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St. John's University, New York v. Sanford M. Bolton

December 10, 2010

ST. JOHN'S UNIVERSITY, NEW YORK, PLAINTIFF,
v.
SANFORD M. BOLTON, HYGROSOL PHARMACEUTICAL CORP., AND SPIRIDON SPIREAS, DEFENDANTS.



The opinion of the court was delivered by: Nicholas G. Garaufis, United States District Judge.

MEMORANDUM & ORDER

Leslie Trager ("Trager") moves to intervene in the above-captioned action as of right under Federal Rule of Civil Procedure 24(a), and, in the alternative, moves for permissive intervention under Rule 24(b). (Mot. to Intervene (Docket Entry # 50).) All parties opposed the motion. For the following reasons, Trager's motion is denied.

I. BACKGROUND

In 2006, Trager brought a breach of contract action against Sanford Bolton ("Bolton") and Hygrosol Pharmaceuticals Corp. ("Hygrosol") on behalf of a client unrelated to St. John's University ("St. John's"). (Tsougarakis Decl. (Docket Entry # 52) Ex. 4.) During the course of the litigation, Trager allegedly discovered that Bolton and Spiridon Spireas ("Spireas") (collectively with Hygrosol, "Defendants") had breached their respective agreements with St. John's.*fn1 In November 2008, Trager "sold" this information to St. John's in exchange for "20% of the net funds received" if St. John's successfully brought a claim against Defendants. (Becker Decl. (Docket Entry # 51) Ex. A.) Trager's agreement with St. John's (the "Agreement") states that "St. John's is not obligated to pursue any information that [Trager] provided." (Id.)

St. John's commenced the instant action against Defendants by notice and summons in New York State Supreme Court on November 18, 2008. (See Docket Entry # 1.) Defendants removed the action to this court on December 15, 2008. (See id.) St. John's subsequently filed a complaint alleging a variety of claims including fraud, breach of contract, and breach of fiduciary duty. (Docket Entry # 13.) Defendants moved to dismiss. (Docket Entry ## 36, 40.) On December 8, 2009 Trager sent a letter to St. John's general counsel, Joseph Oliva, disapproving of St. John's arguments against the motions to dismiss. (Mot. to Intervene Ex. A.) Oliva refused to "substantively respond" to Trager's letter, stating only, "I find your correspondence and approach to be unprofessional and uninformed. The University is very pleased with its motion papers and the extraordinary work of our outside counsel." (Id. Ex. B.)

Trager moved to intervene on February 11, 2010. (See id.) In his motion, Trager objects to the arguments raised by St. John's outside counsel. (Id. at 4-8.) Specifically, Trager argues that St. John's should have raised a "continuous breach doctrine" argument with respect to Spireas's breach of his contract with St. John's, and that St. John's should have distinguished a particular case that Bolton cited in his moving papers. (Id.)

II. DISCUSSION

The court considers first whether Trager may intervene in this proceeding as of right. Second, the court considers whether it should exercise its discretion to permit Trager to intervene even if he does not satisfy the requirements for intervention as of right.

A. Intervention as of Right

Federal Rule of Civil Procedure 24(a) states that, Upon timely application anyone shall be permitted to intervene in an action . . . 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 applicant's interest is adequately represented by existing parties.

To intervene as of right under Rule 24(a)(2), "an applicant must (1) timely file an application, (2) show an interest in the action, (3) demonstrate that the interest may be impaired by the disposition of the action, and (4) show that the interest is not protected adequately by the parties to the action." New York News, Inc. v. Kheel, 972 F.2d 482, 485-88 (2d Cir. 1992)."Failure to satisfy any one of these requirements is sufficient grounds to deny the application." Id. (citations omitted). Trager fails to satisfy both the second and fourth requirements of Rule 24(a)(2).

1. Interest in the Action

To intervene as of right, a putative intervenor must "claim[] an interest relating to the property or transaction which is the subject of the action," Fed. R. Civ. P. 24(a), that is "direct, substantial, and legally protectable. An interest that is remote from the subject matter of the proceeding, or that is contingent upon the occurrence of a sequence of events before it becomes colorable, will not satisfy the rule." Washington Elec. Coop., Inc. v. Massachusetts Mun. Wholesale Elec. Co., 922 F.2d 92, 97 (2d Cir. 1990).

In Butler, Fitzgerald & Potter v. Sequa Corp., 250 F.3d 171 (2d Cir. 2000), the Court of Appeals considered whether a charging lien held by a discharged law firm on its former client's cause of action constituted an interest in the action within the meaning of Rule 24. Under the charging lien in Butler, the discharged firm was to automatically recover a portion of the award if its former client prevailed in the suit. Butler held that, "[d]espite the substantial value of the charging lien, and its potential impairment by an adverse judgment, it is not certain whether this lien qualifies as an interest sufficient to justify Butler's intervention as of right" because Rule 24(a) provides "that the putative intervenor must claim an interest relating to the property or transaction which is the subject of the action." Id. at 177 (emphasis in original). However, "[t]he interest of discharged counsel seemingly is not in the subject of the underlying action, i.e., the contract ...


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