Adam Joseph Res. (M) Sdn. Bhd. v. Cna Metals Ltd. ( 2019 )


Menu:
  •      Case: 17-20685   Document: 00514888296      Page: 1   Date Filed: 03/26/2019
    IN THE UNITED STATES COURT OF APPEALS
    FOR THE FIFTH CIRCUIT
    No. 17-20685                    United States Court of Appeals
    Fifth Circuit
    FILED
    March 26, 2019
    ADAM JOSEPH RESOURCES (M) SDN. BHD.,
    Lyle W. Cayce
    Plaintiff - Appellant                                       Clerk
    BROWN SIMS,
    Movant - Appellant
    v.
    CNA METALS LIMITED,
    Defendant - Appellee
    Appeal from the United States District Court
    for the Southern District of Texas
    Before JOLLY, DENNIS, and HIGGINSON, Circuit Judges.
    E. GRADY JOLLY, Circuit Judge:
    Brown Sims, a Houston law firm, was allegedly cheated out of its
    attorney’s fee by its client, Adam Joseph Resources (AJR) acting through
    collusion with the opposing party, CNA Metals and its attorneys. Brown Sims
    had successfully represented AJR—on a contingency fee basis—throughout a
    two year arbitration proceeding under the Convention on the Recognition and
    Enforcement of Foreign Arbitral Awards (“the Convention”), which Congress
    Case: 17-20685      Document: 00514888296        Page: 2    Date Filed: 03/26/2019
    No. 17-20685
    has implemented at 
    9 U.S.C. § 201
    , et seq. 1 After Brown Sims obtained a
    favorable result for AJR, its wayward client got in bed with CNA and its
    attorneys to consummate a settlement just between themselves.                     These
    machinations made each of the adversaries better off by cutting out Brown
    Sims’s contingent fee interest. Of course, neither Brown Sims nor the district
    court was aware of the agreement. Upon being advised of the settlement
    executed between the parties, the district court, in a well-considered opinion,
    dismissed the case as moot, further finding it was without subject matter
    jurisdiction over Brown Sims’s attempts to intervene and protect its interest.
    Because we hold that it now appears that the district court possessed
    jurisdiction under the Convention, we reverse the dismissal of the case and
    remand for the district court to grant Brown Sims’s renewed motion to
    intervene and consider Brown Sims’s claims on the merits.
    I.
    AJR, a Malaysian business, brought a complaint in the Southern District
    of Texas against CNA Metals, a Texas corporation, invoking federal diversity
    jurisdiction and alleging several breach of contract claims governed by Texas
    law. CNA answered that AJR’s claims were within the scope of an arbitration
    agreement and moved the district court to compel arbitration pursuant to the
    Convention. The district court granted the motion to compel, referred the
    matter to arbitration, and stayed the proceedings pending the outcome of
    arbitration.
    1  The Senate ratified the Convention in 1970 to “encourage the recognition and
    enforcement of commercial arbitration agreements in international contracts and unify the
    standards by which agreements to arbitrate are observed and arbitral awards are enforced
    in the signatory countries.” Scherk v. Alberto-Culver Co., 
    417 U.S. 506
    , 520 n.15 (1974).
    Congress implemented the Convention as Chapter 2 of the Federal Arbitration Act. See 
    9 U.S.C. § 201
    , et seq.
    2
    Case: 17-20685       Document: 00514888296         Page: 3    Date Filed: 03/26/2019
    No. 17-20685
    The arbitration went on for two years and was conducted by the
    American Arbitration Association, which applied Texas law to the dispute.
    AJR prevailed in the arbitration and was awarded $503,943.56. The arbitrator
    certified that the final award was made pursuant to the Convention.
    Throughout this two-year arbitration, AJR was represented by James
    Koecher of the Houston law firm, Brown Sims, P.C. Brown Sims and AJR
    entered into a retention agreement, governed by Texas law, in which AJR
    assigned Brown Sims a 37% interest in any recovery against CNA. CNA was
    represented by Ronald Cohen of the Houston firm Cohen & Small, P.C.
    On the day the arbitral award was issued, Cohen died unexpectedly, a
    death unbeknownst to Brown Sims or the district court. After Cohen’s death,
    CNA hired Mahendru, P.C., a Houston firm that had handled other
    arbitrations between CNA and AJR, to take over for Cohen & Small.
    Mahendru contacted the arbitration case manager to request reconsideration
    of the award. The case manager refused because the arbitration had concluded
    and the award was final.
    At this point, Brown Sims moved the district court to lift the stay and
    enter a final judgment confirming the arbitral award. Meanwhile, without the
    involvement, or even knowledge, of Brown Sims, AJR and CNA began
    negotiating a settlement that would benefit both parties by cutting out Brown
    Sims and its fee. AJR and CNA agreed to settle the outstanding $503,943.56
    arbitral award for $395,000. In the absence of Brown Sims’s interest, AJR
    obtained a larger recovery ($395,000 as opposed to $317,500) and CNA reduced
    its liability by approximately $109,000. 2 CNA’s counsel, Mahendru worked
    2  In the words of the district court: “Thus, compared to the Arbitral Award confirmed
    by this Court’s Final Judgment of December 13th, the settlement reduced Defendant’s
    liability to Plaintiff by approximately $109,000 and by cheating its attorneys out of their
    attorneys’ fees, Plaintiff netted an additional $77,500 for itself.”
