United States District Court, N.D. West Virginia
DEUTSCHE BANK TRUST COMPANY AMERICAS, AS TRUSTEE FOR THE REGISTERED HOLDERS OF UBS COMMERCIAL MORTGAGE TRUST 2012-C1, COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2012-C1, Plaintiff,
MOUNTAIN WEST HOSPITALITY, LLC, Defendant. and WEST VIRGINIA STATE TAX DEPARTMENT, Intervenor-Plaintiff,
DEUTSCHE BANK TRUST COMPANY AMERICAS, AS TRUSTEE FOR THE REGISTERED HOLDERS OF UBS COMMERCIAL MORTGAGE TRUST 2012-C1, COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2012-C1; and MOUNTAIN WEST HOSPITALITY, LLC, Intervenor-Defendants.
MEMORANDUM OPINION IN SUPPORT OF ORDER GRANTING
MOTION TO INTERVENE [DKT. NO. 67]
M. KEELEY, UNITED STATES DISTRICT JUDGE.
an evidentiary hearing on November 28, 2017, the Court
GRANTED the Motion to Intervene filed by the
West Virginia State Tax Department (“the State”).
As indicated in its November 30, 2017, Order Granting Motion
to Intervene, this written opinion sets forth the Court's
reasoning in support of that decision.
10, 2017, the plaintiff, Deutsche Bank Trust Company
Americas, as Trustee for the Registered Holders of UBS
Commercial Mortgage Trust 2012-C1, Commercial Mortgage
Pass-Through Certificates, Series 2012-C1 (“Deutsche
Bank”),  filed a complaint against the defendant,
Mountain West Hospitality, LLC (“Mountain West”)
(Dkt. No. 1). Deutsche Bank alleged breaches of contract
related to a $19, 630, 000 loan made to Mountain West, which
is secured by deeds of trust covering the Hilton Garden Inn
at 606 Emily Drive, Clarksburg, West Virginia (“Hilton
Garden Inn Clarksburg”), and the Hampton Inn at 480
Plantation Drive, Elkins, West Virginia (“Hampton Inn
Elkins”) (collectively, “the Property”).
According to Deutsche Bank, Mountain West has mismanaged the
Property in a variety of way. As relevant to the loan
documents, however, Mountain West allegedly triggered
“Events of Default” by defaulting under its
franchise agreements and failing to pay taxes to the City of
Clarksburg. Id. at 7.
brief stay due to Mountain West's unsuccessful pursuit of
bankruptcy proceedings (Dkt. Nos. 12; 14), on August 2, 2017,
the Court appointed receivers to manage both the Hilton
Garden Inn Clarksburg and the Hampton Inn Elkins pending
Deutsche Bank's intent to schedule a non-judicial sale of
the Property (Dkt. Nos. 25; 26). The substitute trustee
initially scheduled sales of the Property on November 8,
2017, but the sales were later postponed to November 30, 2017
(Dkt. No. 52 at 4). On November 27, 2017, three days prior to
the scheduled sales, Mountain West moved for a temporary
restraining order (“TRO”), as well as a temporary
and permanent injunction, to prevent the substitute trustee
from carrying out the sales (Dkt. No. 45).
Court promptly denied Mountain West's motion for a TRO
and scheduled an evidentiary hearing on the remaining request
for injunctive relief (Dkt. No. 47). The parties presented
evidence, and the Court heard argument on the motion on
November 28, 2017, after which it denied Mountain West's
motion for injunctive relief, concluding that Mountain West
had failed to meet its burden to clearly and convincingly
satisfy all four of the factors articulated in Winter v.
Nat. Res. Def. Council, Inc., 555 U.S. 7 (2008), and
Real Truth About Obama, Inc. v. Federal Election
Com'n, 575 F.3d 342 (4th Cir. 2009), vacated on
other grounds and remanded, 559 U.S. 1089 (2010),
standard reaffirmed in 607 F.3d 355 (4th Cir. 2010)
(Dkt. No. 54).
November 29, 2017, again arguing that it would be irreparably
harmed by such a sale, Mountain West noticed its
interlocutory appeal from this decision (Dkt. No. 57), and
moved the Court to stay the case and enjoin the sale of the
Property pending appeal (Dkt. No. 55). The Court denied
Mountain West's motion “for the reasons it denied
Mountain West's motion for a temporary and permanent
injunction” (Dkt. No. 62). The Court of Appeals for the
Fourth Circuit then denied Mountain West's
“emergency motion for injunction pursuant to Rule 8 of
the Federal Rules of Appellate Procedure” (Dkt. No.
Motion to Intervene
the Court's appointment of receivers to manage the
Property and Mountain West's attempt to prevent
non-judicial sale of the Property, the State moved to
intervene in this case on November 6, 2017 (Dkt. No. 36). In
its motion, the State alleges that, “[s]ince 2015 until
the appointment of the receivers, [Mountain West] collected
state consumer sales tax from its customers but failed to
remit them to the State as required by law.” Under West
Virginia law, such taxes are “deemed to be money held
in trust for the state of West Virginia.” Id.
at 2 (quoting W.Va. Code § 11-10-5j (West 2017)). The
State therefore believes that Mountain West “converted
at least $720, 000 in collected but unremitted trust taxes,
” or that Deutsche Bank “may have converted or
may still be holding some or all of these trust funds either
by or through an account or accounts under its exclusive
control.” Id. The State sought leave to file a
one-count complaint alleging a cause of action for conversion
against both Deutsche Bank and Mountain West (Dkt. No. 36-1).
Mountain West did not respond, Deutsche Bank opposed the
State's motion. It argued that intervention is
inappropriate because the State essentially seeks to
intervene as a creditor to collect pre-receivership taxes
(Dkt. No. 41 at 1). According to Deutsche Bank, “[t]he
State does not have a property interest in Plaintiff's
case to support intervention, and the State's collection
opportunities are not hindered or impaired in any way if
intervention is disallowed.” Id. at 2.
Nonetheless, the Court granted the State's motion on
November 28, 2017 (Dkt. No. 67).
Fourth Circuit favors “‘liberal intervention'
and preventing the ‘problem of absent interested
parties.'” Friend v. REMAC Am., Inc., No.
3:12cv17, 2014 WL 2440438, at *1 (N.D.W.Va. May 30, 2014)
(quoting Feller v. Brock, 802 F.3d 722, 729 (4th
Cir. 1986)). “Prospective intervenors bear the burden
of demonstrating their right to intervene.” In re
Monitronics Int'l, Inc., MDL No. 1:13MD2493, 2015 WL
12748330, at *1 (N.D.W.Va. June 3, 2015) (citing Richman
v. First Woman's Bank, 104 F.3d 654, 658 (4th Cir.
1997)). Under Fed.R.Civ.P. 24, the Court has discretion to
allow intervention either as a matter of right or on a
permissive basis. Stuart v. Huff, 706 F.3d 345, 349
(4th Cir. 2013). For the following reasons, the Court finds
that the State is entitled to intervene under either
Intervention as of Right
Court must grant a timely motion to intervene if the movant
“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