Opinion
96 Civ. 8695 (JGK).
November 17, 2000.
OPINION AND ORDER
International Minerals and Resources, S.A. ("IMR") and International Shipping Company, S.A. ("ISC"), (collectively the "Intervenors"), have moved pursuant to Fed.R.Civ.P. 24(a)(2) to intervene to modify the final judgment in this action, which this Court entered on August 30, 2000. They also move to amend the judgment pursuant to Fed.R.Civ.P. 59(e) and 60(b). Only the defendant, Berisford International plc ("Berisford") opposes this motion.
In a separate motion, the plaintiffs, Bomar Resources Inc. ("Bomar") and Bomar Resources Holdings, Inc. ("BRHI"), have moved under Fed.R.App.P. 4(a)(5)(A) to extend the time to file their notice of cross-appeal from October 11, 2000 to October 23, 2000, the date on which they actually filed their notice of cross- appeal.
I.
The Intervenors are creditors of Bomar as a result of a judgment in their favor against Bomar in the Brazilian Friendship Litigation, which is now being appealed to the Court of Appeals for the Second Circuit. See International Minerals and Resources, S.A. v. Pappas, No. 87 Civ. 3988 (S.D.N.Y. July 10, 2000) (second amended final judgment). The Intervenors have brought an action in the New York State Supreme Court against Berisford, BRHI, Bomar Resources, Inc., and Shimon Katz alleging, among other things, that BRHI is an alter ego of Bomar and jointly and severally liable for the judgment in the Brazilian Friendship Litigation. See International Minerals and Resources v. Berisford, Index No. 600278/00 (N.Y.Sup.Ct. Jan. 21, 2000) (complaint).
In this action, the jury found that Berisford was not liable to the plaintiffs Katz or Bomar for indemnification for various costs including the costs of the Brazilian Friendship litigation. However, the jury found that Berisford was liable to BRHI for 50 percent of its costs for the Brazilian Friendship litigation. The final judgment requires Berisford to indemnify BRHI for half of the amount of any costs, expenses and damages BRHI incurs and pays in the Brazilian Friendship litigation. In an August 28, 2000 Order the Court explained several reasons for the language of the judgment. As the Court explained, without the requirement of payment by BRHI, it would be unclear what expenses Berisford is liable for. Moreover, the underlying indemnification agreement only required the indemnification of costs and not the advancement of costs. There was also a concern that if Berisford paid BRHI before BRHI paid the creditors for the costs, BRHI might keep the money and Berisford might be doubly liable. The Intervenors argue that the wording of the judgment may result in a situation where Berisford will not be obligated to pay them because BRHI has no assets and may not be able to satisfy any of its obligations to the Intervenors. They seek to intervene as plaintiffs pursuant to Fed.R.Civ.P. 24(a)(2) so that they can move to amend the judgment pursuant to Fed.R.Civ.P. 59(e) or 60(b) to provide that Berisford is directly liable to the Intervenors if any court determines that BRHI is liable to the Intervenors for the Brazilian Friendship litigation.
II.
This motion to intervene was filed on September 11, 2000 and a timely notice of appeal from the judgment in this case was filed by Berisford on September 27, 2000. While neither party has raised the issue of whether this Court has jurisdiction to decide this motion to intervene given that a timely notice of appeal has been filed, this Court must inquire into the basis for its jurisdiction. It is well-established that the filing of a notice of appeal divests the district court of jurisdiction and transfers it to the Court of Appeals. See. e.g., Griggs v. Provident Consumer Discount Co., 459 U.S. 56, 58 (1982); Lupo v. Human Affairs Inter., Inc., 28 F.3d 269, 271 (2d Cir. 1994);United States v. Katsougrakis, 715 F.2d 769, 776 (2d Cir. 1983) Thus, this court does not have jurisdiction to decide this motion to intervene. See. e.g., Nicol v. Gulf Fleet Supply Vessels, Inc., 743 F.2d 298, 299 (5th Cir. 1984); Thwaites Place Assoc. v. Secretary of the United States Dep't of Hous. and Urban Dev., 112 F.R.D. 189, 190 (S.D.N.Y. 1986); Rolle v. New York City Hous. Auth., 294 F. Supp. 574, 576-77 (S.D.N.Y. 1969).
