United States District Court, N.D. Illinois, Eastern Division
December 2, 2004.
HELLER FINANCIAL LEASING, INC., a Delaware corporation, Plaintiff,
ARTHUR E. GORDON, et al., Defendants.
The opinion of the court was delivered by: SAMUEL DER-YEGHIAYAN, District Judge
This matter is before the court on Defendant Arthur E. Gordon's
and Rose A. Gordon's (collectively referred to as "the Gordons")
motion to dismiss for lack of subject matter jurisdiction and
motion to dismiss in favor of a parallel action. This matter is
also before the court on Plaintiff Heller Financial Leasing,
Inc.'s ("Heller") motion to dismiss the Defendants'
counterclaims. This matter is also before the court on Heller's
motion to strike Defendants' jury demand and on third party Pace
LLC's (Pace") motion to intervene in the present action. For
reasons stated below, we deny the Gordons' motions to dismiss. We
also grant Heller's motion to dismiss the Defendants'
counterclaims, we grant Heller's motion to strike the Defendants'
jury demand, and we grant Pace's motion to intervene.
In August of 2000, Pace entered into an $18,000,000 promissory
note ("Promissory Note") and Aircraft Chattel Mortgage Security
Agreement with Heller. At the same time, as inducement to Heller to make the loans and
to extend credit to Pace, each of the Defendants entered into
guaranty agreements ("Guarantee Agreements") with Heller. In the
Guaranty Agreements, Defendants agreed to pay Heller "on demand . . .
the due and punctual payments and performance of all
indebtedness of Pace to Heller." (Guaranty Par. 1). Pace and
Defendants failed to make the payments required under the
agreements. In July of 2002, Pace, Defendants, and Heller entered
into a Voluntary Surrender and Transfer Agreement whereby Pace
agreed to voluntarily convey title to the Aircraft to Heller.
Heller brought the present action against the Defendants seeking
to recover the difference between the value of the Aircraft and
the $18 million due and owing to Heller pursuant to the Guarantee
Agreements. Defendants' obligation for the deficiency and the
amount of the deficiency are the sole issues presented by
Heller's complaint. Defendants have made a demand for a jury
trial, and Heller has made a motion to strike this demand. Pace
has also made a motion to intervene in the current action.
Federal Rule of Civil Procedure 12(b)(1) requires a court to
dismiss an action when it lacks subject matter jurisdiction.
United Phosphorus, Ltd. v. Angus Chemical Co., 322 F.3d 942,
946 (7th Cir. 2003). When reviewing a motion to dismiss brought
under Rule 12(b)(1), this court "must accept as true all
well-pleaded factual allegations, and draw reasonable inferences
in favor of the plaintiff." Ezekiel v. Michel, 66 F.3d 894, 897
(7th Cir. 1995) (citing Rueth v. United States Environmental
Protection Agency, 13 F.3d 227, 229 (7th Cir. 1993)). For the
purpose of determining subject matter jurisdiction, this court
"may properly look beyond the jurisdictional allegations of the
complaint and view whatever evidence has been submitted on the issue to determine whether in fact
subject matter jurisdiction exists." Ezekiel, 66 F.3d at 897
(quoting Capitol Leasing Co. v. Federal Deposit Insurance
Corp., 999 F.2d 188, 191 (7th Cir. 1993)). However the burden of
proof "on a 12(b)(1) issue is on the party asserting
jurisdiction." United Phosphorus, Ltd., 322 F.3d at 946.
