Opinion
Civil Action 1:10-cv-469-AT
07-19-2022
BLUE LAKE RECOVERY COMPANY, LLC, as assignee of U.S. ACQUISITIONS, LLC, Plaintiff, v. ANTHONY V. PUGLIESE, II, and THADDEUS J. PRYOR, Defendants.
ORDER
AMY TOTENBERG UNITED STATES DISTRICT JUDGE
This case involves a tangled web of individuals at odds, disputed business interests, and court cases in various jurisdictions, all related to a 2010 Consent Judgment for more than six million dollars that was entered against Defendants Pugliese and Pryor in this Court. The issue before this Court presently, however, is limited, as discussed below.
After nearly ten years of dormancy, Plaintiff Blue Lake Recovery Company, LLC petitioned to revive the 2010 Consent Judgment. This Court granted that petition as unopposed in October 2020. More than a year later, Petitioner James Perretty sought to intervene in the action to (1) seek a stay of the execution of the revived judgment and (2) potentially file a motion to vacate the revived judgment. Thus, Perretty's Motion to Intervene [Doc. 51] and Supplemental Motion to Intervene [Doc. 54] are presently before the Court. Because Perretty has no discernable interest in this case and because his request to intervene was untimely, his Motions are DENIED.
I. BACKGROUND
A. Procedural History in this Action
This case has far-reaching tentacles. However, the issue before this Court - Perretty's intervention request - is confined. As such, the Court outlines only the facts necessary to provide context for its resolution of the instant motions.
This matter was originally removed to this Court by the Federal Deposit Insurance Corporation, acting as receiver for Rockbridge Commercial Bank, on February 18, 2010. (Doc. 1.) Another company, U.S. Acquisition, LLC, was substituted as Plaintiff on June 22, 2010. (Doc. 10.) On September 1, 2010, a consent judgment was entered in favor of U.S. Acquisition, LLC and against Defendants Pugliese and Pryor, jointly and severally, in the principal amount of $5,229,821.98, with interest through and including August 25, 2010, in the amount of $624,414.58, and attorneys' fees in the amount of $428,135.48. (Doc. 42, the “2010 Consent Judgment.”) The Court entered a writ of execution in the amount of $6,282,372.04 on September 27, 2010. After this, there was no activity in the case for nearly ten years.
On August 30, 2020, movant Blue Lake Recovery Company, LLC (“Blue Lake”) field a Motion to Revive the 2010 Consent Judgment. (Doc. 44.) In support, Blue Lake attached documentation demonstrating that U.S. Acquisitions, LLC assigned its interest in the 2010 Consent Judgment to Blue Lake on June 26, 2013. (Doc. 44-2.) No party opposed the motion. The Court, construing the motion as one seeking relief in the nature of scire facias to revive a judgment under Federal Rule of Civil Procedure 81(b), granted the Motion to Revive the Judgment and directed the Clerk to issue new writs of execution to Blue Lake, all on October 13, 2020. (Doc. 49.)
B. Petitioner's Allegations
Over a year later, Petitioner Perretty moved to intervene both as a matter of right, under Fed.R.Civ.P. 24(a) and by way of permissive intervention as outlined in Fed.R.Civ.P. 24(b). (Doc. 51.)
