         09-2846-cv
         Eastern Potato Dealers, Inc. v. TNC Packing Corporation


                                   UNITED STATES COURT OF APPEALS
                                         F OR T HE S ECOND C IRCUIT

                                                  SUMMARY ORDER

R ULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT . C ITATION TO A SUMMARY ORDER FILED ON OR AFTER J ANUARY 1,
2007, IS PERMITTED AND IS GOVERNED BY F EDERAL R ULE OF A PPELLATE P ROCEDURE 32.1 AND THIS COURT ’ S L OCAL R ULE 32.1.1.
W HEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT , A PARTY MUST CITE EITHER THE F EDERAL A PPENDIX OR AN
ELECTRONIC DATABASE ( WITH THE NOTATION “ SUMMARY ORDER ”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON
ANY PARTY NOT REPRESENTED BY COUNSEL .


              At a stated Term of the United States Court of Appeals
         for the Second Circuit, held at the Daniel Patrick Moynihan
         United States Courthouse, 500 Pearl Street, in the City of
         New York, on the 4 th day of February, two thousand and ten.

         Present: PIERRE N. LEVAL,
                  RICHARD C. WESLEY,
                                Circuit Judges,
                  JOHN GLEESON,
                                District Judge. *
         __________________________________________________

         EASTERN POTATO DEALERS, INC., et al.,

                                         Plaintiffs-Appellees,

                         and,

         TNC PACKING CORPORATION, THOMAS CASE,
         and NANCY CASE,

                                         Defendants-Appellees,

                         - v. -                                                         (09-2846-cv)

         DIBBLE & MILLER, P.C.,

                           Non-Party-Appellant. **
         __________________________________________________


         *
            The Honorable John Gleeson, United States District Court for the Eastern
         District of New York, sitting by designation.

         **
            The Clerk of the Court is respectfully directed to amend the official
         caption in this action to conform to the caption in this summary order.
     For Appellant:              GERALD F. NORTON (Craig D.
                                 Chartier, on the brief), Dibble
                                 & Miller, P.C., Rochester, New
                                 York.

     For Appellees:              BRUCE LEVINSON (Gregory Brown,
                                 on the brief), Law Offices of
                                 Bruce Levinson, New York, New
                                 York.

          Appeal from the United States District Court for the
     Western District of New York (Telesca, J.).

 1       UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,

 2   AND DECREED that the April 21, 2009 order of the United

 3   States District Court for the Western District of New York

 4   is REVERSED and the case is REMANDED.

 5       Plaintiffs-appellees brought this action pursuant to

 6   the Perishable Agricultural Commodities Act of 1930

 7   (“PACA”), 7 U.S.C. § 499a et seq.   Non-party appellant

 8   Dibble & Miller, P.C. (“appellant”) appeals from a decision

 9   denying its motion to intervene pursuant to Rule 24(a)(2) of

10   the Federal Rules of Civil Procedure.   We presume the

11   parties’ familiarity with the underlying allegations, the

12   procedural history of the case, and the issues on appeal.

13       The denial of a motion to intervene is reviewed for

14   abuse of discretion.   E.g., MasterCard Int’l Inc. v. Visa

15   Int’l Serv. Ass’n, Inc., 471 F.3d 377, 389 (2d Cir. 2006).

16   The district court held that appellant’s September 5, 2008



                                   2
 1   motion was untimely.   The record suggests, however, that

 2   appellant did not receive notice that it may have an

 3   interest in this litigation until the district court

 4   endorsed the parties’ stipulated settlement on July 15,

 5   2008.

 6       The stipulated settlement was signed by the parties on

 7   July 2, 2008, a mere six days after this action was

 8   commenced.   The settlement provided that defendant-appellee

 9   Thomas Case’s interest in a state court litigation, Case v.

10   Case, Livingston County Index No. 297-2003, would be used to

11   pay Case’s debts to plaintiffs-appellees and to non-parties

12   David Shults and Barbara Finch, notwithstanding that Case’s

13   interest in the state litigation was subject to appellant’s

14   attorney charging lien.   The stipulation purported to defeat

15   appellant’s charging lien by characterizing Case’s entire

16   interest in the state court litigation as PACA trust

17   property, which would give plaintiffs-appellees, who alleged

18   that they were PACA creditors, priority over appellant’s

19   lien.   However, the stipulation provided that the majority

20   of the funds received as Case’s interest in the state court

21   litigation were to be used to pay non-parties, whose

22   interest in the funds appears to be unrelated to the PACA


                                   3
 1   debt that is the subject of this action.

