In a 16 page opinion released January 28, 2016 in the Casino Caribbean, et al. v. Money Centers of America adversary proceeding (Bank. D. Del. Adv. No. 14-50437), Judge Christopher S. Sontchi of the Delaware Bankruptcy Court granted the motion of Quapaw Casino to intervene in the adversary proceeding. Judge Sontchi's opinion is available here (the "Opinion").
Plaintiffs in the adversary proceeding had obtained a court order requiring the Debtors' to maintain a cash balance of $900,000 or more, in order to compensate the Plaintiffs if it should be determined that the Debtors were holding funds as a 'mere conduit' to which the Plaintiffs were entitled. Opinion at *2. Quapaw claimed that the Debtors were likewise holding funds to which it was entitled, and moved to intervene in the adversary proceeding, in order to obtain the same relief. Plaintiffs opposed the motion, fearing that the set-aside funds would be insufficient to compensate them and Quapaw. Opinion at *2.
The Debtors had entered into an agreement with Quapaw to provide ATM and other cash advance services to Quapaw's customers, and that any funds advanced to a customer by Quapaw would be reimbursed by the Debtors. Quapaw is listed on the Debtors' schedules and filed a proof of claim for $502,018. Opinion at *4.
The adversary complaint was filed on July 7, 2014. Quapaw filed its motion to intervene on January 21, 2015. As of that time, the Debtors had not yet filed an answer in the adversary proceeding. Pursuant to Fed. R. Civ. P. 24(a) "A movant has an unconditional right to intervene when its motion is timely filed and either (A) a federal statute grants an unconditional right to intervene or (B) the movant claims an interest that is related to the property or transaction that is the subject of the adversary proceeding and disposing of the proceeding impairs or impedes the movant's ability to protect its interest as a practical matter, unless the parties adequately represent that interest." Opinion at *7. Ultimately, Judge Sontchi found that Quapaw satisfied this requirement. Opinion at *8.
Judge Sontchi then examined the case under the permissive intervention standard of Fed. R. Civ. P. 24(b), finding that Quapaw also satisfied those requirements. Opinion at *16.
As this Opinion illustrates, it is difficult to prevent another party from following the path you create and obtaining the same relief, when their claims are practically identical to your own. In cases like this one, where a finite quantity of funds are available, it may be worth your time to investigate whether your relief would be diminished if another party received identical treatment. If it would, then you may want to spend a bit more time investigating whether those similarly situated parties exist and take them into account in the relief you seek.
The Court held that QCA had a right to intervene under both Fed. R. Civ. P. 24(a)(1) and (a)(2), and that permissive intervention was warranted under Fed. R. Civ. P. 24(b)(1)(B). Rule 24(a) has 4 requirements,
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