Skinner v. Weslaco ( 2000 )

UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 99-40541
Summary Calendar
LARRY SKINNER,
Plaintiff-Appellee,
VERSUS
WESLACO INDEPENDENT SCHOOL DISTRICT; ET AL,
Defendants,
and
ROYSTON, RAYZOR, VICKERY & WILLIAMS, Limited Liability
Partnership
Movant-Appellant,
Appeal from the United States District Court
For the Southern District of Texas
(M-97-CV-240)
June 7, 2000
Before DAVIS, EMILIO M. GARZA, and DENNIS Circuit Judges.
PER CURIAM:*
*
Pursuant to 5TH CIR. R. 47.5, the Court has determined that this
opinion should not be published and is not precedent except under
This is an appeal from the district court’s denial of
Appellant Royston, Rayzor, Vickery & Williams, LLP’s (“Royston”)
motion to intervene. The district court denied Royston’s motion,
finding that the motion was untimely, that Royston had no interest
to protect, and that Royston’s ability to protect its interest was
not impaired. For the reasons that follow, we reverse.
Appellee Larry Skinner filed an employment discrimination suit
against the Weslaco Independent School District (“Weslaco”) in
1997. Initially, Skinner selected Larry Watts to represent him in
this matter. Subsequently, however, Watts withdrew and Skinner
retained Royston as substitute counsel. On March 20, 1998, Skinner
and Royston entered into a formal contingency fee agreement
promising Royston the greater of 40% of the total recovery from the
proceeds of any settlement or judgment, or the amount of attorney’s
fees awarded by the court. This relationship also proved fleeting,
and on April 29, 1998, Skinner terminated Royston.
After firing Royston, Skinner retained Glenn Romero. Skinner
soon fired Romero and rehired Watts, his original attorney. With
the assistance of Watts, Skinner and Weslaco reached a settlement
agreement for $75,150. Skinner then terminated Watts, temporarily
derailing the settlement. Some time thereafter, Skinner, acting
without representation, obtained an identical settlement from
Weslaco.
the limited circumstances set forth in 5TH CIR. R. 47.5.4.
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On February 1, 1999, Weslaco filed an advisory with the
district court indicating that the parties had reached a settlement
agreement and that Skinner was not represented by counsel. One
week later, Royston filed a motion to intervene as of right in
order to recover attorney’s fees for legal work performed on
Skinner’s behalf.
In order to intervene as a matter of right under Fed R. Civ.
P. 24(a)(2), a party must meet “each of the four requirements of
the rule.” Keith v. St. George Packing Co., Inc., 806 F.2d 525,
526 (5th Cir. 1986). First, the applicant must timely file the
application for intervention. Second, the applicant must have an
interest relating to the property or transaction which is the
subject of the action. Third, the applicant must be so situated
that the disposition of the action may, as a practical matter,
impair or impede his ability to protect the interest. Fourth, the
applicant’s interest must be inadequately represented by the
existing parties to the suit. Id.In this case, Royston clearly possesses an interest in the
subject of the underlying action. As we noted in Valley Ranch
Development Co., Ltd v. FDIC, 960 F.2d 550, 556 (5th Cir. 1992), “a
discharged lawyer does have an interest [in the underlying
litigation] for the purposes of intervention.” See also Keith, 806
F.2d at 526; Gaines v. Dixie Carriers, 434 F.2d 52, 54 (5th Cir.
1970). Further, this Court has held that a firm with a contingency
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agreement is “so situated that the final disposition of the action
may as a practical matter impair or impede its ability to protect
that interest.” Gaines v. Dixie Carriers, Inc., 434 F.2d 52, 54
(5th Cir. 1970). Finally, no one disputes that the parties to the
underlying dispute cannot and will not adequately protect Royston’s
interest. Only the question of timeliness remains.
This Court has explained that although “[t]imeliness must be
determined from all the circumstances in the case,” Stallsworth v.
Monsanto Co., 558 F.2d 257, 263 (5th Cir. 1977), four factors should
guide courts in their determination:
(1) the length of time during which the would-be
intervenor actually knew or reasonably should have
known of his interest in the case before he petitioned
for leave to intervene;
(2) the extent of the prejudice that the existing
parties may suffer as a result of the would-be
intervenor’s failure to apply for intervention as soon
as he actually knew or reasonably should have known of
his interest in the case;
(3) the extent of the prejudice that the would-be
intervenor may suffer if his petition for leave to
intervene is denied; and
(4) the existence of unusual circumstances militating
either for or against a determination that the
application is timely.
Association of Professional Flight Attendants v. Gibbs, 804 F.2d
318, 320-21 (5th Cir. 1986), citing Stallworth, 558 F.2d at 263.
Of these four “Stallworth” factors, courts should treat prejudice
to existing parties as the most important consideration. See
McDonald v. E.J. Lavino Co., 430 F.2d 1065, 1073 (5th Cir. 1970).
In denying Royston’s motion, the district court did not
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consider any of the four elements other than the length of time
between the date Royston became aware of its need to intervene and
the date of its actual intervention. The court stated simply that
“it’s been over a year here before you all file your intervention
here” and “I’ve been ready to enter judgment.”
Because of the brevity of the district court’s findings we
must apply a de novo standard of review. Although “normally we
review a finding of timeliness under the abuse of discretion
standard,” we must review de novo “when the district court fails to
articulate reasons for its ultimate determination as to timeliness”
or fails to analyze the Stallsworth elements. Edwards v. City of
Houston, 78 F.3d 983, 1000 (5th Cir.1996). See also Ceres Gulf v.
Cooper, 957 F.2d 1199, 1202 n.8 (5th Cir. 1992)(“Normally we review
the district court’s findings on timeliness under the abuse of
discretion standard. Here, however, we can only review de novo its
ultimate determination, because . . . it did not provide findings
on the intervention factors.”).
Applying a de novo standard of review, we conclude that the
district court erred in concluding that Royston failed to intervene
timely. This Court has repeatedly stressed that hardship to
existing parties is the most important consideration, see, e.g.,
Jones v. Caddo Parish School Bd., 735 F.2d 923, 946 (5th Cir. 1984),
and that “this may well be the only significant consideration when
the proposed intervenor seeks intervention of right.” See
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McDonald, 430 F.2d at 1073. Skinner has simply failed to
demonstrate any hardship other than the fact that Rayzor’s
intervention may diminish his stake in the settlement. In
McDonald, this Court faced a motion to intervene under similar
circumstances and concluded that where a party’s proposed
intervention “was for the limited purpose of staking out a claim to
a portion of the proceeds rather than an attempt to litigate any
prejudgment issue, we are utterly unable to perceive any way in
which any party could have been prejudiced by the timing of the
motion.” Id. at 1073. As such, Skinner has failed to show that
Royston’s late intervention would prejudice him in any way.
Royston, on the other hand, will likely suffer prejudice if
the district court does not permit him to intervene. If Royston
cannot intervene in the instant suit, he will be forced to
institute a separate action. This Court has previously found
prejudice under almost identical circumstances. See Gaines, 434
F.2d at 54; see also United States v. Eastern Transmission Corp.,
923 F.2d 410 (5th Cir. 1991)(noting that prejudice existed in Gaines
because “discharged firm would have had to initiate a subsequent
action to collect the fees allegedly generated in the existing
litigation”). Accordingly, the district court erred in holding that
Royston failed to intervene in a timely manner.
For the above reasons, the district court’s denial of
Appellant’s motion to intervene is REVERSED. The case is REMANDED
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to the district court for further proceedings consistent with this
opinion.
REVERSED and REMANDED.
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