United States Court of Appeals
For the First Circuit
No. 02-2709
THE CADLE COMPANY,
Plaintiff, Appellant,
ATLANTA JOINT VENTURE,
Movant, Appellant,
v.
SCHLICTMANN, CONWAY, CROWLEY & HUGO, A MASSACHUSETTS
GENERAL PARTNERSHIP; JAN R. SCHLICTMANN, INDIVIDUALLY;
AND THOMAS M. KILEY,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Joseph L. Tauro, U.S. District Judge]
Before
Selya, Circuit Judge,
R. Arnold,* Senior Circuit Judge,
and Lipez, Circuit Judge.
Scott L. Machanic, with whom Cunningham, Machanic, Cetlin &
Johnson, LLP, was on brief for appellants.
*
Of the United States Court of Appeals for the Eighth Circuit,
sitting by designation.
Barry A. Ragsdale, with whom Garve W. Ivey, Jr., Ivey &
Ragsdale, was on brief for appellees.
July 31, 2003
R. ARNOLD, Senior Circuit Judge. The Cadle Company, one
of the plaintiffs, is trying to enforce a note against the
defendants. Jan R. Schlichtmann, one of the defendants, however,
purchased Cadle’s cause of action against the defendants at a
sheriff’s sale in Texas. Cadle then claimed that it was merely
acting as agent for a limited partnership, Atlanta Joint Venture,
and that Atlanta still had an enforceable ninety-nine per cent.
interest in the cause of action. Atlanta attempted to intervene,
but the District Court denied Atlanta’s motion as untimely and
concluded that Cadle’s prior representation that it owned the debts
estopped it to assert now that it was actually acting on Atlanta’s
behalf. We agree and affirm the decision of the District Court.
I.
A series of notes and guaranties (the debts) were issued
by lawyers Jan R. Schlictmann and Thomas M. Kiley and the law firm
of Schlictmann, Conway, Crowley & Hugo (collectively, the
defendants) to the Boston Trade Bank. When the Bank failed, The
Cadle Company purchased those instruments and later sought to
enforce them. A long-running dispute commenced over whether Cadle
had an interest in a large settlement that the appellees had
received and paid to other creditors. After six years, the case
reached this Court. We decided that Cadle did have some interest
in the settlement fees and remanded the case for further
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proceedings. See Cadle Co. v. Schlichtmann, 267 F.3d 14 (1st Cir.
2001).
In October of 2002, at a sheriff’s sale in Texas, Mr.
Schlichtmann purchased “[a]ll rights, claims and/or causes of
action belonging to The Cadle Company . . . against any individual
. . . arising in any manner or in any time against Jan R.
Schlichtmann,” for $52,000. Eight days later, Atlanta Joint
Venture, a limited partnership of which Cadle was the general
partner, moved to intervene in this suit as a plaintiff or to be
substituted as the plaintiff.
Atlanta and Cadle argued that Cadle was merely acting as
an agent for Atlanta in the litigation to enforce the debts. They
suggested that Cadle owned only one per cent. of the debts;
Atlanta, they said, still owned the remaining ninety-nine per cent.
of the debts, which were not sold to anyone, and thus remained
enforceable by Atlanta or its agent (Cadle).
In November, the District Court denied Atlanta’s motion
to intervene as untimely. As to Cadle’s argument, the Court
observed that before the sale, during a hearing challenging Cadle’s
standing to enforce the debts, Cadle’s attorney had said Cadle was
the real party in interest in the suit and that it owned the debts.
The District Court declined to entertain Cadle’s new argument that
it had been merely acting as an agent all along. The Court
dismissed the suit because Cadle no longer had an interest in the
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litigation – any dispute between Cadle, acting on its own behalf,
and the defendants having been mooted by Mr. Schlichtmann’s
acquisition of Cadle’s claim. Cadle and Atlanta appealed to this
Court.
II.
This case presents two questions. The first is whether
the District Court properly denied Atlanta Joint Venture’s motion
to intervene. The second is whether The Cadle Company should be
allowed to disavow its ownership of the debts in question.
A.
We review the District Court’s decision to deny a motion
to intervene for an abuse of discretion. Mangual v. Rotger-Sabat,
317 F.3d 45, 61 (1st Cir. 2003). A motion to intervene must be
made in a procedurally proper manner. See Pub. Serv. Co. of N.H.
v. Patch, 136 F.3d 197, 205 n.6 (1st Cir. 1998). Specifically,
whether the intervention is of right or is permissive, it must be
timely. Fed. R. Civ. P. 24(a),(b).
A district court’s determination of timeliness is case-
specific and is entitled to substantial deference. Caterino v.
Barry, 922 F.2d 37, 40 (1st Cir. 1990). Atlanta should have known
that Cadle’s claim was being sold in Texas. Atlanta also should
have anticipated the problems this sale would create, given that
Atlanta had allowed Cadle to hold itself out for seven years as
owner of the debts. Nonetheless, it allowed the District Court to
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halt proceedings for weeks to await the results of the sale, which
might not have been necessary had Atlanta disclosed that its major
interest in the debts was not being sold in Texas. It was only
after the sale that Atlanta decided to make its presence felt.
