15-1086-cv

Laroe Estates, Inc. v. Town of Chester

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UNITEDSTATESCOURTOFAPPEALS
FORTHESECONDCIRCUIT

AugustTerm,2015

(Argued:January27,2016

Decided:July6,2016)

DocketNo.151086cv
_____________________________________

LaroeEstates,Inc.,

MovantAppellant,

v.

TownofChester,

DefendantAppellee.*
_____________________________________

Before:

CALABRESI,LYNCH,andLOHIER,CircuitJudges.

LaroeEstates,Inc.(Laroe),arealestatedevelopmentcompany,
appealsfromanorderoftheDistrictCourt(Ramos,J.)denyingitsmotionto
interveneunderRule24oftheFederalRulesofCivilProcedureinpending
litigationinwhichStevenSherman,anowdeceasedlanddeveloper,suedthe
TownofChester(theTown)allegingaregulatorytaking.Laroeclaimsthat
itownsthepropertythatisthesubjectofShermansdisputewiththeTown.
TheDistrictCourtdeniedLaroesmotiontointervenebecauseLaroelacked
standingtoassertatakingsclaimagainsttheTown.Becausewedonot

TheClerkoftheCourtisdirectedtoamendthecaptionofthiscaseasset
forthabove.
*

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requireproposedintervenorstoshowthattheyindependentlyhavestanding
whenthereisagenuinecaseorcontroversybetweentheexistingparties,we
VACATEtheorderandREMANDtotheDistrictCourttodetermineinthe
firstinstancewhetherLaroemettherequirementsofRule24.

JOSEPHJ.HASPEL,JosephJ.Haspel,
PLLC,Goshen,NY,forMovant
Appellant.

ANTHONYF.CARDOSO(StevenC.Stern,
onthebrief),SokoloffSternLLP,Carle
Place,NY,forDefendantAppellee.

LOHIER,CircuitJudge:

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Inthisappealweconsiderwhetheraproposedintervenormust

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demonstratethatithasstandingevenwhenthereisagenuinecaseor

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controversybetweentheexistingpartiesthatsatisfiestherequirementsof

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ArticleIIIoftheConstitution.Theanswerisno.

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StevenSherman,anowdeceasedlanddeveloper,previouslysuedthe

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TownofChester(theTown)allegingaregulatorytaking.Thatlitigation

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remainspendingintheUnitedStatesDistrictCourtfortheSouthernDistrict

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ofNewYork(Ramos,J.).LaroeEstates,Inc.(Laroe),arealestate

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developmentcompany,claimedthatit,notSherman,currentlyownsthe

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propertythatisthesubjectofShermansdisputeandsoughttointervene

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pursuanttoRule24oftheFederalRulesofCivilProcedure.Ratherthan
2

determinewhetherLaroesatisfiedtherequirementsofRule24,theDistrict

CourtdeniedLaroesmotiononthegroundthatLaroelackedstandingto

assertatakingsclaimagainsttheTown.Becausewedonotrequireproposed

intervenorsinthiscircumstancetoshowthattheyindependentlyhave

standing,weVACATEtheorderandREMANDtotheDistrictCourtto

determineinthefirstinstancewhetherLaroemettherequirementsofRule24.

BACKGROUND

ThisisthesecondtimethatthisCourthasconsideredadisputerelated

totheabandonedMareBrookdevelopmentprojectintheTownofChester.

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Whenwelastdidso,theDistrictCourthaddismissedShermansregulatory

11

takingsclaimagainsttheTownbecauseitwasunripe.Shermanv.Townof

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Chester,No.12Civ.647(ER),2013WL1148922,at*9(S.D.N.Y.Mar.20,2013).

13

Wereversedthatdecision,holdingthattheclaimcouldproceedeventhough

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theTownneverrenderedafinaldecisiononthematter.Shermanv.Town

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ofChester,752F.3d554,561(2dCir.2014)(quotationmarksomitted).That

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conclusionwasbasedontheextraordinaryfactsofShermanscasefactsthat

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arefullyrecountedinourpreviousdecision,withwhichweassume

familiarity.WeremandedthecasebacktotheDistrictCourttoconsider

Shermanstakingsclaimonthemerits.Id.at569.

