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Town of Chester v. Laroe Estates

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Supreme Court of the United States
Town of Chester v. Laroe Estates
Reference: 16-605
Issue: Standing
Term: 2016
Important Dates
Argued: April 17, 2017
Decided: June 5, 2017
Outcome
Second Circuit Court of Appeals vacated and remanded
Vote
9-0 to vacate and remand
Majority
Chief Justice John G. Roberts • Anthony Kennedy • Clarence Thomas • Ruth Bader Ginsburg • Stephen Breyer • Samuel Alito • Sonia Sotomayor • Elena Kagan • Neil Gorsuch


Town of Chester v. Laroe Estates is a case argued during the October 2016 term of the U.S. Supreme Court. Argument in the case was held on April 17, 2017. The case came on a writ of certiorari to the United States Court of Appeals for the 2nd Circuit. On June 5, 2017, in a unanimous opinion by Justice Samuel Alito, the court vacated and remanded the judgment of the Second Circuit Court of Appeals.

In this case, the court held that a party that wishes to intervene in ongoing litigation need not meet requirements for independent standing only if the intervenor seeks the exact relief requested by a plaintiff; if, however, the intervenor seeks separate or additional relief, a court must determine if the intervenor has independent standing to litigate.

HIGHLIGHTS
  • The case: In law, intervenors are permitted to join ongoing litigation without the permission of the original parties either as a matter of right or at the discretion of a court. Based on federal rules of civil procedure, in order to intervene and participate in a lawsuit, the Second Circuit has interpreted the rules such that an intervenor does not have to establish independent legal standing in a case in order to intervene so long as there is a genuine case or controversy between the original, named parties to a dispute. Six other federal appeals courts have ruled similarly, but three federal appeals courts have held that federal rules of civil procedure require an intervenor to independently establish standing in order to intervene.
  • The issue: Must intervenors independently establish standing in order to participate in ongoing litigation under federal rules of civil procedure?
  • The outcome: The court unanimously vacated and remanded the judgment of the Second Circuit Court of Appeals.


    • In brief: In law, intervenors are permitted to join ongoing litigation without the permission of the original parties either as a matter of right or at the discretion of a court. Rule 24 of the federal rules of civil procedure governs when an intervenor may intervene in a dispute either as a matter of right or at the discretion of a court. A federal district court dismissed Laroe's motion to intervene in ongoing civil litigation because the court found Laroe lacked standing. The Second Circuit Court of Appeals, however, held that judgment was in error and that an intervenor need not independently establish standing as long as a genuine case or controversy existed between the original, named parties. Six other federal appeals courts have held similarly, but three federal appeals courts have held that intervenors must independently establish standing under federal rules of civil procedure. Argument in the case was held on April 17, 2017.

    You can review the Second Circuit's opinion here.[1]

    Click on the tabs below to learn more about this Supreme Court case.

    Case

    Background

    This was a case about when a party may intervene in ongoing civil litigation under federal rules of civil procedure.

    This case began as a matter between Steven Sherman, a now-deceased land developer, and the town of Chester, New York. Prior to his death, Sherman sued the town in federal district court alleging a regulatory taking in violation of the Fifth Amendment. The district court dismissed Sherman's original claim, holding that the claim was not yet ripe for litigation as the town had not rendered a final decision on the land in question. The Second Circuit reversed and remanded that decision, asserting that the litigation could proceed.[1]

    Shortly after that decision by the Second Circuit, Laroe Estates, the respondent in this appeal to the U.S. Supreme Court, filed a motion to intervene in the case under federal rules of civil procedure. Laroe claimed that, pursuant to a June 2003 purchase agreement with Sherman, Laroe was an equitable owner of the property under development. Under the agreement with Sherman,[1]

    “

    Sherman agreed to sell Laroe three parcels of land within the proposed MareBrook subdivision. In exchange, Laroe agreed that it would pay $60,000 for each lot approved for development within the three parcels once Sherman’s plans were approved by the Town. The agreement also required Laroe to make $6 million in interim payments while Sherman sought the Town’s approval. The interim payments were secured by a mortgage that Sherman provided to Laroe 'encumbering all of the Development Property.' ... If Sherman failed to obtain the Town’s approval of a sufficient number of lots, Laroe retained the right to terminate the agreement. ...