Perretty's version of events is this: Perretty alleges that the two initial Defendants in this action - Pugliese and Pryor - formed Blue Lake in 2010 to serve as a holding company for the 2010 Consent Judgment for the benefit of themselves as the debtors of the Judgment. (Affidavit of James Perretty, Doc. 51-3 ¶ 4) (“This benefit was asset protection from other matters then pending and later pending against each one as an earlier recorded judgment”). According to Perretty, Pugliese and Pryor agreed that each would designate a representative member/manager of Blue Lake to represent their interests. Perretty asserts that he is Pryor's representative and that an individual named John Rufolo is Pugliese's representative. (Id. ¶¶ 7, 13.) This arrangement would “protect [each] respective party from Blue Lake using the judgment against the [other] party, which afforded each of them with the benefits with little to no risk associated with the judgment remaining unsatisfied.” (Id. ¶ 8.) In support of this version of events, Perretty attaches a purported Operating Agreement to his intervention motion. (Perretty Operating Agreement, Doc. 51-2.) The Perretty Operating Agreement includes provisions stating that the members will not “institute any lawsuit, action or similar proceeding against” either Pryor or Pugliese “to collect upon or levy assets to credit towards the balance due and owing under the judgment . . . unless the [Pugliese or Pryor] Authorizing Representative otherwise consents to such action.” (Id. at ECF 11-12.) This Operating Agreement is signed by Perretty but is not signed by any representative of Pugliese, is not dated, and includes other blanks for information to be filled in, such as the name of the tax matters partner and the name of the “Pugliese Representative.” (Id. at ECF 11, 15, 18.) Perrretty avers that he executed a copy of this agreement and that the agreement was “then sent to Pugliese's side, but I am currently unable to locate a copy with the signature from Pugliese's side.” (Perretty Aff., Doc. 51-3 ¶ 11.) As further support for this arrangement, Perretty attaches an email thread between the attorneys for Pugliese and Pryor, dated August 27, 2010, that discusses the intended drafting of such documentation. (See 8/27/10 email exchange, Doc. 51-4.) The lawyer for Pryor asks Pugliese's lawyer to “please forward me those documents so I can make sure Blue Lake can not go after [Pryor] for the full amount of the judgment.” (Id.) Pugliese's lawyer responds:
We have to draft those documents . . . [Pugliese] and [Pryor] are now in the same position regarding Blue Lake. John Rufolo is manager (no members have been designated yet) . . . . If [Pryor] will give me the
names of the member designated by [him] and the name of the independent third party that will control [Pryor's] judgment satisfaction, I will draft the operating agreement next week. . . . Even better, if you want to take on the drafting, it would be fine with me and may give [Pryor] more comfort.(Id.)
Thus, Petitioner Perretty asserts that he is a 50% owner of Blue Lake attempting to honor the obligations set out in the Perretty Operating Agreement. As additional background, Perretty avers that, in recent years, Pugliese was involved in a fraud lawsuit in civil court that resolved with a $23 million judgment against Pugliese. (Perretty Aff., Doc. 51-3 ¶ 31.) The victim of the fraud, according to Perretty, has gone after Pugliese's wife and their companies to obtain the $23 million. (Id.) This is why, Petitioner Perretty says, Pugliese is now trying to obtain the 2010 Judgment finds from Pryor: because “Blue Lake's ability to collect on the more than $6 million ‘outstanding' on the 2010 Consent Judgment would clearly assist Pugliese with satisfying or settling the victim's fraud judgment,” especially as the $6 million judgment “would be substantially higher 11 years later with interest.” (Id.) (citing Civil Case in Palm Beach County, No. 2009CA02990.)
C. Plaintiff Blue Lake's Position
Blue Lake contends that Perretty is not a member, manager, or owner of Blue Lake. Blue Lake relies on the Affidavit of John Rufolo, submitted with its response in opposition to the intervention motion. In his Affidavit, Rufolo states that he is the sole owner, member, manager of Blue Lake and has been since its creation in 2010. (Affidavit of John Rufolo, Doc. 52-1 ¶ 2.) As evidence, Rufolo attaches what he contends is the true and correct Operating Agreement to his Affidavit. (Rufolo Operating Agreement, Exhibit A to Rufolo Aff., Doc. 52-1 at ECF 7-19.) The Rufolo Operating Agreement is signed, states that is effective August 1, 2010, and identifies Rufolo as the only member. (Id.) Rufolo further states that Blue Lake was incorporated effective August 25, 2010, as supported by attached Delaware Secretary of State records - thus, before the email discussions relied upon by Perretty. (Id. ¶ 5-6; see also Exhibit B to Rufolo Affidavit, Doc. 52-1 at ECF 20.) As such, Rufolo avers that the August 27, 2010 emails (attached to Perretty's Affidavit) reflect discussions to amend the earlier correct (Rufolo) Operating Agreement but that no replacement or amendment ever occurred. (Id. ¶ 7, 10) (“I never executed or agreed to execute, the operating agreement Mr. Perretty attached to his Motion to Intervene.”).