    3
    Case: 17-20685    Document: 00514888296     Page: 4   Date Filed: 03/26/2019
    No. 17-20685
    with AJR’s Malaysian counsel to negotiate, draft, and execute the settlement.
    On December 8, 2016, CNA fully performed its obligation under the settlement
    agreement by wiring $395,000 to AJR’s Malaysian counsel’s bank account.
    Neither Mahendru nor AJR informed Brown Sims or the district court of this
    settlement.
    Still unaware of Cohen’s death or the December 8 settlement, the district
    court continued with the confirmation proceedings. Both Brown Sims and
    Mahendru knew of Cohen’s death but failed to inform the district court. On
    December 13, in the absence of an answer or response in opposition to AJR’s
    motion to confirm the arbitral award, the district court entered final judgment
    for AJR in the amount of $503,943.56. Brown Sims emailed the final judgment
    to CNA and demanded its client be paid.
    CNA then moved the district court under Rule 60(b)(5) to set aside the
    final judgment because the settlement between CNA and AJR released the
    previously entered judgment. Brown Sims, “represent[ing] its own interest in
    the final arbitral award and Final Judgment, an interest that had always been
    litigated in the name of AJR” filed a Rule 60(b)(6) motion for relief from
    judgment. In this motion, Brown Sims asked the district court to reform the
    final judgment confirming the arbitral award to reflect that CNA was liable to
    AJR for $315,776.54 and to Brown Sims directly for its assigned interest in the
    award, $188,167.02 (reflecting costs). Brown Sims also moved to intervene
    under Rule 24. Shortly after, Brown Sims withdrew its Rule 24 motion out of
    fear of destroying the court’s diversity jurisdiction, but nevertheless continued
    to pursue its interest in the final judgment in the name of AJR. Thus, as
    relevant to this appeal, pending before the district court was CNA’s Rule
    4
    Case: 17-20685       Document: 00514888296          Page: 5     Date Filed: 03/26/2019
    No. 17-20685
    60(b)(5) motion to set aside the final judgment and Brown Sims’s Rule 60(b)(6)
    motion for relief from judgment. 3
    The district court first denied AJR/Brown Sims’s Rule 60(b)(6) motion for
    lack of subject matter jurisdiction, then granted CNA’s Rule 60(b)(5) motion to
    set aside the final judgment as satisfied by the settlement agreement,
    proceeded to vacate its earlier final judgment confirming the arbitral award,
    and dismissed the entire action without prejudice as moot. The district court
    construed AJR/Brown Sims’s Rule 60(b)(6) motion as an attempt to intervene
    and assert a new claim in Brown Sims’s name against CNA because Brown
    Sims was “inherently conflicted with its client.” It held that it could not
    exercise supplemental jurisdiction over Brown Sims’s claim because original
    jurisdiction was founded solely upon diversity and allowing Brown Sims to
    intervene would shatter diversity. The court further held that this case did
    not present a “typical attorney-client fee dispute” because Brown Sims sought
    to “effectively adjudge Brown Sims’s claim not only against its client but also
    against the non-diverse Defendant”; and the court did not have supplemental
    jurisdiction to do so because jurisdiction over Brown Sims’s claim was founded
    solely upon diversity, which was lacking between Brown Sims and CNA.
    Finally, the district court found that its lack of subject matter
    jurisdiction over Brown Sims’s claim coupled with the settlement agreement
    between AJR and CNA meant there was no active case or controversy,
    rendering the case moot. Although it acknowledged that Brown Sims may
    have a viable claim to recover its interest because it was “cheat[ed]” out of its
    attorney’s fees, the district court held that it was compelled to dismiss Brown
    3 As noted above, AJR’s complaint initially only raised diversity as a basis for federal
    jurisdiction; the Convention was only asserted later in CNA’s response to the complaint. As
    we shall see, the Convention itself is sufficient to confer federal question jurisdiction over
    Brown Sims’s claims in intervention, despite the case’s initial basis in diversity.
    5
    Case: 17-20685      Document: 00514888296      Page: 6    Date Filed: 03/26/2019
    No. 17-20685
    Sims’s claims for lack of jurisdiction and vacate its final judgment confirming
    the arbitral award.