    Although Sherman’s efforts to secure the Town’s approval stretched on, Laroe did not terminate the agreement. But in April 2013 TD Bank, which held a superior 1 mortgage interest in the property, commenced a foreclosure proceeding. Hoping to salvage the deal in view of the foreclosure, Laroe and Sherman signed a new contract (the “2013 Agreement”) amending their earlier purchase agreement. The 2013 Agreement provided that the $2.5 million Laroe had already advanced Sherman, plus any amount paid to settle Sherman’s obligation to TD Bank, would constitute the purchase price of the property. Once the Town approved the development, Laroe was required to transfer a certain number of lots back to Sherman depending on how many were approved by the Town. Subject to this requirement, the parties deemed the purchase price for the property 'paid in full.' ... To resolve TD Bank’s foreclosure proceeding, the 2013 Agreement also granted Laroe the sole discretion to settle the debt owed to TD Bank and alternatively permitted Laroe to terminate the Agreement if Laroe and TD Bank failed to reach a settlement before the foreclosure sale. Laroe ultimately failed to satisfy Sherman’s obligations to TD Bank. On May 21, 2014, a foreclosure sale occurred, and TD Bank took possession of the property. Laroe nevertheless chose not to terminate the agreement.[2]

    		”

    On March 31, 2015, the district court denied Laroe's motion to intervene. Based on the May 2014 foreclosure sale of the property to TD Bank, the court held that Laroe's claim against the town was futile because Laroe lacked legal standing to assert a takings claim because Laroe was not the owner of an interest in the property at the time of the alleged taking. The court reached no other conclusion on Laroe's claim other than to determine that Laroe lacked standing and that, based on federal rules of civil procedure, this lack of standing rendered Laroe's claim against the town futile, which was the court's basis for dismissing Laroe's motion to intervene.[1]

    Laroe appealed to the Second Circuit Court of Appeals. A three-judge panel of the Second Circuit vacated and remanded the judgment of the district court. The panel held that the district court abused its judicial discretion based on an error of law. The circuit court stated that the district court denied the motion based on the court's judgment that a party seeking to intervene as of right must independently have standing. This holding was in error under Second Circuit precedent. The Second Circuit panel concluded that, when there is a genuine case or controversy between existing parties, a proposed intervenor need not independently have standing themselves in order to intervene in the litigation.[1]

    The circuit panel, however, noted expressly that "although a circuit split on this issue has persisted for some time, the Supreme Court has expressly declined to resolve it. ... Instead, in Diamond v. Charles, it ruled only that when the original party in the litigation on whose side intervention occurred refuses to appeal and an intervenor wishes to appeal on its own, the intervenor must show that it satisfies Article III’s standing requirement in the absence of the original party. ... But since Diamond, the Supreme Court has certainly suggested—although without deciding—that an intervenor need not independently have standing where the original party has standing. ... The District Court therefore erred by denying Laroe’s motion to intervene based on its failure to show it had Article III standing."[1]

    The court also addressed Laroe's motion to intervene as a matter of right. Based on the Second Circuit's 2006 precedent in Mastercard International Inc. v. Visa International Services Association, a district court is required to grant an applicant’s motion to intervene under Rule 24(a)(2) of the federal rules of civil procedure if "(1) the motion is timely; (2) the applicant asserts an interest relating to the property or transaction that is the subject of the action; (3) the applicant is so situated that without intervention, disposition of the action may, as a practical matter, impair or impede the applicant’s ability to protect its interest; and (4) the applicant’s interest is not adequately represented by the other parties.” The panel held that the record in the case was inadequate to rule on Laroe's motion to intervene as a matter of right because the district court had not yet determined the extent of town's actions sufficient to hold that the town's conduct constituted a taking. Having judged that Laroe lacked standing and subsequently dismissing Laroe's motion to intervene, the district court did not pursue the merits of Laroe's claim. Holding the dismissal for lack of standing to be in error, the circuit panel vacated the district court's judgment and remanded the case back to the district court to examine Laroe's claim to intervene as a matter of right under Rule 24(a)(2). Prior to the district court's assessment of that claim, the town of Chester, New York, appealed to the U.S. Supreme Court.[1]

    Petitioner's challenge

    The town of Chester, New York, the petitioner, challenged the holding of the United States Court of Appeals for the 2nd Circuit that, under federal rules of civil procedure, a proposed intervenor does not have to establish standing independently in order to proceed as an intervenor in a lawsuit.

