Encompass Teleservices, Inc. v. Scheets, No. 3:2004cv00821 - Document 401 (D. Or. 2009)
Court Description: OPINION AND ORDER: Denying the Joint Motion of Patrick and Michael to Reopen and for a New Trial 372 ; Denying Motion of William Holmes and W. Holmes & Co. to Intervene 373 . (see formal 20-page opinion/order) Signed on 5/7/09 by Magistrate Judge Dennis J. Hubel. (kb)
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1 2 3 4 5 6 7 IN THE UNITED STATES DISTRICT COURT 8 FOR THE DISTRICT OF OREGON 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 ENCOMPASS TELESERVICES, INC., ) ) Plaintiff, ) ) v. ) ) ) ) RANDALL LEE SCHEETS, aka ) RANDY SCHEETS, ) ) Defendant. ) ) ) RANDY SCHEETS, ) ) Third Party Plaintiff, ) ) v. ) ) SAVANT CALL CENTER ASSOCIATES,) INC., an Arizona corporation; ) JOHN J. CARGAL; MICHAEL A. ) BOYLE; PATRICK BOYLE; and ) KAROL W. KERSH, ) ) Third Party Defendants. ) ______________________________) 24 25 26 Joel Watkins Jess G. Webster Mikkelborg, Broz, Wells & Fryer 1001 Fourth Avenue, Suite 3600 Seattle, Washington 98154 27 28 OPINION AND ORDER Page 1 No. 04-821-HU OPINION AND ORDER 1 2 3 Michael K. Kelley Christopher Lundberg Haglund, Kelley, Horngren & Jones 101 S.W. Main Street, Suite 1800 Portland, Oregon 97204 Attorneys for defendant and third party plaintiff 4 5 6 7 8 Patrick W. Boyle 1500 Rosecrans Avenue, Suite 500 Manhattan Beach, California 90266 Pro se Michael A. Boyle 1500 Rosecrans Avenue, Suite 500 Manhattan Beach, California 90266 Pro se 9 HUBEL, Magistrate Judge: 10 The matters before the court are a joint motion by Patrick and 11 Michael Boyle (the Boyles) to reopen the case and grant a new trial 12 (doc. # 372); and a motion by William Holmes and W. Holmes & Co., 13 LLP (Holmes) to intervene or alternatively, for a new trial, and to 14 amend the court s Findings of Fact and Conclusions of Law (the 15 Opinion) entered on December 9, 2008 (doc. # 373). 16 I. Joint Motion by the Boyles 17 The Boyles request that the court reopen the case to allow 18 testimony from Scott Jonsson, ETI s former attorney, and Scott 19 Roberts, a certified public accountant. They request a new trial on 20 the grounds that 1) the testimony of John Cargal should have been 21 excluded, 2) newly discovered evidence from the bankruptcy 22 adversary proceeding calls into question the outcome of the case, 23 3) the court improperly allowed third party plaintiff Randall 24 Scheets to amend the pretrial order, and 4) the court s valuation 25 of Scheets s shares is not supported by the evidence. 26 /// 27 28 OPINION AND ORDER Page 2 1 Standards 2 Under Rule 59(a)(1)(B), the court may, on motion, grant a new 3 trial on some or all of the issues, and to any party, after a 4 nonjury trial, for any reason for which a rehearing has heretofore 5 been granted in a suit in equity in federal court. Under Rule 6 59(a)(2) the court may, on motion for a new trial, open the 7 judgment, take additional testimony, amend findings of fact and 8 conclusions of law or make new ones, and direct the entry of a new 9 judgment. Such a motion must be filed no later than 10 days after 10 the entry of judgment, and, when the motion is based on affidavits, 11 they must be filed with the motion. Rule 59(c). A post-judgment 12 motion is considered a motion under Rule 59 when it involves 13 reconsideration of matters properly encompassed in a decision on 14 the merits. Osterneck v. Ernst & Whinney, 480 U.S. 169, 174 15 (1989); McCalla v. Royal Maccabees Life Ins. Co., 369 F.3d 1128, 16 1130 (9th Cir. 2004). Judgment is not properly reopened absent 17 highly unusual circumstances, such as newly discovered evidence, 18 clear error by the district court, or an intervening change in the 19 controlling law. Weeks v. Bayer, 246 F.3d 1231, 1236 (9th Cir. 20 2001). Consideration of the motion is committed to the discretion 21 of the district court. Id. at 1234. 22 Discussion 23 Excluded testimony of Jonsson and Roberts 24 The court excluded Scott Jonsson as a trial witness because 25 the Boyles had not filed a witness statement before trial. The 26 Boyles assert in this motion that if allowed, Jonsson would testify 27 28 OPINION AND ORDER Page 3 1 about representations made to Jonsson by Holmes about ETI s books, 2 and about Holmes s concealment of financial information from the 3 Boyles. 4 I deny the motion to reopen the trial to allow testimony from 5 Jonsson because 1) the Boyles submitted no written summary of his 6 testimony or the basis for it at the time of trial, and 2) 7 Jonsson s proposed testimony is hearsay. 