The Intervenors rely on Fed.R.App.P. 4(a)(4)(A)(iv) and 4(a)(4)(B)(i), which provide that if a "party" files a motion to alter or amend a judgment pursuant to Fed.R.Civ.P. 59 a subsequently filed notice of appeal only becomes effective after the Court disposes of the Rule 59 motion. This Rule, however, does not apply to this motion because the Intervenors are not yet "parties" to the case. See. e.g., In re Nasdaq Market-Makers Antitrust Litig., 184 F.R.D. 506, 511 (S.D.N.Y. 1999) (noting that only parties have standing to bring a Rule 59(e) motion). For the Intervenors to file a Rule 59 motion, this Court would have to grant their Rule 24(a) motion, which it cannot do because it does not have jurisdiction to decide that motion.
In any event, to facilitate the possible efficient consideration of these issues on appeal, the Court has considered the merits of the motion to intervene as well as the merits of the motions under Fed.R.Civ.P. 59(e) and 60(b) and finds that they are all without merit and should be denied. See, e.g., Rolle, 294 F. Supp. at 577 (considering merits of motion to intervene though the district court had no jurisdiction to decide it).
III.
Berisford correctly argues that this Court does not have subject matter jurisdiction over the Intervenors' claims. A party who seeks to intervene under Rule 24(a) must establish an independent basis for subject matter jurisdiction. See, e.g., Uni Storebrand Ins. Co. v. Star Terminal Corp., No. 96 Civ. 9556, 1997 WL 391125, at *3 (S.D.N.Y. July 11, 1997); York Research Corp. v. Landgarten, No. 89 Civ. 5556, 1992 WL 373268, at *1 (S.D.N.Y. Dec. 3, 1992); see also Chase Manhattan Bank v. Aldridge, 906 F. Supp. 866, 868 (S.D.N.Y. 1995). The Intervenors do not advance a claim based on federal question jurisdiction pursuant to 28 U.S.C. § 1331. Moreover, they cannot base jurisdiction on diversity of citizenship jurisdiction under 28 U.S.C. § 1332. The Intervenors are corporations organized under the laws of Liberia and Panama while the defendant Berisford is organized and existing under the laws of England and Wales. Therefore, all of these entities are alien corporations. The Notice of Motion makes it clear that the Intervenors are seeking to intervene as plaintiffs against Berisford. Therefore if they were allowed to intervene, the presence of aliens as plaintiffs and the defendant would destroy diversity of citizenship jurisdiction. See, e.g., Corporacion Venezolana de Fomento v. Vintero Sales Corp., 629 F.2d 786, 790 (2d Cir. 1980).
