ELR Citation: ELR 20374
No(s). 92-6300 (2d Cir. Jan 26, 1994)

The court holds that a bank holding a mortgage on property located within a Superfund site may not intervene as of right under the Federal Rule of Civil Procedure 24(a)(2) or §113(i) of the Comprehensive Environmental Response, Compensation, and Liability Act in a suit by the United States to recover cleanup costs from lessees of property within the site after the government settled its claims against the lessees. The court addresses Rule 24(a)(2)'s and §113(i)'s motion to intervene using Rule 24(a)(2)'s test for intervention, because conditions for intervention under each provision are nearly identical. The court holds that the bank's motion to intervene was not timely, despite the bank's claim that it was unaware of the suit and subsequent settlement agreement. Addressing the several aspects of a timely motion to intervene, the court finds that the bank had constructive knowledge of its interest in the underlying action for at least 15 months and actual knowledge for eight months before it filed its motion to intervene. The court also finds that permitting the motion to intervene would unduly prejudice the settling parties by halting the cleanup efforts and forcing renegotiation. The court concludes that prejudice to the bank upon denial of its motion to intervene does not tip the balance in its favor, because although the bank would have been better able to protect its security interest had it been permitted to intervene, there is no immediate affect on the value of its collateral to warrant reversal of the denial of its motion. Also, any restrictions on the use of the property while the cleanup is proceeding will only affect the bank indirectly. The court also finds that the bank's delay in filing for intervention is not justified by any unusual circumstances.

The court holds that the district court did not abuse its discretion by denying the bank's motion for permissive intervention under Rule 24(b), given that the parties to the action had already agreed to the terms of the settlement and that intervention would require renegotiation and delay the cleanup efforts. Finally, the court holds that the bank was not a necessary party for a just adjudication of the action and, therefore, was not required to be joined under the Federal Rule of Civil Procedure 19(a).

Counsel for Plaintiff
John A. Bryson, Peter A. Appel
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Counsel for Defendant
Donald W. Stever
Dewey & Ballantine
1301 Avenue of the Americas, New York NY 10019
(212) 259-8000
Howard B. Epstein
Lord Day & Lord Barrett Smith
1675 Broadway, New York NY 10019
(212) 969-6000

Cardamone, J. (before Feinberg and Altimari, JJ.):