Wells Fargo Bank NA v. LHS Finance LLC et al

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WO
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
Wells Fargo Bank NA,
Plaintiff,
v.
LHS Finance LLC, et al.,
Defendants.
No. CV-24-03536-PHX-MTL
ORDER
Pending before the Court is Proposed Intervenor Scott Roberts’ Motion to Intervene
(Doc. 50). Scott Roberts (“Scott”) moves for leave to intervene in this case for the limited
purpose of addressing the allocation of any sanctions that issue regarding the Court’s
resolution of Plaintiff Wells Fargo’s Motion for Sanctions. (Id.)
I.
Scott, along with his siblings, Nicole Roberts (“Nicole”) and Niel Roberts (“Niel”),
manage Defendant LHS Finance LLC. (Id.) Disputes have arisen between Scott and his
siblings concerning their management of LHS. (Id.) According to Scott, the procedures in
LHS’s Operating Agreement have been “repeatedly neglected by Niels and Nicole,” and
“[t]hey have both taken actions purportedly on behalf of LHS, without Scott’s knowledge
or participation,” including the initiation of this action. (Id.) He requests leave to intervene
for the limited purpose of arguing that any monetary sanctions should be imposed against
Niel and Nicole personally rather than against LHS. (Id.)
LHS opposes Scott’s motion, arguing that Scott has no protectable interest in the
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sanctions dispute, the motion is procedurally defective, Scott’s requested relief is improper,
and the governance dispute is properly litigated in arbitration. (Doc. 52.) Wells Fargo takes
no position on the motion. (Doc. 53.)
II.
The Court finds that Scott is not entitled to intervene as a matter of right under
Federal Rule of Civil Procedure (“Rule”) 24(a). The Court must permit intervention when
a proposed intervenor:
claims an interest relating to the property or transaction that is the subject of
the action, and is so situated that disposing of the action may as a practical
matter impair or impede the movant’s ability to protect its interest, unless
existing parties adequately represent that interest.
Fed. R. Civ. P. 24(a). To intervene under Rule 24(a), Scott must have a “significant
protectable interest.” Citizens for Balanced Use v. Mont. Wilderness Ass’n, 647 F.3d 893,
897 (9th Cir. 2011). A qualifying interest must be “direct, non-contingent, substantial and
legally protectable.” S. Cal. Edison Co. v. Lynch, 307 F.3d 794, 803 (9th Cir. 2022); see
also United States v. Alisal Water Corp., 370 F.3d 915, 919 (9th Cir. 2004) (holding that
an economic interest must be “concrete and related to the underlying subject matter of the
action”). Scott’s identified interest—that a sanction against LHS “would diminish the
assets of the entity in which Scott owns a one-third interest, so that he would “indirectly
bear the consequences” and “suffer indirect economic consequences if LHS is sanctioned,”
(Doc. 50 at 4, 6)—is derivative of LHS’s interest. Scott’s asserted interest is insufficient to
entitle Scott to intervene. See Alisal, 370 F.3d at 920 (“A mere interest in property that may
be impacted by litigation is not a passport to participate in the litigation itself.”).
Nor is permissive intervention appropriate under Rule 24(b). The Court may permit
intervention when a proposed intervenor “is given a conditional right to intervene by a
federal statute” or “has a claim or defense that shares with the main action a common
question of law or fact.” Fed. R. Civ. P. 24(b)(1). “In exercising its discretion, the [C]ourt
must consider whether the intervention will unduly delay or prejudice the adjudication of
the original parties’ rights.” Fed. R. Civ. P. 24(b)(3). As such, the Court “has discretion to
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deny permissive intervention” and “must consider whether intervention will unduly delay
the main action or will unfairly prejudice the existing parties.” Donnelly v. Glickman, 159
F.3d 405, 412 (9th Cir. 1998). The Court agrees with LHS that deciding which members
of LHS should bear the resulting loss from any sanctions would require the Court to address
excessive ancillary issues involving nonparties, including LHS’s members authority,
knowledge, and personal responsibility. (See Doc. 52 at 8.) Permissive intervention is thus
inappropriate because it “would only serve to undermine the efficiency of the litigation
process.” Donnelly, 159 F.3d at 412.
IT IS THEREFORE ORDERED that Proposed Intervenor Scott Roberts’ Motion
to Intervene (Doc. 50) is DENIED.
Dated this 9th day of October, 2026.
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