The only other possible basis for jurisdiction over the Intervenors' claims is supplemental jurisdiction pursuant to 28 U.S.C. § 1367. However, in a case such as this where jurisdiction over the plaintiffs' initial claim is based on diversity pursuant to 28 U.S.C. § 1332, 28 U.S.C. § 1367(b) provides that a district court cannot exercise supplemental jurisdiction over claims brought by a party seeking to intervene as a plaintiff under Rule 24, if exercising such jurisdiction would be inconsistent with the requirements for jurisdiction under 28 U.S.C. § 1332. See 28 U.S.C. § 1367(b); see also Development Fin. Corp. v. Alpha Hous. Health Care, Inc., 54 F.3d 156, 158 (3d Cir. 1995); Central Synagogue v. Turner Construction Co., 64 F. Supp.2d 347, 350 (S.D.N.Y. 1999); Colonial Penn Ins. Co. v. American Centennial Ins. Co., No. 92 Civ. 3791, 1992 WL 350838, at *3 (S.D.N.Y. Nov. 17, 1992)
The Intervenors contend that an independent basis for jurisdiction is not required if the intervening party is only intervening to protect its interest in the subject matter of the action that would likely be lost without intervention. But the cases that the Intervenors cite for that proposition specify that this rule only applies to non-plaintiff intervenors who must intervene to protect interests put in issue in a federal action rather than plaintiff intervenors who are attempting to establish their own affirmative claim. See, e.g., Evert v. Finn, No. 98 Civ. 3293, 1999 WL 246711, at *3 (D. La. 1999) ; Hallco Mfg. Co. v. Quaeck, 161 F.R.D. 98, 102 (D. Ore. 1995); MCI Telecomm. Corp. v. Logan Group, Inc., 848 F. Supp. 86, 88-89 (D. Tx. 1994). In this case, the Intervenors are intervening as plaintiffs who are seeking to establish their own claim directly against Berisford and are clearly barred by the text of 28 U.S.C. § 1367(b)
Moreover, the Intervenors have not established that they have a property interest at stake in the judgment. While the Intervenors have a judgment against Bomar in the Brazilian Friendship litigation, they have not yet established any rights with respect to BRHI or Berisford. To establish such an interest, the Intervenors would have to litigate and win their claim that Berisford is liable directly to them regardless of the payments that BRHI makes or that they have a claim against BRHI. Those are claims that the Intervenors have never established.
Thus, the motion to intervene must be dismissed because this Court lacks subject matter jurisdiction over the Intervenors' claims.
IV.
Moreover, even if there were jurisdiction, the Intervenors have failed to establish that they have a right to intervene under Fed.R.Civ.P. 24(a). According to the Second Circuit Court of Appeals:
In order to intervene as of right pursuant to Rule 24(a)(2), the applicant must: (1) file a timely motion; (2) show an interest in the litigation; (3) show that its interest may be impaired by the disposition of the action; and (4) show that its interest is not adequately protected by the parties to the action. Failure to meet any one of these requirements suffices for a denial of the motion.In re Holocaust Victim Assets Litig., 225 F.3d 191, 197-98 (2d Cir. 2000) (citation omitted); accord New York News, Inc. v. Kheel, 972 F.2d 482, 485 (2d Cir. 1992)
A.
Berisford argues that the Intervenors' motion does not meet the first prong of the test because it is untimely. For a Rule 24(a) motion, timeliness is determined by looking at the totality of the circumstances through the consideration of four specific factors:
. . . (1) how long the applicant had notice of its interest in the action before making the motion; (2) the prejudice to the existing parties resulting from this delay; (3) the prejudice to the applicant resulting from a denial of the motion; and (4) any unusual circumstance militating in favor of or against intervention.In re Holocaust Victim Assets Litig., 225 F.3d at 198; accord Farmland Dairies v. Commissioner of New York State Dep't of Agriculture and Markets, 847 F.2d 1038, 1044 (2d Cir. 1988) While the Intervenors argue that a motion to intervene to file a motion to alter a judgment pursuant to Fed.R.Civ.P. 59(e) is timely if it is filed promptly after the entry of a final judgment, that is not an absolute rule. See, e.g., Dow Jones Co., Inc. v. United States Dep't of Justice, 161 F.R.D. 247, 251 (S.D.N Y 1995) (rejecting a rule that prompt filing of a post-judgment intervention motion is dispositive of the issue of timeliness under Rule 24.). In fact, the Second Circuit Court of Appeals has noted that post-judgment intervention "is generally disfavored because it usually creates delay and prejudice to existing parties." United States v. Yonkers Board of Educ., 801 F.2d 593, 596 (2d Cir. 1986) (citation omitted)
In this case, the Intervenors had ample notice of their interest in this litigation and failed to act. Berisford claims without contradiction that the Intervenors have been judgment creditors of Bomar since October 18, 1999, see Affidavit of Christine Jackson, sworn to Oct. 3, 2000 ("Jackson Aff.") at ¶ 19, and were put on notice of Berisford's prior Fed.R.Civ.P. 50(b) motion in this case at least since March 31, 2000 when Berisford served its motion to dismiss the Intervenors' state court action. See Jackson Aff., Ex. F at 9, Ex. G at ¶¶ 39-42. As the Intervenors have conceded, they could not have believed that Berisford and BRHI would adequately represent their interests because the Intervenors have been and are involved in on-going state court litigation with Berisford and BRHI. (Intervenors' Memo. at 2.) The possibility that any interests of the Intervenors would not be provided for in this case has been present from the beginning of the litigation. They knew or should have known of their interest in this case. See, e.g., Catanzo v. Wing, 103 F.3d 223, 232-34 (2d Cir. 1996). They did not seek to assert any independent claims in this litigation and waited to intervene until after this Court had already carefully considered all the arguments in connection with the proper judgment to enter. The motion is thus untimely.