Under these circumstances, we cannot say that the District Court
abused its discretion in deciding that Atlanta’s motion was
untimely.
B.
We review de novo the District Court’s dismissal of this
suit on the ground of mootness. Me. Sch. Admin. Dist. No. 25 v.
Mr. R., 321 F.3d 9, 17 (1st Cir. 2003). An action is moot if one
of the parties loses a cognizable interest in the suit. Gulf of
Me. Fishermen’s Alliance v. Daley, 292 F.3d 84, 87 (1st Cir. 2002).
In this case, the question of mootness turns on whether
judicial estoppel should be invoked against Cadle. If Cadle is
held to its prior representations, that it owned the debts in full,
then Cadle cannot assert now that it is acting as an agent in this
suit. In that case Cadle would have to be a plaintiff in its own
right, which it cannot be, because its own interest in this action
was sold. Because we have already decided that Atlanta was
properly prevented from intervening, that would leave this case
with no plaintiffs with claims against any of the defendants. So
we turn our attention to the application of judicial estoppel.
Judicial estoppel is a doctrine that precludes a party
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from asserting a position contrary to a position it has already
asserted. Patriot Cinemas, Inc. v. Gen. Cinema Corp., 834 F.2d
208, 212 (1st Cir. 1987). On August 23, 2002, Cadle made crucial
representations to the District Court when its standing to enforce
the debts was challenged. In arguing that it had the right to
enforce the note, Cadle said:
[T]he note and security interests were bought
by the Cadle Company. They were assigned to
the Cadle Company by the FDIC. And there has
never been any writing that has ever
transferred that ownership interest in the
notes and the security interest to anyone
else.
* * *
There is a business understanding between
Atlanta Joint Venture and its general partner
[Cadle] as to how the proceeds of the
litigation are going to be decided. That
doesn’t change who is the titled owner of the
note [and] the security interests.
* * *
So the Cadle Company is the real party in
interest here. It owns the note.
There is no ambiguity in Cadle’s stated position. When the
question arose as to what role Atlanta played in all of this, and
Cadle had an opportunity to explain that it was Atlanta’s agent,
Cadle said:
While The Cadle Company may have orally
promised Atlanta Joint Venture that it would
receive the proceeds of any recovery, thus
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giving Atlanta Joint Venture a potential claim
if The Cadle Company does not fulfill its
promise, The Cadle Company still “owns” the
debt.
* * *
The Cadle Company still has title to the debt.
Cadle’s position appeared clearly staked out: It owned the debts
in full. A month later, once Cadle’s suit was in jeopardy because
of the outcome of the sheriff’s sale, Cadle altered its position
and claimed that its interest in the litigation was limited and
that it was holding the debts merely as an agent for Atlanta, which
owned a ninety-nine per cent. stake in them. Cadle argues that its
positions were consistent because, according to the Uniform
Commercial Code, its status as a holder entitled it to enforce the
debts in its own name and hold itself out as owner of the debts.
Whether what Cadle told the District Court is technically true or
not, according to the Uniform Commercial Code (or any other law),
is beside the point.
Our focus is on the impression Cadle’s statements
reasonably created in the District Court. Beddall v. State St.
Bank & Trust Co., 137 F.3d 12, 23 (1st Cir. 1998) (noting that the
party to be estopped made no effort to correct the district judge’s
misunderstanding of a fact). The District Court was entitled to
know the full situation before it when resolving the challenge to
Cadle’s standing.
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For whatever reason, Cadle maintained its position that
“it own[ed] the note,” was “the real party in interest here,” and
had sole legal entitlement to any proceeds from this suit. Cadle
said it bought the debt, and that “there has never been any writing
that has ever transferred that ownership interest in the notes or
security interests to anyone else.”
Cadle either knew or should have known that the District
Court would take these assertions at face value and believe that
Cadle was acting to protect its own interest, not someone else’s.
We decline to allow Cadle to claim now that it was always acting on
Atlanta’s behalf and should be allowed to continue to do so. “We
generally will not permit litigants to assert contradictory
positions at different stages of a lawsuit in order to advance
their interests.” Beddall, 137 F.3d at 23. We see no reason to
make an exception in this case.
This is not to say that the claim against the defendants
has been extinguished; if some other party has a claim, then that
claim is unaffected. However, Cadle has no cognizable interest in
this suit because its interests in this suit, whatever they were,
were sold in the sheriff’s sale. Further, Cadle is estopped to
assert that it was acting as an agent all along; thus, Cadle has no
role to play in this litigation, and there are no other plaintiffs
to continue the action. Under such circumstances, the District
Court was correct to dismiss the action.
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For these foregoing reasons, we affirm the District
Court’s decision in all respects.
Affirmed.
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