In ruling on a motion to dismiss brought pursuant to Federal
Rule of Civil Procedure 12(b)(6), the court must draw all
reasonable inferences that favor the plaintiff, construe the
allegations of the complaint in the light most favorable to the
plaintiff, and accept as true all well-pleaded facts and
allegations in the complaint. Thompson v. Illinois Dep't of
Prof'l Regulation, 300 F.3d 750, 753 (7th Cir. 2002); Perkins
v. Silverstein, 939 F.2d 463, 466 (7th Cir. 1991). The
allegations of a complaint should not be dismissed for a failure
to state a claim "unless it appears beyond doubt that the
plaintiff can prove no set of facts in support of his claim which
would entitle him to relief." Conley v. Gibson, 355 U.S. 41,
45-46 (1957). Nonetheless, in order to withstand a motion to
dismiss, a complaint must allege the "operative facts" upon which
each claim is based. Kyle v. Morton High School, 144 F.3d 448,
444-45 (7th Cir. 1998); Lucien v. Preiner, 967 F.2d 1166, 1168
(7th Cir. 1992). The plaintiff need not allege all of the facts
involved in the claim and can plead conclusions. Higgs v.
Carter, 286 F.3d 437, 439 (7th Cir. 2002); Kyle,
144 F.3d at 455. However, any conclusions pled must "provide the defendant
with at least minimal notice of the claim," Id., and the
plaintiff cannot satisfy federal pleading requirements merely "by
attaching bare legal conclusions to narrated facts which fail to
outline the bases of [his] claim." Perkins, 939 F.2d at 466-67. DISCUSSION
I. Motion to Dismiss for Lack of Jurisdiction
The Gordons contend that this action should be dismissed
because Heller has not provided sufficient evidence that this
court has subject matter jurisdiction. Heller asserts in its
complaint that this court has diversity subject matter
jurisdiction. (Comp. Par. 6). The party seeking to invoke the
court's jurisdiction bears the burden of showing that subject
matter jurisdiction exists. See NLFC, Inc. v. Devcom
Mid-America, Inc., 45 F.3d 231, 237 (7th Cir. 1995) (stating
that "[t]he party invoking federal jurisdiction bears the burden
of establishing the elements of jurisdiction."). Diversity
jurisdiction exists if "the matter in controversy exceeds the sum
or value of $75,000" and the action is "between . . . citizens of
different States. . . ." 28 U.S.C. § 1332(a). For the purposes of
diversity of citizenship "a corporation shall be deemed to be a
citizen of any State by which it has been incorporated and of the
State where it has its principal place of business. . . ."
28 U.S.C. § 1332(c)(1). In the Seventh Circuit a corporation's
principal place of business is deemed the "place where the
corporation has its nerve center." Krueger v. Cartwright,
996 F.2d 928, 931 (7th Cir. 1993).
The Gordons argue that they dealt with an entity entitled
Commercial Equipment Finance Group ("CEFG") whose main offices
are located in California. The Gordons theorize that CEFG is the
same entity as Heller and that Heller's principal place of
business is thus in California. If Heller's principal place of
business was in fact in California, since the Gordons are
citizens of California, there would not be complete diversity
which is required for diversity jurisdiction. The Gordons
speculate that Heller is located in California, but is attempting
to conceal that fact by providing documentation showing that its
parent company's corporate headquarters are located in Illinois. (Ans. 3). The Gordons
contend that Heller purposefully creates confusion between the
names "Heller Financial Leasing" and "Heller Financial Inc.,
Leasing." (Ans. 3). However, the Gordons provide no basis for
such a conclusion or any explanation regarding how the Gordons
came up with the two names mentioned by the Gordons.
In fact it is the Gordons themselves that vaguely refer to
entities throughout their briefs and are confused regarding the
proper titles of entities. For example, after the Gordons make
reference in their answer to "Heller Financial Leasing" and
"Heller Financial Inc., Leasing," the Gordons make reference to
an entity termed "Financial." (Ans. 2). However, both of the
above names contain the word "Financial." Another example is the
Gordons' reference in its answer to "Heller Financial" which
again is included in both of the above mentioned names referred
to by Heller. (Ans. 3).