    After the court vacated its final judgment, Brown Sims filed a renewed
    Rule 24 motion to intervene and a Rule 59(e) motion to alter or amend the
    judgment both asserting that, aside from diversity jurisdiction, the district
    court had subject matter jurisdiction under the Convention. In its complaint
    in intervention against CNA, Brown Sims requested the district court hold
    CNA liable for its contingency fee interest in the award and the costs arising
    from CNA and its attorneys’ actions.           Although the district court again
    acknowledged that it “cannot help but feel contempt” for AJR who “betrayed
    its attorneys by settling the case behind their back to cheat them out of legal
    fees that they had earned,” it denied the motions for lack of subject matter
    jurisdiction over Brown Sims’s claim against CNA. Brown Sims now appeals:
    (1) the district court’s denial (for lack of jurisdiction) of its Rule 60(b)(6) motion
    for relief from the final judgment; (2) the district court’s grant of CNA’s Rule
    60(b)(5) motion to set aside the final judgment; and (3) the district court’s
    denial of Brown Sims’s renewed Rule 24 motion to intervene.
    II.
    On appeal, Brown Sims argues that the district court erred in finding
    that it was without subject matter jurisdiction to consider its claim against
    CNA.     Brown Sims points to three potential sources of subject matter
    jurisdiction: (1) jurisdiction arising directly under the Convention, (2)
    jurisdiction arising from the supplemental jurisdiction statute, and (3)
    jurisdiction ancillary to the court’s diversity jurisdiction. Brown Sims further
    argues that the district court erred in denying its Rule 24 motion to intervene
    of right. Finally, Brown Sims argues that not only should this court hold that
    the case is not moot, but that this court should also render judgment for it
    6
    Case: 17-20685       Document: 00514888296         Page: 7    Date Filed: 03/26/2019
    No. 17-20685
    against CNA in the amount of $188,167.02, which represents its interest in the
    final arbitral award plus the costs of this appeal.
    CNA responds that the district court was right in all respects. First,
    there is no federal subject matter jurisdiction because the parties are not
    diverse and the claim does not arise under federal law. Second, the court
    correctly denied Brown Sims’s motion to intervene because it did not possess
    subject matter jurisdiction over the claim that Brown Sims attempted to assert
    in intervention. Finally, the district court correctly concluded that the case
    was moot because the parties properly before the court no longer had a case or
    controversy, or, in the alternative, this court should not directly render
    judgment for Brown Sims but instead remand to the district court to determine
    whether the settlement was a proper satisfaction of the judgment thereby
    mooting the case and entitling CNA to Rule 60(b)(5) relief. We first turn to
    consider the court’s holding that it did not possess subject matter jurisdiction
    to consider Brown Sims’s claim against CNA. 4
    III.
    A.
    “We review a ruling on subject-matter jurisdiction de novo.” Venable v.
    Louisiana Workers’ Comp. Corp., 
    740 F.3d 937
    , 941 (5th Cir. 2013). 5 Neither
    party disputes that the arbitration agreement itself falls under the
    Convention.      The question is whether the ancillary claim of Brown Sims
    4 We address jurisdiction before considering Brown Sims’s right to intervene because
    jurisdiction is an absolute prerequisite to Brown Sims’s success, whereas intervention is one
    potential route for Brown Sims to resolve its claim.
    5 We reject CNA’s argument that Brown Sims has waived arguing the Convention as
    a ground for jurisdiction. Brown Sims raised the issue below in its Rule 59(e) motion which
    the district court considered on the merits. Cf. Freudensprung v. Offshore Tech. Servs., 
    379 F.3d 327
    , 338 n.5 (5th Cir. 2004) (considering jurisdictional argument premised on the
    Convention that was raised for the first time in a 28(j) letter prior to oral argument).
    7
    Case: 17-20685         Document: 00514888296         Page: 8    Date Filed: 03/26/2019
    No. 17-20685
    against CNA also falls under the jurisdiction of the Convention or if it must
    depend upon some other source of jurisdiction. 6
    We recently addressed the scope of federal jurisdiction under the
    Convention in Stemcor USA Inc. v. Cia Siderurgica do Para Cosipar. There
    we held that “[f]or a federal court to have jurisdiction under the Convention
    two requirements must be met: (1) there must be an arbitration agreement or
    award that falls under the Convention, and (2) the dispute must relate to that
    arbitration agreement.” Stemcor USA Inc. v. Cia Siderurgica do Para Cosipar,
    
    895 F.3d 375
    , 378 (5th Cir. 2018) (in abeyance pending Louisiana Supreme
    Court resolution of unrelated state law question). 7 The court looks to § 205—
    the provision relating to removal of the arbitration from state to federal court—
    for guidance in interpreting original jurisdiction under § 203. See id. at 379.
    Section 205 provides for removal to federal court when “[t]he subject matter of
    an action or proceeding . . . relates to an arbitration agreement or award falling
    under the Convention.” 
    9 U.S.C. § 205
    . Interpreting § 205, we have earlier
    noted that “the phrase ‘relates to’ generally conveys a sense of breadth” and is
    6  The district court is correct that this case was brought initially under diversity
    jurisdiction. Only after CNA raised the Convention, in its responsive pleading, did the new
    ground of federal jurisdiction appear. The district court was correct to observe that diversity
    jurisdiction was not applicable to Brown Sims because its entry into the case eliminated
    diversity of citizenship. In any event, so far as Brown Sims’s claim is concerned, federal
    jurisdiction rests on the Convention, not diversity. As will be shown below, that this
    subsequent ground for federal jurisdiction did not appear in the complaint is of no
    consequence given that the Convention abrogates the well-pleaded complaint rule. See 
    9 U.S.C. § 205
     (“The procedure for removal of causes otherwise provided by law shall apply,
    except that the ground for removal provided in this section need not appear on the face of the
    complaint but may be shown in the petition for removal.”).