D. Related Cases
As indicated above, there are a number of related actions in courts across the country. First, there is at least one lawsuit in Palm Beach County, Florida. Blue Lake states that it filed this case - on August 28, 2020, two days before the motion to revive in this action was filed - to obtain under Florida law a Florida judgment based on the 2010 judgment. On November 3, 2020, Blue Lake and Pugliese entered and filed a consent judgment in this Florida action. (See Rufolo Aff., Doc. 52-1 Exhibit D.) While the lawsuit initially named only Pugliese as a Defendant, Pryor was added as a Defendant via amended complaint. Pryor's counsel then moved to dismiss the action against him. According to Blue Lake, because it had revived the judgment in this case, it dismissed Pryor without prejudice in the Florida case and that case was closed. (Resp., Doc. 52 at 6.)
There is also a case pending in New Jersey state court. In February 2021, after this Court revived the 2010 Consent Judgment, Blue Lake filed a case in Morris County New Jersey to domesticate the revived 2010 Consent Judgment (from this Court) to levy upon Mr. Pryor's property in New Jersey. (Rufolo Aff. ¶ 26). See Blue Lake Recovery v. Thaddeus John Pryor, Superior Court of Morris County, New Jersey, Docket No. DJ-011727-21.
During the New Jersey litigation, Blue Lake claims it discovered that Petitioner Perretty had filed various fraudulent legal actions in Blue Lake's name without Blue Lake's knowledge or authority. One of those actions was also filed in this district. In August 2020 - ten days before Blue Lake filed the revival motion in this 2010 case - a fresh complaint to revive the 2010 Consent Judgment was filed at Perretty's direction, in the name of Blue Lake, against Pryor. That case was assigned to Judge Jones. See Blue Lake Recovery LLC v. Pryor, I:2O-CV-346O-SCJ (Aug. 20, 2020). Judge Jones revived the 2010 Judgment on October 20, 2020 (approximately two weeks after the 2010 Consent Judgment had been revived in this case). However, on January 20, 2021, counsel hired by Perretty to represent Blue Lake moved to vacate the revived consent judgment in the case before Judge Jones. See I:2O-CV-346O-SCJ, at Doc. 10 (N.D.Ga. Jan. 20, 2021). According to the filing, the motivation for vacating was in part because Blue Lake was not an active Delaware company and its registration had been “cancelled.” Id . The motion also states that “the parties thought they had an understanding on this matter at the time they each consented to revival of the judgment . . . but which is no longer the situation.” Id.
At a later hearing before Judge Jones, counsel for Blue Lake (at Rufolo's direction - the same counsel for Blue Lake as in the present case) represented that Blue Lake is currently an active company in good standing with the Delaware Secretary of State's Office. See I:20-CV-3460-SCJ at Doc. 26 at p. 22. This representation is supported by documentation filed by Blue Lake in this case, showing that the company is in “Good Standing” as of 7/20/2021. (See Rufolo Aff., Doc. 521 at ECF 20.)
Then, on September 9, 2021 - allegedly after finding out about the case assigned to Judge Jones, among other cases in Florida and California - Blue Lake (this time, at the direction of Rufolo) moved to set aside and void the action ab initio, asserting that the case was filed without the authorization or knowledge of Blue Lake. See I:2O-CV-346O-SCJ, at Doc. 12 (N.D.Ga. Sept. 2, 2021). Judge Jones scheduled an evidentiary hearing and ordered the attorney who filed the suit (at the direction of Perretty), Perretty, and Pryor to show cause why they should not be held in contempt. See I:2O-CV-346O-SCJ, at Doc. 13 (N.D.Ga. Sept. 9, 2021). There was a hearing before Judge Jones on September 27, 2021 on the motion to set aside as well as on sua sponte sanctions. See I:2O-CV-346O-SCJ at Doc. 20 (N.D.Ga. Sept. 27, 2021); see also Transcript of 9/27/21 hearing, id. at Doc. 26. Judge Jones ultimately granted the motion to set aside ab initio and did not sanction the attorney hired by Perretty. See I:2O-CV-346O-SCJ at Docs. 21, 22 (N.D.Ga. Sept. 28-29, 2021). Judge Jones also reviewed a motion for attorney's fees filed by Blue Lake (at the direction of Rufolo) against Perretty and ultimately did not sanction Perretty in light of disputes regarding the ownership of Blue Lake. See 1:20-cv-3460-SCJ at Doc. 27 (N.D.Ga. Nov. 30, 2021).