Shortlythereafter,Laroefiledamotiontointervene,purportingtobe

theequitableownerofthepropertyatissueinShermansdispute.Laroe

claimsthatitenteredintoapurchaseagreementwithShermaninJune2003

(the2003Agreement),pursuanttowhichShermanagreedtosellLaroe

threeparcelsoflandwithintheproposedMareBrooksubdivision.In

exchange,Laroeagreedthatitwouldpay$60,000foreachlotapprovedfor

developmentwithinthethreeparcelsonceShermansplanswereapproved

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bytheTown.TheagreementalsorequiredLaroetomake$6millionin

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interimpaymentswhileShermansoughttheTownsapproval.Theinterim

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paymentsweresecuredbyamortgagethatShermanprovidedtoLaroe

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encumberingalloftheDevelopmentProperty.JointAppx192.If

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ShermanfailedtoobtaintheTownsapprovalofasufficientnumberoflots,

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Laroeretainedtherighttoterminatetheagreement.Overthenextyear,

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LaroeadvancedShermanmorethan$2.5millionfortheproject.

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AlthoughShermanseffortstosecuretheTownsapprovalstretched
on,Laroedidnotterminatetheagreement.ButinApril2013TDBank,which
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heldasuperiormortgageinterestintheproperty,commencedaforeclosure

proceeding.Hopingtosalvagethedealinviewoftheforeclosure,Laroeand

Shermansignedanewcontract(the2013Agreement)amendingtheir

earlierpurchaseagreement.The2013Agreementprovidedthatthe$2.5

millionLaroehadalreadyadvancedSherman,plusanyamountpaidtosettle

ShermansobligationtoTDBank,wouldconstitutethepurchasepriceofthe

property.OncetheTownapprovedthedevelopment,Laroewasrequiredto

transferacertainnumberoflotsbacktoShermandependingonhowmany

wereapprovedbytheTown.Subjecttothisrequirement,thepartiesdeemed

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thepurchasepriceforthepropertypaidinfull.JointAppxat234.To

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resolveTDBanksforeclosureproceeding,the2013Agreementalsogranted

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LaroethesolediscretiontosettlethedebtowedtoTDBankandalternatively

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permittedLaroetoterminatetheAgreementifLaroeandTDBankfailedto

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reachasettlementbeforetheforeclosuresale.Laroeultimatelyfailedto

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satisfyShermansobligationstoTDBank.OnMay21,2014,aforeclosuresale

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occurred,andTDBanktookpossessionoftheproperty.Laroenevertheless

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chosenottoterminatetheagreement.

Throughoutthisperiod,Sherman(andsubsequentlyhisestate)

continuedlitigatinghistakingsclaim.Afterweremandedthecase,Laroe

soughttointervene.ByorderdatedMarch31,2015,theDistrictCourtdenied

themotion,concludingthatLaroesclaimagainsttheTownwasfutile.

Shermanv.TownofChester,No.12Civ.647(ER),2015WL1473430,at*1516

(S.D.N.Y.Mar.31,2015).AlthoughtheDistrictCourtacknowledgedthat

legalfutilityisnotmentionedinRule24,itreasonedthatfutilitywas

nonethelessaproperbasisfordenyingamotiontointervene.Id.at*15

(citingInreMerrillLynch&Co.,Inc.ResearchReportsSec.Litig.,Nos.02

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MDL1484(JFK),02Civ.8472(JFK),2008WL2594819,at*5(S.D.N.Y.June26,

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2008)).RelyingonourdecisioninU.S.OlympicCommitteev.Intelicense

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Corporation.,S.A.,737F.2d263(2dCir.1984),theDistrictCourtconcluded

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thatLaroelackedstandingtoassertatakingsclaimbecauseitwasnotthe

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ownerofaninterestinpropertyatthetimeoftheallegedtaking.Sherman,

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2015WL1473430,at*15(quotingU.S.OlympicComm.,737F.2dat268).

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HavingconcludedthatLaroelackedstanding,theDistrictCourtdid

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notdiscussatlengthwhetherLaroeotherwisesatisfiedtherequirementsof

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Rule24,otherthantosuggestinafootnotethatit[was]notclearthat[Laroe]
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satisfie[d]Rule24stimelinessrequirement,sinceLaroewaitedtofileits

motionuntilafterthisCourtreversedtheDistrictCourtsdecisiondismissing

Shermanstakingsclaim.Id.at*16n.20.ButbecausetheDistrictCourt

concludedLaroelackedstanding,itdeclinedtodeterminewhetherthe

motionwastimely.Id.

