Medequa LLC v. O'Neill & Partners LLC

Background

Medequa LLC brought this action against O’Neill & Partners LLC to enforce an escrow agreement and recover money held in escrow. The agreement involved Medequa, non-party SonerMed LLC, and O’Neill & Partners. After the agreement was terminated, Medequa requested the return of the escrowed money.

In three orders issued in August and September 2021, the court directed O’Neill & Partners to deposit the full $5.1 million held in escrow into the court’s Disputed Ownership Fund. O’Neill & Partners deposited $3.3 million but did not deposit the remaining amount. The opinion also states that, on July 25, 2022, the court decided Medequa’s motion for partial summary judgment and ordered judgment for Medequa on its breach-of-contract claim.

D&O TRADECO, INC. stated that it had deposited $3.4 million with O’Neill & Partners and believed that the money deposited with the court belonged to D&O rather than to Medequa or O’Neill & Partners. D&O moved to intervene—meaning to become a party so it could assert its interest in the case—in March 2022. Tech 4 Good Pty Ltd later moved to intervene, stating that it also claimed an interest in the funds as payment for shipments of nitrile gloves. Medequa opposed both motions, and O’Neill & Partners filed no response.

Legal Standard

Federal Rule of Civil Procedure 24 allows intervention as of right when a motion is timely, the proposed intervenor claims an interest related to the property or transaction at issue, resolving the case could impair that interest, and existing parties may not adequately protect it. Courts may also allow permissive intervention when appropriate.

D&O’s Motion

The court rejected Medequa’s argument that D&O’s motion was untimely. Although D&O waited several months after learning that its funds might have been misappropriated, the delay did not prejudice the existing parties. The court also found that denying intervention could prejudice D&O by making it harder to recover money that D&O claimed belonged to it.

The court held that D&O satisfied the remaining requirements for intervention as of right. D&O claimed a direct, substantial, and legally protectable interest in the specific money held in the Disputed Ownership Fund. If the money were transferred to Medequa, D&O’s ability to protect its claimed ownership interest would be impaired. The court also found that D&O’s interests were not adequately represented because D&O’s position was adverse to both O’Neill & Partners and Medequa.

Because the court found that D&O could intervene as of right, it did not need to decide D&O’s request for permissive intervention under Rule 24(b). The court stated, however, that it would likely have granted permissive intervention as well.

Tech 4 Good’s Motion

The court granted Tech 4 Good’s motion for the same reasons. Although Tech 4 Good waited longer than D&O, the court accepted its explanation that it did not learn of a potential need to pursue claims against O’Neill & Partners until May 2022. The court stated that O’Neill & Partners, rather than the third parties, was chiefly responsible for the delay. Allowing both companies to intervene would also promote judicial efficiency by permitting their claims to be addressed in one proceeding.

The court further stated that, even if Tech 4 Good were not entitled to intervene as of right, it would grant permissive intervention under Rule 24(b).

Disposition

The court granted both motions to intervene. It ordered all parties to appear at a status conference on August 12, 2022, to address further progress in the case and the disposition of the funds held in the Disputed Ownership Fund. The Clerk was directed to terminate ECF Nos. 91 and 96.