United States District Court, D. North Dakota
ORDER DENYING TIMOTHY C. EVANSON, JON C. EVANSON, AND
DANIEL G. EVANSON'S MOTION TO INTERVENE AND RELIEF FROM
L. Hovland, Chief Judge.
the Court is “Timothy C. Evanson, Jon C. Evanson, and
Daniel G. Evanson'sMotion to Intervene and Lift Injunction
Order” filed on July 21, 2017. See Docket No.
139. On July 28, 2017, the Receiver in this case filed a
response in opposition to the motion. See Docket No.
141. The United States Securities and Exchange Commission
(“SEC”) also filed a response in opposition to
the motion on August 1, 2017. See Docket No. 142.
For the reasons set forth below, the Evansons' motion to
intervene and request to lift the preliminary injunction in
this matter is denied.
commenced this action on May 5, 2015. In its complaint, the
SEC alleged North Dakota Developments, LLC, Robert Gavin, and
Daniel Hogan engaged in a fraudulent scheme in violation of
the anti-fraud and registration provisions of the federal
securities statutes. See Docket No. 1. Specifically,
the SEC alleged the Defendants made misrepresentations to
investors, misappropriated invested funds, and made, and were
continuing to make, Ponzi-like payments.
filed a motion for a temporary restraining order the same day
it filed its complaint against the Defendants. See
Docket No. 3. In support of its motion for a temporary
restraining order, the SEC contended the fraud was ongoing
and, consequently, additional investors would be defrauded if
emergency relief was not granted. The Court granted the
SEC's motion for a temporary restraining order.
See Docket No. 5. On May 18, 2015, the Court
converted the temporary restraining order to a preliminary
injunction and appointed a receiver to take control of the
assets of North Dakota Developments and the Relief
Defendants. See Docket No. 20. The preliminary
injunction enjoins the Defendants from further violations of
specific statutes and from soliciting or accepting further
to their motion, the Evansons appear to have entered into a
lease agreementwith North Dakota Developments to construct
temporary housing on the Evansons' property in McKenzie
County, North Dakota. See Docket No. 139-1, p. 2.
The monthly rent due to Evansons pursuant to the lease
agreement was $26, 530.00. Id. North Dakota
Developments appears to have breached the lease agreement
when a lien was filed against Evansons' property in April
2015. Id. at 3. The Evansons seek to intervene in
this action to pursue collection of two security deposits in
the amount of $20, 000 and $22, 000, to pursue collection of
property taxes due in the amount of $5, 349.76, and to pursue
collection of back and future rents due under the lease in
the amount of $2, 228, 520.00 plus interest at the rate of
10% per annum.
their motion, the Evansons contend the court-appointed
Receiver in this case declines to release the security
deposits, to pay back rent and future rent, and to reimburse
the Evansons for property taxes. The Evansons assert that the
preliminary injunction injures the Evansons with no
corresponding benefit to the receivership. See
Docket No. 139-1, p. 6. Specifically, the Evansons claim the
security deposits as their collateral, and the receivership
has no interest in those funds. Consequently, the Evansons
seek to intervene in this action to protect its ability to
obtain satisfaction of their claims against North Dakota
Developments. The Evansons also request the Court lift the
preliminary injunction so that the Evansons can pursue
collection actions against North Dakota Developments.
of the Federal Rules of Civil Procedure governs intervention
by third parties. The Evansons seek to intervene in this case
as a matter of right pursuant to Rule 24(a). The SEC and the
Receiver contend intervention is unwarranted because the
Evansons have failed to satisfy the requirements of Rule 24.
24(a) of the Federal Rules of Civil Procedure provides for
intervention as a matter of right by an interested third
(1) is given an unconditional right to intervene by a federal
(2) 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
Civ. P. 24(a). The Eighth Circuit requires that an
application for intervention must satisfy the following
tripartite test in order to intervene pursuant to Rule
24(a)(2): “1) the party must have a recognized interest
in the subject matter of the litigation; 2) that interest
must be one that might be impaired by the disposition of the
litigation; and 3) the interest must not be adequately
protected by the existing parties.” United States
v. Union Elec. Co., 64 F.3d 1152, 1160-61 (8th Cir.
1995). A recognized interest is one that is direct,
substantial, and legally protectable. Id. at 1161.
An economic interest in the outcome of the litigation is not
itself sufficient to satisfy Rule 24(a)(2). Med. Liab.