Murken v. Solv-ex Corporation

124 P.3d 1192

2005 NMCA 137

Arlo and Joyce MURKEN, on behalf of themselves and all others similarly situated, Plaintiffs-Appellees, v. SOLV-EX CORPORATION, John S. Rendall, W. Jack Butler, and Deutsche Morgan Grenfell, Inc., Defendants-Appellees, and John S. Rendall, and W. Jack Butler, Counter and Cross Claimants-Appellees, v. Suncor Energy, Inc.; Syncrude (Canada), Ltd.; Shell (Canada) Ltd.; Exxon-Mobil Corp.; Deutsche Bank, Ag; Lee Raymond and Kenneth Rawl (Exxon); Al Hyndman (True North Energy); Helmar Kopper (Deutsche Bank); and Merrill Lynch Pierce Fenner and Smith, Inc., Third Party Defendants-Appellees, and Bernard C. Baier (including shares held by Pension and Profit sharing Plan FBO Bernard C. Baier with Suburban Radiology, Patricia A. Baier, Mary Kathleen Baier, and Susan Baier); John Boessel; Harold S. Carpenter (including shares held by Marilyn N. Carpenter, Heartland Systems Company, and Carpenter Investment Company); Lee S. Chapman; Clark A. Colby (including shares held by Thomas Colby, Kimberly Colby, Clark A. Colby, Jr., Melinda Colby, Clark A. Colby III, Vicki Colby, Robert Vogel, and Mr. and Mrs. Kenneth Brooke, Lloyd Clarke, Peggy Williams, Stephanie Kempf, Jeff Lamson, Charles I. Colby and Ruth Colby Family Trust Number One, Ruth Colby Trust `A', Charles I. Colby and Ruth Colby Nation Development Trust, Charles I. Colby and Ruth Colby Family Trust, and The Six Incorporated Trust); Keith Denner; Joey

Feste; Joe Fielder; William R. and Virginia R. Fielder; Jerry V. Flatt; Samuel A. Francis; Kenneth L. Haack; Armon J. Helvig; Steve Lindell; Holbrook Mahn; Edward J. Michael; Toby Michael; Cliff Phelps; Kelly Wentzel; and Don White, Proposed Intervenors-Appellants.

No. 24,685.

Court of Appeals of New Mexico.

October 25, 2005.

Branch Law Firm, Turner W. Branch, Albuquerque, NM, Alexander, Hawes & Audet LLP, William M. Audet, San Jose, CA, for Appellees Arlo and Joyce Murken.

Modrall, Sperling, Roehl, Harris & Sisk, P.A., John R. Cooney, Charles A. Armgardt, Albuquerque, NM, Milbank, Tweed, Hadley & McCloy LLP, Jeffrey Barist, New York, NY, Michael D. Nolan, Washington, DC, for Appellee Deutsche Morgan Grenfell, Inc.

Johnson & Nelson, P.C., Robert A. Johnson, Albuquerque, NM, Jenkens & Gilchrist, Joel R. Sharp, Dallas, TX, for Appellee Merrill Lynch.

Sanchez, Mowrer & Desiderio, P.C., Robert J. Desiderio, Albuquerque, NM, for Appellants.

OPINION

KENNEDY, Judge.

{1} A securities fraud class action was filed against Solv-Ex Corporation (Solv-Ex), two of its executives (John S. Rendall and W. Jack Butler), and Deutsche Morgan Grenfell, Inc. (DMG) on October 29, 1996, after the value of Solv-Ex stock abruptly plummeted. Almost seven years later, on August 13, 2003, a group of persons claiming to be class members sought to intervene (the Intervenors), asserting that their claims were different from the class claims because the Intervenors believed that DMG, Merrill Lynch, and other unidentified third parties were at fault and not Rendall or Butler. This appeal asks us to determine whether the district court properly denied this motion to intervene.

{2} We initially hold that the Intervenors have, through a failure to include specific cites to the voluminous record proper, limited the scope of our review. We hold that, to the extent that we are able to review their arguments, the district court did not abuse its discretion in ruling that the Intervenors' motion to intervene was untimely. We affirm.

BACKGROUND

{3} In October 1996, after the value of Solv-Ex stock plummeted, Solv-Ex shareholders sued Solv-Ex, Rendall, Butler, and DMG, primarily claiming that Defendants had in various ways deliberately distorted Solv-Ex's financial condition. The underlying facts of this case were also litigated in several other forums. See, e.g., In re Solv-Ex Corp. Secs. Litigation, 198 F.Supp.2d 587 (S.D.N.Y.2002). In this case, various motions to dismiss the complaint were litigated for almost a year before DMG was dismissed as a party in July 1997. Solv-Ex filed bankruptcy the next month.

