of Plaintiffs-Intervenors, Sardar A Duad Khan and Shahwar
Duad Khan ("the Khans"), from the District Court’s denial of their motion for intervention. The main
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District Judge for the Eastern District of Louisiana, sitting by designation.
demand in the case is the enforcement of an arbitration award in favor of TCL and against defendant-
appellee China National Machinery Import and Export Company ("CMC"). The Khans sought to
intervene in t he District Court to litigate the issue of whether they are the proper owners of the
Plaintiff-Appellee corporation, Trans Chemical Limited ("TCL"). The District Court denied the
Khans’ intervention on corporate ownership three times, but did allow intervention on the issue of
arbitration-related expenses. After considering issues of appellate jurisdiction, the proper standard
of review, intervention of right, and permissive intervention, this Court AFFIRMS the decision of the
District Court.
I. BACKGROUND & PROCEDURAL HISTORY2
The facts giving rise to this litigation began in 1987 when Dr. Shardar Khan and Dr.
Mohammed Halipoto, American citizens and natives of Pakistan, decided to build the first hydrogen
peroxide plant in Pakistan. To accomplish this goal, Khan and Halipoto formed two companies. The
first was United International, a partnership established under Texas law, and the second was TCL,
a subsidiary of United International and a corporation formed under Pakistani law. TCL was later
converted to a public entity, with the Khan and Halipoto each owning 50% of the stock of the
company.
TCL obtained financing for the project from the Industrial Development Bank of Pakistan
("IDBP") and the Investment Corporation of Pakistan ("ICP"). As security for the loans, the
following assets were pledged: the proposed chemical plant, 40% of TCL’s stock, and the personal
guarantees of Khan and Halipoto. Between 1987 and 1993, the loans to TCL totaled approximately
2
Additional facts surrounding this litigation may be found in the District Court’s initial
opinion in this matter, In re Arbitration between Trans Chemical Ltd. and China National Import
and Export Corp., 978 F. Supp. 266 (S.D. Tex. 1997), aff’d 161 F.3d 314 (5th Cir. 1998).
2
$7.3 million. TCL contracted with CMC to build the plant in Pakistan. The contract between CMC
and TCL contained a provision mandating arbitration of any disputes in Houston, Texas. In 1988,
Dr. and Mrs. Halipoto filed for personal bankruptcy under Chapter 11 of the Bankruptcy Code in the
Southern District of Texas. They were granted a partial discharge in August 1990, but the case
remained open so the trustee could administer and sell property of the estate. In 1994, after disputes
arose concerning the building of the plant, TCL and CMC submitted their claims for arbitration in
Houston. TCL hired the Houston law firm, Beck, Redden, Secrest ("BRS") to represent them in the
arbitration proceeding, which was scheduled to begin in June, 1995. On June 1, 1995, CMC initiated
an adversary proceeding in the Halipotos’ bankruptcy case against TCL, the Khans, the Halipotos,
and the Halipotos’ bankruptcy trustee, arguing that the arbitration involved property of the Halipotos
estate, that TCL, Khan, and Halipotos, and Khan exercised unauthorized control over the estate
property, and that the arbitration provision in the 1988 contract between TCL and CMC was
fraudulent because CMC was not aware of the Halipotos’ pending bankruptcy. The Bankruptcy
Court refused CMC’s request to stay arbitration.
On August 15, 1995, the arbitration panel awarded more than $9.4 million to TCL. TCL then
immediately filed suit in the Southern District of Texas to confirm and enforce the arbitration award.
CMC challenged the court’s subject matter jurisdiction, but the District Court rejected this argument
and confirmed the award. See In re Arbitration between Trans Chem. Ltd. and China Nat’l Mach.
Import & Export Corp., 978 F. Supp. 266 (S.D. Tex. 1997). The parties appealed to this Court,
which affirmed, stating simply "We agree with the District Court’s analysis of these issues and
therefore adopt Parts I-V of its careful and comprehensive opinion." Trans Chem. Ltd. v. China
Nat’l Import and Export Corp., 161 F.3d 314, 319 (5th Cir. 1998).
