Civil Procedure II

Michaels Stores v. Castle Ridge Plaza Assocs.

United States District Court for the District of New Jersey, 1998

Facts:

Plaintiff bought Castle Ridge L.T.'s assets, principally a lease for a store in a shopping center. Castle Ridge L.T. assigned and transferred its title and interest, and plaintiff indemnified Castle Ridge L.T. against its obligations. Castle Ridge L.T. was not allowed to assign the lease unless one purchased all or substantially all of Castle Ridge L.T.'s assets and liabilities and Castle Ridge L.T. gave the landlord, defendant, notice of the new tenant. Castle Ridge L.T. provided defendant the required notice.

Plaintiff then received a copy of notice from defendant's counsel asserting that plaintiff would not be permitted to operate as an arts and crafts store in the leased premises due to Rag Shop's objections. Plaintiff argues that this was not prohibited in the terms of the lease. Rag Shop states that its lease gives it the exclusive right to operate an arts and crafts store at the shopping center. Defendant rejected plaintiff's payment for the rent, so plaintiff sued for a declaration that its intended use is proper.

Rag Shop seeks to intervene to protect its position with respect to the other parties.

Issue:

Can Rag Shop intervene as of right or permissively intervene?

Rules:

  • See:

    FRCP 24
  • LexisNexis IconWestLaw LogoGoogle Scholar LogoPage 363–364

    To intervene as of right, an applicant must meet four separate requirements. The application must be timely, the applicant must have an interest relating to the subject matter of the action, there must be a practical impairment of the applicant's ability to protect that interest, and the applicant's interest must not be adequately represented by the existing parties.

  • LexisNexis IconWestLaw LogoGoogle Scholar LogoPage 364–365

    [A]n intervenor's interest in the action must be one that is significantly protectable. To be significantly protectable, the applicant's interest must be "a legal interest as distinguished from interests of a general and indefinite character." "The applicant must demonstrate that there is a tangible threat to a legally cognizable interest to have the right to intervene."

Reasoning:

  • The case was only filed three months ago and is still in its preliminary stages. Rag Shop will still have a week or two to make submissions regarding summary judgment. It is too early for the parties to possibly suffer any prejudice as a result.

  • Rag Shop would have a significant interest in enforcing its exclusivity provisions. Plaintiff opening a another arts and crafts store would impair this interest.

  • While defendant's position is not directly adverse to Rag Shop's, Rag Shop would have a bigger burden if plaintiff were to prevail as they would have to deal with a new competitor in addition to filing suit against defendant. Defendant would simply have to begin charging plaintiff instead of Rag Shop. Defendant would still collect money from plaintiff.

Holding:

Rag Shop can intervene as of right. Motion granted.

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