Heller filed a supplemental brief with the court to which it
attached a declaration that is signed by Ron Lis ("Lis"), a Vice
President for Heller Financial Leasing, Inc., which is the named
plaintiff in the instant action. In the declaration Lis verifies
that the corporate headquarters for Heller, the named plaintiff
in this action, are located in Chicago, Illinois. Lis also states
that CEFG which the Gordons contend they dealt with in
California, is not a separate corporation from Heller. Lis states
that CEFG is merely a division of Heller and has always been a
division of Heller. The Gordons have not provided any evidence to
refute the assertions made by Lis. Instead, the Gordons claim
that they need further documentation and irrefutable proof that
Lis is not lying in his declaration. Heller has provided a signed
declaration indicating that this court has subject matter
jurisdiction and the Gordons have offered absolutely no evidence
that calls into doubt the sworn statement by Lis. Therefore, we deny the motion to dismiss for lack of subject
II. Motion to Dismiss in Favor of Duplicative Parallel Action
The Gordons seek to dismiss this action based on the fact that
a similar action involving the same parties is pending in a
California federal bankruptcy court. A district court may dismiss
a suit "for reasons of wise judicial administration . . .
whenever it is duplicative of a parallel action already pending
in another federal court." Serlin v. Arthur Andersen & Co.,
3 F.3d 221, 224 (7th Cir. 1993) (quoting Ridge Gold Standard
Liquors v. Joseph E. Seagram, 572 F.Supp. 1210, 1213 (N.D. Ill.
1983)). In determining whether another action is duplicative a
district court has a "a great deal of latitude and
discretion. . . ." Id. (quoting Ridge Gold, 572 F.Supp. at 1210).
An action is duplicative of the present action if the "claims,
parties, and available relief do not significantly differ between
the two actions." Id. (quoting Ridge Gold, 572 F.Supp. at 1213).
When a district court determines that another parallel
proceeding should be given "priority" the action before the
district court "should be stayed, rather than dismissed, unless
it is absolutely clear that dismissal cannot adversely affect
any litigant's interests." Central States, Southeast and
Southwest Areas Pension Fund v. Paramount Liquor Co,
203 F.3d 442, 445 (7th Cir. 2000).
Heller brought the instant action against Defendants alleging a
breach of the Guaranty Agreement. Defendants in this action
brought a counterclaim against Heller in this action. During the
pendency of the instant action Defendant Eiseley Bennett and
Defendant Jeffrey Bennett (collectively referred to as "the
Bennetts") filed for bankruptcy in the Southern District of
California. All claims in the instant action against the Bennetts
are currently stayed due to the bankruptcy proceedings. In the bankruptcy proceedings Defendants filed an Adversary
Proceeding against Heller alleging the same claims that they have
included in their counterclaim in the instant action. As we will
explain in detail below, we are granting Heller's motion to
dismiss the counterclaim in the instant action. Thus, the same
claims are no longer at issue in the two actions. The precise
issues and claims in the bankruptcy proceeding are not the same
as those in the instant action. We do not find that the
bankruptcy proceedings involve duplicative issues, and for the
above stated reasons and other reasons, we do not find that the
interest of efficient and effective judicial administration would
be best served by dismissing the instant action. The proper forum
to address the issues in the instant action is in this court
which was chosen by Heller. Therefore, we deny the Gordons'
motion to dismiss this action in favor of a duplicative parallel
III. Motion to Dismiss Defendants' Counterclaim
Heller seeks to dismiss Defendants' counterclaim. In November
of 2000, Pace leased the aircraft in question to KFC National
Management Company ("KFC"). Once Heller learned of this lease
agreement, Heller notified KFC that the Aircraft Mortgage between
Heller and Pace prohibited the lease of the Aircraft to third
parties. KFC terminated its aircraft lease with Pace, which was
subsequently followed by Pace's default on the Promissory Note.
Defendants have set forth two counterclaims based on the alleged
conduct by Heller, alleging tortious interference with
contractual relations claims and intentional interference with
prospective economic advantage claims.
When a case is before a federal court based on diversity
jurisdiction the court "has the obligation to apply the law of
the state as it believes the highest court of the state would apply it if presented with the issue." Allstate Ins.