8 The court issued court trial management orders, setting out, 9 among other things, the requirements for witness statements, on 10 January 18, 2007 (doc. # 211), September 24, 2007 (doc. # 285), and 11 July 3, 2008 (doc. # 321). The court repeated this information at 12 the final pretrial conference held on July 24, 2008. Other orders 13 issued 14 statements. See Orders dated 15 16, 2008 (doc. # 330). The Boyles were aware, or should have been 16 aware, that they required to submit a written summary for each of 17 their witnesses. This was never done by the Boyles for Jonsson, 18 although they did do it, for better or worse, for other witnesses 19 they called. by the court also contained reminders about witness April 30, 2008 (doc. # 308) and July 20 The Boyles could have avoided the hearsay problem by calling 21 Holmes, who was subject to subpoena and had personal knowledge 22 about the state and completeness of ETI s books. Again, they chose 23 not to call Holmes as a witness despite having identified him as 24 one of their witnesses and providing a witness statement for his 25 testimony that covered this information in part. 26 /// 27 28 OPINION AND ORDER Page 4 1 Roberts is an accountant for the Parrot Group, the successor 2 auditors to Holmes Royer. The court excluded Roberts s testimony at 3 trial because the Boyles failed to identify him as a trial witness 4 and further because they did not file and serve an expert witness 5 statement from him before trial. The Boyles request that Roberts be 6 permitted to testify that Holmes had complete control over all of 7 ETI s financial information, and that consequently the Boyles had 8 no idea there were any missing revenues from ETI s books. 9 I deny the motion to reopen the trial to allow testimony from 10 Roberts because 1) the Boyles failed to identify him as a trial 11 witness and to file and serve an expert witness statement before 12 trial, or explain their failure to do so, and 2) the Boyles 13 themselves could have testified at trial as to their lack of 14 knowledge about ETI s books, and did not elect to do so. I also 15 note that coming in after this case started, Roberts would have no 16 personal knowledge of what the Boyles knew or did not know from any 17 source other than the Boyles. Likewise, no source of personal 18 knowledge for Roberts about Holmes s control of ETI s financial 19 information was ever revealed or apparent. 20 Newly discovered evidence 21 The Boyles assert that evidence from the ETI bankruptcy 22 proceeding, indicating that a loan from Michael Boyle to ETI was 23 incorrectly booked as revenue from T-Mobile, constitutes newly 24 discovered evidence that could have changed the outcome of the 25 litigation. However, the Boyles motion was not, at the time of 26 filing, accompanied by an affidavit showing that this evidence is 27 28 OPINION AND ORDER Page 5 1 newly discovered, i.e., was not within the custody or control of 2 the Boyles before the entry of judgment, as required by Rule 59(c). 3 See also Feature Realty, Inc. v. City of Spokane, 331 F.3d 1082, 4 1093 (9th Cir. 2003)(evidence in the possession of the party before 5 the judgment was rendered is not newly discovered). I deny the 6 motion for new trial on the basis of newly discovered evidence 7 because the Boyles have not made a showing that the evidence was 8 beyond their custody or control before the entry of judgment in 9 this case. 10 Testimony of John Cargal 11 The Boyles assert that the court erred by allowing testimony 12 from John Cargal because Scheets filed no witness statement for 13 Cargal. They argue that because Cargal was allowed to testify, I 14 must also allow Jonsson and Roberts to testify. I disagree. 15 First, John Cargal was a party to this action, not a non-party 16 witness. Second, Michael Boyle participated in two depositions of 17 Cargal, 18 designated Cargal as a witness before trial and designated his 19 entire deposition for use at trial (Exhibit 502). See Watkins 20 Affidavit, Exhibits A, B, C and D. Cargal was also extensively 21 cross examined at trial by Michael Boyle. The Boyles were not 22 surprised by, nor unprepared for, Cargal s testimony. The same 23 cannot be said for either Jonsson, former counsel for ETI, Savant 24 and the Boyles, nor for Roberts. It does not appear that they were 25 deposed, an event that would be unusual for Jonsson, an attorney 26 for several parties in the case including the Boyles. in December 