Opinion
Case No. 2:00-CV-988
February 1, 2001
OPINION AND ORDER
This is a diversity action in which plaintiff seeks the dissolution of a partnership between plaintiff and defendant Gardner Morelli, as well as partition under O.R.C. Chapter 5307, and a declaration that defendant Sandra Morelli possesses only a dower interest in certain real properties. This matter is before the Court on defendant Sandra Morelli's motion for leave to intervene as a defendant in the first two causes of action seeking dissolution and partition.
I. Background
Plaintiff McRedmond Morelli is the brother of defendant Gardner Morelli. Complaint ¶ 3. Defendant Sandra Morelli is the estranged wife of Gardner Morelli. Id. ¶ 4.
From January 3, 1993 to November 1, 1995, McRedmond and Gardner Morelli purchased several parcels of real property located in Columbus, Ohio. Id. ¶¶ 5-29. On or about May 29, 1999, title to these properties was transferred to "Morelli Properties, LLC." Id. ¶ 32. This limited liability company was to consist of McRedmond and his wife Sheryl Morelli and Gardner and Sandra Morelli. Id. ¶ 30; Answer of Sandra Morelli ¶ 30. Although plaintiff contends that the articles of formation for the limited liability company were never filed with the State of Ohio, Complaint ¶ 31, defendant Sandra Morelli asserts that the limited liability company was in fact formed and she attaches evidence indicating that, on January 13, 1999, the Articles of Organization for Morelli Properties, LLC, was filed with the Ohio Secretary of State. Answer of Sandra Morelli ¶ 31; Exhibits A and B attached to Answer of Sandra Morelli.
Plaintiff alleges that he and Gardner formed an "implied-in-fact partnership . . . in which both agreed to contribute time and money toward the purchase and improvement of the subject properties. The amount of time and money invested by each was to determine their percentage of ownership." Complaint ¶ 35. Plaintiff also asserts that Morelli Properties, LLC, never operated as a limited liability company and that it "never had an existence separate and apart from McRedmond and Gardner as partners in an implied-in-fact partnership." Id. ¶ 33. Plaintiff contends that the "subject properties were transferred to the purported LLC solely as an accommodation to Gardner and Sandra in an effort to help resolve their marital problems." Id.
The complaint in this action alleges that all the properties at issue are jointly owned by McRedmond and Gardner, in the implied-in-fact partnership. Id. ¶ 35, 36, 45. Plaintiff seeks dissolution of this alleged partnership and a partition of the properties that would enable him to buy out Gardner's interests in the properties. Id. ¶¶ 37, 40. Plaintiff also seeks a determination of all the interests of the parties in the properties and a declaration that defendant Sandra Morelli is possessed of only a dower interest in the properties. Id. ¶¶ 45-46.
II. Discussion
A. Rule 24 Intervention
Sandra Morelli seeks to intervene as a defendant in the dissolution and partition claims asserted in the first two causes of action. Rule 24 of the Federal Rules of Civil Procedure provides in relevant part:
(a) Intervention of Right. Upon timely application anyone shall be permitted to intervene in an action: (1) when a statute of the United States confers an unconditional right to intervene; or (2) 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 applicants interest is adequately represented by existing parties.
(b) Permissive Intervention. Upon timely application anyone may be permitted to intervene in an action: (1) when a statute of the United States confers a conditional right to intervene; or (2) when an applicant's claim or defense and the main action have a question of law or fact in common.. In exercising its discretion the court shall consider whether the intervention will unduly delay or prejudice the adjudication of the rights of the original parties.
Sandra Morelli asserts that she is entitled to intervene in the first two causes of action pursuant to Rule 24(a)(2)and (b)(2).
Rule 24 requires, as an initial matter, that the application for intervention be timely. The United States Court of Appeals for the Sixth Circuit has identified five factors for consideration in assessing whether an application for leave to intervene is timely:
(1) the point to which the suit has progressed;
(2) the purpose for which intervention is sought;
(3) the length of time preceding the application during which the proposed intervener knew or reasonably should have known of his interest in the case;
(4) the prejudice to the original parties due to the proposed intervener's failure, after he or she knew or reasonably should have known of his or her interest in the case, to apply promptly for intervention; and
(5) the existence of unusual circumstances militating against or in favor of intervention.Cuyahoga Valley Ry. Co. v. Tracey, 6 F.3d 389, 396 (6th Cir. 1993) (quoting Grubbs v. Norris, 870 F.2d 343, 345 (6th Cir. 1989)).
Plaintiff filed the complaint on August 29, 2000. Plaintiff and defendant Sandra Morelli filed a stipulation extending the deadline for Sandra to move or plead in response to the complaint until October 16, 2000. Extension of Time to Move or Plead (September 27, 2000). On October 17, 2000, defendant Sandra Morelli filed her answer as well as the motion to intervene. The motion to intervene was therefore filed during the initial stages of the suit: discovery had not yet been initiated, and a preliminary pretrial conference had not yet been held. Furthermore, McRedmond and Gardner, the original parties to the first two causes of action, were not prejudiced by the short delay between the filing of the complaint and the filing of the motion to intervene. The Court therefore concludes that Sandra Morelli's motion to intervene is timely. See United States v. Union Elec. Co., 64 F.3d 1152 (8th Cir. 1995) (motion to intervene filed more than four months after complaint but before much progress had been made in the litigation was timely); Chiles v. Thornburgh, 865 F.2d 1197 (11th Cir. 1989) (motion to intervene filed seven months after original complaint was filed, three months after government filed its motion to dismiss and before discovery began was timely). The Court will now proceed to the merits of the motion.
