Stewart v. Tuli

• Decision Date: 01 September 1989
• Docket Number: No. 1304,1304
• Parties: Walter W. STEWART, et ux. v. Vijai K. TULI, et al. ,
• Court: Court of Special Appeals of Maryland

Page 726

82 Md.App. 726

573 A.2d 109

Walter W. STEWART, et ux. v. Vijai K. TULI, et al.

No. 1304, Sept. Term, 1989.

Court of Special Appeals of Maryland.

May 9, 1990.

G. Vann Canada, Jr. (Miles & Stockbridge, on the brief), Rockville, for appellants.

Morton A. Faller (Meyer, Faller, Weisman and Greenburg, P.C., on the brief), Washington, D.C., for appellee, Tuli.

Argued before ALPERT, FISCHER and CATHELL, JJ.

ALPERT, Judge.

Appellee, Vijai K. Tuli ("Tuli"), filed suit against the appellees, William J. Novak and Myra J. Novak (the "Novaks") to specifically enforce a contract for the sale of real property owned by the Novaks. Subsequently, the appellants, Walter W. Stewart and Nancy S. Stewart (the "Stewarts"), filed a Motion to Intervene to assert their rights under a contract for the same real property that is the subject matter of the Tuli Contract. The motion was denied.

On appeal, the Stewarts ask this court to consider the following questions:

I. Did the court below err by denying the Stewarts' motion to intervene on the basis that their interests were identical to those of the Novaks and were already adequately presented?

II. Did the court below err by denying the Stewarts' motion to intervene because the time of performance under the terms of the Stewart contract is indefinite and, consequently, either violative of the rule against perpetuities or constitutes an unreasonable restraint on the alienation of real property?

We hold that the court below erred in denying the Stewarts' Motion to Intervene. Accordingly, we reverse the decision of the trial court.

Facts

The Novaks and Tuli entered into a written Contract of Sale dated January 18, 1989 (the "Tuli Contract"). Tuli agreed to purchase and the Novaks agreed to sell Lots 18, 14, and part of Lot 13, Block B, in "Section 1, Potomac Manors Subdivision," Potomac, Maryland (the "property"). Paragraph 8 of an Addendum to the Tuli Contract provided that the Novaks were entitled to examine certain financial information to be furnished by Tuli. After reviewing the information provided by Tuli, the Novaks informed Tuli that the contract was null and void, alleging that the information was not satisfactory.

The Novaks then entered into a written contract dated February 20, 1989 with the Stewarts for the same property (the "Stewart Contract"). Aware that Tuli might attempt to enforce the Tuli Contract, paragraph 2 of an Addendum to the Stewart Contract provided that if Tuli attempted to keep "his contract alive," the Stewarts did not have to go to settlement until such time as clear title could be granted by the Novaks.

Tuli filed a complaint against the Novaks for specific performance on March 4, 1989. The Stewarts then filed a Motion to Intervene as a party defendant, which was vigorously opposed by the Novaks. On July 31, 1989, the court denied the Stewarts' motion.

Intervention As of Right

The Stewarts contend that the court below erred in denying their Motion to Intervene. They assert that they are the owners of a valuable equitable interest in real estate which is not or may not be adequately protected.

In Hartford Ins. Co. v. Birdsong, 69 Md.App. 615, 519 A.2d 219 (1987), this Court had an opportunity to examine Md. Rule 2-214(a) and Fed.R.Civ.P. 24(a), from which the former was derived. We then adopted a four-part test devised by the federal appellate courts to determine whether or not intervention as a matter of right is justified in any particular case. These requirements are:

(1) the application for intervention must be timely; (2) the applicant must have an interest in the subject matter of the action; (3) disposition of the action would at least potentially impair the applicant's ability to protect its interest; and (4) the applicant's interest must be inadequately represented by existing parties.

69 Md.App. at 622, 519 A.2d 219.

In the instant case, Tuli does not contend that the Stewarts' Motion to Intervene was untimely. Tuli does contend, however, that while the Stewarts may have an interest in the outcome of the litigation, they are not parties to the Tuli contract and, therefore, have no interest in the subject matter of this specific performance suit. We see no merit in this contention. If Tuli prevails and the court orders specific performance, the Stewarts' interest in their contract is lost. The Stewarts undoubtedly have an interest in the subject matter of the action that could be lost if not protected.