2007 27 28 OPINION AND ORDER Page 6 and June 2008. Third, the Boyles 1 Amendment of pretrial order 2 The Boyles contend that the Court incorrectly granted 3 [Scheets] leave to amend the Pre-Trial Order on the third day of 4 the five day trial, which shifted the basis of the complaint from 5 interference of [sic] a statutory purchase to diversion. In fact, 6 although both the Boyles and Scheets proffered proposed pretrial 7 orders to the court, neither of the parties proposed pretrial 8 orders, nor any other pretrial order, was lodged in this case. The 9 court and the parties knew what the claims were in this case, as 10 set forth in the complaint, answer, counterclaim, and answer to the 11 counterclaim. The claims were the subject of several motions with 12 opinions by the court prior to trial as well. The claims were tried 13 and a decision was reached. 14 Inadequate basis for damages 15 The Boyles assert that the valuation of Scheets s shares at 16 $900,000, arrived at by the court as finder of fact is not 17 supported by the evidence,1 and that the court should have an 18 independent third party determine the value of those shares. I have 19 reviewed the testimony and exhibits relating to this issue and 20 adhere to my Findings of Fact and Conclusions of Law. 21 The court s valuation started with the parties stipulation to 22 a valuation date of July 24, 2004. As the finder of fact, I 23 declined to use the cost approach to valuation because it was not 24 1 27 As a matter of law, the court declined to award any damages representing excess contributions to the Boyles, because this claim is properly asserted by the corporation, not by a shareholder, and as such the claim belongs to ETI s trustee in bankruptcy. 28 OPINION AND ORDER Page 7 25 26 1 well suited to a services-based business. Scheets s evidence on the 2 issue of valuation of his shares as of July 24, 2004 was in the 3 form of the testimony of Mr. William Partin. Some witnesses, 4 because of education or experience, are permitted to state opinions 5 and the reasons for these opinions. Ninth Circuit Model Civil Jury 6 Instructions 2.11 (Expert Opinion). As the finder of fact, the 7 court is to judge expert opinion like any other testimony, and 8 may accept it or reject it, and give it as much weight as [the 9 court] think[s] it deserves, considering the witness s education 10 and experience, the reasons given for the opinion, and all the 11 other evidence in the case. Id. The fact finder followed this 12 instruction in evaluating Mr. Partin s testimony and all the 13 evidence on the damages issues. 14 I decline the Boyles apparent invitation to explain with 15 mathematical precision the damages as determined by the court. I do 16 note, however, several issues that caused me not to adopt Mr. 17 Partin s valuation under the income approach, the market approach, 18 or his blend of the two, weighing the income approach three times 19 as heavily as the market approach. For all his belief in the 20 inherent strength of the income approach over the market approach, 21 Mr. Partin arrived at a figure of $2,389,690 for the income 22 approach and $2,364,822 for the market approach, a difference of 23 less 24 difference 25 credibility of the other. 26 /// than $25,000, or if number one 27 28 OPINION AND ORDER Page 8 about 1%. were One would entitled to expect three a greater times the 1 I awarded substantially less than Mr. Partin s valuations 2 under either approach for several reasons. However, none of those 3 reasons suggested that the shares had no value on July 24, 2004. 4 Indeed, the testimony in this case and all the evidence supports a 5 finding that they had substantial value on that date. 6 While Mr. Partin testified about the theories of business 7 valuation 8 Scheets s shares as if they were as mathematical and precise as the 9 laws of physics, they clearly are not. It is not the Heisenberg and presented his opinions about the value of Mr. 10 Uncertainty 11 difficult to measure the value of shares of a corporation; it is 12 all the assumptions, approximations, and extrapolations of data 13 regarding 14 imprecision. This imprecision is then used to forecast the future 15 success of a business largely dependent on the efforts of human 16 beings--hardly something that is susceptible to mathematics--and 17 the finder of fact is asked to accept these predictions as a 18 measurement of the value of the business. At its root, valuing a 19 business is no more or less than establishing