Thisappealfollowed.
DISCUSSION

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1. ArticleIIIStanding
LaroefiledamotionforinterventionasamatterofrightunderRule

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24(a)(2)or,inthealternative,permissiveinterventionunderRule24(b).We

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reviewadistrictcourtsdenialofamotiontointerveneforabuseof

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discretion.Floydv.CityofNewYork,770F.3d1051,1057(2dCir.2014).A

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districtcourtabusesitsdiscretionwhenitsdecisionrestsonanerroroflaw

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(suchasapplicationofthewronglegalprinciple)oraclearlyerroneous

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factualfinding.MasterCardIntlInc.v.VisaIntlServ.Assn,471F.3d377,

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385(2dCir.2006).Here,theDistrictCourtdeniedthemotionasfutile

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because,itheld,apartyseekingtointerveneasofrightmustindependently

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havestanding,andLaroe,itconcluded,separatelylackedstandingtoasserta
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takingsclaimagainsttheTown.SeeSherman,2015WL1473430,at*16.

Although,astheDistrictCourtacknowledged,legalfutilityisnotmentioned

inRule24,id.at*15,wehaveaffirmeddenialsofamotiontointerveneon

thatbasis,UnitedStatesv.GlensFallsNewspapers,Inc.,160F.3d853,856(2d

Cir.1998)(affirmingthedenialofanewspapersmotiontointervenetoask

thedistrictcourttovacateaconsentordersealingdraftsettlement

documents).Butwehavenotheldthatapartyseekingtointerveneasof

rightmustindependentlyhavestanding.

Infact,wesuggestedsomewhattothecontraryinUnitedStatesPostal

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Servicev.Brennan,whereaunionofpostalserviceemployeessoughtto

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interveneinadisputebetweentheU.S.PostalServiceandtheownersofa

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smallmaildeliverybusinessinRochester.579F.2d188,190(2dCir.1978).

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Thedistrictcourtdeniedtheunionsmotionpartlybecausetheunionlacked

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standing.Althoughweultimatelyaffirmedthatdecisiononothergrounds,

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id.at191,weexplainedthatthemotionshouldnothavebeendeniedforlack

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ofstanding,because[t]hequestionofstandinginthefederalcourtsistobe

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consideredintheframeworkofArticleIII[,]whichrestrictsjudicialpowerto

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casesandcontroversies,id.at190(quotationmarksomitted).Therefore,
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wereasoned,there[is]noneedtoimposethestandingrequirementupon[a]

proposedintervenorwhere[t]heexistenceofacaseorcontroversy[has]

beenestablishedintheunderlyinglitigation.Id.Ourapproachaccordswith

thatofthemajority(butnotall)ofoursistercircuitsthathaveaddressedthis

issue.1See,e.g.,Kingv.GovernoroftheStateofNewJersey,767F.3d216,

24546(3dCir.2014);Perryv.Schwarzenegger,630F.3d898,90506(9thCir.

2011);CityofHerrimanv.Bell,590F.3d1176,11831184(10thCir.2010);

Dillardv.ChiltonCty.Commn,495F.3d1324,133637&n.10(11thCir.

2007);UnitedStatesv.Tennessee,260F.3d587,595(6thCir.2001);Ruizv.

SomecommentarymistakenlysuggeststhattheSecondCircuitisoneofthe
minorityofjurisdictionsthatrequireintervenorstodemonstratethatthey
independentlyhavestanding,relyingonourdecisioninInreHolocaust
VictimAssetsLitigation,225F.3d191(2dCir.2000),citedin6Moores
FederalPractice24.03.Inthatcase,wedismissedtheappealofan
interveningnonprofitorganizationbecauseitlackedstanding.Id.at19697.
Butwebasedthatdecisionontheprudential(ratherthanconstitutional)
groundthatitfailedtoshowthatithadorganizationalstanding.Id.at195
97;seealsoHuntv.Wash.StateAppleAdvert.Commn,432U.S.333,343
(1977).Althoughweacknowledgedthatsixofthenonprofitsmembers
ostensiblyhadstandingtosueintheirownright,weultimatelyaffirmedthe
DistrictCourtsdenialoftheirmotiontointervenebecausetheydidnot
otherwisesatisfytherequirementsofRule24.HolocaustVictimAssetsLitig.,
225F.3dat197202.HolocaustVictimAssetsLitigationthereforedoesnot
abrogateourpositioninBrennanthataproposedintervenorneednot
independentlyhavestanding.
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Estelle,161F.3d814,82930(5thCir.1998).Butsee,e.g.,CityofChicagov.