    7   
    9 U.S.C. § 203
     provides that:
    An action or proceeding falling under the Convention shall be deemed
    to arise under the laws and treaties of the United States. The district
    courts of the United States (including the courts enumerated in section
    460 of title 28) shall have original jurisdiction over such an action or
    proceeding, regardless of the amount in controversy.
    8
    Case: 17-20685      Document: 00514888296         Page: 9    Date Filed: 03/26/2019
    No. 17-20685
    a “low bar” to federal jurisdiction. Beiser v. Weyler, 
    284 F.3d 665
    , 669 (5th Cir.
    2002). In Beiser, the court interpreted § 205’s “relates to” to mean “having a
    possible effect on the outcome of an issue or decision” and held that “whenever
    an arbitration agreement falling under the Convention could conceivably affect
    the outcome of the plaintiff’s case, the agreement ‘relates to’ the plaintiff’s
    suit.” Id. Further, if the “subject matter of the litigation has some connection,
    has some relation, has some reference to the arbitration clauses,” it “relates to”
    the arbitration for purposes of the Convention. Acosta v. Master Maint. &
    Const. Inc., 
    452 F.3d 373
    , 378–79 (5th Cir. 2006).
    In Stemcor, we held that “an attachment to facilitate” an arbitration and
    “increase [the plaintiff’s] chance of recovering on any award” “relates to” the
    covered arbitration. Stemcor, 895 F.3d at 380–81. We rejected the notion that
    courts should “read jurisdiction under the Convention restrictively,” and
    further endorsed the federal trend toward “recogniz[ing] jurisdiction under the
    Convention to issue state-law preliminary remedies in aid of arbitration.” Id.
    at 380, 380 n.2.
    Without the benefit of Stemcor’s guidance, 8 the district court analyzed
    Brown Sims’s claim as it would any other similar claims asserting federal
    question jurisdiction—under the well-pleaded complaint rule, looking only to
    the ground of jurisdiction asserted in the initial complaint—and determined
    that jurisdiction was based solely upon diversity. For this reason, it did not
    consider jurisdiction directly under the Convention. Stemcor, however, now
    makes clear that there is another path to jurisdiction. Stemcor carries forward
    the point that the Supreme Court has previously noted—that the Convention
    8 The district court’s final word in this case was its denial of Brown Sims’s renewed
    motion to intervene on October 23, 2017, long before Stemcor’s clarification of the scope of
    jurisdiction under the Convention was published in the summer of 2018.
    9
    Case: 17-20685       Document: 00514888296         Page: 10     Date Filed: 03/26/2019
    No. 17-20685
    confers broader federal jurisdiction than even Chapter 1 of the Federal
    Arbitration Act. See Vaden v. Discover Bank, 
    556 U.S. 49
    , 59 n.9 (2009) (“FAA
    § 205 goes further and overrides the well-pleaded complaint rule pro tanto.”);
    Acosta, 
    452 F.3d at 377
     (“Congress granted the federal courts jurisdiction over
    Convention cases and added one of the broadest removal provisions, § 205, in
    the statute books.”).
    An attorney’s attempt to assert a claim against a defendant to obtain his
    interest in a final arbitral award or to reform a final judgment confirming a
    final arbitral award to reflect his contingent fee interest in the award certainly
    “relates to” the arbitration agreement and award. Cf. Stemcor, 895 F.3d at 381
    (noting that because a party sought a remedy “to bring about a covered
    arbitration,” the suit related to the arbitration). Here, Brown Sims’s claim
    seeks to bring about the allocation of a covered arbitral award. Not only does
    Brown Sims’s claim have the potential to affect the arbitral award, it goes to
    the very heart of the arbitration proceeding—whether the award is confirmed
    or set aside as settled, how the award is dispersed, and the relative liabilities
    of the parties.
    There may well be ancillary issues arising in other cases that do not
    “relate to” the arbitral proceeding. Brown Sims’s claim is not such a case. Its
    claimed interest in the arbitral award for services rendered in obtaining the
    award plainly “relates to” the award. 9 Cf. Acosta, 
    452 F.3d at 377
     (“It is
    9 The district court’s reliance on Venable misses the mark. That case, analyzed under
    the more demanding standard for traditional federal question claims, involved two separate
    claims—one for breach of contract and one for tortious conduct at a settlement conference.