 2         After receiving notice of the parties’ stipulated

 3   settlement when the district court endorsed it on July 15,

 4   2008, appellant sent a July 17, 2008 letter to the court

 5   regarding its objection to the terms of the stipulation.

 6   The court responded that it was “not authorized to issue

 7   advisory opinions” and that appellant was “not a party to

 8   the . . . action.”        Appellant then pursued a negotiated

 9   resolution of its objection with the parties for several

10   weeks.    When it became clear that it would not get

11   satisfaction by negotiation, appellant filed a motion to

12   intervene in this action on September 5, 2008, to contest

13   whether the funds referenced in the stipulation could be

14   properly characterized as PACA funds, and whether the

15   stipulation could be used to defeat its attorney charging

16   lien. 1   Based on this sequence of events, we find any

17   prejudice to appellees that would result from permitting

18   appellant to intervene to be wholly unpersuasive as a basis

19   for denying the motion.



     1
        The wiser course would have been for appellant to immediately seek to
     intervene in the district court when it received notice of the stipulated
     settlement. However, no party was prejudiced by its failure to do so because
     a copy of appellant’s July 17, 2008 letter to the district court was mailed to
     counsel for all parties, and appellant immediately undertook negotiations with
     the parties in an attempt to protect its interests.

                                           4
 1       Moreover, on August 26, 2008 — prior to appellant’s

 2   motion to intervene, and while appellant was still

 3   negotiating with the parties — the district court wrote to

 4   the court-appointed receiver in the state court action

 5   regarding “whether the proceeds belonging to Thomas Case

 6   should be forwarded . . . to [appellant] or . . . the

 7   plaintiffs in the Federal Court action.”   The district court

 8   asserted to the receiver that the stipulated settlement in

 9   the federal action “clearly contemplated” that “the

10   settlement proceeds [from the state court action] should be

11   forwarded to” counsel for the plaintiffs in the federal

12   action.   This letter from the district court operated to the

13   immediate detriment of appellant, as it hastened the

14   remittance of the funds at issue in Case v. Case to

15   appellees’ counsel before appellant had taken formal action

16   to protect its interest in either the state or federal case.

17   At a minimum, the district court should have taken this

18   conduct into account when analyzing the prejudice to

19   appellant that would result from denying its motion to

20   intervene.

21       Finally, although the decision below was reached solely

22   on the basis of timeliness, appellees argue that the



                                   5
 1   district court’s decision should be affirmed for two

 2   alternative reasons:    (1) appellant lacks a sufficient

 3   interest in this action to justify mandatory intervention;

 4   and (2) “[t]he monies in issue . . . are PACA trust funds

 5   and whatever rights [appellant] may have are subordinate to

 6   those of plaintiffs.”     Both of these contentions are

 7   premised on the assertion that the parties’ stipulated

 8   settlement relates exclusively to funds held in a statutory

 9   trust pursuant to PACA.     Not only is that precisely the

10   factual assertion that appellant wishes to intervene in

11   order to contest, but it is also belied to some extent by

12   the terms of appellees’ challenged stipulation.      Indeed, the

13   stipulation directs that the vast majority of the settlement

14   amount be paid to Shults and Finch, who were not alleged to

15   have been the beneficiaries of a PACA trust in the federal

16   action.   Consequently, these arguments are insufficient to

17   warrant an affirmance of the district court’s decision.

18       We have reviewed appellees’ remaining arguments and

19   find them to be without merit.      Therefore, we hold that the

20   district court abused its discretion because its conclusion

21   “cannot be located within the range of permissible

22   decisions.”   Patricia Hayes & Assocs., Inc. v. Cammell Laird



                                     6
 1   Holdings U.K., 339 F.3d 76, 80 (2d Cir. 2003) (internal

 2   quotation marks omitted).   Accordingly, the April 21, 2009

 3   order of the district court is REVERSED.

 4       In an oral order issued at the argument of this appeal

 5   on January 27, 2010, we directed that all funds or property

 6   distributed pursuant to the stipulated settlement be paid to

 7   the Clerk of the district court for safekeeping, pending a

 8   determination of the parties’ rights to the funds at issue.

 9   In a written order issued the next day, we memorialized that

10   instruction and directed the district court to grant

11   appellant’s motion to intervene.   The case is therefore

12   REMANDED for further proceedings consistent with this order

13   and our previous orders.

14                               For the Court
15                               Catherine O’Hagan Wolfe, Clerk
16
17
18




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