BNP Paribas v. Kurt Orban Partners LLC

Background

BNP Paribas brought claims against Kurt Orban Partners LLC and Matt Orban concerning a receivable arising from a July 13, 2018 agreement under which Traxys North America LLC sold steel alloy bars to Kurt Orban Partners. Traxys alleges that it delivered the steel, invoiced Kurt Orban Partners for $4,531,713.03, and was not paid. Matt Orban had personally guaranteed Kurt Orban Partners’ payment obligation.

Traxys later entered into an agreement with BNP Paribas under which BNP Paribas bought Traxys’s rights to the receivable. Traxys remained responsible for servicing and collecting the receivable for a time. BNP Paribas’s complaint asserted one claim against Kurt Orban Partners for breach of the steel contract and one claim against Matt Orban for breach of the guarantee.

Traxys moved to intervene as a plaintiff. It sought to participate to help establish that the receivable was valid and to protect its economic interests if it became obligated to repurchase the receivable from BNP Paribas. Traxys also wanted to pursue an account-stated claim, but BNP Paribas had declined to include that claim in the complaint. BNP Paribas opposed intervention, arguing that Traxys lacked standing to pursue the account-stated claim, had misunderstood its obligations under the receivables agreement, and would not advance the case. The defendants took no position.

Legal standard

Federal Rule of Civil Procedure 24(a) allows intervention as of right when the applicant satisfies requirements including timeliness, an interest related to the case, a risk that the case could impair that interest, and inadequate representation by existing parties. Rule 24(b) allows permissive intervention when the applicant’s claim or defense shares a question of law or fact with the main action. Permissive intervention is discretionary, and courts principally consider whether it would cause undue delay or prejudice.

Court’s analysis

The court found Traxys’s motion timely. Traxys filed it after the defendants answered and after the court denied the defendants’ motion to dismiss. Although Traxys could have moved earlier, BNP Paribas did not argue that intervention would prejudice it, and the court found that the motion was not filed at a critical stage. The court also noted that Traxys was already involved in the litigation because BNP Paribas had subpoenaed its documents and Traxys would need to provide evidence and witnesses.

The court concluded that Traxys had at least some interest in the outcome. If BNP Paribas collected the receivable, Traxys could remain liable for interest and collection costs. If BNP Paribas failed to collect, BNP Paribas might demand that Traxys repurchase the receivable and pay related interest, costs, and attorney’s fees. The court further found common legal and factual questions because Traxys’s proposed claim and BNP Paribas’s claims concerned the rights and obligations arising from the same steel contract and related facts.

The court found no showing that intervention would cause undue delay or prejudice. It also determined that Traxys’s participation could help develop the factual record because Traxys was an original party to the steel contract and was already expected to provide documents, testimony, and witnesses. The court noted that Traxys and BNP Paribas shared the ultimate goal of collecting the receivable, but Traxys asserted that BNP Paribas had not adequately represented its interests because BNP Paribas refused to add the account-stated claim.

Disposition

The court found that Traxys had sufficiently established the requirements for permissive intervention under Rule 24(b). Judge Sarah L. Cave therefore granted the motion. The order allowed Traxys to intervene as a plaintiff but did not decide the merits of BNP Paribas’s claims, Traxys’s proposed claim, the validity of the receivable, or the defendants’ alleged liability. The court also stated that the parties could seek to postpone an upcoming status conference if Traxys did not have enough time to participate meaningfully.