what a willing buyer 20 would pay a willing seller. The reasons for a buyer s confidence in 21 the business add to its value; those that weaken confidence lower 22 its value. Many such variables are subjective, not objective. Principle or non-identical any similar businesses concept that that produce makes much of it the 23 Some of the court s primary reasons for rejecting Mr. Partin s 24 conclusion on valuation include his glib assumption that ETI s 25 profits would continue into the future relatively unabated from the 26 exponential growth experienced in 2003 and 2004, despite a number 27 28 OPINION AND ORDER Page 9 1 of disquieting circumstances that would have been apparent to a 2 potential 3 allegations 4 preferential distributions to the Boyles over other shareholders, 5 the development of two shareholder lawsuits, and ETI s dependence 6 on one client, T-Mobile, with the account being based in some 7 unquantifiable way on a romantic relationship between Michael Boyle 8 and a T-Mobile employee. All this would make a potential purchaser 9 skeptical about the continued viability of ETI, and the finder of 10 fact disbelieve Mr. Partin s conclusions. The assumption that a 11 potential buyer would treat these events as non-recurring expenses 12 or problems, so that the business could be valued without regard to 13 them except for subtracting out the losses and expenses, is simply 14 not believable. buyer. These against circumstances Cargal, the included revelation serious of fraud significant 15 While someone trying to value the business in mid-2004 would 16 not have had the actual performance figures for 2005-2007 to assist 17 him, 18 continued success of the business seemed inextricably tied to the 19 success of the Boyles. In other words, a potential buyer would have 20 had to be comfortable dealing with the Boyles in light of the 21 poorly kept financial records, the evidence of excessive and 22 preferential compensation for them, the fraud alleged against 23 Cargal, and the heavy reliance on a single customer. those figures bear out the doubts I express here. The 24 On the other hand, the rapid growth of ETI, generating the 25 huge sums that were taken advantage of by the Boyles and Cargal, do 26 support a substantial value for the Scheets shares in mid-2004. In 27 28 OPINION AND ORDER Page 10 1 deciding the Boyles post trial motion, I have reexamined my 2 findings of fact regarding the damage award and again find it 3 supported by the evidence in the record. Therefore, I deny the 4 motion. 5 II. Motion to intervene 6 Holmes moves to intervene, either as of right pursuant to Rule 7 24(a), or permissively pursuant to Rule 24(b). The purpose of the 8 intervention is to request that the court enter an order amending 9 some of the findings of fact and conclusions of law contained in 10 the Opinion. Alternatively, Holmes moves the court to exercise its 11 inherent power to amend and correct findings that 1) William Holmes 12 and Holmes Royer participated in a conspiracy with the Boyles, 13 Cargal and Kersh to conceal and misdirect corporate assets of ETI; 14 and 2) Holmes and Holmes Royer participated in acts of malfeasance 15 intended to prevent Scheets from realizing the full value of his 16 interest in ETI. Holmes asserts that the court s Opinion has had an 17 adverse effect on the business reputations and earning capacities 18 of Holmes and Holmes Royer, and that Holmes, as a non-party, was 19 denied his due process rights because he had no opportunity to 20 present evidence, cross-examine witnesses, or otherwise defend 21 himself from 22 specific findings of fact referring to Holmes and Holmes Royer s 23 conduct 24 references. and the adverse requested findings. that they be Holmes has amended to set out remove seven those 25 Holmes contends that if William Holmes and Holmes Royer had 26 been able to participate at trial, they would have presented 27 28 OPINION AND ORDER Page 11 1 evidence showing that 1) the financial reports prepared for ETI 2 disclosed that Holmes Royer was not an independent accountant; 2) 3 their financial reports were accurate based on information made 4 available by ETI management to them at the time; 3) neither Holmes 5 nor Holmes Royer was involved in any scheme to oppress Scheets, 6 divert ETI 7 information; and 4) Holmes and Holmes Royer communicated to Scheets 8 the existence of previously undisclosed bank accounts as soon as 9 they were discovered and after their withdrawal of the financial 10 funds, or withhold misstate any ETI financial statements they prepared. 