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Katebian v. Missaghi

United States District Court, E.D. Michigan, Southern Division

November 21, 2019

Morteza Katebian, Plaintiff,
v.
Arash Missaghi, et. al., Defendant.

          OPINION AND ORDER DENYING SOUTHFIELD VACANT LAND, LLC'S MOTION TO INTERVENE (ECF NO. 47)

          Sean F. Cox United States District Court Judge.

         To protect its mortgage on vacant land, a lender moves to intervene in this shareholder dispute. Plaintiff and Defendants oppose the lender's intervention.

         Because the lender seeks to intervene solely to protect its own contingent claim on Defendants' alleged asset, it lacks the substantial legal interest required for intervention as of right. Moreover, any interest that it does have will be adequately represented by the Defendants. And, because the motion was untimely and the circumstances do not support permissive intervention, that request also fails. Accordingly, the Court will deny the motion to intervene.

         BACKGROUND

         Plaintiff Morteza Katebian alleges that Defendants Arash Missaghi, Laila Alizadeh, and Troy Wilson (the “Individual Defendants”) forged documents that purported to transfer his total ownership interest in Defendant Liberty & York to Alizadeh. In this lawsuit, Plaintiff seeks a declaratory ruling on whether he or Alizadeh owns Liberty & York, and alleges counts for common law conversion, statutory conversion, and civil conspiracy.[1] In short, Plaintiff and Defendants are fighting over who actually owns Liberty & York and whether the Individual Defendants stole, and conspired to steal, Plaintiff's ownership interest.

         Liberty & York sits atop a somewhat complicated corporate structure. It is the sole shareholder of Skymark Properties Corporation, which in turn is the sole member of a series of limited liability companies including Skymark Properties II, LLC. (“Skymark II”). When the Individual Defendants controlled Liberty & York and its subsidiaries, Skymark II conveyed vacant land in Southfield, Michigan (“the Southfield Property”) to Skymark Properties Vacant Land, LLC (“Skymark Vacant Land”).[2] The next day, Skymark Vacant Land granted a mortgage on the Southfield property to another non-Libery-&-York company, Southfield Vacant Land, LLC (“Intervenor”). This mortgage secured a $1, 000, 000 loan from Intervenor to Skymark Vacant Land, .

         Because Plaintiff contends that he-not the Individual Defendants that approved the conveyance-is the rightful owner of Liberty & York and its subsidiaries, he filed a quiet-title action against Intervenor in Oakland County Circuit Court, seeking to invalidate this allegedly unauthorized conveyance and mortgage. Plaintiff filed the state lawsuit on January 2, 2019, roughly two months after he filed this federal lawsuit against the Defendants. The state case was assigned to the Honorable Martha D. Anderson.

         With his state court complaint, Plaintiff also filed a motion to enjoin Intervenor from foreclosing on the mortgage, which by that time was in default. The state court granted that motion and stayed the foreclosure for thirty days. Ultimately, the parties in the state court case stipulated to the entry of an order staying the foreclosure until Judge Anderson ruled on the Intervenor's motion for summary disposition.

         Intervenor represents that, on April 22, 2019, the state court held a status conference, at which the parties and the court agreed to three things: (1) Intervenor would file a motion for summary disposition; (2) Plaintiff would file a motion to stay the state case until this Court disposed of the federal case; and (3) the court would hear both motions at the same time.

         On April 26, 2019, Intervenor filed its motion for summary disposition, arguing that Plaintiff did not have personal standing to bring the quiet-title claim. Plaintiff responded, arguing that, until this Court decides who owns Liberty & York, the validity of the mortgage cannot be decided by the state court. Plaintiff also filed his motion to stay the state court proceedings until this Court's decision.

         The state court scheduled a hearing on Plaintiff's motion to stay but not Intervenor's motion for summary disposition. Intervenor represents that, as the hearing approached, Plaintiff agreed to withdraw the motion to stay because the court had not scheduled a simultaneous hearing for the motion for summary disposition. Intervenor represents that, because Plaintiff agreed to withdraw the stay motion, the state court cancelled the scheduled hearing and Intervenor did not file a response. “Despite this, on July 10, 2019, the [state] court entered its order granting the stay motion.” (ECF No. 47, PageID 937). Accordingly, the state court action appears to be stayed until this Court makes its decision. Intervenor remains enjoined from foreclosing on the Southfield Property.

         Seemingly unhappy with the court's decision to stay the state case, Intervenor has now moved to intervene in this case. Intervenor argues that it meets the requirements for intervention of right under Fed.R.Civ.P. 24(a)(2) or, in the alternative, the requirements for permissive intervention under Fed.R.Civ.P. 24(b)(1)(B). Plaintiff and Defendants oppose the motion to intervene.[3]

         ANALYSIS

         Under Rule 24, there are two avenues by which a non-party can intervene in a pending case: Intervention of Right and Permissive Intervention. Intervenor invokes both avenues in its motion.

         I. ...


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