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While these matters were pending before the District Court and Court of Appeals, TCL
defaulted on its loans from the IDBP and ICP in Pakistan. In April, 1996, an attorney for the IDBP
sent a letter of default to the Khans and Halipotos. The Khans allege that they never received that
letter because it was improperly addressed. On May 15, 1996, IDBP initiated foreclosure
proceedings against TCL in Pakistan to collect on unpaid loans totaling more than $8.6 million. The
Pakistani court issued an interim attachment of TCL’s property. The Khans again allege that they
never received notice of this proceeding because the address used on court documents was not the
Khans’ proper address.
In September, 1996, BRS, the attorney s for TCL, wrote the IDBP and thanked them for
contacting Drs. Khan and Halipoto regarding the outstanding loan balance. The letter further
requested the bank’s indulgence while TCL attempted to collect on the arbitration award against
CMC.
In December, 1996, the Pakistani court affirmed its interim attachment of TCL’s property and
directed the sale of the company’s assets. That order also contained an incorrect address for the
Khans and Halipotos. Advertisements were placed in Pakistani newspapers to announce the sale of
the plant. On June 3, 1997, New Orient International Limited ("New Orient") offered to buy the
plant, contingent on all of TCL’s equity shares being assigned as well. However, the Khans and
Halipotos had pledged only 40% of their shares in TCL to secure the loans so the bank had to take
additional measures to complete the sale.
Thereafter, on July 8, 1997, ICP wrote Mrs. Khan at the correct address and notified her that
ICP planned to auction TCL’s shares of stock pledged as collateral if the debt was not timely paid.
The letter further stated that if the sale of these shares was insufficient to satisfy the loan, the bank
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would then proceed to sell the Khans’ personal property, including the shares not pledged, under the
personal guaranty signed by the Khans at the time the loans were extended. A week later, IDBP
moved the Pakistani court to cancel the outstanding shares of stock in TCL. On July 23, 1997, Dr.
Khan wrote a Pakistani attorney to engage his services to prevent the sale of his shares in TCL. The
attorney subsequently declined representation, stating that TCL’s problems with the banks "requires
immediate and time consuming attention which we are not in a position to provide."
The Khans reportedly continued to contact the IDBP and ICP, but to no avail. On November
13, 1997, the Pakistani court issued an order cancelling their shares of TCL and directing that they
be re-issued to New Orient. The following month, CMC advised the District Court in Houston that
it had received from New Orient notice of a change in ownership of TCL. New Orient also contacted
BRS to inform the firm of the change in ownership. New Orient requested that BRS cease dealing
with the Khans and Halipotos; rather, New Orient asserted that it had the right to collect the
arbitration award directly from CMC. New Orient then brought an action in Beijing, China to enforce
the arbitration award against CMC.
At this point, the Halipotos’ bankruptcy trustee, who had learned of New Orient’s
involvement with the case, moved for an injunction in the Bankruptcy Court to prevent CMC from
negotiating settlement of the arbitration award outside the bankruptcy proceeding. On January 14,
1998, the Bankruptcy Court held a hearing, in which Dr. Khan testified regarding the loss of his
shares and his discussions with IDBP and ICP. Dr. Khan further testified about the incorrect
addresses on the documents filed with the Pakistani court and his lack of notice of that court’s
decision. At the conclusion of the hearing, Bankruptcy Judge Karen Brown granted the injunction.
She found that the Pakistani proceeding to cancel the shares was done ex parte and that the addresses
5
for the Khans and Halipotos were either incorrect or were no longer used by the shareholders.
Further, she found that the banks knew of the shareholders’ current addresses, but intentionally failed
to include this in their petitions to the Pakistani court. Judge Brown found that the transaction was
designed to defeat the protections of TCL’s interests in the arbitration award, as determined by the
District Court. She then ordered that the amount of the award be placed into the registry of the court
and enjoined CMC from proceeding with other litigation until the rights of the parties could be
determined.
In March, 1998, the Khans filed a request with the court in Pakistan to vacate the foreclosure.
However, two months later, the Khans withdrew the request, claiming that it was "without prejudice"
to their rights to "agitate the matter at any other stage."
Despite the Bankruptcy Court’s injunction, New Orient continued to pursue CMC for
collection of the arbitration award in China because they could not find any of CMC’s assets in the
United States even after the court appointed a receiver t o search for CMC’s assets in the United
States. CMC also refused to comply with the court’s order to deposit the funds in the registry of the
court. As a result, the District Court imposed sanctions against CMC; by August, 1999, those
penalties amounted to more than $20 million.
