SEC v. Wolfson ( 2007 )

FILED
United States Court of Appeals
Tenth Circuit
UNITED STATES CO URT O F APPEALS November 2, 2007
Elisabeth A. Shumaker
FO R TH E TENTH CIRCUIT
Clerk of Court
SEC URITIES A N D EX CH A N GE
C OM M ISSIO N ,
Plaintiff-Appellee,
No. 06-4085
(D.C. No. 2:03-CV-914-DAK)
A LLEN Z. WO L FSO N , (D. Utah)
Appellant,
v.
R ICHA RD D . C LA Y TO N ,
Receiver-Appellee.
OR D ER AND JUDGM ENT *
Before TA CH A, Chief Judge, KELLY and O’BRIEN, Circuit Judges.
The Securities and Exchange Commission (SEC) commenced this civil
enforcement action in October 2003, charging numerous individual and corporate
*
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument. This order and judgment is
not binding precedent, except under the doctrines of law of the case, res judicata,
and collateral estoppel. It may be cited, however, for its persuasive value
consistent w ith Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
defendants with violating the federal securities laws by fraudulently raising funds
from investors located primarily in the United Kingdom. The SEC’s complaint
sought injunctive, statutory, and equitable relief against the defendants, including
disgorgement of their wrongful gains. On October 31, 2003, the SEC moved for
appointm ent of a receiver to marshal and preserve the defendants’ assets. On
January 12, 2004, the district court appointed appellee Richard D. Clayton
receiver for this purpose, giving him broad powers to preserve, take control of,
and liquidate the defendants’ property for the benefit of the defrauded investors.
The receiver proceeded to discharge his duties, while the SEC obtained consent
judgments from many of the defendants, including an individual defendant, David
W olfson.
A year and a half later, on June 10, 2005, appellant Allen Z. W olfson, who
was not a defendant or otherwise a party to the action, filed a M otion for
Appointment of Attorney with the district court. In this pleading, he identified
himself as the father of defendant David W olfson and explained that he was
currently jailed at the M etropolitan Detention Center in New York City.
Asserting that he had been “stripped of all my assets illegally and fraudulently by
[the receiver],” R., Vol. XIX, doc. 478, at 1, M r. W olfson requested that the
district court appoint counsel for him to assist him in regaining his assets. He did
not formally request to intervene in the action.
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The SEC opposed the motion, arguing that M r. W olfson was not entitled to
court-appointed counsel; that he was not entitled to intervene in the action; and
that properties in which he asserted ownership were subject to a power of attorney
and control by his son, David W olfson, and had been used in furtherance of the
illegal stock fraud scheme. A magistrate judge struck M r. W olfson’s motion by
minute entry on July 25, 2005, for the reasons stated by the SEC in its opposition
brief.
M r. W olfson thereafter filed a number of pro se pleadings with the district
court. Although none of these pleadings w as expressly entitled a motion to
intervene, two of them did discuss intervention under Fed. R. Civ. P. 24(a) in
some detail. On November 29, 2005, M r. W olfson filed his “Response to Richard
Clayton Receiver and the Securities Exchange Commission to Disregard Allen
W olfson Notice of Lien and Violation of His Constitutional Rights.” R., Vol.
XXI, doc. 545. In his motion, M r. W olfson stated that it was “brought pursuant
to Federal Rule of Civil [P]rocedure 24(A)(2) (Intervention of Right).” Id. at 2.
He then argued that he met the requirements for intervention under Rule 24(a).
On February 3, 2006, M r. W olfson filed a “M otion for District Court Judge To
Rule.” R., Vol. XXI, doc. 580. He again recited that he met all the requirements
for intervention under Rule 24(a), and set forth an argument concerning how each
of the requirements was met.
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On M arch 9, 2006, the district court entered an order striking
M r. W olfson’s outstanding motions and other pleadings. Id., Vol. XXII, doc. 592.
The district court stated that M r. W olfson’s motions “are all denied because
M r. W olfson is not a party to this action.” Id. at 1. It further found that “he has
never moved to intervene in this action, nor has he demonstrated that he should be
permitted to intervene.” Id. Finally, the court noted that “[a]t this point in the
litigation” it “would not permit his intervention in any event.” Id. M r. W olfson
filed a timely notice of appeal from this order.
1. Jurisdictional Issue
The receiver and the SEC contend that we lack jurisdiction over this
appeal, because the case is ongoing and there is no final order denying
intervention which could form the basis for an interlocutory appeal. “An order
denying intervention is final and subject to immediate review if it prevents the
applicant from becoming a party to an action.” Hutchinson v. Pfeil, 211 F.3d 515,
518 (10th Cir. 2000) (quotation omitted). In support of their contention, the
receiver and the SEC argue that M r. W olfson has never moved to intervene and
therefore is not entitled to an appeal from a denial of intervention. They further
argue that the district court did not enter an appealable order denying a motion to
intervene, because it concluded it had no such motion before it.
