Case Number: BC607148 Hearing Date: July 20, 2016 Dept: 56

Case Name: MH Pillars Ltd. v. PaymentWorld Limited, et al.
Case No.: BC607148
Matter: Motion to Intervene by Kenneth D. Bell, Receiver

Tentative Ruling: Motion to intervene is granted.

Plaintiff MH Pillars Ltd. filed this action against Defendants PaymentWorld Limited, PaymentWorld LLC and Roman Balanko, alleging various causes of action concerning misappropriation of funds for credit card transactions. Kenneth D. Bell, Receiver for Rex Venture Group LLC (RVG) moves to intervene pursuant to CCP §387.

Intervention is mandatory when a party “claims an interest relating to the property or transaction which is the subject of the action and that [party] is so situated that the disposition of the action may as a practical matter impair or impede that [party’s] ability to protect that interest, unless that [party’s] interest is adequately represented by existing parties … .” CCP §387(b). Intervention is discretionary when a person “has an interest in the matter in litigation” CCP §387(a), and shows that the party has as direct and immediate interest in the action, the intervention will not enlarge the issues, and the reasons for the intervention outweigh those against it. See Siena Ct. Homeowners Assn v. Green Valley Corp. (2008) 164 Cal.App.4th 1416, 1428.

Bell has established both mandatory and discretionary grounds for intervention. Bell has been appointed as receiver of the assets of RVG by a federal court in an SEC enforcement action relating to the same Ponzi scheme alleged in this action. Bell has been directed to locate and take possession of property in order to return money to the victims of the scheme. RVG was one of Plaintiff’s customers, and Plaintiff alleges that Defendants conducted transactions and retained funds from the same scheme. Plaintiff’s complaint concedes that Bell is entitled to a portion of the same funds that are sought in this action, and it is clear that Bell’s interests will not be adequately represented by the existing parties.

Defendants argue that Bell’s claims will enlarge the issues in this action, and his claims are adequately protected in federal court. Neither argument is relevant to mandatory intervention, which has been established. In all events, Bell’s claims will not enlarge the issues because they are derivative of a portion of Plaintiff’s claims against Defendants, and Defendants have not shown that Bell’s interests are adequately protected by orders entered in federal court.

The motion is granted, and Bell may file and serve his proposed complaint in intervention. Counsel shall submit a separate version for filing at the hearing.