Co. v. Keca, 368 F.3d 793, 796 (7th Cir. 2000). Under
Illinois law, the general rules of contract construction apply to
guaranty agreements. McLean County Bank v. Brokaw,
519 N.E.2d 453, 456 (Ill. 1998). See also Fimsa, Inc. v. Unicorp Financial
Corp., 759 F. Supp. 1297, 130 (N.D. Ill. 1991) (stating that
"[u]nder Illinois law . . . Guaranties are contracts legally
enforceable in accordance with their express provisions.). Under
Illinois law, guaranty agreements should be consistently enforced
when the language is clear and unambiguous, including provisions
under which the guarantor waives "each and every defense."
Chrysler Credit Corp. v. Marino, 63 F.3d 574, 577 (7th Cir.
1995). Such waiver provisions under which the guarantor waives
any available defenses are enforceable under Illinois law,
regardless of their severity. United Air Lines v. ALG, Inc.,
916 F.Supp. 793, 795 (N.D. Ill. 1991); See also Citicorp Savings
of Illinois v. Ascher, 554 N.E.2d 409, 411 (Ill.App.Ct. 1990)
(stating that "[w]here the language is not ambiguous, [the
guaranty] must be construed according to its terms."); Bank of
Benton v. LaBuwi, 551 N.E.2d 749, 753-54 (Ill.App.Ct. 1990)
(stating that "[a] guaranty contract which is unequivocal in its
terms must be interpreted according to the language used, for it
is presumed that the parties meant what their language clearly
imports."). In the instant action the Guaranty Agreements entered
into by the Defendants and Heller in the present case state the
Guarantor's obligations hereunder shall be
unconditional (and shall not be subject to any
defense, setoff, counterclaim, or recoupment
whatsoever) . . . irrespective of the genuineness,
validity, regularity, or enforceability of the
indebtedness or any conduct of Debtor [Pace] and/or
Lender [Heller] which might constitute a legal or
equitable discharge or a surety, guarantor or
guaranty. (Guaranty Par 1) (emphasis added). The language in
the Guaranty Agreements is clear and unambiguous. The
Guaranty Agreements were part of the inducement to
get Heller to extend credit to Pace. These agreements
function to allocate the risks of default between the
parties. See United Air Lines, 916 F. Supp. at 795
(finding that such provisions are an "attempt by
market participants to allocate risks and
opportunities."). Defendants' promise to repay the
loan in the event of Pace's default was not the only
consideration in these agreements. The waiver of all
and any "defense, setoff, counterclaim, or recoupment
whatsoever" also served as consideration and
inducement for Heller to enter into the agreements
and extend credit to Pace. See Chrysler Credit,
63 F.3d at 578 (noting that guaranty was made to induce
completion of loan). When the language in the
agreements is clear and unambiguous, it is not this
court's place to step in to try and read an alternate
intent into the language of the guaranty agreement.
Fimsa, Inc., 759 F. Supp. at 1301.
The Defendants claim that the waiver provision of the Guaranty
Agreements only applies to claims that existed at the time the
contract was entered into and not to claims that might arise at a
later date. More specifically, they suggest that the court in
Fimsa only found a guaranty waiver provision to apply to all
present and later claims because the waiver contained language
that indicated that the waiver applied to claims that "the
undersigned may now have or hereafter may have."
759 F.Supp. at 1301. As previously stated, under
Illinois law, the general rules of contract construction apply to
guaranty agreements. McLean County, 519 n.E.2d 456. Under Illinois
law, the words of a contract should be interpreted in accordance with
their plain and ordinary meaning where they are clear and unambiguous.
Zurich Ins. Co. v. Northbrook Excess and Surplus Ins. Co.,
494 N.E.2d 634
, 642 (Ill.App.Ct. 1986). See also U.S. Fire Ins. Co. v.
Schnackenberg, 429 N.E.2d 1203
, 1205 ((Ill. 1981) (stating that "if the provisions . . . are clear and
unambiguous there is no need for construction and the provisions
will be applied as written.").
In the Guaranty Agreements Defendants expressly waive all
defenses and counterclaims "whatsoever" which includes future
claims. (Guaranty Par 1). Courts have not required temporal
language such as "in the future" or "hereafter" in order for a
waiver provision to apply to future claims. See e.g., Home
Federal Bank for Savings v. Daly, 1990 WL 251775 at *3 (N.D. Ill
1990); Lincoln Park Federal Savings & Loan Association v.