11 Standards 12 13 or Under Rule 24(a), intervention as of right is allowed to anyone who 14 claims an interest relating to the property or transaction that is the subject of the action, and is so situated that disposing of the action may as a practical matter impair or impede the movant s ability to protect its interest, unless existing parties adequately represent that interest. 15 16 17 Rule 24(b) gives the court discretion to permit anyone to intervene 18 who has a claim or defense that shares with the main action a 19 common question of law or fact. Rule 24(b)(1)(B). Both sections of 20 the rule require timely application. League of United Latin 21 American Citizens v. Wilson, 131 F.3d 1297, 1302 (9th Cir. 1997). 22 A motion under Rule 24(a) requires satisfaction of four 23 criteria: 1) the motion must be timely; 2) the proposed intervenor 24 must assert an interest relating to the property or transaction 25 which is the subject of the action; 3) the proposed intervenor must 26 be so situated that without intervention the disposition of the 27 28 OPINION AND ORDER Page 12 1 action may as a practical matter impair or impede its ability to 2 protect 3 inadequately 4 Californians for Safe Dump Truck Transp. v. Mendonca, 152 F.3d 5 1184, 1189 (9th Cir. 1998). In determining whether intervention is 6 appropriate, the court is guided "primarily by practical and 7 equitable considerations." Donnelly v. Glickman, 159 F.3d 405, 409 8 (9th Cir. 1998). If the court finds that the motion to intervene is 9 not timely, it need not reach any of the remaining elements of Rule 10 24. United States v. Washington, 86 F.3d 1499, 1503 (9th Cir. 1996). 11 In determining whether a Rule 24(a) motion is timely, the that interest; represented and 4) by the the party's other interest parties. must See, be e.g., 12 court 13 applicant seeks to intervene; 2) the prejudice to other parties; 14 and 3) the reason for and length of the delay. United States v. 15 Washington, 86 F.3d 1499, 1503 (9th Cir. 1996). In considering these 16 factors, the court must bear in mind that any substantial lapse of 17 time weighs heavily against intervention. Id. considers 1) the stage of the proceeding at which an 18 Permissive intervention under Rule 24(b) is granted if the 19 proposed intervenor provides an independent basis for jurisdiction, 20 the motion is timely, and the proposed intervenor s claims or 21 defenses share a question of law or fact with the action. League of 22 United Latin American Citizens, 131 F.3d at 1308. Even when the 23 proposed 24 district court has discretion to deny permissive intervention if 25 the intervention will unduly delay the main action or will unfairly 26 /// intervenor satisfies 27 28 OPINION AND ORDER Page 13 these three requirements, the 1 prejudice 2 Donnelly, 159 F.3d at 409. the existing parties. 3 4 Fed. R. Civ. P. 24(b)(2); Discussion Timeliness 5 Actual or imputed knowledge 6 Holmes must show that he filed his motion to intervene as soon 7 as he knew or had reason to know that his interests might be 8 adversely affected by the outcome of the litigation. United States 9 v. Oregon, 913 F.2d 576, 589 (9th Cir. 1990). 10 Holmes argues that his application is timely because he had no 11 reason to know his interest was adversely affected until the date 12 the Opinion was issued, and he filed the motion within the 10 day 13 period for amending or correcting findings pursuant to Rules 52 and 14 59. Holmes argues further that no party will sustain prejudice from 15 the intervention, because the relief Holmes seeks does not affect 16 the outcome of the case. 17 I am unpersuaded by Holmes s assertion that he had no reason 18 to know the court might enter an opinion with findings adverse to 19 him. Holmes knew or should have known of the existence and nature 20 of 21 malpractice case, Scheets v. Holmes, CV 07-1147-HU, and in that 22 case was at all times represented by counsel, Mary Anne Rayburn, 23 who was appointed by Holmes s insurance carrier. He was apparently 24 also 25 independently, on issues related to Scheets v. Holmes, but Mr. 26 Schlachter was never counsel of record. The court held joint the present represented case. by Holmes Robert 27 28 OPINION AND ORDER Page 14 was a party Schlachter, in the hired ancillary by Holmes 1 scheduling conferences for this case and the Scheets v. Holmes 2 case. (Doc. ## 259, 262, 272, 277, 282). Discovery was to some 3 extent conducted jointly in both