United States District Court, D. Arizona
ORDER
Hon.
Rosemary, Marquez, United States District Judge
Pending
before the Court is a Motion to Intervene filed by non-party
First Citizens Bank & Trust Company d/b/a First Citizens
Bank (“First Citizens”). (Doc. 19.) Plaintiff Sun
Sky Hospitality, LLC (“Plaintiff” or “Sun
Sky”) filed a Response in opposition (Doc. 20), and
First Citizens filed a Reply (Doc. 21).
I.
Background
In
2010, First Citizens' predecessor-in-interest loaned
Plaintiff $3.737 million, with the United States Department
of Agriculture (“USDA”) guaranteeing 80% of the
loan principal and applicable interest under its Business and
Industry Guaranteed Loan Program. (Doc. 19 at
3.)[1]
In an underlying state-court proceeding, First Citizens
alleges that Sun Sky defaulted on the USDA-backed loan.
(Id. at 4.) Plaintiff has asserted
frustration-of-purpose and failure-to-mitigate defenses in
the state-court proceeding. (Id.)
On
February 21, 2018, Plaintiff filed the above-captioned
lawsuit pursuant to the Administrative Procedure Act and the
Declaratory Judgment Act, seeking to depose USDA employee
Gary Mack under state-court subpoena and to compel production
of documents in the USDA's possession. (See Doc.
1.) Plaintiff and Defendant have been engaged in efforts to
resolve, without Court involvement, the issue that
precipitated this case and a companion case, United
States v. Sun Sky Hospitality LLC, MC 18-00002-RM. As a
result of those efforts, Plaintiff conducted a deposition of
Mr. Mack on June 13, 2018, and Plaintiff and Defendant agreed
to a second, limited deposition if necessary after Defendant
produced additional documents to Plaintiff. (Doc. 14 at 1-2;
see also Doc. 20-1 at 4-5.)
On
September 11, 2018, Plaintiff and Defendant notified chambers
of a discovery dispute concerning documents that Defendant
had withheld from production on the grounds that they may be
privileged. (See Doc. 16.) On September 18, 2018,
the Court ordered Defendant to submit the relevant documents
to the Court for in camera review. (Id.)
The Court further ordered Defendant to serve a copy of its
Order on counsel representing First Citizens in the
underlying state litigation. (Id.) Defendant
complied with both orders. (Docs. 17, 18.) The documents
submitted for in camera review are:
1. An April 29, 2011 engagement letter from attorney Margaret
Gillespie of May Potenza Baran & Gillespie, P.C. to First
Citizens;
2. An August 28, 2013 document titled “Proposed
Action” from Margaret Gillespie to First Citizens,
which sets forth legal opinions and is marked
“attorney-client privileged”; and
3. A September 8, 2015 confidential mediation memorandum from
May Potenza Baran & Gillespie, P.C.
On
September 21, 2018, First Citizens filed the pending Motion
to Intervene. (Doc. 19.) First Citizens seeks to intervene
for the limited purpose of (1) addressing Defendant's
potential disclosure of information and documents that First
Citizens asserts are privileged, (2) addressing this
Court's in camera review of the information and
documents, and (3) seeking a protective order to preclude
improper disclosure of the information and documents.
(Id. at 1.)
II.
Motion to Intervene
A.
Legal Standard
Under
Rule 24(a)(2) of the Federal Rules of Civil Procedure,
“the court must permit anyone to intervene who, ”
on timely motion, “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.” Fed.R.Civ.P. 24(a)(2). When
analyzing a motion to intervene under Rule 24(a)(2), the
Court must determine (1) whether the motion is timely; (2)
whether the movant has “a ‘significantly
protectable' interest relating to the property or
transaction which is the subject of the action”; (3)
whether the movant is “so situated that the disposition
of the action may as a practical matter impair or impede its
ability to protect that interest”; and (4) whether the
movant's interest is “inadequately represented by
the parties to the action.” Wilderness Soc'y v.
U.S. Forest Serv., 630 F.3d 1173, 1177 (9th Cir. 2011)
(en banc) (internal quotation omitted).
Under
Rule 24(b)(1)(B), on timely motion, the court has discretion
to permit anyone to intervene who “has a claim or
defense that shares with the main action a common question of
law or fact.” Fed.R.Civ.P. 24(b)(1)(B). When analyzing
a motion for permissive intervention under Rule 24(b), the
Court must determine (1) whether there is “an
independent ground for jurisdiction”; (2) whether the
motion is timely; and (3) whether there exists “a
common question of law and fact between the movant's
claim or defense and the main action.” Freedom from
Religion Found., Inc. v. Geithner, 644 F.3d 836, 843
(9th Cir. 2011). “In exercising its discretion over
...