The issue of Blue Lake's ownership is now being litigated in state court in Palm Beach County, Florida in a lawsuit initiated by Perretty against Pugliese and Blue Lake. See also Perretty v. Pugliese et al., Circuit Court of the 15th Judicial Circuit for Palm Beach County, Filing No. 140030358 (attached as Doc. 54-3 in this action).
With this necessary context and background, the Court turns to the pending intervention motions.
II. LEGAL STANDARD
Under Federal Rule of Civil Procedure 24(a), the Court must permit parties to intervene as of right when (1) “[their] application to intervene is timely;” (2) “[they have] an interest relating to the property or transaction which is the subject of the action;” (3) “[they are] so situated that disposition of the action, as a practical matter, may impede or impair [their] ability to protect that interest;” and (4) “[their] interest is represented inadequately by the existing parties to the suit.” Tech. Training Assocs., Inc. v. Buccaneers Ltd. P'ship, 874 F.3d 692, 695-96 (11th Cir. 2017) (internal quotations omitted) (quoting Stone v. First Union Corp., 371 F.3d 1305, 1308-09 (11th Cir. 2004)).
By comparison, parties seeking permissive intervention under Federal Rule of Civil Procedure 24(b) must show (1) that the application to intervene is timely, and (2) that the intervenors' claims or defenses share a question of law or fact in common with the main action. Chiles v. Thornburgh, 865 F.2d 1197, 1213 (11th Cir. 1989). “The district court has the discretion to deny intervention even if both of those requirements are met, and its decision is reviewed for an abuse of discretion.” Id. (citing Sellers v. United States, 709 F.2d 1469, 1471 (11th Cir. 1983)).
Under either avenue, a motion to intervene must state the grounds for intervention “and be accompanied by a pleading that sets out the claim or defense for which intervention is sought.” Fed.R.Civ.P. 24(c).
III. DISCUSSION
Petitioner Perretty seeks to intervene in order to request a stay of the execution of the revived 2010 Consent Judgment. Further, if he is found to be a 50% manager by the Florida state court, Perretty states that he intends to seek an order from this Court vacating its October 2020 order reviving the 2010 Consent Judgment. Petitioner Perretty seeks intervention as of right, or alternatively, permissive intervention.
As a preliminary matter, the Court addresses Blue Lake's argument that Perretty's Motion should be denied at the get-go for failure to comply with Rule 24's notice and pleading requirement that the intervention motion be “accompanied by a pleading that sets out the claim or defense for which intervention is sought.” Fed.R.Civ.P. 24(c). (Blue Lake Response, Doc. 52 at 1112.)
Petitioner Perretty admits that his motion was not accompanied by a pleading and that it does not technically comply with the requirements of the Rule. However, he relies on Piambino v. Bailey, 757 F.2d 1112 (11th Cir. 1985) in arguing that the Court should overlook this defect. There, the Eleventh Circuit explained that, while some circuits have “denied intervention to movants who have failed strictly to heed the requirements of Rule 24(c),” the “majority of circuits, including this circuit, has not, choosing instead to disregard nonprejudicial technical defects.” Id. at 1121. The intervention motion before the Piambino Court arose in the context of extended litigation in which the Eleventh Circuit had previously ordered that the same party be accorded intervention as a matter of right in an earlier suit (Piambino I) and therefore the district court's denial of intervention in Piambino II was in violation of the law of the case doctrine. Id. at 1120-21 (“Although our opinion [in Piambino I] did not explicitly address the procedural requirements of Rule 24, its command that Sylva be allowed to intervene necessarily implied that any procedural noncompliance with Rule 24 on his part was inconsequential.”). Piambino should be read with this full context in mind.
Recently, a bankruptcy court in this circuit took issue with Piambino's reasoning, noting that that decision and others like it “are contrary to the clear requirements or Rule 24(c),” and further:
[T]he fact that courts of appeal after the fact (indeed, often after years of litigation) have determined to excuse noncompliance with Rule 24(c) does not mean that at the outset of a request to intervene this Court is free to disregard the clear requirements of Rule 24(c): a motion to intervene must be accompanied by a pleading. Because the
committee's motion was not accompanied by a pleading, it must be denied on this basis as well.In re Bal Harbour Quarzo, LLC, 638 B.R. 660, 669-70 (Bankr. S.D. Fla. 2022) (emphasis in original).