Fed.EmergencyMgmt.Agency,660F.3d980,98485(7thCir.2011)(treating

ArticleIIIstandingasanadditionalrequirementforintervenors);United

Statesv.Metro.St.LouisSewerDist.,569F.3d829,83334&n.2(8thCir.2009)

(same);UnitedStatesv.PhilipMorrisUSAInc.,566F.3d1095,114546(D.C.

Cir.2009)(same).

Althoughacircuitsplitonthisissuehaspersistedforsometime,the

SupremeCourthasexpresslydeclinedtoresolveit.SeeDiamondv.Charles,

476U.S.54,6869(1986).Instead,inDiamondv.Charles,itruledonlythat

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whentheoriginalpartyinthelitigationonwhosesideinterventionoccurred

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refusestoappealandanintervenorwishestoappealonitsown,the

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intervenormustshowthatitsatisfiesArticleIIIsstandingrequirementinthe

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absenceoftheoriginalparty.Id.at68.ButsinceDiamond,theSupreme

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Courthascertainlysuggestedalthoughwithoutdecidingthatan

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intervenorneednotindependentlyhavestandingwheretheoriginalparty

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hasstanding.InMcConnellv.FederalElectionCommission,forexample,the

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Courtdeterminedthatitneednotaddressthestandingoftheintervenor

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defendantsbecauseitwasclear...thatthe[nameddefendant,]...whose
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position...[was]identicaltothe[intervenordefendants,]hadstanding.

540U.S.93,233(2003),overruledonothergroundsbyCitizensUnitedv.Fed.

ElectionCommn,558U.S.310(2010).Soitisfairtosaythatwhilethe

SupremeCourthasnotexplicitlyendorsedourapproach,ithassubsilentio

permittedpartiestointerveneincasesthatsatisfythecaseorcontroversy

requirementwithoutdeterminingwhetherthosepartiesindependentlyhave

standing.TheDistrictCourtthereforeerredbydenyingLaroesmotionto

intervenebasedonitsfailuretoshowithadArticleIIIstanding.

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2. FailuretoStateaClaim
TheTownarguesinthealternativethatweshouldaffirmtheDistrict

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CourtsorderbecauseLaroesmotionalsofailstostateaclaimagainstthe

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TownwhetherornotLaroehasstanding.OralArg.Tr.27.Thatargument,

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however,isforeclosedbyTrbovichv.UnitedMineWorkersofAmerica,404

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U.S.528(1972).Inthatcase,aunionmembersoughttointerveneinasuitby

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theSecretaryofLaborseekingtosetasidetheresultsofaunionelection.Id.

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at52930.Although,undertherelevantstatute,onlytheSecretarywas

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authorizedtobringsuchaclaim,theunionmemberwaspermittedto

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participateontheSecretaryssideofthecase,aslongashedidnotassertany
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newgroundsforrelief.Id.at537,539.Thus,underTrbovich,apartyneed

nothaveastandaloneclaimofitsowntointerveneontheplaintiffssideofa

caseatleastaslongasitassertsthesamelegaltheoriesandseeksthesame

reliefastheexistingplaintiff.

Thatprincipleapplieshere.Althoughitisunclearfromtherecord

whetherLaroebelievestheTownisdirectlyliabletoShermanorLaroeforthe

allegedtaking,Laroehasacknowledgedthatitsdamagesareessentiallythe

sameasShermans.OralArg.Tr.16.AndtheTowndoesnotdisputethatthe

landthatLaroenowclaimsitownsispartofthesameparceloflandatissue

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inShermanstakingslitigation.EvenifLaroehasnoindependentclaimthat

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couldsurviveamotiontodismissunderRule12(b)(6)anissueweneednot

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decidethatdoesnotbaritfromcontinuingtoparticipateinthelitigationof

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Shermanstakingsclaim,solongasitseeksreliefthatdoesnotdiffer

