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Gertz v. JVC Americas Corp. (In re Arter & Hadden, LLP)
Citations: 339 B.R. 454; 2006 Bankr. LEXIS 320Docket: Bankruptcy No. 03-23293; Adversary No. 05-1475
Court: United States Bankruptcy Court, N.D. Ohio; February 8, 2006; Us Bankruptcy; United States Bankruptcy Court
Gerald M. Fisher filed a motion to intervene in an adversary proceeding initiated by Marc P. Gertz, the Chapter 7 Trustee for the Debtor, seeking to recover $118,639.10 for unpaid legal services related to the JVC Litigation. The litigation involved JVC Americas Corp., which had retained John T. Lillis, who subsequently engaged the Debtor, Arter, Hadden, LLP. After the Debtor's dissolution in July 2003, Fisher, a partner at the Debtor, moved to a new firm, Lord Bissell, Brook, LLP (LBB), which was later involved in the JVC Litigation. Fisher claims an entitlement to $114,000 of the funds currently held in a trust account by Lillis, having received an assignment of LBB's interest in the attorneys' fees. Fisher contends that he qualifies for intervention as of right under Federal Rule of Civil Procedure 24(a), which requires a timely application, a substantial legal interest, a risk of impairment to that interest without intervention, and inadequate representation by existing parties. The court will assess whether Fisher has demonstrated the last two prongs, as the Trustee acknowledges Fisher's timely application and legal interest. The court's review of the right to intervene is de novo, but the timeliness determination is reviewed for abuse of discretion. To establish the impairment element necessary for intervention, a prospective intervenor must demonstrate that their substantial legal interest may be affected if intervention is denied, which is a minimal burden. Fisher contends that his interest in certain funds is at risk of impairment due to the Court's potential ruling on entitlement to these funds. The Trustee argues that allowing Fisher's intervention would complicate proceedings and lead to inconsistent outcomes. However, the possibility of varying adjudications supports Fisher's claim that his rights could be compromised without intervention. Fisher claims entitlement to a portion of the funds held by Lillis, and if the Trustee prevails, the funds would be released to the Trustee, obstructing Fisher's recovery efforts. Regarding inadequate representation, applicants must show that their interests are not adequately represented by an existing party, which is typically a minimal burden. A presumption of adequate representation exists if the intervenor shares the same ultimate objective as a party. While both Lillis and Fisher aim to demonstrate that the Trustee is not entitled to the escrowed funds, their interests diverge. Fisher asserts a right to the majority of the funds, while Lillis may not have the same incentive to defend the case vigorously. Given this divergence, Fisher's motion to intervene is justified and granted, overruling the Trustee's objection, with each party responsible for their own costs.