Furthermore, there would be substantial prejudice in allowing the Intervenors to enter the case at the post-judgment stage. Their proposed modification of the judgment would require the Intervenors to establish that Berisford is directly liable to them even for costs that BRHI does not actually pay, which would require significant litigation that would delay the resolution of this case.
Any possible prejudice to the Intervenors in not allowing them to intervene is ameliorated by the fact that they already have a current lawsuit pending in state court against Berisford and BRHI. Moreover, any possible prejudice to the Intervenors is outweighed by the untimeliness of the application and the prejudice to the current parties that would result from such an intervention.
B.
Finally, Berisford correctly argues that the Intervenors do not have an interest in the subject matter of the suit. The Intervenors do not yet have a judgment against either Berisford or BRHI. The interest of the party seeking to intervene under Rule 24(a)(2) must be direct as opposed to remote or contingent.See, e.g., United States v. State of New York, 820 F.2d 554, 558 (2d Cir. 1987); Restor-a-dent Dental Lab., Inc. v. Certified Alloy Products, Inc., 725 F.2d 871, 874 (2d Cir. 1984). The possibility that a party will establish an interest in a judgment through a pending lawsuit in another court is a contingent interest. See, e.g., Washington Electric Coop., Inc. v. Massachusetts Mun. Wholesale Electric Co., 922 F.2d 92, 97 (2d Cir. 1990); Restor-a-dent, 725 F.2d at 875. While in Holborn Oil Trading Ltd. v. Interpetrol Bermuda Ltd., 658 F. Supp. 1205 (S.D.N.Y. 1987), a court did allow a judgment creditor to intervene in a case involving a judgment against the parent company of the subsidiary against which the creditor had a judgment, that decision was based on the court's finding that the judgment creditor had presented sufficient allegations and evidence of fraud establishing that the parent company should be liable for the debts of the subsidiary. See id . at 1209. Here, the Intervenors do not submit specific allegations or evidence that Bomar is trying fraudulently to avoid its obligations through BRHI. Thus they have not established that they have an interest in this litigation.
V.
Finally, even if their motion to intervene were granted, the Intervenors have not established that they are entitled to relief under Fed.R.Civ.P. 59(e) or 60(b).
The standard for granting a motion to alter or amend a judgment pursuant to Rule 59(e) is strict. See In re Health Management Systems. Inc., 113 F. Supp.2d 613, 614 (S.D.N.Y. 2000). "Alteration or amendment of a prior decision is warranted only where controlling law has changed, new evidence is available, and/or clear error must be corrected or manifest injustice prevented." Cavallo v. Utica-Watertown Health Ins. Co., 3 F. Supp.2d 223, 225 (N.D.N.Y. 1998). A Rule 59(e) motion is not a vehicle for reargument or "asserting arguments that could and should have been made before judgment issued." In re Aquaculture Found., 183 F.R.D. 64, 66 (D. Conn. 1998).
The Intervenors do not argue that the controlling law has changed or new evidence has been found. They have not established that the wording of the judgment is clear error. Finally, there is no manifest injustice in the final judgment because the Intervenors had notice of their interest in this litigation and should have moved to protect their interests in this case earlier. The arguments that they advance are ones that could and should have been made before judgment was issued.
