Onbirback v. Premier Auto Credit

Background

The plaintiffs are San Jose Auto Outlet Plus Trucks Inc. and its owner, Khosrow Onbirback. The remaining defendants include Premier Auto Credit and several of its officers or employees, as well as KPMG. The complaint alleges that Premier and its employees falsified income and employment information in connection with 290 auto-loan applications. The plaintiffs assert claims including bank fraud, wire fraud, racketeering, fraud, conspiracy, grand theft, and concealment of cash.

Hassan Abpikar, who is not an original party, stated that Onbirback asked him to serve as a consultant concerning issues with Premier’s approval and funding of allegedly falsified loan applications. Abpikar and Onbirback signed a written Recovery Assistance & Success Fee Agreement under which Abpikar would receive 30% of any amount recovered by the plaintiffs. Abpikar asked to intervene—that is, to become a party to the case—either as a matter of right under Federal Rule of Civil Procedure 24(a)(2) or permissively under Rule 24(b)(1)(B). Onbirback filed a notice of non-opposition and acknowledged Abpikar’s interest in any recovery.

Legal standards

Intervention as of right requires a timely motion, a significantly protectable interest related to the property or transaction in the lawsuit, a risk that the case’s resolution would impair the applicant’s ability to protect that interest, and inadequate representation of the interest by the existing parties.

Permissive intervention is discretionary. It requires a timely motion and a claim or defense sharing a common question of law or fact with the main action. The court must also consider whether intervention would unduly delay or prejudice the original parties. The person seeking intervention bears the burden of showing that the requirements are met.

Court’s reasoning

The court found that Abpikar’s motion was timely. It nevertheless held that he could not intervene as of right because his contractual entitlement to part of the plaintiffs’ litigation recovery was not a significantly protectable interest in the plaintiffs’ claims against the defendants. The court relied on authority holding that a consultant’s contractual right to a portion of a plaintiff’s recovery does not create that type of interest in the underlying claims.

The court further stated that, even if Abpikar had shown a significantly protectable interest, resolving the case would not practically prevent him from protecting his rights under the Fee Agreement. The agreement granted him an equitable lien and security interest in recovered proceeds. The court also found that the plaintiffs shared his interest in maximizing recovery and that Onbirback had acknowledged and reaffirmed his obligations under the agreement.

The court likewise denied permissive intervention. Although the motion was timely and no original party argued that intervention would cause undue delay or prejudice, the court found no common question of law or fact between Abpikar’s possible claim for payment under the Fee Agreement and the plaintiffs’ claims concerning alleged misconduct involving auto loans. The court distinguished a prior case in which intervention was appropriate because the court was expected to decide the intervenor’s fee dispute along with the underlying claims. Here, the court did not expect to decide issues concerning the Fee Agreement.

Disposition

The court DENIED Mr. Abpikar’s motion to intervene. The opinion states that pending motions to compel arbitration and KPMG’s motion to dismiss would be addressed in future orders.