Judge: Serena R. Murillo, Case: 21STCV22206, Date: 2023-08-11 Tentative Ruling
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Case Number: 21STCV22206 Hearing Date: August 11, 2023 Dept: 31
TENTATIVE
Empire’s unopposed motion
for leave to intervene is GRANTED.
Legal
Standard
Code of Civil
Procedure, section 387, subdivision (d)(1) provides that the court shall, upon
timely application, permit a nonparty to intervene in the action or proceeding
if “a provision of law confers an unconditional right to intervene,” or “[t]he person seeking
intervention claims an interest relating to the property or transaction that is
the subject of the action and that person is so situated that the disposition
of the action may impair or impede that person’s ability to protect that
interest, unless that person’s interest is adequately represented by one or
more of the existing parties.” Additionally, upon timely application, a court
may “permit a nonparty to intervene in the action or proceeding if the person
has an interest in the matter in litigation, or in the success of either of the
parties, or an interest against both.” (Code Civ. Proc., § 387, subd. (d)(2).) A
court will determine the timeliness of a motion to intervene based on the date
when a nonparty “knew or should have known their interests in the litigation
were not being adequately represented.” (Ziani Homeowners
Assn. v. Brookfield Ziani LLC (2015) 243
Cal.App.4th 274, 282.)
In terms of the
form of the petition, Code of Civil Procedure section 387, subdivision (c)
provides that a nonparty “shall petition the court for leave to intervene by
noticed motion or by ex parte application. The petition shall include a copy of
the proposed complaint in intervention or answer in intervention and set forth
the grounds upon which intervention rests.”
Discussion
Empire seeks to
intervene in this case. It
argues it has a statutory right to enforce JWD’s claims against Cross-Defendants/Plaintiffs
and to intervene
for that purpose. Empire provided labor to JWD while JWD was performing
construction on the home of Plaintiffs and Cross-Defendants Greg and
Lisa Cassileth (collectively, the “Cassileths”). JWD failed to pay Empire for
these services. It currently owes over $140,000 representing employee wages
and other expenses. JWD claimed that it could not pay Empire because its
clients had stopped
paying, and that Empire’s best (and likely only) source of payment was from
JWD’s clients. Empire secured a judgment against JWD in March 2023. Unbeknownst
to Empire, JWD abandoned its case against its clients, the Cassileths, in which it
claims to be owed over $217,000—more than enough to satisfy Empire’s judgment.
JWD’s counsel has withdrawn and its principal, James Dumas, is in bankruptcy.
A motion to intervene must be timely. (Ziani
Homeowners Ass’n v. Brookfield Ziani LLC (2015) 243 Cal.App.4th 274, 282.) “Timeliness is determined by
the totality of the circumstances facing would-be intervenors, with a focus on
three primary factors: ‘(1) the stage of the proceeding at which an applicant
seeks to intervene; (2) the prejudice to other parties; and (3) the reason for
the delay.’” (Crestwood Behavioral Health Inc. v. Lacy (2021) 70
Cal.App.5th 560, 574.) “‘[D]elay in itself does not make a request
for intervention untimely.’” (Id.) When mandatory intervention “is
sought, because ‘the would-be intervenor may be seriously harmed if
intervention is denied, courts should be reluctant to dismiss such a request
for intervention as untimely, even though they might deny the request if the
intervention were merely permissive.’” (Id.)
In determining whether intervention is timely, courts “focus
‘“on the date the person attempting to intervene should have been aware his
interest[s] would no longer be protected adequately by the parties, rather than
the date the person learned of the
litigation.”’ (Ziani, 243 Cal.App.4th at
281.) Here, Empire had no notice that JWD had silently abandoned this case
until it learned about the status in connection with Mr. Dumas’ bankruptcy in
January 2023. It then filed its motion to intervene within three weeks of receiving
the judgment that gives it the right to do so. This judgment created the
interest Empire seeks to assert in this case, triggering its right to intervene.
(See Code Civ. Proc. § 708.210.)
