Spring Constr. Co., Inc. v. Harris
| Decision Date | 22 January 1980 |
| Docket Number | 78-1876,Nos. 78-1875,s. 78-1875 |
| Citation | 614 F.2d 374 |
| Parties | SPRING CONSTRUCTION CO., INC., Appellee, and Lawyers Title Insurance Corp., Appellant, and Bank of Va-Eastern, First & Merchants National Bank of Tidewater, Appellees, v. Patricia R. HARRIS, Secretary of the Department of Housing and Urban Development, Appellee. SPRING CONSTRUCTION CO., INC., Appellant, and Lawyers Title Insurance Corp., Appellee, and Bank of Va-Eastern, First & Merchants National Bank of Tidewater, Intervening Plaintiffs, v. Patricia R. HARRIS, Secretary of the Department of Housing and Urban Development, Appellee. |
| Court | U.S. Court of Appeals — Fourth Circuit |
William A. Cox, III, Norfolk, Va. (Kellam, Pickrell & Lawler, Norfolk, Va., Victor A. Altman, William S. Tenant, Krooth & Altman, Norfolk, Va., on brief), for Spring Const. Co., Inc.
James C. Howell, Norfolk, Va. (Willcox, Savage, Lawrence, Dickson & Spindle, Norfolk, Va., on brief), for Lawyers Title Ins. Co., Inc.
John J. O'Keefe, III, Chesapeake, Va. (Outland, Gray, O'Keefe & Hubbard, Chesapeake, Va., on brief), for First & Merchants Nat. Bank.
James S. Mathews, Norfolk, Va. (Vandeventer, Black, Meredith & Martin, Norfolk, Va., on brief), for Bank of Va-Eastern.
Before WIDENER and PHILLIPS, Circuit Judges, and THOMSEN, * Senior District Judge.
Spring Construction Co., Inc. (Spring) filed this action in 1973 against the Secretary of the Department of Housing and Urban Development (HUD) and Parker-Riddick Village, Inc. and Cogic Homes, Inc. (Owners), seeking damages for breach of contract and equitable relief, arising out of a contract between Spring as general contractor and Owners for the construction of two federally financed housing projects in Suffolk, Virginia. The district court denied relief and Spring appealed. We reversed and held that Spring was entitled to recover as a creditor third party beneficiary of the building loan agreements and that an equitable lien attached to the res in favor of Spring. The case was remanded to the district court for a determination of damages. The facts are set out in detail in that opinion, Spring Construction Co. v. Harris, 562 F.2d 933 (4 Cir. 1977).
The district court thereafter granted the motions of Lawyers Title Insurance Company (LTIC) and Bank of Virginia and First and Merchants National Bank (Banks) to intervene. LTIC had issued mortgagee title insurance policies on these projects to VNB Mortgage Corporation (VNB), the construction lender, and had been required to pay claims of subcontractors and materialmen. The Banks had obtained judgments against Spring in a state court in Norfolk in 1976.
Following a hearing in June 1978, the district judge filed an opinion on August 28, 1978, concluding that He entered a formal order to that effect on the same day.
Spring, LTIC and HUD appealed from that decision. HUD subsequently withdrew its appeal. No one now disputes the amount of Spring's recovery from HUD or the priority of the attorney's lien against that recovery. Any error with respect to permitting intervention by the Banks herein is moot, since the Banks have perfected a lien against the fund by other means, subject only to the lien for attorney's fees. The issues presented for review are: (1) whether the district court was correct in allowing LTIC to intervene; (2) whether LTIC is entitled to equitable relief; (3) whether the district court properly considered the affirmative defenses raised by Spring; and (4) the relative priorities of the liens of Spring's attorneys, the Banks and LTIC.
(1)
In opposition to LTIC's intervention, Spring argues that LTIC did not comply with the requirements of Rule 24(c) because LTIC's motion to intervene did not state the grounds for intervention and was not accompanied by a pleading setting forth the claim for which intervention is sought. Although some cases have held that intervention should be denied when the moving party fails to comply strictly with the requirements of Rule 24(c), the proper approach is to disregard non-prejudicial technical defects. See 7A Wright and Miller, Federal Practice and Procedure § 1914 (Supp. 1978) and cases cited in n. 84 thereto. The petition and accompanying affidavit filed by LTIC set forth sufficient facts and allegations to apprise Spring of LTIC's claims. Moreover, LTIC's failure to file an accompanying pleading was rectified when it filed its amended complaint shortly thereafter, and it does not appear that Spring was prejudiced by such failure.
Spring also argues that LTIC's intervention was not timely, because this litigation began in 1973 and it was not until after our September 1977 decision in favor of Spring that LTIC sought to intervene. It does not appear, however, that LTIC was in a position to intervene during the early stages of this litigation. LTIC had contested the validity of the liens of Spring's subcontractors and materialmen in various suits in the state court, and it was not until April 1977 that LTIC reached a settlement with these subcontractors and materialmen, paid them, and received assignments of their claims against Spring. The prior appeal in this case was then pending, and LTIC filed its claim promptly after that appeal was decided. 1
An application of intervention, whether permissive or of right, must meet the requirement of timeliness. Mere passage of time is but one factor to be considered in light of all the circumstances. Atkins v. State Board of Education, 418 F.2d 874 (4 Cir. 1969). The most important consideration is whether the delay has prejudiced the other parties; in this case no party has been prejudiced by LTIC's waiting to intervene until the case was remanded to the district court. The district court did not abuse its discretion in finding that LTIC's application for intervention was timely in light of all of the circumstances.
The district court did not specify whether the intervention of LTIC was permissive or of right. Spring claims that if LTIC intervened permissively, under Rule 24(b), an independent jurisdictional basis (complete diversity in this case) was required, and was not fulfilled. Although a party seeking permissive intervention must generally establish an independent jurisdictional basis, there are exceptions to that rule. Francis v. Chamber of Commerce, 481 F.2d 192, 195 n. 6 (4 Cir. 1973); 7A Wright and Miller, § 1917, pp. 586-588. LTIC has shown a sufficient interest in the property and transactions to be entitled to intervention of right under Rule 24(a). The 1966 amendments liberalized Rule 24(a); now, in order to intervene of right, a party need not prove that he would be bound in a res judicata sense by any judgment in the case. Where, as here, the disposition of a case would, as a practical matter, impair the applicant's ability to protect his interest in the transaction, intervention may be allowed under Rule 24(a). See Advisory Committee's Note to the 1966 amendment to Rule 24(a). We conclude that the district court did not err in allowing the intervention of LTIC and the Banks.
(2)
LTIC advanced four possible theories under which it might recover against Spring: assignment of contract rights, quantum meruit, unjust enrichment and constructive trust. Although the district court did not discuss all of these in detail, it held that a constructive trust was not established, but that LTIC was "entitled to recover under the equitable doctrine of unjust enrichment, after the Banks are paid."
We agree that LTIC is not entitled to recover under a constructive trust theory. See Pair v. Rook, 195 Va. 196, 77 S.E.2d 395 (1953); Glen Construction Co., Inc. v. Bank of Vienna, 410 F.Supp. 402, 406 (E.D.Va.1976), rev'd on other grounds, 557 F.2d 1050 (4 Cir. 1977); Perrin & Martin, Inc. v. United States, 233 F.Supp. 1016 (E.D.Va.1964).
We also agree that LTIC, as assignee of the claims of the subcontractors and materialmen, was entitled to recover under the equitable doctrine of unjust enrichment. Considerations are present here that are not present in the ordinary owner-contractor-subcontractor relationship. All of the parties looked to the federally insured mortgage funds for compensation. See ...
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