Carrane, 548 N.E.2d 636, 639 (Ill.App.Ct. 1989); United Air
Lines, 916 F. Supp. at 794. Therefore, the language of the
Guaranty Agreement is applicable to Guarantor's present
counterclaims and establishes that Defendants have waived their
right to all defenses and counterclaims.
Finally, Defendants assert that the waiver provision should not
be applied to their counterclaims asserting tortious conduct
because such a ruling would run contrary to public policy. The
counterclaims that Defendants assert arise from Heller's act of
informing KFC that, under the terms of Heller and Pace's Aircraft
Mortgage Agreement, Pace did not have the authority to lease the
aircraft. As a result of Heller informing KFC of the terms of
Heller and Pace's agreement, KFC terminated its pending aircraft
lease agreement with Pace. Defendants claim that the present case
is analogous to a situation in which, after loaning money to a
debtor for the purpose of renting an apartment, the bank burned
down the apartment knowing that the debtor was to use rental
income to repay the debt. However, this comparison is misplaced
because Defendants have not alleged that Heller has done anything
criminal such as burning down a building. Rather, all Heller did
was inform the third party that, under the explicit terms of
Pace's agreement with Heller, Pace did not have the authority to
lease the aircraft to a third party. This was not a criminal act. Under the actual terms of the written Aircraft
Mortgage Agreement, this was not even a false declaration.
(Security Agreement § 5.2).
Furthermore, the Supreme Court of Illinois has stated that it
is in the interest of public policy to hold parties to contracts
that the parties freely and voluntarily entered into with each
other. In the present case, Defendants freely and voluntarily
entered into an agreement that clearly and unambiguously waived
any "defense, setoff, counterclaim, or recoupment whatsoever"
that Defendants might have. (Guaranty Par 1). Not only did
Defendants agree to this explicit language by signing the
original Guaranty Agreements, under the Voluntary Surrender and
Transfer Agreement they subsequently agreed that "[Defendants]
shall not dispute the validity or enforceability of the [Guaranty
Agreements]." (Surrender Agreement Par 5(d)). By signing the
Voluntary Surrender and Transfer Agreement and the original
Guaranty Agreements, Defendants effectively twice agreed to waive
any "defense, setoff, counterclaim, or recoupment whatsoever."
When sophisticated business actors, under the representation of
counsel, twice agree to waive all defenses and counterclaims, it
is not against public policy to hold those parties to their word,
nor is it the court's place to rewrite the terms that the parties
have clearly agreed to on their own. Therefore, we grant the
motion to dismiss Guarantor's counterclaims.
IV. Heller's Motion to Strike Jury Demand.
Heller has moved to strike Defendants' jury demand as it
relates to both Heller's breach of guaranty claim and Defendants'
counterclaims. Although the Seventh Amendment guarantees the
right to a jury trial in civil cases, the right can be waived.
Stewart v. RCA Corp., 790 F.2d 624, 630 (7th Cir. 1986).
There is a presumption against enforcing such waivers and thus a
waiver of the right to a jury trial must be "made knowingly and voluntarily." Whirlpool FIN.
Corp. v. Sevaux, 866 F.Supp. 1102, 1105 (N.D. Ill. 1994);
Sutter Insurance Co. v. Applied Systems, 2004 WL 161508, at *7
(N.D. Ill. 2004); In re Reggie Packing Co., Inc.,
671 F. Supp. 571, 573 (N.D. Ill. 1987). A court should "indulge every
reasonable presumption" against a jury waiver because the right
to a jury trial is fundamental. Aetna Insurance Co. v. Kennedy,
301 U.S. 389, 393 (1937).
Heller argues, in support of its motion to strike Defendants'
jury demand, that Defendants have contractually waived this
right. The relevant language of the Guaranty Agreements state:
"Guarantor hereby waives . . . any rights to a trial by jury of
any claim or cause of action or in any litigation or any court
with respect to or arising out of this Guaranty." (Guaranty
Agreement 5). The Defendants do not contest the fact that the
jury waiver in the Guaranty Agreements is a valid waiver.