On these facts, the Court
concludes Empire’s motion is timely. (Crestwood Behavioral, 70 CalApp.5th at 574 (collecting cases finding three-to-eight-month
delay in moving to intervene after discovery of interest in the case was
timely).)
Further, there is no prejudice to
Plaintiffs by allowing Empire to intervene. (Crestwood Behavioral
Health Inc. v. Lacy (2021) 70 Cal.App.5th 560, 574 (“only the prejudice caused by the movant’s delay
should be considered” when assessing whether the intervention is timely
(internal citations and quotations omitted).) Any prejudice to be
assessed by the Court does not “include prejudice that would result from
allowing intervention.” (Id.) There has been no discovery or
other proceedings that will be impacted by Empire’s intervention. There
is no need to reopen discovery or delay trial (which has not yet been
set). Plaintiffs have not shown any prejudice, and indeed, do not oppose
the motion to intervene.
Mandatory Intervention
By statute, California law permits
judgment creditors to intervene in actions by their debtors. (See Code
Civ. Proc.
§ 708.430(a) (“court ... may permit a judgment creditor who has obtained a lien
... to intervene.”).)
This provision “is remedial in nature and should be liberally construed to give
effect to the remedy which it authorizes.” (McClearen v. Superior Court (1955)
45 Cal.2d 852, 856 (discussing former section 688.1); “One of the prime
purposes” of Section 708.430 “was to protect judgment creditors against collusive
actions by their debtors” In re Marriage of Kerr (1986) 185 Cal.App.3d
130, 134 (citing Takehara v. H.C. Muddox Co. (1972) 8 Cal.3d 168, 172.)
Here,
Empire may intervene as a matter of right under Code Civ. Proc. § 387(d)(1)(B) if (1) it has an interest relating to
the property or transaction that is the subject of the action, (2) the
disposition of this case may impair or impede its ability to protect that
interest and (3) Empire’s interests are not adequately represented by the
existing parties. Empire meets all three requirements.
First,
Empire was involved in
the subject matter of this action by providing labor to Defendant JWD at the same
time Defendant JWD was working on Plaintiffs’ home. Empire has a
direct interest in resolving whether JWD is owed money on that project, which
should have been used to pay for Empire’s staff. More fundamentally, it has
succeeded to JWD’s rights in the mechanics lien asserted in this case, giving
it a direct property interest.
Second, if this case proceeds
without Empire’s involvement, the disposition of this case will “impair or
impede [its] ability to protect [its] interest.” Code Civ. Proc. §
387(d)(1)(B). Where denial of intervention would “as a practical matter” impede
a party’s ability to protect its interests, intervention is required. (Hodge v.
Kirkpatrick Dev., Inc. (2005) 130 Cal.App.4th 540, 550-51. A party’s
interest is deemed to be impaired where denial of intervention could give rise to
defenses in a subsequent suit by the intervenor. (Id. at 551-52.) While
Empire could file a separate creditor’s suit, doing so would give rise to a
series of procedural defenses, which would impair Empire’s ability to protect
its interests. Plaintiffs could argue that this action did not toll the 90-day
limitations for foreclosing on a mechanics lien, eliminating Empire’s
ability to enforce that lien. (See Civ. Code § 8460 (providing that if
action to foreclose lien is not initiated within 90 days “the claim of lien
expires and is unenforceable.”). JWD has repeatedly confirmed that it
has no other assets and is out of business. The only likely source of recovery
is JWD’s claims
asserted in this action, which JWD has allowed to languish.
Third, Empire’s interests are not
adequately protected by JWD, which has failed to retain counsel, has had its
Cross-Complaint stricken, and faces default judgment. JWD, which is insolvent,
has effectively abandoned this action.
The Court concludes Empire has a
mandatory right to intervene. Thus, it does not consider Empire’s other
arguments as to permissive intervention.
Conclusion
Based on the
foregoing, Empire’s motion
for leave to intervene is GRANTED.
Empire is ordered
to file the proposed cross-complaint-in-intervention
attached as Exhibit 1 as required under Code of Civil Procedure section 387,
subdivision (e) with the Court within 10 days of this order.
Moving party is ordered to give
notice of this ruling.