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substantiallyfromthatsoughtbySherman.Becauseneitheraproposed

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intervenorslackofArticleIIIstandingnoritsfailuretostateanindependent

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claimnecessarilyrendersamotiontointervenefutile,theDistrictCourt

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shouldhaveinsteadfocuseditsanalysisontherequirementsofRule24,to

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whichwenowturn.
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1
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3. Rule24
Laroefiledamotionforbothinterventionasamatterofrightand

permissiveintervention.Convincingustoreversethedenialofamotionfor

permissiveinterventionisnotoriouslydifficult.SeeUnitedStatesv.Pitney

Bowes,Inc.,25F.3d66,73(2dCir.1994).Here,though,weneednotaddress

LaroesmotionforpermissiveinterventionbecauseLaroereliesonthesame

reasonssupporting[its]requesttointerveneas[of]right.AppellantsBr.

34.WethereforefocusononlyLaroesmotiontointerveneasofright.

Thedistrictcourtmustgrantanapplicantsmotiontointerveneunder

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Rule24(a)(2)if(1)themotionistimely;(2)theapplicantassertsaninterest

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relatingtothepropertyortransactionthatisthesubjectoftheaction;(3)the

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applicantissosituatedthatwithoutintervention,dispositionoftheaction

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may,asapracticalmatter,impairorimpedetheapplicantsabilitytoprotect

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itsinterest;and(4)theapplicantsinterestisnotadequatelyrepresentedby

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theotherparties.MasterCard,471F.3dat389;seealsoFed.R.Civ.P.

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24(a)(2).TheTownofChesterarguesthatLaroefailsthistestbecauseits

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applicationwasuntimely,itlacksaseparateinterestintheproceeding,and

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anyinterestithasinthelitigationisadequatelyrepresentedbyShermans
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estate.Becausethefactualrecordbeforeusisinsufficientlydevelopedatthis

stagetoallowusconfidentlytoresolvethesearguments,wevacatetheorder

andremandtotheDistrictCourttodetermineinthefirstinstanceifLaroe

satisfiestherequirementsofRule24.

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A. Timeliness
Indeterminingwhetheramotiontointerveneistimely,courtsconsider

(1)howlongtheapplicanthadnoticeoftheinterestbeforeitmadethe

motiontointervene;(2)prejudicetoexistingpartiesresultingfromanydelay;

(3)prejudicetotheapplicantifthemotionisdenied;and(4)anyunusual

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circumstancesmilitatingfororagainstafindingoftimeliness.PitneyBowes,

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25F.3dat70.

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TheTowncontendsthatLaroewaitedtoolongtofileitsmotionto

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intervene.LaroerespondsthatitfirstlearnedofthislitigationaftertheTown

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fileditsmotiontodismissinMay2012.AlthoughLaroewaiteduntilMay

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2014toinformtheDistrictCourtthatitwishedtointervene,itexplainsthatit

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couldnothavefileditsmotionearlierbecausetheDistrictCourthadbythen

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dismissedShermanssuitanditcouldhaveintervenedonlyafterwedecided

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Shermansappealin2014.
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Laroesexplanationfailstoanswerwhyitdidnottrytointervene

beforetheDistrictCourtfirstdismissedShermanstakingsclaim.Buteven

assumingthatLaroecouldhavemovedtointervenesooner,thelitigationis

stillatanearlystage.Afterweremandedthecase,theTownfiledamotionto

dismissseveralotherclaimsfromShermanscomplaintthatwedidnot

addressinourpreviousopinion.Amotionforreconsiderationisnow

pendingbeforetheDistrictCourt.Sodespiteeightyearshavingpassedsince

Shermanfirstfiledsuitinfederalcourt(andmorethansixteenyearssince

Shermanfirstappliedforsubdivisionapproval),thepartieshavenoteven

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begundiscovery.Althoughwerecognizethatthepointtowhichthesuithas

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progressedisonlyonefactorinthedeterminationoftimeliness,NAACP

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v.NewYork,413U.S.345,36566(1973),thiscasedoesnotrepresentan

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attemptbyanintervenortojoinalawsuitattheeleventhhour.

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NorarewepersuadedthatLaroesdelayinfilingthemotion

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prejudicedtheTown.TheTownpointstotwowaysinwhichitmayhave

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sufferedprejudice.First,itasserts,Laroesinterventionwouldcreate[t]he

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possibilityof...amuchmoredifficultsettlementposition.OralArg.Tr.29.