Tuli's major contention, however, is that the Stewarts' interest is already being represented adequately since the Novaks are resisting Tuli's efforts to specifically enforce the Tuli contract. Should the Novaks prevail in the underlying litigation, he argues, the Stewarts' interest will have been protected. Should Tuli prevail, the Stewarts' claim for damages for breach of contract is nonetheless preserved.

In Maryland Radiological Soc'y, Inc. v. Health Servs. Cost Review Comm'n, 285 Md. 383, 390, 402 A.2d 907 (1979), the Court of Appeals fashioned the following three-prong test for "interest analysis" to determine whether or not there was adequate representation of a movant's interest: (1) if its interest is not represented or advocated to any degree by an existing party, or if the existing parties all have interests that are adverse to those of the movant, the movant should be permitted to intervene; (2) if the movant's interest is similar, but not identical to that of the existing party, a discriminating judgment is required on the circumstances of the particular case, but the movant ordinarily should be allowed to intervene unless it is clear that the party having a similar interest will provide adequate representation; and (3) if the interest of an existing party and the movant are identical, or if an existing party is charged by law with representing a movant's interest, a compelling showing should be required to demonstrate why this representation is not adequate.

The Stewarts assert that Tuli's interest is adverse to theirs and that the Novaks are not in a position to advocate the Stewarts' rights under the Stewart Contract. Tuli, on the other hand, argues that the Stewarts' interest is identical to the position already being advanced by the Novaks.

We disagree with the position that the Stewarts' interest is identical to the position already advanced by the Novaks in that a successful action by Tuli would lead to differing consequences for the Stewarts and Novaks respectively. It is reasonable to assume that the Novaks, as vendors of real property, seek only to realize the highest profit that circumstances permit. The Stewarts, on the other hand, seek a specific piece of property. Thus, while at present both the Novaks and Stewarts seek to have the Tuli Contract declared null and void, and thus do not have adverse interests, they do not necessarily have the same ultimate objective.

Concluding, as we do, that the interests of the Stewarts are similar but not identical to the Novaks, we now can determine whether the Stewarts have demonstrated that their interest is inadequately represented by the Novaks. We note again that if the movant's interest is similar but not identical to that of the existing party, a discriminating judgment is required on the circumstances of the particular case, but the movant ordinarily should be allowed to intervene unless it is clear that the party having a similar interest will provide adequate representation. Maryland Radiological Soc'y, supra. We further note that the burden of showing that existing representation may be inadequate is a minimal one. Maryland-Nat'l Capital Park & Planning Comm'n v. Washington Nat'l Arena, 30 Md.App. 712, 716, 354 A.2d 459 (1976).

In Nuesse v. Camp, 385 F.2d 694 (D.C.Cir., 1967), the D.C. Circuit Court of Appeals reversed the district court's denial of a motion to intervene in an action by a Wisconsin bank for declaratory and injunctive relief against the United States Comptroller of Currency. The Wisconsin banking commissioner applied to intervene. The court, in holding that the commissioner was entitled to intervention as of right under Rule 24(a), ¹ stated that the bank "might conceivably be interested in a future settlement that would soften the impact on its private interest." Thus, he pointed out that "their interest may not coincide." Nuesse, 385 F.2d at 703.

The 7th Circuit Court of Appeals, in Lake Investors Dev. Group v. Egidi Dev. Group, 715 F.2d 1256 (7th Cir.1983), an action brought by a vendor against a purchaser for breach of a real estate sales contract, reversed the district court's denial of a petition to intervene brought by a holder of a security interest in the contract. The appellate court held that although the vendor had every reason to pursue its cause of action in order to recover under the contract, the vendor and the intervenor did not have the same ultimate objective.

In the case sub judice, the Stewarts have a valuable contract right which requires protection and which could be extinguished if the Novaks should enter into a settlement with Tuli. At some point during litigation, it may be in the Novaks' best interest to reach a compromise with Tuli and, under the terms of the compromise, agree to convey the...