    Certiorari granted

    On November 3, 2016, the town of Chester, New York, the petitioner, initiated proceedings in the Supreme Court of the United States in filing a petition for a writ of certiorari to the United States Court of Appeals for the 2nd Circuit. The U.S. Supreme Court granted the town's certiorari request on January 13, 2017. Argument in the case was held on April 17, 2017.[3]

    Arguments


    Question presented

    Question presented:

    "Whether intervenors participating in a lawsuit as of right under Federal Rule of Civil Procedure 24(a) must have Article III standing (as three circuits have held), or whether Article III is satisfied so long as there is a valid case or controversy between the named parties (as seven circuits have held)."[3]


    Audio

    • Audio of oral argument:[4]



    Transcript

    • Transcript of oral argument:[5]

    Outcome

    Decision

    Justice Samuel Alito delivered the opinion of the court. The court held that a party that wishes to intervene in ongoing litigation need not meet requirements for independent standing only if the intervenor seeks the exact relief requested by a plaintiff; if, however, the intervenor seeks separate or additional relief, a court must determine if the intervenor has independent standing to litigate.[6]

    Opinion

    In his opinion for the court, Justice Alito stated that for an intervenor who seeks to intervene under Federal Rules of Civil Procedure, the intervenor "must have Article III standing in order to pursue relief that is different from that which is sought by a party with standing. That includes cases in which both the plaintiff and the intervenor seek separate money judgments in their own names."[6]

    Here, however, Justice Alito also noted that it was not clear in the record whether the respondent, Laroe Estates, was seeking the same or additional relief in its lawsuit as an intervenor. As this question was unresolved, and as a result of the court's opinion, the judgment of the Second Circuit was vacated and the case was remanded to the Second Circuit for additional proceedings.[6]

    Concurring opinions

    There were no concurring opinions filed in this case.

    Dissenting opinions

    There were no dissenting opinions filed in this case.


    The opinion

    Filings

    The U.S. Supreme Court granted the town's certiorari request on January 13, 2017.

    Merits filings

    Parties' briefs

    • Laroe Estates, the respondent, filed a merits brief on March 27, 2017.

    Amicus curiae briefs

    The following groups filed amicus curiae briefs in support of the petitioner in this case, the town of Chester, New York:

    • Brief of the National Association of Counties
    • Brief of Professor Aaron-Andrew P. Bruhl
    • Brief of the United States of America

    The following individual filed an amicus curiae brief in support of neither party:

    • Brief of Nancy Sherman, executrix of the Sherman estate

    The following groups filed amicus curiae briefs in support of the respondent in this case, Laroe Estates:

    • Brief of the Constitutional Accountability Center and the Institute for Justice
    • Brief of the National Association Home Builders et al.

    Certiorari filings

    Parties' filings

    • The town of Chester, New York, the petitioner, filed a petition for a writ of certiorari on November 3, 2016.

    Amicus curiae filings

    The following groups filed amicus curiae briefs in support of granting certiorari:

    • Brief of the International Municipal Lawyers Association

    See also

    Footnotes

    1. ↑ 1.0 1.1 1.2 1.3 1.4 1.5 1.6 U.S. Court of Appeals for the Second Circuit, Laroe Estates, Inc., v. Town of Chester, decided July 6, 2016
    2. ↑ Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
    3. ↑ 3.0 3.1 Supreme Court of the United States, Chester, N.Y. v. Laroe Estates, Inc., January 13, 2017
    4. ↑ Supreme Court of the United States, Town of Chester v. Laroe Estates, argued April 17, 2017
    5. ↑ [https://www.supremecourt.gov/oral_arguments/argument_transcripts/2016/16-605_2dp3.pdf Supreme Court of the United States, Town of Chester v. Laroe Estates, Inc., argued April 17, 2017
    6. ↑ 6.0 6.1 6.2 Supreme Court of the United States, Town of Chester, New York, v. Laroe Estates Inc., decided June 5, 2017
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