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Second,itclaimsthatbecauseLaroescontractwithShermanwasessentially
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onlyamortgageagreement,othercreditorsmayattempttojointhelitigation

ifLaroeispermittedtointervene.2Whilebothargumentsmayexplainhow

theTownisprejudicedbyLaroesparticipationinthelitigation,neither

showshowitwouldbeprejudicedbyLaroesdelayinfilingitsmotionto

interveneouronlyconcernontimelinessunderRule24.Indeed,atoral

argumenttheTownwiselyconcededthattimelinesswasnotnecessarily

wheretheprejudicewouldcomein[,]inthiscase.OralArg.Tr.30.

Laroe,ontheotherhand,claimsitwouldbeprejudicedbythedenialof

itsmotiontointervene.Itinvestedasignificantsumofmoneyintotheproject

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andlostthatinvestmentallegedlyduetotheTownsonerousregulatory

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process.ShermansestatedoesnotopposeLaroesintervention.ButLaroe

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informedtheDistrictCourtthatShermanswidow,theexecutrixofhisestate,

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wasunwillingtopursuethetakingsclaimunlessLaroegaveheran

ThelatterargumentassumesthatShermansothercreditorsaresimilarly
situatedtoLaroeinotherwords,thattheyagreedtopurchaseproperty
fromSherman,prepaidasubstantialsumofmoney,andsignedasecond
agreementwithShermanthatdeemedthepurchasepricepaidinfull.There
isnothingintherecordbeforeustosuggestthatanyothercreditorisinthe
samesituationasLaroe,letalonesomanycreditorsthatLaroesintervention
wouldopenthefloodgatesastheTownfears.OralArg.Tr.22.
2

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incentivetomovethecaseforward.LaroesLettertotheDistrictCourt,

May28,2014,ECFNo.16.AndonappealLaroerepresentsthatShermans

estateiswithoutfundsandthereforeunableorunwillingtopursuethe

claim.OralArg.Tr.10.Shermansdeath,theallegedrefusalofhis

impecuniousestatetopursuethetakingsclaim,andthesubsequentsaleof

theforeclosedpropertymightwellprejudiceLaroeandinanyevent

constituteunusualcircumstancesmilitatingfor...afindingoftimeliness.

MasterCard,471F.3dat390.TheDistrictCourtdidnotaddressthisissue,

andonremanditshouldhavetheopportunitytodoso.

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B. AnInterestRelatingtotheProperty
Rule24nextrequiresthemovanttoassert[]aninterestrelatingtothe

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propertyortransactionthatisthesubjectoftheaction.Id.at389.That

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interestmustbedirect,substantial,andlegallyprotectable.Wash.Elec.

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Coop.,Inc.v.Mass.Mun.WholesaleElec.Co.,922F.2d92,97(2dCir.1990).

15

Andwhentheunderlyingdisputeinvolvesatakingsclaim,themovantmust

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showthattheinterestexistedatthetimetheallegedtakingoccurred.

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ThepartiesdisputewhetherLaroeisanequitableownerofthe
propertyreferencedinthe2003AgreementunderNewYorklaw.Eachside
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marshalswhatappeartobenonfrivolousargumentsinitsfavor.3See

AppellantsBr.1113,2224(citing,e.g.,MatterofCityofNewYork,306N.Y.

278,282(1954);Beanv.Walker,464N.Y.S.2d895,897(4thDept1983)

([N]otwithstandingthewordsofthecontractandimplicationswhichmay

arisetherefrom,thelawofpropertydeclaresthat,upontheexecutionofa

contractforsaleofland,thevendeeacquiresequitabletitle.));AppelleesBr.

AlthoughtheTowncharacterizesthe2003Agreementasonlyamortgage
agreement,AppelleesBr.17,itappearsonitsfacetobeanagreementforthe
purchaseofproperty.Forexample,itreferstoShermanastheSellerand
LaroeasthePurchaser,anditstatesthatSelleragreestosellandconveyto
Purchasercertainlotsfromtheproposedsubdivision.Itistruethat
Shermanprovidedamortgageassecurityforthe$2.5millionLaroepaidhim,
butstructuringthetransactioninthatwaydoesnotnecessarilyconvertthe
purchaseagreementintoaloan.Attheendoftheday,Laroedidnotwantto
bepaidbackitwantedtheproperty.