    See Venable v. Louisiana Workers’ Comp. Corp., 
    740 F.3d 937
    , 941 (5th Cir. 2013). Brown
    Sims’s claim is not for damages resulting from the collusive settlement itself but to reform
    the judgment to reflect its interest in the arbitral award. Unlike Venable, the focus of this
    litigation, the arbitral award, has never varied. All that has changed is the distribution of
    the award itself. Brown Sims does not seek one penny from CNA over and above its interest
    in the award itself and the costs of this appeal.
    10
    Case: 17-20685    Document: 00514888296      Page: 11    Date Filed: 03/26/2019
    No. 17-20685
    unarguable that the subject matter of the litigation has some connection, has
    some relation, has some reference to the arbitration clauses here.”). To the
    point, Brown Sims’s claim may or may not fail on the merits, but Stemcor
    demonstrates that the Convention confers jurisdiction for addressing and
    resolving Brown Sims’s claim.
    B.
    With jurisdiction now decided, we move on to fully consider Brown Sims’s
    motion to intervene of right. We review the denial of a motion to intervene of
    right de novo. “Although the movant bears the burden of establishing its right
    to intervene, Rule 24 is to be liberally construed.” Brumfield v. Dodd, 
    749 F.3d 339
    , 341 (5th Cir. 2014) (citing 6 James W. Moore et al., Moore’s Federal
    Practice § 24.03[1][a] (3d ed. 2008)). This decision is a practical undertaking,
    considering the particular facts and circumstances of the case. See id.
    As an initial matter, we must consider whether a live case and
    controversy existed when Brown Sims attempted to intervene. See Kendrick
    v. Kendrick, 
    16 F.2d 744
    , 745 (5th Cir. 1926) (“An existing suit within the
    court’s jurisdiction is a prerequisite of an intervention, which is an ancillary
    proceeding in an already instituted suit or action by which a third person is
    permitted to make himself a party, either joining the plaintiff in claiming what
    is sought by the complaint, or uniting with the defendant in resisting the
    claims of the plaintiff, or demanding something adversely to both of them.”).
    Although generally disfavored, courts often consider post-settlement motions
    to intervene of right. See, e.g., McDonald v. E.J. Lavino Co., 
    430 F.2d 1065
    ,
    1072 (5th Cir. 1970) (“[A]n attempt to intervene after final judgment
    [approving a settlement] is ordinarily looked upon with a jaundiced eye. The
    rationale which seems to underlie this general principle, however, is the
    assumption that allowing intervention after judgment will either (1) prejudice
    the rights of the existing parties to the litigation or (2) substantially interfere
    11
    Case: 17-20685      Document: 00514888296         Page: 12    Date Filed: 03/26/2019
    No. 17-20685
    with the orderly processes of the court. In the present case neither of these
    results would have ensued if the intervention had been allowed.”); Skinner v.
    Weslaco Indep. Sch. Dist., No. 99-40541, 
    2000 WL 959531
     (5th Cir. June 7,
    2000) (discharged attorney could intervene to assert contingent fee interest
    after the named parties settled). The proper inquiry into post-settlement
    intervention is one of timeliness under Rule 24 rather than mootness when a
    real party in interest is attempting to insert itself into the still pending case
    post-settlement and the district court has subject matter jurisdiction to
    adjudicate the claim in intervention.            See, e.g., United Airlines, Inc. v.
    McDonald, 
    432 U.S. 385
    , 393 n.14 (1977) (motion to intervene filed three weeks
    after a settlement agreement, that was incorporated into the district court’s
    final judgment, should be granted); 10 see also Karaha Bodas Co., L.L.C. v.
    Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 
    335 F.3d 357
    , 365
    (5th Cir. 2003) (holding that a dispute stemming from an international
    arbitration under the Convention was not mooted by an Indonesian court’s
    annulment of the arbitral award because “as long as there is some interest in
    the outcome for which effective relief is available, the case is not moot”).
    Because the district court had subject matter jurisdiction to hear Brown Sims’s
    claim, the settlement between AJR and CNA did not moot the case. Therefore,
    we will examine Brown Sims’s Rule 24 motion. 11
    To be entitled to intervene as of right, Brown Sims must demonstrate
    that (1) it timely applied; (2) it has an interest relating to the property or
    10 Additionally, during oral argument, counsel for CNA conceded that the case was not
    formally moot at the time Brown Sims filed its Rule 60(b)(6) motion.
    11 The district court did not consider the merits of Brown Sims’s Rule 24 motion
    because it found that it was without jurisdiction over any claim asserted by Brown Sims.
    Remand is unnecessary because the facts relevant to intervention are not in dispute and as
    discussed below, all Rule 24 factors weigh decisively in favor of granting Brown Sims’s
    motion.
    12
    Case: 17-20685      Document: 00514888296         Page: 13    Date Filed: 03/26/2019
    No. 17-20685
    transaction that is the subject of the case; (3) disposition of the case may
    practically impair or impede its ability to protect its interest; and (4) it is
    inadequately represented by the existing parties. Fed. R. Civ. P. 24(a); Sierra
    Club v. Espy, 
    18 F.3d 1202
    , 1204–05 (5th Cir. 1994).
