CIFI Latam, S.A. v. Tauch

Background

CIFI Latam, S.A. sued Kyle Tauch, alleging that Tauch owed the full principal amount of a short-term loan because he guaranteed the loan agreement between CIFI and JOM Nicaragua, S.A. Tauch opposed CIFI’s request for monetary damages and argued that the guarantee and related documents were obtained through fraud, bad faith, and commercially unreasonable conduct.

JOM moved to intervene, meaning to join the existing lawsuit as an additional party. JOM sought to proceed as a third-party plaintiff and assert claims against CIFI for breach of the implied duty of good faith and fair dealing, fraudulent inducement, and fraudulent concealment. JOM alleged that CIFI’s conduct surrounding the loan agreements caused JOM to pay nearly $500,000 in direct and third-party adviser fees and incur more than $5 million in project costs, even though JOM did not receive or use loan proceeds.

Legal standard

The court considered intervention under Federal Rule of Civil Procedure 24. Intervention as of right requires a timely application, a significant protectable interest related to the case, a risk that the case could impair that interest, and a showing that the existing parties may not adequately represent the applicant’s interest. Permissive intervention allows a person or entity with a claim or defense sharing a common legal or factual question with the main action to join if doing so would not unduly delay or prejudice the original parties.

Court’s analysis

The court found that JOM’s motion was timely because the case was still in its early stages. Liability had not been decided, no discovery had occurred, and the court had not set a pretrial conference or discovery deadlines.

The court also found common legal and factual questions. CIFI’s claims against Tauch concerned a personal guarantee for a loan agreement made with JOM. Tauch’s defenses involved allegations that the loan, guarantee, and related financing documents were obtained through fraud, bad faith, and commercially unreasonable conduct. JOM’s proposed claims against CIFI arose from the formation and execution of the same agreements and involved similar issues.

The court found no indication that allowing JOM to intervene would prejudice CIFI or Tauch. It therefore concluded that permissive intervention was appropriate.

Disposition

In CIFI Latam, S.A. v. Tauch, Judge Sarah Netburn granted JOM Nicaragua, S.A.’s motion to intervene. JOM was allowed to proceed as a third-party plaintiff. The order addressed only whether JOM could join the litigation; it did not decide the merits of CIFI’s claims, Tauch’s defenses, or JOM’s proposed claims.