cases, including the depositions 4 of John Cargal, a primary accuser of Mr. Holmes. Ms. Rayburn 5 represented Holmes at at the Cargal depositions taken in December 6 2007 and June 2008. Much of the evidence used in the trial of this 7 case was discovered in the course of Scheets v. Holmes, which 8 ended when Holmes settled with both Scheets and ETI s bankruptcy 9 trustee. See Watkins Affidavit, ¶¶ 4, 6, 7. Scheets v. Holmes was 10 settled before the court entered the Opinion in this case. Ms. 11 Rayburn attended at least part of the trial of this case.2 12 Holmes asserted at oral argument that he thought he had 13 bought his peace when he settled Scheets v. Holmes, and had no 14 reason to think the court might make findings adverse to him once 15 Scheets v. Holmes was dismissed with prejudice on December 1, 2008, 16 and the bankruptcy trustee s dispute with Holmes was resolved. He 17 18 2 27 Ms. Rayburn has submitted a declaration stating that she attended portions of the first two or three days of trial. Holmes had initially been identified as a trial witness by both Scheets and Michael Boyle, Boyle having served Holmes with a subpoena. She says that the evening before Holmes was to testify, Michael Boyle told her he would not be calling Holmes. Unbeknownst to her, Scheets had also withdrawn Holmes as a witness. Because the court excluded lay witnesses from observing the trial and it appeared that Holmes would be a witness, she was unable to inform Holmes about the testimony and evidence she had seen and heard while in the courtroom. Declaration of Mary Anne Rayburn ¶ 3. The trial ended on August 8, 2008, with Holmes never testifying. Nothing precluded Ms. Rayburn from that date on from telling Holmes about the trial testimony and arguments regarding Holmes. Schlachter has submitted a declaration stating that neither he nor anyone from his firm attended any portion of the trial. Declaration of Robert Schlachter ¶ 2. 28 OPINION AND ORDER Page 15 19 20 21 22 23 24 25 26 1 argues that this court was not required to make findings against 2 Holmes to support its conclusions or the judgment against the 3 Boyles. I do not find this assertion persuasive, for several 4 reasons. 5 This case was tried to the court, not a jury; the court is 6 required to make findings of fact and issue conclusions of law. 7 Fed. R. Civ. P. 52(a)(1). Both sides in this case accused Holmes of 8 misconduct, and Holmes should have anticipated that the court could 9 not and would not ignore those accusations in its Opinion. 10 Holmes could not reasonably have believed that the mere 11 existence of a stipulated judgment of dismissal with prejudice in 12 Scheets v. Holmes, presumably based on a settlement the terms of 13 which were not revealed to the court, protected him from any 14 possibility that the court would make findings adverse to him in 15 its Opinion in this case when all parties pointed at Holmes s 16 conduct in one way or another. In fact, it is highly likely that 17 the manner in which this case was tried, and the evidence that was 18 produced at trial in this case, formed some basis or motivation for 19 the settlement of Scheets v. Holmes. The official court reporter 20 for the trial of this case received an order, on either August 4 or 21 5, 2008, for the transcripts of the opening statements of counsel 22 and the Boyles, and the trial testimony of Cargal and Scheets. The 23 Cargal transcript was delivered to Ms. Rayburn on August 14, 2008, 24 and the Scheets transcript was delivered to her on September 18, 25 2008. Whether Holmes made a deliberate decision not to intervene or 26 simply failed to appreciate the consequences of not intervening in 27 28 OPINION AND ORDER Page 16 1 this case, the length of time between the trial, in August 2008, 2 and the settlement of Scheets v. Holmes in December 2008, gave 3 Holmes ample time to intervene in this case while negotiating the 4 settlement of Scheets v. Holmes, a course of conduct that truly 5 would have bought his peace. 6 Stage of the proceedings 7 Scheets asserts that postjudgment intervention is generally 8 disfavored because it creates delay and prejudice to existing 9 parties and undermines the orderly administration of justice. 