In November, 1998, the Beijing court granted New Orient’s motion to enforce the arbitration
award and ordered CMC to transfer the full amount to New Orient’s bank account in Beijing. This
was done, and TCL has been paid the amounts due under the arbitration award. In May, 1999, TCL
and CMC filed a joint motion to dismiss the District Court case in Houston. New Orient then filed
a disputed motion to substitute counsel for BRS. BRS was seeking to intervene in the matter to
collect its contingency fees on the litigation proceeds and enforce their attorney’s lien on the
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judgment.
Ten days after BRS moved to intervene, the Khans filed their motion to intervene and
opposed the motions to substitute counsel and dismiss the proceedings. Thereafter, in August, 1999,
the Halipotos, individually and through their bankruptcy trustee, filed motions to intervene. The
District Court granted BRS’s intervention and motion for substitution of counsel and denied the
motions to intervene filed by the Khans and Halipotos, individually. The Court granted the trustee’s
motion because the trustee had secured an injunction in the Bankruptcy Court to prohibit exactly the
type of action that had occurred in this case. The court then denied the joint motion to dismiss,
finding that the settlement between New Orient and CMC was a direct violation of the Bankruptcy
Court’s order.
The Khans then field a motion to reconsider, which was partially granted to permit
intervention on the Khans’ claims for expenses. However, the court denied the motion in all other
respects, but stated that its denial was "without prejudice to being re-urged if the Bankruptcy Court
denies the Khans a forum as to the issue of the Khans’ interest in shares of TCL." During the hearing
on the motion, the district judge told the Khans that if they were not satisfied with the Bankruptcy
Court’s ruling, they could appeal that matter to him; otherwise, the District Court found that the
dispute should be resolved before the Bankruptcy Court. The Khans sought to appeal this ruling, but
this Court affirmed, stating simply "We affirm for essentially the same reasons stated by the able
District Court." Trans Chemical, Ltd. v. China Nat’l Mach. Import and Export Corp., No. 99-20895
(5th Cir. June 11, 2001) (per curiam) (unpublished). This Court found that the appeal was essentially
premature because the District Court indicated its willingness to entertain the motion again after the
Bankruptcy Court had ruled.
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The Bankruptcy Court thereafter entered an order of civil contempt against CMC and New
Orient/ TCL. The parties subsequently entered a settlement agreement for $80,000 contingent on
the Bankruptcy Court abstaining from deciding the Khans’ ownership interest. In the Order
Approving Compromise and Settlement, entered October 16, 2001, the Bankruptcy Court stated:
Upon the Trustee’s receipt of the Cash Settlement Payment, the Trustee, TCL
and CMC agree and stipulate and the Court finds and concludes as follows:
a. The Arbitration Award entered in favor of TCL is a
corporate asset of TCL and is not an asset of any shareholder of TCL,
including but not limited to any person, trust, corporation, or other
entity, and the ownership of TCL shares does not entitle any
individual shareholder to any direct claim for relief or damages for any
action or inaction regarding the Arbitration Award.
b. The resolution of all remaining issues regarding the
ownership of TCL and its assets (i) is a matter of Pakistan law ...; (ii)
no longer involves the Trustee or the Bankruptcy estate; (iii) requires
the presence of parties not currently before the Bankruptcy Court; and
(iv) is a matter on which the Court will abstain in favor of a court of
competent jurisdiction, including the courts of Pakistan, with
jurisdiction over all of the necessary parties.
On December 13, 2001, Judge Brown then entered an Order Dismissing and Closing
Adversary Proceeding, which stated that "all matters between the Trustee, ... [TCL]... and ... [CMC]
have been resolved. The Court shall abstain with respect to all remaining matters." The Khans took
no action with regard to these rulings from the Bankruptcy Court. On December 28, 2001, the
District Court dismissed the claims of the trustee and estate against TCL and CMC.