In2013ShermanandLaroeagreedthatthemorethan$2.5million
LaroehadalreadypaidShermanwouldconstitutethepurchasepriceforthe
property,alongwithanymoneyLaroepaidtosettleShermansdebtsunder
theTDBankmortgages.TheTownassertsthatthisadditionalrequirement
demonstratesthatLaroedidnothaveavestedinterestintheproperty:it
neversettledtheTDBankmortgages,soitneverheldaninterestintheland.
Wedisagree.The2013AgreementvestedLaroewiththesolediscretionto
settletheTDBankmortgages.JointAppxat234.SolongasLaroe
transferredtherequirednumberoflotsbacktoShermanaftertheTown
approvedthesubdivision,the2013amendmentdeemedthepurchaseprice
paidinfull.Id.
3

18

2325(citingYaleAutoParts,Inc.v.Johnson,758F.2d54,58(2dCir.1985)

([T]ohaveapropertyinterestentitledtoFourteenthAmendment

proceduralprotection[,]aperson...musthavemorethanaunilateral

expectationofit.)(quotationmarksomitted)).Therecordcertainlysuggests

thatShermanintendedtosellatleastaportionoftheproposeddevelopment

toLaroe.ButtheTownrespondsthatevenifLaroewastheequitableowner,

itlackedavestedpropertyinterestatthetimeoftheallegedtaking.

AppelleesBr.2425.Indeed,onewayofthinkingabouttheTowns

misguidedargumentaboutstandingisthatitisessentiallyachallengetothe

10

interestrequirementofRule24(a)(2).4Buttryingtoidentifytheprecise

11

natureofLaroesinterestinthepropertyisdifficultatthisstageofthe

12

litigation,whenthefactualrecordhasnotbeenfullydeveloped.Forexample,

13

the2003Agreementprovidedforthesaleofcertainlotswithintheproposed

14

MareBrooksubdivision,butLaroenowclaimstobetheowneroftheentire

15

property.Norcanweconclude,basedontherecordbeforeus,thatLaroehad

Inparticular,bothpartiesframethisappealasraisingaquestionofstanding
premisedonNewYorklaw:whethertheequitableownerofrealproperty
hasstandingtoassertaregulatorytakingsclaimagainstthetowninwhich
thepropertyislocated.
4

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aninterestinthepropertywhentheallegedtakingoccurredbecause,asLaroe

acknowledgedatoralargument,theDistrictCourthasyettodeterminewhen

theTownsconductallegedlybecamesoonerousthatitrosetothelevelofa

taking.

NoneoftheseuncertaintiesmeanthattheRule24motionshouldhave

beendenied.Rule24(a)(2)requiresnotapropertyinterestbut,rather,an

interestrelatingtothepropertyortransactionwhichisthesubjectofthe

action.Brennanv.N.Y.C.Bd.ofEduc.,260F.3d123,130(2dCir.2001)