Here, in accordance with its preference for ruling on the merits, the Court follows Eleventh Circuit precedent as outlined in the admittedly-different context of the Piambino case and will therefore excuse Petitioner Perretty's “nonprejudicial technical defect[].” Piambino, 757 F.2d at 1121. That said, granting Perretty this procedural leniency will not help his position. Indeed, as in the Bal Harbour case, the reason for the lack of an attached pleading is “[p]erhaps because” the movant (Perretty here) “has no claim or defense in [his] own right.” Ultimately, as demonstrated below, Perretty's motion fails on the merits.
A. Intervention as of Right
The Court begins with the first requirement: timeliness. To determine whether this requirement is satisfied, the Court must consider both “the length of time during which the [Proposed Intervenor] knew or reasonably should have known of their interest in the case before moving to intervene” and “the extent of prejudice to the existing parties.” Chiles, 865 F.2d at 1213.
Petitioner Perretty filed his intervention motion in November 2021, approximately 15 months after Blue Lake filed the motion to revive the 2010 Judgment (Doc. 44) in August 2020 and 13 months after this Court granted the revival motion (Docs. 47, 49) in October 2020. Nevertheless, Perretty contends that his motion to intervene is timely because he only learned on September 2, 2021 that Rufolo claims to be the sole member-manager of Blue Lake. (Br. in Support of Motion to Intervene (“Mot.”), Doc. 51-1 at 7.)
However, as Blue Lake points out, Mr. Perretty contends that “absent his consent,” Blue Lake “lacked authority to file the August 30, 2020 Petition to Revive Judgment.” (Mot., Doc. 51-1 at 1-2.) Despite this assertion that Rufolo did not have authority to act for Blue Lake, Perretty did not seek to intervene for 15 months. Nowhere has Mr. Perretty argued that he was unaware of the August 30, 2020 Petition filed by Blue Lake. Moreover, Perretty was certainly aware of this Court's revival of the 2010 Consent Judgment by February 2021, when Blue Lake initiated the New Jersey action against Pryor - litigation that Perretty admits he was involved with. The New Jersey case was initiated approximately nine months before Perretty's motion to intervene in this case. Ultimately, regardless of when Perretty found out that Rufolo claimed to be the sole member-manager of Blue Lake, his purported interest in this situation, according to him, is because Rufolo acted unilaterally by initiating the revival action. Considering that Perretty waited 15 months from after the revival action was initiated, his motion is untimely. Additionally, for the reasons articulated below, Perretty has no legal interest in this action and therefore is not legally prejudiced by the denial of his motions. On the other hand, Blue Lake could be prejudiced by the Court granting the intervention motion: a hypothetical stay of the execution of the revived 2010 Consent Judgment in this case could affect the New Jersey litigation that was initiated in reliance on this Court's revival of the 2010 Consent Judgment. For these reasons - because Perretty's motion was untimely and because the prejudice assessment weighs in favor of Blue Lake - Perretty cannot satisfy the first intervention factor.
Even if Perretty could demonstrate that his motion was timely, he cannot satisfy the second prong of the intervention assessment because he has not shown that he has “an interest relating to the property or transaction which is the subject of the action.” Buccaneers Ltd. P'ship, 874 F.3d at 695-96. The subject of this action is the 2010 Consent Judgment revived in favor of Blue Lake and against Pugliese and Pryor. Thus, it is Blue Lake itself that has an interest in the 2010 Judgment. All evidence before the Court indicates that the 2010 Consent Judgment is Blue Lake's only asset, and Blue Lake plainly has an interest in the revival of the Judgment. Blue Lake is a limited liability company incorporated and registered in Delaware. Under Delaware law, “[a] limited liability company interest is personal property. A member has no interest in specific limited liability company property.” See Del. Code Ann. Tit. 6, § 18-701 (West). Accordingly, even if Perretty were a 50% member of Blue Lake, he, as an individual, has no interest in the 2010 Consent Judgment - the subject of this action.
Further, as the 2010 Consent Judgment has in fact been revived, there are no other pending issues for resolution and Perretty has no other conceivable interest in this matter.