Instead, Defendants argue that the language of the waiver
indicates that it only applies to claims that "arise out of" the
Guaranty Agreements and Defendants argue that the counterclaims
do not arise out of the Guaranty Agreements. However, as
explained above, Defendants' counterclaims are being dismissed
which renders the jury trial issue in regards to the
counterclaims a moot issue. In Defendants' answer brief to the
motion to strike, they only address the propriety of a jury trial
in the context of Guarantor's counterclaims. Defendants also
argue that enforcing the jury waiver provision in the Guaranty
Agreements would be against public policy when applied to
Defendants' counterclaims because those counterclaims are tort
claims. However, even if this argument is true, this reasoning
does not apply to Heller's breach of guaranty claim because
Heller's claim is only a contract claim and not a tort claim.
Defendants have not presented any evidence that would indicate
that the waiver provision was not signed knowingly and
voluntarily. Therefore, we grant Heller's motion to strike Guarantor's jury demand.
V. Pace's Motion to Intervene
Pace seeks to intervene in the instant action pursuant to
Federal Rule of Civil Procedure 24.
A. Intervention as of Right
Pursuant to Federal Rule of Civil Procedure 24(a) a prospective
intervenor that seeks intervention in a timely manner is entitled
to intervene: "(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 applicant's interest is adequately
represented by existing parties." Fed.R.Civ.P. 24(a). In the
instant action there is no federal statute that confers an
unconditional right upon Pace to intervene.
To proceed under 24(a)(2) a prospective intervenor must show
that: "(1) the application is timely; (2) the applicant has an
`interest' in the property or transaction which is the subject of
the action; (3) disposition of the action as a practical matter
may impede or impair the applicant's ability to protect that
interest; and (4) no existing party adequately represents the
applicant's interest. Security Ins. Co. of Hartford v.
Schipporeit, Inc., 69 F.3d 1377, 1380 (7th Cir. 1995). It is
the burden of the prospective intervenor to prove "each of the
four elements of intervention as of right," Keith v. Daley,
764 F.2d 1265, 1268 (7th Cir. 1985), and if the prospective intervenor fails to show that any of the above four factors are
not in its favor, "[t]he failure to meet any one factor dictates
denial of the petition." Reich v. ABC/York-Estes Corp.,
64 F.3d 316, 321 (7th Cir. 1995).
Pace argues that it has a direct interest at stake in the
present action that would be impaired if it were not allowed to
intervene. A prospective intervenor must establish that it has an
interest in the instant action that is "direct, significant, and
legally protectable." Solid Waste Agency of Northern Cook County
v. U.S. Army Corps of Engineers, 101 F.3d 503, 506 (7th Cir.
1996). The Seventh Circuit has stated that the interest of the
prospective intervenor must be "something more than a mere
`betting' interest . . ., but less than a property right . . .
[and] [w]hether an applicant has an interest sufficient to
warrant intervention as a matter of right is a highly
fact-specific determination, making comparison to other cases of
limited value." Security Ins. Co. of Hartford,
69 F.3d at 1380-81. Whether or not the proposed intervenor's interest would
be impaired "depends on whether the decision of a legal question
involved in the action would as a practical matter foreclose
rights of the proposed intervenors in a subsequent proceeding."
Meridian Homes Corp. v. Nicholas W. Prassas & Co.,
683 F.2d 201, 204 (7th Cir. 1982).
Pace argues that the "determination of whether Heller performed
its obligations . . . directly affects Pace because it implicates
Pace's obligations under the Promissory Note, as well as the
Guarantors [sic] obligations under the Guarantee Agreements."