10 Calvert v. Huckins, 109 F.3d 636, 638 (9th Cir. 1997); see also 11 United States v. Blue Chip Stamp Co., 272 F. Supp. 432, 436 (C.D. 12 Cal. 1967), aff d sub nom. Thrifty Shoppers Scrip Co. v. United 13 States, 389 U.S. 580 (1968)(motion after entry of decree should be 14 denied in any but the most unusual circumstances, and such 15 circumstances are not present where proposed intervenors had for 16 some time been aware of the existence and nature of the case, been 17 given every opportunity to be heard, and had not moved to intervene 18 until 19 arguments had been heard, and a consent judgment entered ). Holmes 20 has not responded directly to this argument. lengthy and complex negotiations had been completed, 21 Prejudice to parties 22 Holmes asserts that neither Scheets nor the Boyles has pointed 23 to any prejudice they would suffer if his motion to intervene were 24 allowed, arguing that the court could grant the relief he seeks 25 without 26 disturbing the judgment. I do not find this argument persuasive. making any new 27 28 OPINION AND ORDER Page 17 factual determinations and without 1 First, Holmes has included in his motion the argument that 2 intervention would permit him to rebut allegations underlying the 3 court s findings of fact, including the following: 1) Holmes and 4 Holmes Royer were engaged as litigation consultants, rather than as 5 independent accountants engaged to review ETI records and value 6 Scheets s shares; 2) Holmes and Holmes Royer did not participate in 7 any diversion of business from ETI to Savant; 3) Holmes had learned 8 that Cargal embezzled money from Savant; 4) Holmes and Holmes Royer 9 had no reason to believe that ETI s revenue numbers were inaccurate 10 because the financial information they generated were based on 11 representations to them by Cargal and the Boyles; and 5) neither 12 Holmes nor Holmes Royer knew of or participated in the Boyles s 13 alleged use of undisclosed ETI accounts. See Declaration of William 14 Holmes and attached exhibits. 15 The Boyles respond to this argument with a promise to offer 16 evidence, should Holmes be allowed to intervene and rebut the 17 allegations summarized above, that Holmes was the custodian of ETI 18 and Savant s financial information, and that he, not the Boyles, 19 was 20 information to be given to Scheets. the one who caused incomplete and inaccurate financial 21 On the basis of these arguments, I conclude that granting 22 Holmes s motion to intervene could very well inject new issues, 23 well beyond the scope of the original claims and defenses, into 24 this case and delay its ultimate resolution. These issues -the 25 knowledge, access to information, and conduct of the Boyles in 26 relation to the knowledge, access and conduct of Holmes and Holmes 27 28 OPINION AND ORDER Page 18 1 Royer -would mire the court and the parties in retrying facts and 2 deciding issues that are tangential to the issues as originally 3 tried in this case. It is by no means certain that such a process 4 would leave the facts unchanged and the judgment undisturbed. It 5 clearly would delay ultimate disposition of the case. In such 6 circumstances, I exercise my discretion to deny the motion to 7 intervene. See Smith v. Marsh, 194 F.3d 1045 (9th Cir. 1999). 8 The motion to intervene as of right under Rule 24(a)is denied 9 as untimely. Accordingly, I do not reach any of the remaining 10 elements of Rule 24(a). The motion for permissive intervention 11 under Rule 24(b) is denied on the grounds that it is untimely and 12 that 13 relitigation of facts, would delay disposition of this case, and 14 could prejudice the judgment Scheets has obtained. 15 III. Inherent authority to amend Opinion intervention would be likely to result in unnecessary 16 Holmes urges the court, if it denies the motion to intervene, 17 to exercise its inherent authority sua sponte to correct manifest 18 errors of fact and law. Gumbel v. Pitkin, 124 U.S. 131, 145-46 19 (1888)(equitable powers of court over own process, to prevent 20 abuse, oppression and injustice, are inherent). Holmes has not, 21 however, directed the court to any manifest errors of fact or of 22 law in its Opinion. I therefore decline to exercise such power. 23 IV. 24 Conclusion The Joint Motion of Patrick and Michael Boyle to Reopen and 25 for New Trial (doc. # 372) is DENIED. 26 /// 27 28 OPINION AND ORDER Page 19 1 The motion of William Holmes and W. Holmes & Co. to Intervene 2 or, in the Alternative for a New Trial or Other Orders (doc. # 373) 3 is DENIED. 4 IT IS SO ORDERED. 5 6 Dated this 7th day of May, 2009. 7 8 /s/ Dennis James Hubel Dennis James Hubel United States Magistrate Judge 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 OPINION Page 20
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