    Turning first to timeliness, we examine four factors: (1) the length of
    time during which the intervenor actually knew or reasonably should have
    known of his interest in the case; (2) the extent of prejudice to the existing
    parties to the litigation; (3) the extent of prejudice to the would-be intervenor;
    and (4) unusual circumstances. See Stallworth v. Monsanto Co., 
    558 F.2d 257
    ,
    264–66 (5th Cir. 1977).        “The requirement of timeliness is not a tool of
    retribution to punish the tardy would-be intervenor, but rather a guard against
    prejudicing the original parties by failure to apply sooner . . . . Federal courts
    should allow intervention ‘where no one would be hurt and greater justice could
    be attained.’” Sierra Club, 
    18 F.3d at 1205
     (quoting E.J. Lavino Co., 
    430 F.2d at 1074
    ).     Here, all four timeliness factors weigh in favor of allowing
    intervention. First, Brown Sims attempted to intervene as soon as it learned
    that its interest may be in peril. To be sure, Brown Sims withdrew its initial
    motion to intervene based on the same flawed jurisdictional assumption made
    by the district court. 12     Nevertheless, it eventually renewed its motion to
    intervene when it was absolutely clear that it could not vindicate its interest
    without intervention. See 
    id. at 1206
     (“A better gauge of promptness is the
    speed with which the would-be intervenor acted when it became aware that its
    interests would no longer be protected by the original parties.”). With the
    benefit of hindsight, perhaps it would have been more ideal to maintain the
    initial intervention motion, but we cannot say that Brown Sims’s attempt to
    12Furthermore, the district court construed Brown Sims’s Rule 60(b)(6) motion, which
    was indisputably timely, as a motion to intervene.
    13
    Case: 17-20685      Document: 00514888296         Page: 14    Date Filed: 03/26/2019
    No. 17-20685
    navigate its quandary was unreasonable: intervene and risk destroying
    diversity or abstain from intervening and risk mootness.
    Second, any prejudice created to the arbitrating parties is of their own
    making; or should it be said that equity is not on their side. CNA and AJR will
    suffer prejudice by allowing Brown Sims to intervene to protect its interest
    that is, the prejudice of possibly dismantling their scheme, “[b]ut prejudice
    must be measured by the delay in seeking intervention, not the inconvenience
    to the existing parties of allowing the intervenor to participate in the
    litigation.” 
    Id.
    The third factor—the extent of prejudice to the would-be intervenor if its
    petition were denied—weighs heavily in favor of allowing intervention by
    Brown Sims. The disposition of this matter without Brown Sims would greatly
    impede its ability to protect its interest for a number of practical reasons,
    including: (1) requiring Brown Sims to institute a new proceeding in a court
    unfamiliar with the dispute and uncertain to obtain personal jurisdiction over
    both CNA and AJR; (2) a potential statute of limitations defense; (3) forcing
    Brown Sims to incur substantial expenses associated with a separate lawsuit;
    and (4) if the district court’s Rule 60(b)(5) ruling stands, CNA may raise a res
    judicata defense to a subsequent attempt to collect fees by Brown Sims. 13 This
    factor also favors Brown Sims.
    The final timeliness factor—unusual circumstances—certainly falls
    toward Brown Sims. In Stallworth, this court found that since one of the
    existing parties made it more difficult for the potential intervenors to acquire
    information that would alert them to the need to intervene, the existing party
    “should not be heard to complain that the appellants should have known about
    13 Further complicating Brown Sims’s attempt to gain redress in state court against
    its wayward client is the fact that it is not clear from the record if AJR is even still in
    existence.
    14
    Case: 17-20685    Document: 00514888296       Page: 15   Date Filed: 03/26/2019
    No. 17-20685
    it or appreciated its significance sooner.” Stallworth, 558 F.2d at 267. Here,
    CNA and AJR settled the case surreptitiously to decrease their liability by
    cutting Brown Sims out of its contingent fee. Now CNA argues that Brown
    Sims cannot intervene to protect its interest because it did not intervene before
    the settlement, even though Brown Sims was purposefully kept in the dark.
    These unusual circumstances are exclusively in Brown Sims’s favor. Thus we
    hold that all four factors support a conclusion that Brown Sims’s motion to
    intervene was timely. We next advance to Rule 24’s requirements imposed on
    Brown Sims to establish its substantive right to intervene.
    After establishing timeliness, Brown Sims must meet three further
    requirements to intervene as of right.       First, Brown Sims must “have an
    interest relating to the property or transaction that is the subject of the action.”
    Sierra Club, 
    18 F.3d at
    1204–05. Second, Brown Sims must show that the
    disposition of the case will practically impair or impede its ability to protect its
    interest.   See 
    id.
        Third, Brown Sims must show that its interest is
    inadequately represented by the existing parties. See 
    id.
    Our consideration of these requirements is controlled by Gaines v. Dixie
    Carriers, Inc., in which we held that a law firm that had been discharged by
    its client must be allowed to intervene as of right in a suit to protect its
    contingent fee interest in any recovery by its former client. 