On December 21, 2001, the Khans moved for leave to file an amended complaint in
intervention again seeking to litigate the issue of TCL’s corporate ownership. On February 25, 2002,
the District Court issued a written order and reasons denying the Khans’ motion for leave to file an
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amended complaint in intervention. The District Court found that the Bankruptcy Court’s holding
in the Order Approving Compromise and Settlement did not deny the Khans a forum; rather, it found
that the courts of Pakistan were an appropriate forum. The judge further noted that this decision
would have to stand because the Khans had not appealed that decision or the Bankruptcy Court’s
decision "to ‘abstain in favor of a court of competent jurisdiction.’" The Court further concluded that
the Khans made a knowing decision to form a Pakistani corporation and borrow from a Pakistani
bank. The Court expressed its reluctance to re-litigate these matters when the other parties to the
Pakistani pro ceeding were not before the District Court. Finally, the Court concluded that "[t]he
Khans have known since 1997 that the Pakistani courts canceled their shares. If they thought that
the Pakistani court was wrong, they should have sought relief in Pakistan." It is from this order that
the Khans take this appeal.
II. Whether the District Court’s Order was a Final Order for the Purposes of Appellate
Jurisdiction
The Khans appeal from the District Court’s order denying leave to file an amended complaint
in intervention. However, the parties briefed the issue, and the District Court considered the issue,
as a complaint in intervention, rather than one seeking leave to amend. Accordingly, this Court will
similarly construe the District Court’s order as denying a complaint in intervention.
Before reaching the merits of this appeal, this Court must first determine whether it has
jurisdiction to hear this appeal. Rule 24 of the Federal Rules of Civil Procedure defines two types
of intervention: intervention of right (Rule 24(a)); and permissive intervention (Rule 24(b)).
Appellate jurisdiction over orders denying relief under Rule 24 varies depending on whether relief is
sought under Rule 24(a) or Rule 24(b). Because the Khans assert they are entitled to either
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intervention of right or permissive intervention, this Court must consider its jurisdiction in each
context.
This Court clearly has appellate jurisdiction from the denial of a motion to intervene as of
right. See Edwards v. City of Houston, 78 F.3d 983, 992 (5th Cir. 1996) (en banc). However, if a
motion for permissive intervention is denied, this Court operates under an "anomalous rule" that
provides jurisdiction only to consider whether the district court abused its discretion denying the
motion. Id. If it did, the Court retains jurisdiction and must reverse; if it did not, the Court must
dismiss for lack of jurisdiction. Id.
III. Standard of Review
As noted above, this Court must determine whether the Khans were entitled to either
intervention of right or permissive intervention. This Court reviews de novo denials of intervention
of right. Id. at 995. Orders denying permissive intervention are reviewed for "clear abuse of
discretion" and will be reversed only if "‘extraordinary circumstances’" are shown. Id.
IV. Whether the District Court Erred in denying the Khan’ Motion for Leave to Amend
their Complaint in Intervention as a Matter of Right.
Rule 24 of the Federal Rules of Civil Procedure states that intervention of right is to be
permitted upon timely application "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." FED. R. CIV. P. 24(a).
Timeliness of intervention depends on a review of all the circumstances, and the Fifth Circuit has
identified four factors to consider: (1) the length of time the intervenor knew or should have known
10
of his interest in the case; (2) prejudice to the existing parties resulting from the intervenor’s failure
to apply for intervention sooner; (3) prejudice to the intervenor if his application for intervention is
denied; and (4) the existence of unusual circumstances. See Stallworth v. Monsanto Co., 558 F.2d
257, 264-66 (5th Cir. 1977).
The Khans’ first motion for intervention was filed on June 10, 1999. It is undisputed that the
latest date on which the Khans were aware of the challenge to their ownership of TCL was December
21, 1997 when TCL’s attorneys received correspondence from New Orient informing counsel of the
change in TCL’s ownership. At that point, the Halipotos’ bankruptcy trustee moved for an injunction
to prohibit TCL and CMC from settling the arbitration judgment outside of the federal court action.
Dr. Khan participated in that hearing, in which the injunction was granted on January 14, 1998.
However, the Khans waited more than a year to bring any action in the District Court to recover their
shares.