(emphasisadded).AninterestthatisotherwisesufficientunderRule

10

24(a)(2)doesnotbecomeinsufficientbecausethecourtdeemstheclaimtobe

11

legallyorfactuallyweak.Id.Here,Laroespositionappearssufficientlytied

12

toShermansthattheDistrictCourtshouldhaveconsideredwhetherit

13

satisfiedtherequirementsofRule24.Tobeclear,wedonotmeanto

14

definitivelystatewhether,underNewYorklaw,Laroehasavestedinterestin

15

thepropertythatwouldpermitittobringatakingsclaimagainsttheTownin

16

aseparateaction.ThatisnotwhatRule24requires.Insteaditasksonly

17

whethertheproposedintervenorhasaninterestintheproceedingthatis

18

direct,substantial,andlegallyprotectable.Wash.Elec.Coop.,922F.2dat
20

97.Aninterestfailstomeetthefirsttworequirements(whicharenot

genuinelydisputedbytheparties)ifitisremotefromthesubjectmatterof

theproceeding,or...contingentupontheoccurrenceofasequenceof

events.Id.InWashingtonElectricCooperative,Inc.v.Massachusetts

MunicipalWholesaleElectricCo.,forexample,weheldthatastateregulatory

agencysinterestinlitigationbetweentwoelectriccompanieswasnot

sufficientbecauseitwasbaseduponadoublecontingency.Id.The

regulatoryagencyhopedtocollectonbehalfofratepayersaportionofany

judgmenttheplaintiffelectriccompanyobtainedfromthedefendant.Id.at

10

95.Butinorderfortheagencytosucceed,theplaintiffwasfirstrequiredto

11

winajudgmentagainstthedefendant,andthentheagencywouldhavehad

12

toconvincetheVermontPublicServiceBoard,anonpartytothedispute,to

13

decidethattheratepayerswereentitledtoapercentageoftheplaintiffs

14

recovery.Id.at97.Suchaninterest,weexplained,cannotbedescribedas

15

directorsubstantial.Id.

16

Astothethirdrequirementthattheinterestbelegallyprotectable,

17

Laroeappearstohavepaidinfullfortheproperty,anditcouldhaveclosed

18

onthesalewereitnotfortheallegedregulatorytakingatissueinthe
21

underlyingdispute.WeretheDistrictCourttoconcludethattheTowndidin

factcommitaregulatorytaking,itseemstousthatitcouldpotentially

providereliefthatbenefitsLaroe.Thus,whetherornotLaroeactuallyholdsa

formoftitletotheproperty,ithasmadeatleastacolorableclaimatthisstage

inthelitigationthatithasaninterestrelatingtothepropertythatislegally

protectable.Id.Ofcourse,additionalfactsmayshedlightontheprecise

natureofthisinterest.WethereforefinditprudenttoremandfortheDistrict

CourttodetermineinthefirstinstancewhetherLaroesatisfiestheinterest

requirementofRule24,separateandapartfromthequestionofwhetherit

10

wouldhavestandinginitsownright.Insodoing,itwouldbeimportant,in

11

ourview,fortheDistrictCourttoexpressitsjudgmentonwhetherunder

12

NewYorklawLaroehasadirect,substantial,andlegallyprotectable

13

interestrelatingtotheproperty.Id.

14
15

C. RemainingRequirements
Rule24(a)(2)alsorequiresthemovanttoshowthatitissosituated

16

thatwithoutintervention,dispositionoftheactionmay,asapracticalmatter,

17

impairorimpede[its]abilitytoprotectitsinterest,andthatitsinterestis

18

notadequatelyrepresentedbytheotherparties.MasterCard,471F.3dat
22

389.Aswehaveobserved,Laroesabilitytoprotectitsinterestappearslikely

tobeimpairedbyajudgmentonShermanstakingsclaim,sinceLaroe

purportstobetheequitableownerofthatproperty.Butagain,the

underdevelopedfactualrecordonappealmakesitdifficultforusto

determinewhetherShermanwilladequatelyrepresentLaroesinteresta

questiontheDistrictCourtdidnotaddressatall.[T]heburdento

demonstrateinadequacyofrepresentationisgenerallyspeakingminimal,

Butler,Fitzgerald&Potterv.SequaCorp.,250F.3d171,179(2dCir.2001)

(quotingTrbovich,404U.S.at538n.10),andLaroehasrepresentedthat

10

Shermansestateiswithoutfundsandthusunwillingorunabletopursue

11

thetakingsclaim,OralArg.Tr.10.Still,thisassertionconflictswiththe

12

estatescontinuedefforttoopposetheTownssecondmotiontodismiss,

13

whichwasfiledafterweremandedShermanstakingsclaimbacktothe

14

DistrictCourt.LaroealsoadmittedthatShermansestatesharedaunityof

15

interestwithLaroewithrespecttotheTownsliabilityfortheallegedtaking,

16

thoughLaroearguedthattheymaydisagreeaboutlitigationstrategyandon

17

theissueofdamagesweretheytoprevail.OralArg.Tr.11.Weleaveittothe

18

DistrictCourttodeterminewhether,amongotherthings,endingthe
23

litigationonewayortheotherwouldimpairLaroesabilitytoprotectits

interests,andwhetherShermansestateadequatelyrepresentsthoseinterests.

CONCLUSION

Fortheforegoingreasons,wevacatetheDistrictCourtsorderofMarch

31,2015,insofarasitdeniedLaroesmotiontointervene,andweremandfor

furtherproceedingsconsistentwiththisopinion.

24