(Reply 2). We agree that determinations in the instant action may
affect Pace's interests which are direct and significant. Not
only will the amount of indemnification be at issue, findings
concerning Heller's performance will inhibit Pace from arguing
otherwise in a future action brought on its own behalf or in an
action brought by Heller against Pace. Pace also correctly argues
that it "has a significant interest in the resolution of the value of the
aircraft and related collateral at the time of surrender to
Heller and any resulting deficiency because the determination
effects [sic] how much Pace owes Heller, if anything under the
Promissory Note." (Reply 2-3). Pace's has shown that it has a
direct interest that will be impaired if it is not allowed to
Finally, Pace argues that its interests would not be adequately
represented by Gordon. Heller cites Wade v. Goldschmidt,
673 F.2d 182, 186 n. 7 (7th Cir. 1982) for the proposition that
"presumption of adequacy of representation arises when the
proposed intervenors and a party to the suit have the same
ultimate objective." (Inter. Ans. 4). However, Heller fails to
correctly quote the Seventh Circuit and has omitted pertinent
language that is contrary to its position. The quote in Wade
actually reads as follows: "Even if we were to assume arguendo
that applicants have a direct legally protectable interest,
applicants have not overcome the presumption of adequacy of
representation that arises when the proposed intervenor and a
party to the suit (especially if it is the state) have the same
ultimate objective. Environmental Defense Fund v. Higginson,
631 F.2d 738, 760 (D.C. Cir. 1979); United States Postal Service
v. Brennan, 579 F.2d 188, 191 (2d Cir. 1978)." Id. (emphasis
added). The court in Wade cited Environmental Defense Fund v.
Higginson, 631 F.2d 738, 760 (D.C. Cir. 1979) and in
Environmental four States sought to intervene in the action.
Id. at 157. The court in Wade also cited United States
Postal Service v. Brennan, 579 F.2d 188, 191 (2d Cir. 1978) and
in Brennan the proposed intervenors were arguing that the
United States Attorney's Office would not adequately represent
their interests. Id. at 76. However, unlike in Environmental
and Brennan, in the instant action neither Pace nor Defendants
are a public entity acting on behalf of its citizens and thus
pursuing a common interest. We also note that the court in
Brennan quoted Trbovich v. United Mine Workers, 404 U.S. 528, 538 n. 10
(1972) for the proposition that "[a]n applicant for intervention
as of right has the burden of showing that representation may be
inadequate, although the burden "should be treated as minimal."
579 F.2d at 191.
Pace has shown that its interests will not be adequately
represented by Defendants. Heller also argues that Defendant
Jeffrey Bennet is the Managing Member of Pace and has a fiduciary
duty to Pace. Such a connection in and of itself is not proof
that his interest and Pace's interests are synonymous and there
are potential differences in his choice of arguments and
representation in the action and those for Pace. Therefore, we
find that Pace's interests would not be adequately represented by
Defendants and that Pace has a right to intervene.
B. Permissive Intervention under Rule 24(b)(2)
Pace also argues that it should be allowed by the court in its
discretion to intervene. Even if Pace did not have a right to
intervene, we would find in our discretion that Pace may
intervene. Civil Rule of Procedure 24(b)(2) provides the
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. When a party to an action relies for
ground of claim or defense upon any statute or
executive order administered by a federal or state
governmental officer or agency or upon any
regulation, order, requirement, or agreement issued
or made pursuant to the statute or executive order,
the officer or agency upon timely application may be
permitted to intervene in the action. 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.
Fed.R. Civ. P 24(b)(2). Clearly, Pace's involvement and
connection to the main claim in this action warrants allowing an
intervention by Pace. There are clearly common issues of fact and
law that will apply to claims involving Defendants and Pace. The
instant proceedings are still at the pleading stage and the
intervention need not cause any undue delay. Nor has Heller shown
that it will be prejudiced by the intervention. We find that the
intervention would further the interests of judicial economy and
the efficient operation of the judicial system. Therefore, we
grant Pace's motion to intervene.
Based on the foregoing analysis, we deny the Gordons' motion to
dismiss for lack of subject matter jurisdiction and deny the
motion to dismiss in favor of a duplicative parallel action. We
also grant Heller's motion to dismiss the Defendants'
counterclaims, and we grant Heller's motion to strike the
Defendants' jury demand. We also grant Pace's motion to
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