Appellants argue that their delay in moving to intervene was based on the belief that TCL’s
attorneys, BRS, were representing their interests by participating in the action for an injunction before
the Bankruptcy Court. The Khans contend that they were not aware of the need to intervene in the
matter until BRS sought to withdraw its represent ation of TCL before the District Court. These
arguments fail for two reasons. First, BRS represented TCL and not the Khans, individually. Any
duties BRS owed were to TCL and not the Khans. Second, The Khans are undone by their
arguments concerning appeal from the Bankruptcy Court’s orders. They assert that even i f the
Bankruptcy Court had determined the issue of ownership of the corporation, the parties would then
have had to return to the District Court on that issue to have the Bankruptcy Court’s findings
accepted by the District Court to undo the substitution of counsel. The Khans argue that the only
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effective remedy for them in this case is intervention, and appeal from the Bankruptcy Court was not
necessary. In effect, they argue that the Bankruptcy Court action was not necessary to protect their
interests.
The Khans cannot have it both ways. They cannot argue first that the Bankruptcy Court was
protecting their interests, and, second, that the Bankruptcy Court action was not necessary since the
only relief available was intervention in the District Court. Since the Khans assert that their only
remedy in this case was intervention, they should have moved to intervene immediately in the District
Court. The failure to wait more than 1 ½ years to do so is untimely.
Aside from considerations of timeliness, the Khans’ appeal also fails for a second reason; they
have failed to articulate an interest in the subject matter of the litigation. In New Orleans Public
Service, Inc. v. United Gas Pipe Line Co., 732 F.2d 452 (5th Cir. 1984) (en banc),this Court held
that the applicant’s interest relating to the subject of the action must be "direct and substantial" and
must be "something more than an economic interest." Id. at 463. As shareholders in TCL, they have
an economic interest in the award, but this is not direct and substantial as required under Rule 24 and
this Court’s ruling in New Orleans Public Service.
The Khans rely on Borkowski v. Fraternal Order of Police, 155 F.R.D. 104 (E.D. Pa. 1994),
to support their argument that a shareholder may intervene in litigation to assert issues of corporate
control. In Borkowski, the corporation was equally owned by two shareholders, who were also the
corporation’s directors. The corporation entered into an agreement with the defendants for the sale
of insurance risks. The defendant thereafter terminated the agreement, and the corporation’s business
faltered. The shareholders disagreed among themselves on whether litigation was necessary. One
of the shareholders unilaterally determined that the other shareholder was no longer a 50%
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shareholder and removed him as director. Thereafter, as the sole director, he initiated the
corporation’s lawsuit against the defendant. The deposed shareholder then sought intervention in the
suit solely to assert its rights as shareholder and dismiss the litigation. The District Court permitted
the intervention, but expressly limited the intervention to permit dismissal of the corporation’s
complaint. Id. at 110.
The Khans’ situation, however, is distinguishable from the facts of Borkowski. The Khans
do not seek to intervene to dismiss the case. They wish to pursue a cause of action wholly separate
and apart from the underlying cause of action. They do not have a claim against CMC, the
defendants in the case. They wish to litigate an issue much different from the issues defined by the
initial pleadings in this case, which concerns the enforcement of an arbitration award. Any claims the
Khans have arising out of the loss of their shares are against TCL, New Orient, and the Pakistani
banks. Only TCL is before the District Court below; neither New Orient nor the Pakistani banks are
involved in this litigation.
Appellees refer this Court to Rigco, Inc. v. Rauscher Pierce Refsnes, Inc., 110 F.R.D. 180
(S.D. Tex. 1986), in which the court denied shareholders leave to intervene in a cause of action
brought by their corporation. The court in Rigco noted that an intervenor’s interest in a cause of
action is to be read narrowly. Further, any cause of action the shareholder has must be against the
defendants in the case. Id. at 183. In this case, the Khans’ asserted intervention on the issue of
corporate ownership is not a cause of action against CMC. Their claims for expenses do arise out
of that litigation and were properly allowed to proceed. The same holds true for the interventions
of the trustee and BRS. Those parties claimed a right of action arising out of the arbitration award,
which the main demand was seeking to enforce and collect. Here, the Khans’ ownership claims are
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separate from that action. Again, intervention is not appropriate.
