Hallco Manufacturing Co. v. Quaeck

161 F.R.D. 98, 1995 U.S. Dist. LEXIS 5981, 1995 WL 254371
CourtDistrict Court, D. Oregon
DecidedApril 28, 1995
DocketCiv. No. 94-792-FR
StatusPublished
Cited by1 cases

This text of 161 F.R.D. 98 (Hallco Manufacturing Co. v. Quaeck) is published on Counsel Stack Legal Research, covering District Court, D. Oregon primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hallco Manufacturing Co. v. Quaeck, 161 F.R.D. 98, 1995 U.S. Dist. LEXIS 5981, 1995 WL 254371 (D. Or. 1995).

Opinion

FRYE, District Judge:

The matter before the court is the motion of Raymond Keith Foster, Keith Mfg. Co., Inc., and Keith Sales Co. (hereinafter collectively referred to as “Foster”) to intervene (# 40).

BACKGROUND

A jury has heretofore returned a verdict on the merits in favor of Foster and against Hallco Manufacturing Co., Inc. (Hallco), Olof A. Hallstrom, and Robert M. Snellman on the issue of patent infringement. The trial to determine the amount, if any, of Foster’s damages is scheduled to begin on September 26, 1995. Foster seeks damages in excess of ten million dollars.

This action was filed by Hallco against the defendants, Manfred Quaeck, Jane Doe Quaeck, Roach Incorporated (Roach), HMC Sales, Inc. (HMC), Western Services, Inc. (Western), Robert M. Snellman, and Barbara Snellman. In its complaint, Hallco alleges that Manfred Quaeck obtained patents that should have been issued to Hallco; that Robert Snellman and Western substantially assisted Quaeck in obtaining the patents that should have been issued to Hallco; that all of the defendants misappropriated Hallco’s trade secrets; that Roach or HMC or both of them licensed the patents without Hallco’s authority; that Snellman secretly owned Roach and HMC; that Snellman diverted business from Hallco to Roach and HMC; that Snellman usurped Halleo’s corporate opportunities and tortiously interfered with Hallco’s business; that the defendants engaged in trade defamation by telling Hallco’s customers that Hallco could not sell certain equipment because of patents issued to Quaeck; that the Stock Redemption Agreement should be reformed to limit the scope of the release because Snellman fraudulently concealed facts and breached his fiduciary duty; and that Snellman defrauded Hallco.

Quaeck, Snellman and Roach allege as counterclaims that Hallco breached the release and covenant not to sue provisions of the Stock Redemption Agreement, or, in the alternative, that Hallco falsely promised to release Snellman which induced Snellman to sell his stock in Hallco for at least three million dollars less than he would have otherwise sold it. Quaeck, Snellman, and Roach commenced a third-party action against the Hallstroms alleging the same claims against the Hallstroms as they had alleged against Hallco.

Under Rule 24 of the Federal Rules of Civil Procedure, Foster moves for intervention as of right or, in the alternative, for permissive intervention in this action in order to allege claims of fraudulent transfer, constructive fraudulent transfer and conspiracy to defraud against Hallco, the Hall-stroms, Snellman and Roach on the basis of the Stock Redemption Agreement. Foster also seeks to allege claims against Hallco and the Hallstroms for fraudulent business transfers and to allege claims against Snellman, Quaeck, Roach, HMC and Western for fraudulent transfers, constructive fraudulent transfers, and for conspiracy to defraud.

CONTENTIONS OF THE PARTIES

The parties to this action oppose Foster’s motion for intervention on the grounds (1) that Foster is not entitled to intervene as of right because Foster does not have a protect-able interest in the transaction at issue which is not adequately represented by Hallco; and (2) that Foster should not be granted permissive intervention because this court lacks subject matter jurisdiction over Foster’s proposed complaint in intervention. The parties contend that there is no supplemental jurisdiction under 28 U.S.C. § 1367(b) over the proposed claims of Foster because jurisdiction in this action is based on diversity of citizenship, and there is no independent basis for this court to exercise jurisdiction over the claims of Foster. The parties to this action also argue that to allow Foster to intervene in this action will result in undue delay in the adjudication of the case and will bring a halt to the settlement negotiations being conducted between the parties.

Foster contends that it may intervene in this action as a matter of right under Rule [101]*10124(a) of the Federal Rules of Civil Procedure because it has a protectable interest in the form of judgment entered against Halleo. Foster also argues that its intervention in this action will not cause undue delay because the parties in this action may post a ten million dollar guarantee that would adequately protect Foster’s judgment, and then “[tjhere would be no need for resolution of the claims by the Foster Intervenors in [this action].” Reply Memorandum in Support of Foster-Intervenor’s Motion to Intervene, p. 10.

With regard to the jurisdictional issue, Foster contends that resolution of that issue should await a motion to dismiss after the court grants its motion to intervene. Foster also az’gues that the limitation of 28 U.S.C. § 1367(b) on this court’s supplemental jurisdiction does not apply because an intezvenor as of right is a non-plaintiff intervenor. Foster also argues that the non-diverse parties, Halleo and the Hallstroms, can be dismissed from Fostez’’s claims in order to preserve diversity jui’isdiction because they are not indispensable parties.

APPLICABLE LAW

Rule 24 of the Federal Rules of Civil Procedure provides:

(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 applicant’s interest is adequately represented by existing parties.
(b) Permissive Intervention. Upon timely application anyone may be permitted to interveize 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.

As to intervention as of right under Rule 24(a) of the Federal Rules of Civil Procedure, the United States Court of Appeals for the Ninth Circuit applies a four-part test:

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Bluebook (online)
161 F.R.D. 98, 1995 U.S. Dist. LEXIS 5981, 1995 WL 254371, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hallco-manufacturing-co-v-quaeck-ord-1995.