    434 F.2d 52
     (5th
    Cir. 1970). In that case Mr. Gaines signed a contingent fee contract with a law
    firm and, after the firm “allegedly spent considerable time working on” his
    claim, proceeded to discharge the firm without cause. 
    Id. at 53
    . While the
    litigation was pending, the firm filed a motion to intervene in the underlying
    action to protect its contingent fee interest in any potential recovery. The court
    held that “the appellant law firm here claimed an interest in the action . . . and
    is so situated that the final disposition of the action may as a practical matter
    15
    Case: 17-20685        Document: 00514888296          Page: 16      Date Filed: 03/26/2019
    No. 17-20685
    impair or impede its ability to protect that interest. Neither of the existing
    parties is concerned with protecting the appellant’s interest.” 
    Id. at 54
    .
    From Gaines forward, this circuit has consistently held that an
    attorney’s contingent fee is a sufficient “interest relating to the property or
    transaction that is the subject of the action” for purposes of intervention. See,
    e.g., Valley Ranch Dev. Co. v. F.D.I.C., 
    960 F.2d 550
    , 556 (5th Cir. 1992) (“[A]
    discharged lawyer with a contingent fee agreement does have an ‘interest’ for
    purposes of intervention.”); Keith v. St. George Packing Co., 
    806 F.2d 525
     (5th
    Cir. 1986) (attorney entitled to intervene as of right to protect contingent fee
    interest); Skinner, 220 F.3d at 584 (applying Gaines to find that a discharged
    lawyer who has a contingency fee interest “clearly possesses an interest in the
    subject of the underlying action” for purposes of Rule 24); see also Gilbert v.
    Johnson, 
    601 F.2d 761
    , 767 (5th Cir. 1979), cert. denied, 
    445 U.S. 961
     (1980)
    (“It therefore appears that this [attorney’s lien] was an interest in this
    litigation for which protection from the court can properly be sought by
    allowing the party to intervene in the pending action.”). 14
    Moving on to the second requirement, we are easily persuaded that the
    disposition of this matter would impair or impede Brown Sims’s ability to
    protect its interest. 15 See Gaines, 
    434 F.2d at 54
     (“[A]ppellant law firm here
    14Although Gaines’s recognition of a sufficient Rule 24 interest in a contingent fee has
    been criticized in this circuit and other circuits have declined to adopt its rationale, its
    holding is directly controlling in this case. See, e.g., Keith, 
    806 F.2d at 526
     (“Although Gaines
    may not represent the most persuasive use of Fed. R. Civ. P. 24, it binds us as the law of this
    Circuit until modified en banc.”); Butler, Fitzgerald & Potter v. Sequa Corp., 
    250 F.3d 171
    ,
    178 (2d Cir. 2001) (declining to adopt Gaines and Gilbert).
    15 Brown Sims points to numerous practical consequences arising from the
    circumstances of this case that would prevent it from vindicating its interest: (1) requiring
    Brown Sims to institute a new proceeding in a court unfamiliar with the dispute and
    uncertain to obtain personal jurisdiction over both CNA and AJR; (2) a potential statute of
    limitations defense; (3) forcing Brown Sims to incur substantial expenses associated with a
    separate lawsuit; (4) if the district court’s Rule 60(b)(5) ruling stands, CNA may successfully
    16
    Case: 17-20685      Document: 00514888296        Page: 17     Date Filed: 03/26/2019
    No. 17-20685
    . . . is so situated that the final disposition of the action may as a practical
    matter impair or impede its ability to protect that interest.”); see also Valley
    Ranch Dev. Co., 
    960 F.2d at 556
     (attorney’s interest in contingent fee is
    impaired if attorney “can show actual collusion between his clients and other
    parties or an actual attempt to deny him his fees”). CNA argues that, in spite
    of the potential difficulties in initiating another suit, Brown Sims’s interest is
    not impaired because it is not formally foreclosed from bringing another suit.
    This argument runs counter to the text of Rule 24 and our precedent, which
    focuses on practical consequence. See Ceres Gulf v. Cooper, 
    957 F.2d 1199
    ,
    1202 (5th Cir. 1992) (“[T]he inquiry under [Rule 24] (a)(2) is a flexible one,
    which focuses on the particular facts and circumstances surrounding each
    application; that intervention of right must be measured by a practical rather
    than technical yardstick.” (internal quotation marks omitted)); see also
    Brumfield, 749 F.3d at 344 (“The impairment requirement does not demand
    that the movant be bound by a possible future judgment, and the current
    requirement is a great liberalization of the prior rule.”). 16
    Indeed, we have explicitly interpreted Gaines to dismiss the argument
    that an attorney’s ability to institute a future proceeding to recover fees
    negates intervention as of right: “Aside from its unique factual setting, the
    distinguishing feature in Gaines is the fact that the discharged firm would
    have had to initiate a subsequent action to collect the fees allegedly generated
    in the existing litigation.” United States v. Tex. E. Transmission Corp., 
    923 F.2d 410
    , 415–16 (5th Cir. 1991); see also Skinner, 220 F.3d at 584 (“[The
    argue that Brown Sims’s interest was released; and (5) the potential insolvency of Brown
    Sims’s former client.