Finally, the Khans ask this Court to take note of the problems surrounding litigation of the
ownership issues in Pakistani courts. The Khans assert that being required to litigate these issues is
difficult because of the problems with the court system in that country and the fact that the United
States St ate Department has warned against travel to Pakistan. During oral argument, counsel
referred this Court to decisions of the Second3 and Ninth4 Circuits wherein those courts held that
foreign judgments could be challenged in this Court because of problems arising from the judicial
system of those countries. The Khans argue that this Court should permit them to challenge the
ownership proceedings in these proceedings. The Court, however, finds these cases unpersuasive and
distinguishable from the present case. Both cases involve matters in which the foreign company and
the party cast in judgment were directly before the District Court.5 In other words, there was no
intervention, and all the part ies necessary to challenge the foreign judgments were before those
courts. As this Court has noted above, the Khans’ motion for intervention comes too late and is too
dissimilar to the underlying case before the District Court for intervention to be proper. The Court
finds that any unfairness in the Pakistani legal system does not outweigh the inefficiencies of keeping
this case open to litigate entirely different issues against entities that are not presently before the
3
Bridgeway Corp. v. Citibank, 201 F.3d 134 (2d Cir. 2000).
4
Bank Melli Iran v. Pahlavi, 58 F.3d 1406 (9th Cir. 1995).
5
For example, in Bridgeway Corp., a Liberian corporation brought suit in the United
States seeking to enforce the judgment of a Liberian court against the defendant; the Second
Circuit affirmed the District Court’s grant of summary judgment in favor of the defendant based
on a finding that the Liberian judicial system was incompatible with notions of due process.
Bridgeway Corp., 201 F.3d at 137. Similarly, in Bank Melli Iran, the Ninth Circuit affirmed the
District Court’s findings that it was not possible for the defendant to have obtained due process of
law in an Iranian court. Bank Melli Iran, 58 F.3d at 1407.
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Court.
In conclusion, the Khans’ attempt to intervene to litigate the issue of corporate ownership was
not timely as it was filed well after the Khans were aware that their ownership interest in TCL was
at stake. Further, t he intervention seeks to litigate issues wholly separate from the main demand.
Accordingly, the District Court’s refusal to permit intervention as a matter of right is AFFIRMED.
V. Whether the District Court Erred in Denying the Khans’ Motion for Leave to Amend
their Complaint to Assert Permissive Intervention
Rule 24(b)(2) states that permissive intervention is appropriate where "an applicant’s claim
or defense and the main action have a question of law or fact in common." FED. R. CIV. P. 24(b)(2).
As noted above, this Court will reverse a district court’s denial of permissive intervention only in
"extraordinary circumstances" where the district court has abused its discretion. Edwards, 78 F.3d
at 995.
In this case, the main action is the claim brought by TCL for the enforcement of the arbitration
award against CMC. It is not related to the Khans’ arguments pertaining to corporate ownership.
Furthermore, the District Court permitted the trustee to intervene, distinguishing its claims from those
of the Khans, stating that "the bankruptcy trustee is allowed to intervene for the purpose of enforcing
the injunction against CMC and arguably against TCL. In this regard, there’s no new claim that’s
going to be asserted by the bankruptcy trustee, such as the new claims that Drs. Khan and Halipoto
sought to assert." There is no disparate treatment between the relief granted the trustee and the relief
refused the Khans.
Thus, the trustee’s claims related to the injunction, which was issued based on the judgment
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pertaining to the arbitration award. As the Khans have failed to show a common question of law or
fact between TCL’s claims against CMC, permissive intervention is not appropriate. This Court
finds that the District Court did not abuse its discretion in denying the Khans’ request for permissive
intervention. Accordingly, the District Court’s decision is AFFIRMED.
VI. Conclusion
For the forego ing reasons, the Khans’ motion for intervention on the issues of corporate
ownership was untimely, as they clearly had notice that their interests in TCL were challenged more
than 1 ½ years before moving to intervene. Furthermore, the Khans have failed to demonstrate that
they have a sufficient interest in the outcome of the litigation, which was brought to enforce an
arbitration award. They are merely shareholders of the corporation, and any interest they claim in the
main demand is a derivative interest. This is not sufficient to maintain an intervention of right. As
to permissive intervention, the Khans have failed to show that the District Court abused its discretion
when it denied permissive intervention. Accordingly, the District Court’s order denying intervention
is AFFIRMED.
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