Federal Deposit Ins. Corp. v. Hanrahan

• Decision Date: 14 January 1980
• Docket Number: No. 79-1579,79-1579
• Citation: 612 F.2d 1051
• Parties: FEDERAL DEPOSIT INSURANCE CORPORATION, Plaintiff-Appellee, v. John P. HANRAHAN, Defendant. Appeal of Patricia E. HANRAHAN, Applicant for Intervention.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1051

612 F.2d 1051

57 A.L.R.Fed. 142

FEDERAL DEPOSIT INSURANCE CORPORATION, Plaintiff-Appellee, v. John P. HANRAHAN, Defendant Appeal of Patricia E. HANRAHAN, Applicant for Intervention.

No. 79-1579.

United States Court of Appeals Seventh Circuit.

Argued Nov. 1, 1979.

Decided Jan. 14, 1980.

Mark M. Camp, Wauwautosa, Wis., for defendant.

John W. Hein, Milwaukee, Wis., for plaintiff-appellee.

Before WOOD and CUDAHY, Circuit Judges, and GRANT, Senior District Judge. ^*

HARLINGTON WOOD, Jr., Circuit Judge.

This is an appeal from an order of the district court denying Mrs. Patricia E. Hanrahan's motion to intervene in attachment proceedings. We affirm.

On August 20, 1976, the Federal Deposit Insurance Corporation (FDIC) brought an action in the Federal District Court for the Eastern District of Wisconsin against John P. Hanrahan, a resident of Kansas, ¹ to collect on a promissory note in the principal amount of $51,652.78, plus interest. On September 12, during the pendency of the action, Mr. Hanrahan entered into a contract to sell his former Wisconsin residence, which he owned in joint tenancy with his wife, the appellant, Mrs. Patricia E. Hanrahan. On November 2, the day before the scheduled closing of the house sale, the district court, after a hearing, granted FDIC a writ of attachment against Mr. Hanrahan's interest ² in his former residence pursuant to Wisconsin Statutes sections 811.03(1)(e), 811.11, and 811.12 (1977). ³ Those sections provide for pre-judgment attachment of non-exempt Wisconsin real estate belonging to a non-resident debtor who is indebted in a sum exceeding fifty dollars. On November 9, Mr. Hanrahan moved to dissolve the writ, proposing to deposit into the court approximately $22,500, which represented one-half of the anticipated net proceeds from the sale of the house. After a hearing the court denied his motion. Within the next few days the parties agreed to a release of the writ provided Mr. Hanrahan deposit a $45,000 cash bond with the clerk of the court which would inure to the party ultimately prevailing in the action on the note. On November 14, the court entered an order adopting the stipulation. The residence was sold following the order. Mr. Hanrahan deposited the $45,000 with the court on November 16. On November 21 the court released the writ.

On December 20, Mrs. Hanrahan, also a resident of Kansas, moved to intervene as a party-plaintiff pursuant to rule 24(a)(2) of the Federal Rules of Civil Procedure by claiming a one-half interest in the $45,000 bond based upon her one-half ownership in the residence. The district court denied her motion on three grounds: (1) Mrs. Hanrahan's application to intervene was untimely; (2) the $45,000 release consideration was not comprised of her interest; and (3) by acquiescing in the conditional release of her property, Mrs. Hanrahan was estopped from asserting a separate interest in the funds on which the court conditioned the release.

Rule 24(a)(2) of the Federal Rules of Civil Procedure provides for intervention as of right by an applicant who: (1) timely applies; (2) claims an interest "relating to the property or transaction which is the subject of the action"; (3) is "so situated that the disposition of the action may as a practical matter impair or impede his ability to protect that interest"; and (4) is not "adequately represented by the existing parties." ⁴ Fed.R.Civ.P. 24(a)(2); Central States, Southeast, and Southwest Areas Health and Welfare Fund v. Old Security Life Insurance Co., 600 F.2d 671 (7th Cir. 1979).

Mrs. Hanrahan asserts that the district court incorrectly ruled on the timeliness of her motion to intervene. Timeliness is a threshold question in a rule 24(a) application and is determined by the court from all the circumstances in the exercise of its sound discretion. NAACP v. New York, 413 U.S. 345, 366, 93 S.Ct. 2591, 37 L.Ed.2d 648 (1973). That determination is not set aside on review without a showing of an abuse of discretion. Id.; Romasanta v. United Airlines, Inc., 537 F.2d 915 (7th Cir. 1976), Aff'd, United Airlines, Inc. v. McDonald, 432 U.S. 385, 97 S.Ct. 2464, 52 L.Ed.2d 423 (1977).

Mrs. Hanrahan claims that her motion to intervene in the attachment proceedings on December 20, thirty days after the writ of attachment on her house was discharged, was timely in view of her remoteness from the forum, the necessity to retain local Wisconsin counsel, and the need for local counsel to become acquainted with the nature of the dispute. The essence of her claim is that she had no interest in the attachment proceedings until her half of the proceeds from the sale of the house was deposited into court in exchange for release of the writ. Thus, she asks the court to calculate timeliness from the date of release of the writ of attachment. Her right to intervene, however, arose well in advance of that date; it arose on November 2 when the writ of attachment issued against her husband's interest in the jointly owned residence that was under contract for sale. Her interest arose at that time because she then had an interest, of which she was aware, in the property. Although Mrs. Hanrahan did not receive notice of that writ, she cannot reasonably claim, nor does she claim, that she was actually unaware of the proceedings. Commonwealth of Pennsylvania v. Rizzo, 530 F.2d 501, 507 (3d Cir.), Cert. denied, 426 U.S. 921, 96 S.Ct. 2628, 49 L.Ed.2d 375 (1976). In fact, her counsel admitted in oral argument that she did not intervene sooner because the attachment was not on her property, not because she did not have notice of the proceedings. The writ of attachment prevented the closing of the sale of the house in which she had an interest and this effect ought to have alerted her to the necessity of intervention even though her half interest in the property was not attached. However, she failed to exercise her rights and instead waited forty-nine days from the date of attachment to file her application to intervene, a period of time which the district court could find not excusable on account of remoteness from the forum or need to familiarize an attorney with the nature of the dispute.

Moreover, to allow Mrs. Hanrahan to intervene this late in the proceedings would cause the very harm to FDIC that underlies the timeliness requirement of rule 24. Romasanta, 537 F.2d at 918; EEOC v. United Air Lines, Inc., 515 F.2d 946, 949 (7th Cir. 1975). FDIC obtained a writ of attachment against Mr. Hanrahan's property pursuant to statutory procedures because it anticipated judgment against Mr. Hanrahan on its action on the $51,652.78 note. FDIC had the statutory right to refuse to release that writ unless Mr. Hanrahan delivered to the court a bond equal to either the amount alleged by FDIC to be due, the value of the property attached, or a sum fixed by the court. ⁵ However, in light of the impending sale of the house, FDIC consented, and the court agreed, to release the writ on a $45,000 bond. After the writ was released, the property was sold. To allow Mrs. Hanrahan to intervene subsequent to the sale of that property to contest the validity of the $45,000 cash bond may cause irreparable harm to FDIC whose release of the security is irrevocable now that the house has been sold. If Mrs. Hanrahan were successful in her claim to one-half of the $45,000 bond now deposited in the court, FDIC,...