Rule 60(b) allows the Court to "relieve a party . . . from a final judgment, order, or proceeding" if the party demonstrates its case falls under one of five different enumerated reasons or for "any other reason justifying relief from the operation of the judgment." Fed.R.Civ.P. 60(b)(6). The Intervenors do not specify what provision of Rule 60(b) they satisfy and have not shown that they qualify under any of the provisions. Furthermore, they do not demonstrate a showing of "extraordinary circumstances" that is necessary to grant relief under Rule 60(b)(6). See Transaero. Inc. v. La Fuerza Area Boliviana, 24 F.3d 457, 461 (2d Cir. 1994); DeWeerth v. Baldinger, 38 F.3d 1266, 1272 (2d Cir. 1994) ; Mendell v. Gollust, 909 F.2d 724, 731 (2d Cir. 1990), aff'd, 501 U.S. 115 (1991)
Thus, even if the Intervenors had a right to intervene in this case, their motions under Rule 59(e) or Rule 60(b) would be denied.
VI.
Finally, Bomar and BRHI move for an extension of time to file a notice of cross-appeal. The final judgment in this case was entered on August 30, 2000. On September 27, 2000, Berisford filed a notice of appeal from the final judgment in this case. A notice of cross-appeal must be filed within 14 days after the first notice of appeal was filed, see Fed.R.App.P. 4(a)(3), which would have made the plaintiffs' notice due on October 11, 2000. The plaintiffs, Bomar and BRHI, did not file their notice within that time and instead filed a notice of cross-appeal on October 23, 2000. They now move to extend their time to file a notice of cross-appeal through October 23, 2000 claiming that their failure to file a timely notice was based on "excusable neglect."
Under Fed.R.App.P. 4(a)(5)(A), this Court may extend the time to file a notice of appeal if "(i) a party so moves no later than 30 days after the time prescribed by this Rule 4(a) expires; and (ii) that party shows excusable neglect or good cause." The plaintiffs meet the first requirement because their notice was filed on October 23, 2000, which is well within thirty days of October 11, 2000, the due date for their notice under Fed.R.App.P. 4(a).
In considering whether there is "excusable neglect," a court should evaluate: "(1) the danger of prejudice to the nonmovant, (2) the length of delay and potential impact on judicial proceedings, and (3) the reason for the delay, including whether the movant acted in good faith and whether the circumstances were within the movant's reasonable control." Active Glass Corp. v. Architectural and Ornamental Iron Workers Local Union 580, 899 F. Supp. 1228, 1230 (S.D.N.Y. 1995). The plaintiffs claim that they delayed filing the notice of cross-appeal because they believed that the time to file the motion was tolled because the Intervenors filed a motion under Fed.R.Civ.P. 59 to alter or amend a judgment, which under Fed.R.App.P. 4(a)(4)(A)(iv) would toll the time to file a notice of cross-appeal. Berisford correctly replies that Rule 4(a)(4)(A)(iv) requires a party to file the Rule 59 motion for the deadline to be tolled, and the Intervenors are not parties because their motion to intervene was never granted. There is, however, some merit to the argument of excusable neglect in view of the absence of authority on the question of the effect of a Rule 59 motion by an aspiring intervenor. Indeed, Berisford has suggested to the Clerk of the Court of Appeals that the Court of Appeals should defer consideration of the pending appeal pending a decision by this Court on the Rule 59(e) and Rule 60(b) motions. See Affidavit of Howard Hawkins, sworn to November 6, 2000 at ¶ 8. Thus, the failure to file the cross-appeal in a timely fashion was made in good faith.
Granting the application will result in minimal delay and Berisford has not shown that it will be prejudiced by allowing the cross-appeal to have been filed about two weeks late. Therefore, the failure to file was based on excusable neglect and Bomar and BRHI should be permitted to file their late notice of cross-appeal.
CONCLUSION
For the reasons discussed in this opinion, the Intervenors motion to intervene under Fed.R.Civ.P. 24(a)(2) is denied. The motion by Bomar and BRHI to extend the time to file a Notice of cross-appeal is granted and the time to file is extended to October 23, 2000.