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Brendel v. Meyrowitz

United States District Court, N.D. Texas, Dallas Division

March 30, 2017

GREG BRENDEL, Plaintiff,
v.
SCOTT MEYROWITZ, et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          SIDNEY A. FITZWATER UNITED STATES DISTRICT JUDGE

         In this removed action arising from an investment in precious stones, the instant motions require the court to decide whether a party may intervene to assert her interest as a judgment creditor in another lawsuit in funds that were paid into the state court registry in this case, and whether to confirm or vacate an arbitration award. It must also decide whether to take judicial notice of an arbitration award or state court injunction. For the reasons explained, the court grants a limited intervention; takes judicial notice of the existence of a state court injunction; grants in part and denies in part the motion to confirm the arbitration award, enter final judgment, and release funds; and denies the motion to vacate the arbitration award.

         I

         Because this case is the subject of two prior memorandum opinions and orders, see Brendel v. Meyrowitz, 2016 WL 1721312, at *1 (N.D. Tex. Apr. 29, 2016) (Fitzwater, J.) (“Brendel II”); Brendel v. Meyrowitz, 2016 WL 302282, at *1 (N.D. Tex. Jan. 25, 2016) (Fitzwater, J.), the court will recount only the background facts and procedural history that are pertinent to this decision.

         Plaintiff Greg Brendel (“Brendel”) sued Scott Meyrowitz (“Scott”), Mary Meyrowitz (“Mary”), and SSB International, LLC (“SSB”) in connection with an investment in precious stones.[1] Brendel alleges that he entered into an agreement with Scott under which, in exchange for the sum of $250, 000, Brendel was to receive 50% of the profits, after full reimbursement of his $250, 000 payment, from proceeds received from the sale of certain precious stones. Brendel asserts that he wired the sum of $250, 000 to Scott's account at Wells Fargo Bank, held in the name of SSB, but, instead of using the funds as agreed, Scott converted them to his personal use and refused to return the $250, 000 payment or deliver the precious stones.

         Brendel originally brought suit in Texas state court, but it was removed based on diversity of citizenship. Before the case was removed, the state court ordered that $250, 000 be taken from an account controlled by Scott and Mary and deposited into the court registry, to remain there until entry of final judgment. The state court's order remains in effect until this court modifies or abrogates it, which it has not done, or until a final judgment is entered. See Brendel II, 2016 WL 1721312, at *4.

         After the case was removed, this court granted Scott and SSB's motion to compel arbitration. Brendel's evidence at the ensuing arbitration included defendants' financial records. Brendel won an arbitration award of $1, 018, 254.22 (the “Arbitration Award”). Brendel moves to confirm the Arbitration Award, enter judgment in his favor, and release to him the funds held in the state court registry. Brendel also asks the court to take judicial notice of the Arbitration Award and the state court injunction. Scott and SSB move to vacate the Arbitration Award.

         Aside from Brendel's claims against Scott and SSB, which were arbitrated, he also alleges claims against Mary that were not subject to arbitration, and remain pending in this lawsuit.

         A few days after Brendel moved to confirm the Arbitration Award, Sarah Pappas (“Pappas”) moved to intervene in this case as a defendant and intervenor-counterplaintiff. Pappas alleges that she was a victim of a similar scheme to the one that Brendel alleges in this case, and she claims an interest in the funds that were paid into the state court registry. Pappas maintains that she is entitled to some or all of the registry funds because she has an Arizona state court default judgment against Scott, Mary, and SSB; the registry funds are traceable to an unrepaid loan from Pappas to Scott, Mary, and SSB; and she has obtained a writ of execution that was levied on the registry funds. Brendel opposes the motion to intervene.

         Aside from Pappas' motion to intervene, Brendel also asks the court to take judicial notice of the Arbitration Award and the state court injunction; Brendel moves the court to confirm the Arbitration Award, enter final judgment, and release funds to him; and Scott and SSB move the court to vacate the Arbitration Award.

         II

         Brendel requests that the court take judicial notice of the state court injunction and the Arbitration Award. The other parties have not responded to this request.

         “The court may judicially notice a fact that is not subject to reasonable dispute because it . . . can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” Fed.R.Evid. 201. A judicial act in state court falls within the category of sources “whose accuracy cannot reasonably be questioned, ” and may be judicially noticed. See Colonial Leasing Co. of New Eng. v. Logistics Control Grp. Int'l, 762 F.2d 454, 459 (5th Cir. 1985); 21B Charles Alan Wright & Kenneth W. Graham, Federal Practice and Procedure § 5106.4, at 240 (2d ed. 2005 and Supp. 2016).

         Accordingly, the court takes judicial notice of the state court injunction, but only for its existence, not for the correctness of any facts found. See Gray ex rel. Rudd v. Beverly Enters.-Miss., Inc., 390 F.3d 400, 407 n.7 (5th Cir. 2004) (“Although we cannot take judicial notice of findings of fact of other courts, the fact that a judicial action was taken is indisputable and is therefore amenable to judicial notice.”). The court declines, however, to take judicial notice of the Arbitration Award at this time. Brendel cites no authority to support judicial notice in these circumstances, and he does not explain the reason for his request. The court therefore limits its decision to the question whether to confirm the Arbitration Award, as set out below.

         III

         The court now turns to Pappas' motion to intervene. Pappas moves to intervene as of right, or, alternatively, to intervene permissively.

         A

         A party is entitled to an intervention as of right under Rule 24(a)(2) if (1) the motion to intervene is timely, (2) the interest asserted by the potential intervenor is related to the action, (3) the interest may be impaired or impeded by the action, and (4) the interest is not adequately represented by the existing parties. See, e.g., In re Lease Oil Antitrust Litig., 570 F.3d 244, 247 (5th Cir. 2009); Sierra Club v. Espy, 18 F.3d 1202, 1204-05 (5th Cir. 1994) (citing New Orleans Pub. Serv., Inc. v. United Gas Pipe Line Co., 732 F.2d 452, 463 (5th Cir. 1984) (en banc) (“NOPSI”)).

         B

         The first element-timeliness-is determined by examining (1) the length of time between the potential intervenor's learning that its interest is no longer protected by the existing parties and its motion to intervene, (2) the extent of prejudice to the existing parties from allowing late intervention, (3) the extent of prejudice to the potential intervenor if the motion ...


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