If M r. W olfson did in fact move to intervene, however, our jurisdiction
would not be defeated merely because the district court failed to recognize and
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rule on his motion. “[F]ailure to rule on a motion to intervene can be interpreted
as an implicit denial” of the motion. Toronto-Dominion Bank v. Central Nat’l
Bank & Trust Co., 753 F.2d 66, 68 (8th Cir. 1985). This is particularly true
where the district court’s delay in ruling or failure to rule may, as a practical
matter, impair the assertion of the intervenor’s interest in the subject matter of the
suit. See Americans United for Separation of Church & State v. City of Grand
Rapids, 922 F.2d 303, 306 (6th Cir. 1990). Here, M r. W olfson claimed that he
was entitled to intervene to prevent his property from being liquidated by the
receiver. If he in fact filed a colorable motion to intervene, the district court’s
failure to rule on it was the practical equivalent of an appealable denial.
W e must determine, then, whether the district court should have treated
M r. W olfson’s pleadings (nos. 545, 580) as Rule 24 motions to intervene. The
question is not whether these motions had merit or were procedurally adequate,
but rather whether they were intervention motions at all. Rule 24(c) provides that
A person desiring to intervene shall serve a motion to intervene upon
the parties as provided in Rule 5. The motion shall state the grounds
therefor and shall be accompanied by a pleading setting forth the
claim or defense for which intervention is sought. The same
procedure shall be followed when a statute of the United States gives
a right to intervene.
Documents 545 and 580 were served on the parties. Although neither was
formally titled “motion to intervene,” each did state the grounds on which
M r. W olfson sought to intervene in the action. Neither was “accompanied by a
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pleading setting forth the claim or defense for which intervention is sought” as
required by Rule 24(c). W hile this might have provided grounds for denial of the
motions as procedurally inadequate, it hardly disqualified them as m otions to
intervene. C.f., e.g., Providence Baptist Church v. Hillandale Comm., Ltd.,
425 F.3d 309, 313-14 (6th Cir. 2005) (collecting cases analyzing procedural
compliance with Rule 24(c) separate pleading requirement under “lenient” and
“strict” approaches). W e therefore conclude that the district court did have a
motion or motions to intervene before it, and, for purposes of appellate finality,
essentially denied the motions. A district court order “denying a motion to
intervene” therefore exists, and we have jurisdiction to consider this appeal.
2. M erits of Intervention M otion
The pleadings filed by M r. W olfson appear to be procedurally deficient
under Rule 24(c), and the district court indicated “[a]t this point in the litigation,
the court would not permit [M r. W olfson’s] intervention in any event.” R., Vol.
XXII, doc. 592, at 1. W e have therefore carefully considered whether to affirm
the denial of intervention based on the procedural inadequacy or untimeliness of
M r. W olfson’s motions.
Issues involving the procedural adequacy of a Rule 24 motion are reviewed
for an abuse of discretion, as an issue involving the “supervision of litigation.”
Providence Baptist Church, 425 F.3d at 313. This includes determination of
whether such a motion should be denied as untimely. See Coalition of
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Arizona/New M exico Counties v. Dep’t of the Interior, 100 F.3d 837, 840
(10th Cir. 1996). Since the district court did not exercise its discretion, it left us
no reviewable decision on the procedural adequacy of the motion. The district
court’s dictum concerning timeliness of the motion also falls short of an express
ruling on a motion to intervene. It supplies no reviewable reasoning for denying
the motion as untimely. W e therefore decline to affirm on the grounds that the
motion was either untimely or procedurally inadequate.
W e also decline to follow the appellees’ suggestion that we affirm the
denial of M r. W olfson’s motions on the merits, reaching the Rule 24 factors for
the first time on appeal. W hile there is some authority that intervention as of
right is to be reviewed de novo, see, e.g., City of Stilwell v. Ozarks Rural Elec.
Coop. Corp., 79 F.3d 1038, 1042 (10th Cir. 1996), the issues involved in
determining whether M r. W olfson actually has an interest requiring protection
and whether intervention is required to protect that interest require fact-finding
that would be inappropriate for resolution by an appellate court, particularly given
the voluminous record.
In sum, M r. W olfson presented the district court with a colorable attempt to
intervene in this action. W hile not explicitly titled “motion to intervene,” his
attempts to intervene addressed the relevant factors under Rule 24. Under the
Rules, “[n]o technical forms of pleading or motions are required.” Fed. R. Civ. P.
8(e)(1). W hile it may be that his motions should have been denied for procedural
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or substantive deficiencies, the district court did not exercise its discretion to rule
on them, treating them instead as something other than motions to intervene.
W e must therefore vacate its decision and remand for appropriate consideration
and any necessary fact-finding concerning the motions.
The judgment of the district court is therefore VACATED to the extent it
denied M r. W olfson’s attempts to intervene in this action without treating them as
motions to intervene, and the case is REM ANDED for further proceedings in
accordance with this order and judgment.
Entered for the Court
Deanell R. Tacha
Chief Circuit Judge
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