{4} On August 22, 1997, the Class Plaintiffs¹ filed an amended complaint naming only DMG, Rendall, and Butler. DMG also moved to dismiss this complaint. While the litigation in the other Solv-Ex cases apparently continued, and Solv-Ex asserted some third-party claims in 1998, the record otherwise remains silent as to what occurred in the case before us over the next several years. In July 2001, the district court dismissed some of the Class Plaintiffs' claims. After this, there are no pleadings in the record until October 25, 2002, when Rendall filed his answer along with counterclaims, cross-claims, and a third-party complaint. Rendall named approximately a dozen new parties that he blamed for Solv-Ex's downfall. Butler later asserted his own claims.

{5} The numerous new parties filled the next year with extensive motions, hearings, and orders. Rendall's claims against Merrill Lynch were compelled to arbitration and he appealed that ruling. Otherwise, approximately six motions to dismiss, several answers, and other matters were pending. On May 22, 2003, the parties attended mediation in Texas.

{6} On August 13, 2003, a motion to intervene was filed on behalf of over twenty individually named parties claiming to be "named Solv-Ex shareholders." The motion stated that these parties were "shareholders or former shareholders of Solv-Ex stock." However, the motion did not specifically describe the Intervenors' relationship to the Class Plaintiffs. The motion asserted that the Intervenors' claims were different from the Class Plaintiff shareholders' claims because the Intervenors believed that DMG and Merrill Lynch, not Rendall or Butler, were at fault. The Class Plaintiffs, Merrill Lynch, and DMG all filed responses opposing intervention (and are hereinafter referred to as "the opponents"). The opponents asserted, inter alia, that the Intervenors' motion was untimely, that their proposed complaint failed to state a claim for which relief could be granted, had not shown that their rights were not adequately represented by the Class Plaintiffs, and that the Intervenors had failed to show that they had an interest that would be impaired by resolution of the litigation.

{7} The district court heard this matter in October 2003. The Intervenors' counsel stated that the individuals he represented currently owned approximately one-third of Solv-Ex stock. He asserted that this meant that the Intervenors suffered one-third of the damage when Solv-Ex stock fell. Therefore, counsel reasoned, the Intervenors had an interest relating to the property or transaction.

{8} The Intervenors further claimed that, as class members, they had a right to intervene when the named representatives were not adequately representing their interests. The allegedly inadequate representation stemmed from the Intervenors' wish to assign blame to someone else for a common injury. The Intervenors asserted that because the class had never been certified, they had never had an opportunity to be heard on this issue.

{9} The opponents pointed out that there was no evidence that the Intervenors were part of the putative class at all. The Intervenors responded that they were part of the putative class. They argued that since Rendall, Butler, and the Intervenors combined owned at least half of the Solv-Ex stock, that meant that the Intervenors must have purchased or sold some of their stock within the ten-month class period.

{10} The opponents also argued that the Intervenors were not asserting the same claims that the Class Plaintiffs had against Defendants. Instead, they claimed, the Intervenors were attempting to institute a new action against parties not named in the Class Plaintiffs' complaint based on a theory different from the Class Plaintiffs' theory. Merrill Lynch focused on its assertion that the Intervenors' claims were identical to Rendall's and Butler's claims, which had been compelled to arbitration.

{11} The Intervenors agreed that their claims were different from Class Plaintiffs' claims. The Intervenors reiterated that they were not adequately represented, but "at odds with" the Class Plaintiffs. The district court denied the motion to intervene, finding that:

there is no basis for intervention whatsoever. Even in the most unfathomable concept of time, as imagined by lawyers and judges, seven years cannot be considered timely, given what has transpired in this case. For that and for all of the reasons advanced by the opponents to the motion, the motion is not well-taken and is therefore denied.

The district court's November 2003 written order found the motion to intervene untimely. The district court also found that the Intervenors had not shown "an interest in the subject matter" of the suit, had "fail[ed] to show any interest that would be impaired by the disposition" of the suit, and had "fail[ed] to show any interest that would not already be adequately represented by current parties." This appeal followed.

DISCUSSION

Standard of Review

{12} The threshold question of whether the motion to intervene was timely under Rule 1-024 NMRA is reviewed for an abuse of discretion. In re Norwest Bank of N.M., N.A., 2003-NMCA-128, ¶ 17, 134 N.M. 516, 80 P.3d 98. The Intervenors correctly assert that the district court "should be more circumspect in [its] exercise of discretion when the intervention is of right rather than permissive." Apodaca v. Town of Tome Land Grant, 86 N.M. 132, 133, 520 P.2d 552, 553 (1974). A misapplication of law is an abuse of discretion. Wilson v. Mass. Mut. Life Ins. Co., 2004-NMCA-051, ¶ 21, 135 N.M. 506, 90 P.3d 525.

Timeliness

{13} The Intervenors do not argue, and we do not address, whether they should have been permitted to intervene pursuant to Rule 1-024(B) (permissive intervention). We also note that this case raises other questions that we do not reach, such as whether intervention by class members is...