Opinion
Civ. No. 97-1154, C/W ALL CASES, SECTION K(1).
February 3, 2000.
Before the court is the Motion for Review of Magistrate's Order Denying Intervention (Doc. # 193) by Tai Ping Insurance Company Limited, Formosa Plastics Corporation and Nan Ya Plastics Corporation (hereinafter collectively referred to as "the movants"). Having read the submissions of the parties, this court is prepared to rule on the motion.
A final judgment was entered in the above-captioned consolidated cases on August 3, 1999. The FLORA interests, against whom judgment was entered, filed a notice of appeal on August 18, 1999. Subsequently, on September 28, the movants filed a Motion for Leave to Intervene. The Magistrate Judge denied the motion on two grounds. First, the court lacks jurisdiction to entertain the intervention. Second, the intervention is untimely. The court will address each argument in turn.
1. Standard of Review
Under 28 U.S.C. § 636(b)(1)(A) and Fed.R.Civ.P. 72(a), the court's standard of review concerning a magistrate judge's determination of a nondispositive issue is whether the decision has been shown to be "clearly erroneous or contrary to law." The "clearly erroneous" standard requires that the court affirm the decision of the magistrate judge unless "on the entire evidence [the court] is left with a definite and firm conviction that a mistake has been committed." United States v. United States Gypsum Co., 333 U.S. 364, 395 (1948)); See also Fed.R.Civ.P. 72(a).
2. Jurisdiction
The movants object to the Magistrate Judge's October 5, 1999 Minute Entry as to jurisdiction, which reads as follows:
[A]s a general rule, a district court is divested of jurisdiction upon the filing of the notice of appeal with respect to any matters involved in the appeal, including the judgment or order that is the subject of the appeal. (citations omitted) This general rule applies to motions to intervene that are filed after final judgment has been entered and the matter appealed.
Movants argue that the district court retains authority to entertain the intervention, citing a case from the D.C. Circuit which criticized the Fifth Circuit for its position on the question of intervention after final judgment in Nicol v. Gulf Fleet Supply Vessels, Inc., 743 F.2d 298 (5th Cir. 1984). See Associated Builders v. Herman, 166 F.3d 1248, 1256-1257 (D.C. Cir. 1999). In addition, the movants argue that the proposed intervention fits within one of the Fifth Circuit's exceptions to the general rule concerning jurisdiction of the district court once an appeal is taken. Specifically, in Sierra Club v. Cedar Point Oil Co., 73 F.3d 546, 578 (5th Cir. 1996), the Fifth Circuit upheld the district court's modification of an injunction in order to maintain the status quo stating;
With respect to the jurisdictional question, it is significant that the injunction by its own terms created the possibility for a change in its operation. Stated differently, part of the `status quo' of this action is that the court's injunction has ongoing effect, and that effect was subject to change depending upon subsequent developments. The court did not exceed its authority in stepping in to supervise this change through an amendment of its original order.
The FLORA interests argue that if intervention was improper in Nicol, then even stronger reasons for dismissal exist in this case. In Nicol, a law firm sought to intervene twenty-two days after judgment was entered but before the appeal was taken. In this case, movants did not seek to intervene until after appeal was taken. In addition, the FLORA interests do not agree that the intervention would aid the appeal by maintaining the status quo because the intervention involves contested facts. Respondents contend that the intervention would effectively require the case to be reopened for litigation of prejudgment issues. Furthermore, although movants characterize the intervention as an assertion of their "right to share in the stipulated damages," they have not stated that they will not ask for an increase in the amount that FLORA interest may be obligated to pay.
Despite the criticism from the D.C. Circuit, this court sits within the Fifth Circuit and is bound to follow its holding in Nicol. The Nicol court disallowed intervention after the entry of final judgment. In this case, not only was judgment entered, but appeal had been taken when the Motion for Leave to intervene was filed. Moreover, the court does not find that assertion of claims in intervention at this late date will preserve the status quo or aid the appeal. Therefore, the court lacks jurisdiction to permit intervention after appeal is taken, and the proposed intervention does not constitute an exception to the general rule. The Magistrate Judge's finding that this court lacks jurisdiction is not clearly erroneous or contrary to law.
3. Untimeliness
Movants also contest the Magistrate Judge's finding that the intervention is untimely. In his ruling, the Magistrate Judge noted that the concept of timeliness of intervention is flexible and left to the court's discretion. In finding that movants had not intervened timely, the Magistrate Judge considered that the movants knew or should have known that the case had been pending for over two years prior to entry of the final judgment. Furthermore, the intervention would prejudice the FLORA interests, who would be required to expend additional time and money.
Movants argue that the delayed intervention is justified because it did not know what its actual payment would be for general average contribution until the General Average Adjustment or Statement that was issued in September of 1998. Moreover, at least one of the movants was aware that the M/T FORMOSA SIX was asserting claims for cargo and general average as collision damages. Movants additionally submit that the FLORA interests would not be prejudiced by the proposed intervention, but that movants might be forced to bring a separate action against the owners of the FORMOSA SIX to recover a proportion of the proceeds.
On the other hand, respondents maintain that movants cannot justify their untimely intervention because there was no reason to wait on the General Average Adjustment. The movants could have timely filed a claim and later specified the amount. FLORA interests argue that, if the intervention is allowed, the integrity of the settlement among the existing parties will be compromised. The court agrees.
The Magistrate Judge's finding that movants' proposed intervention was unjustifiably late is not clearly erroneous. Accordingly,
IT IS ORDERED that the Motion for Review of the Magistrate Judge's Order is GRANTED and that the Minute Entry of October 5, 1999 is hereby AFFIRMED.
MINUTE ENTRY FALLON, J. February 3, 2000