1. Intervention as of Right
An applicant is entitled to intervene as of right when she demonstrates a legal interest in the subject matter of the pending action or claims, establishes that disposition of the action or claims may impair or impede her ability to protect the legal interest, and demonstrates that the existing parties to the action or claims cannot adequately protect the proposed intervener's interest. Grutter v. Bollinger, 188 F.3d 394, 397-98 (6th Cir. 1999) (citing Jansen v. City of Cincinnati, 904 F.2d 336, 340 (6th Cir. 1990)). The interest must be both "direct and substantial." Meyer Goldberg, Inc. of Lorain v. Goldberg, 717 F.2d 290, 292 (6th Cir. 1983). While these terms are not easily defined, the United States Court of Appeals for the Sixth Circuit has opted "for a rather expansive notion of the interest sufficient to invoke intervention of right." Michigan State AFL-CIO v. Miller, 103 F.3d 1240, 1245 (6th Cir. 1997); Bradley v. Milliken, 828 F.2d 1186, 1192 (6th Cir. 1987) ("interest" is to be liberally construed). Moreover, "close cases should be resolved in favor of recognizing an interest under Rule 24(a)." Miller, 103 F.3d at 1247; Grutter, 188 F.3d at 399. Furthermore, the proposed intervener need not possess the same standing as would be required to initiate a lawsuit. Purnell v. City of Akron, 925 F.2d 941, 948 (6th Cir. 1991).
As to the first requirement, Sandra Morelli asserts that she has a "vital interest in the subject matter of the first and second causes of action," Defendant Sandra Morelli's Memorandum in Support of Her Motion to Intervene, at 4, because the properties at issue in those causes of action belong, not to either McRedmond or Gardner, but to Morelli Properties, LLC, in which Sandra Morelli has an interest. Whether Sandra Morelli's asserted interest is sufficient to warrant intervention as of right depends upon whether she has a "significantly protectable" interest. See Donaldson v. United States, 400 U.S. 517, 532 (1971); Jansen, 904 F.2d at 341. Given the "expansive" notion of this concept, Michigan State AFL-CIO v. Miller, 103 F.3d at 1245, this Court concludes that Sandra Morelli is indeed possessed of a "significantly protectable" interest in the first two claims asserted in this action.
The second prong of the test requires a showing that the interest of the applicant in intervention will be impaired "as a practical matter" should intervention not be granted. Grutter, 188 F.3d at 397-98. To satisfy this element, an applicant in intervention must establish only that impairment of her substantial legal interest is possible should intervention be denied. Miller, 103 F.3d at 1247; Purnell, 925 F.2d at 948. This burden is likewise minimal. Miller, 103 F.3d at 1247. This Court agrees that a decision favorable to the plaintiff on the merits of his first two causes of action will impact Sandra Morelli's asserted interest in the properties at issue. The Court therefore concludes that Sandra Morelli has met the second prong of the test for intervention as of right under Fed.R.Civ.P. 24(a)(2).
Closely related to the second prong of the test is the third prong, which requires a showing that the interests of the proposed intervener will not be adequately represented by the existing parties to the claims. The burden is on the applicant in intervention to establish that the representation of the current parties to the claims is inadequate; however, this burden is likewise "minimal." Trbovich v. United Mine Workers of America, 404 U.S. 528, 538 n. 10 (1972). It is "sufficient that the movant prove that representation may be inadequate." Miller, 1103 F.3d at 1247 (emphasis added); Linton v. Comm'r of Health and Env't, State of Tenn., 973 F.2d 1311, 1319 (6th Cir. 1992). The applicant can carry this burden by establishing that the existing party who purports to seek the same outcome will not make all of the prospective intervener's arguments. Miller, 103 F.3d at 1247 (citing Forest Conservation Council v. United States Forest Serv., 66 F.3d 1489, 1498-99 (6th Cir. 1995).
Both McRedmond and Gardner assert that Morelli Properties, LLC, is a shell and they both claim ownership of the very properties allegedly transferred to the limited liability company. Both men also contend that Sandra Morelli has, at best, a dower interest in the properties at issue. These positions are inconsistent with the positions taken by Sandra Morelli. Under the circumstances presented in this case, the Court concludes that Sandra Morelli has met the final test for intervention as of right under Fed.R.Civ.P. 24(a)(2). In any event, for the reasons stated infra, the Court concludes that Sandra Morelli has met the standards governing permissive intervention.
2. Permissive Intervention
As the language of Fed.R.Civ.P. 24(b) expressly states, grant of leave to intervene under Rule 24(b) lies within the sound discretion of the trial court when the "applicant's claim or defense and the main action have a question of law or fact in common," as long as intervention will not "unduly delay or prejudice the adjudication of the rights of the original parties." Rule 24(b)(2). See also City of Cleveland v. Cities Serv. Oil Co., 47 F.R.D. 543, 546 (N.D. Ohio 1969). The motion to intervene must also be timely. Miller, 103 F.3d at 1248. Moreover, permissive intervention under Fed.R.Civ.P. 24(b) is to be liberally granted, so as to promote the convenient and prompt disposition of all claims in one litigation. City of Cleveland, 47 F.R.D. at 546.
Given that plaintiff seeks a determination of all the parties' interests in the properties at issue, the Court concludes that defendant Gardner Morelli's defenses and those of Sandra Morelli share a common question of law or fact. Furthermore, the Court concludes that intervention by Sandra Morelli in the first two causes of action would not unduly delay or prejudice the original parties to those claims.
III. Conclusion
Sandra Morelli's motion to intervene as a defendant in the first two causes of action is GRANTED.