As noted above, this lack of interest is perhaps illustrative as to why Perretty could not or did not present an attached pleading “setting out the claim or defense for which intervention is sought.” Fed.R.Civ.P. 23(c). Indeed, Perretty's request for intervention is not based on any claim or defense but rather a desire to seek a stay. Where a party seeks to intervene “not to present a claim or defense,” but instead “to obtain a stay[,] Rule 24 of the Federal Rules of Civil Procedure is not an appropriate vehicle for seeking to stay an action.” Home Design Services, Inc. v. Banyan Construction & Development, Inc., 2007 WL 9719238, at *1 (M.D. Fla. Nov. 21, 2007). See also Securities and Exchange Commission v. Mintrade Tech., LLC, 2019 WL 3428682, at *5 (S.D. Fla. May 28, 2019) (explaining that intervention is not appropriate where intervention is sought for sole purpose of requesting stay, collecting cases), report and recommendation adopted, 2019 WL 5290940 (S.D. Fla. July 17, 2019). Thus, Perretty has not shown that he has a legally cognizable interest in the case and his request for intervention as of right fails on this key second factor as well.
Perretty suggests that he does not seek to intervene only to request a stay because he may, in the future, hypothetically, move to vacate the order reviving the 2010 Consent Judgment if it is determined that he is a 50% member-manager of Blue Lake. First, Perretty has not in fact requested such relief at this time. Second, for the reasons stated herein, Perretty, as an individual, would have no basis to vacate any order as he has no interest in this matter - only Blue Lake would, as it did in the Judge Jones case.
Because Perretty has no discernable interest, he also fails on the third prong. He is not “so situated that disposition of the action, as a practical matter, may impede or impair [his] ability to protect that interest.” Buccaneers Ltd. P'ship, 874 F.3d at 695-96. By his own admissions, Perretty's actions are in fact intended to protect the interest of the individual he represents: Pryor. To the extent Pryor's interests (as a Defendant in this case) have been affected by the initiation of the New Jersey suit to record and execute the 2010 Judgment against him, Pryor's interests are clearly being represented in that case. The evidence submitted by the parties demonstrates that Pryor has retained counsel in the New Jersey action to represent his interests. And once again, to the extent that Perretty argues that this Court's actions will impede or impair his ability to protect his interest, the Court reiterates that the issue of Blue Lake's governance is not before this Court. That issue is being litigated in Palm Beach County, Florida, which Perretty agrees is “the best venue for this ownership and management determination.” (Mot., Doc. 51-1 at 6.) This Court's actions in the present case (of reviving the 2010 Consent Judgment in favor of Blue Lake) did not and could not have had any identifiable effect on that controversy.
On the fourth prong, because Perretty has no interest in this litigation, there is no concern of inadequate representation. And again, to the extent Perretty's actions demonstrate an intent to protect Pryor's interest in halting the execution of the 2010 Consent Judgment, Pryor is a named party in this action as well as in the New Jersey action that was brought to domesticate the 2010 Consent Judgment. As such, Pryor is fully capable of defending his own interest.
In short, because Perretty has no interest in this case, he cannot satisfy the requirements for intervention as of right. His request is also meritless because he has not shown that his request for intervention was timely.
B. Permissive Intervention
For similar reasons, Perretty is not entitled to permissive intervention. First, as reasoned above, his application to intervene was not timely. Moreover, because he has no interest in the action, Perretty has no “claim or defense” that “share[s] a question of law or fact in common with the main action.” Chiles, 865 F.2d at 1213. Again, Delaware law regarding limited liability companies makes plain that, even if Perretty were a manager, he does not have an interest in Blue Lake's property - the 2010 Consent Judgment. See Del. Code Ann. Tit. 6, § 18-701 (West). Only Blue Lake itself does. Further, there is no conceivable argument that Perretty has an interest in the defense of this revival because he is not one of the individual debtors of the 2010 Judgment, as Pugliese and Pryor are. Accordingly, in its discretion, the Court finds that there is no basis or support for Perretty's request for permissive intervention.
IV. CONCLUSION
For the reasons stated above, Petitioner Perretty's Motions to Intervene [Docs. 51, 54] are DENIED.
IT IS SO ORDERED