    16 We do not hold that under Stemcor, Rule 24 is the only path to resolve issues
    surrounding a covered arbitral award in federal court—such other possible avenues we leave
    for another day.
    17
    Case: 17-20685     Document: 00514888296     Page: 18   Date Filed: 03/26/2019
    No. 17-20685
    intervening attorney] will likely suffer prejudice if the district court does not
    permit him to intervene. If [the intervening attorney] 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.”). Therefore,
    CNA’s argument that Brown Sims will have to institute subsequent litigation
    to protect its interest is a decisive argument in favor of finding Brown Sims’s
    interest to be impaired.
    Third, it is clear that the existing parties to the lawsuit will not
    adequately represent Brown Sims’s interest in its contingent fee. Cf. Gaines,
    
    434 F.2d at 54
     (“Neither of the existing parties is concerned with protecting
    the appellant [law firm’s] interest.”). CNA’s argument attempts to distinguish
    Gaines, in which intervention was sought before a settlement was reached, on
    the grounds that here “Brown Sims only sought to intervene ‘as of right’ after
    CNA had already paid the settlement funds to AJR.” Some cheek! CNA settled
    the case, hid the settlement from Brown Sims, and now CNA argues that
    Brown Sims cannot intervene to assert a claim to its fee because it did not
    intervene before the unknown and collusive settlement agreement was
    consummated. A little too much for us to accept.
    Therefore, on the record before us and the undisputed facts, it is
    unmistakable that Brown Sims has met all of Rule 24’s criterion for
    intervention as of right. The district court need not concern itself further with
    this issue and, on remand, should grant Brown Sims’s Rule 24 motion.
    18
    Case: 17-20685      Document: 00514888296        Page: 19     Date Filed: 03/26/2019
    No. 17-20685
    C.
    Finally, we consider the district court’s disposition of the Rule 60(b)
    motions. 17 To refresh the reader: we review “a district court’s interpretation of
    a federal rule of civil procedure . . . de novo” but “a district court’s application
    of the Rule only for abuse of discretion.” Lowry Dev., L.L.C. v. Groves & Assocs.
    Ins., Inc., 
    690 F.3d 382
    , 385 (5th Cir. 2012). A court “abuses its discretion if it
    bases its decision on an erroneous view of the law or on a clearly erroneous
    assessment of the evidence.” Hall v. Louisiana, 
    884 F.3d 546
    , 549 (5th Cir.
    2018). As set out above, the same error of law—finding a lack of subject matter
    jurisdiction—underlying the district court’s denial of Brown Sims’s motion to
    intervene also motivated the denial of Brown Sims’s Rule 60(b)(6) motion
    (seeking to protect its contingent fee interest in the arbitral award) and the
    grant of CNA’s Rule 60(b)(5) motion (seeking to set aside the arbitral award as
    settled). Contrary to Brown Sims’s assertion, however, it would not be proper
    for this court to render a judgment in its favor. The proceedings below focused
    almost exclusively on jurisdiction and the district court has not had an
    opportunity to fully examine the factual issues of this dispute and, if
    appropriate, fashion a practical remedy. The district court must yet consider
    whether Brown Sims had a viable and legal interest in the award and, if so,
    whether CNA is liable to Brown Sims for its claimed interest in the award.
    Therefore, we vacate the district court’s grant of Brown Sims’s Rule 60(b)(6)
    motion and denial of CNA’s Rule 60(b)(5) motion and remand for consideration
    on the merits.
    17 CNA’s waiver arguments are meritless. Brown Sims specifically and extensively
    opposed the Rule 60(b)(5) ruling in its Rule 59(e) motion to alter or amend judgment below
    and does so again on appeal.
    19
    Case: 17-20685    Document: 00514888296     Page: 20   Date Filed: 03/26/2019
    No. 17-20685
    IV.
    To sum up: we have held, first, that the district court, under the
    Convention, possessed subject matter jurisdiction over Brown Sims’s claims
    against CNA.    Second, we have further held that because the court had
    jurisdiction, and Brown Sims established its right to intervene, it erred in
    denying Brown Sims’s Rule 24 motion. Finally, we have held that for the same
    reason that it erred in denying Brown Sims’s Rule 24 motion, the district court
    erred in denying Brown Sims’s 60(b)(6) motion and further erred in granting
    CNA’s Rule 60(b)(5) motion, dismissing the case.
    Accordingly, we REVERSE the district court’s order denying Brown
    Sims’s Rule 24 motion to intervene as of right and VACATE the district court’s
    judgment denying Brown Sims’s Rule 60(b)(6) motion and granting CNA’s Rule
    60(b)(5) motion. We therefore REMAND to the district court to consider Brown
    Sims’s claims on the merits in a manner not inconsistent with this opinion.
    REVERSED, VACATED, and REMANDED.
    20