Martin SAMUELS, Respondent,
v.
Lafayette Ronald HUBBARD, Defendant,
and
Church of Scientology of California, Inc., and Church of Scientology, Mission
of Davis, Intervenors-Appellants.
A8311-07227; CA A30844.
Court of Appeals of Oregon.
Argued and Submitted Oct. 10, 1984.
Decided Dec. 19, 1984.
Church and its mission moved to intervene in tort suit against founder of the
church. The Circuit Court, Multnomah County, Charles S. Crookham, J.,
denied the motions, and the church and its mission appealed. The Court of
Appeals, Van Hoomissen, J., held that: (1) denial of intervention was
appealable; (2) church and its mission were not entitled to intervene as of
right; and (3) trial court did not abuse its discretion in refusing to permit
intervention.
Affirmed.
[1] APPEAL AND ERROR
Denial of motion to intervene was appealable, regardless of propriety of the
denial. ORS 19.010(2)(a); Rules Civ.Proc., Rule 33, subds. B, C.
[2] PARTIES
Church and its mission were not entitled to intervene as of right in tort suit
against founder of the church in which it was alleged that the founder directed
and controlled others, including the church and its mission, who allegedly
committed torts against plaintiff. Rules Civ.Proc., Rules 29, subd. A, 33,
subd. B.
[3] PARTIES
Adoption of new intervention rule did not expand bases for permissive
intervention from what they were under former statute. Rules Civ.Proc., Rule
33, subd. C; ORS 13.130 (Repealed).
[4] PARTIES
Trial court's refusal to permit church and its mission to intervene in suit
against founder of the church in which it was alleged that the founder directed
and controlled others, including the church and its mission, who committed
torts against plaintiff was not an abuse of discretion, since, inter alia,
judgment would have no res judicata or stare decisis effect as to the church
and its mission, judgment would not preclude the church and its mission from
raising ecclesiastical defenses in another proceeding, and, even though the
church and its mission were required by contract to indemnify the founder,
under applicable law, the church and its mission could control the founder's
defense to the extent that the issues involved their indemnity liability.
Rules Civ.Proc., Rule 33, subd. C.
[4] PARTIES
Trial court's refusal to permit church and its mission to intervene in suit
against founder of the church in which it was alleged that the founder directed
and controlled others, including the church and its mission, who committed
torts against plaintiff was not an abuse of discretion, since, inter alia,
judgment would have no res judicata or stare decisis effect as to the church
and its mission, judgment would not preclude the church and its mission from
raising ecclesiastical defenses in another proceeding, and, even though the
church and its mission were required by contract to indemnify the founder,
under applicable law, the church and its mission could control the founder's
defense to the extent that the issues involved their indemnity liability.
Rules Civ.Proc., Rule 33, subd. C.
*482 **701 Marc D. Blackman, Portland, and Eric M. Lieberman, New York
City, argued the cause for intervenors-appellants. On the briefs were Marc D.
Blackman, Diane L. Alessi and Ransom, Blackman & Simson, Portland.
Garry P. McMurry, Portland, argued the cause for respondent. With him on the
brief were Ronald L. Wade and Rankin, McMurry, VavRosky & Doherty, Portland.
Before RICHARDSON, P.J., and VAN HOOMISSEN and YOUNG, JJ.
*483 VAN HOOMISSEN, Judge.
Plaintiff filed this civil action against Hubbard, the founder of Scientology,
alleging that Hubbard had committed torts against him. Plaintiff does not
allege that Hubbard personally committed the alleged torts, which include
conversion, outrageous conduct, defamation and fraud. Rather, he alleges that
he directed and controlled others who did so and that they were Hubbard's
agents. They include intervenors Church of Scientology of California, Inc.,
and Church of Scientology, Mission of Davis. Plaintiff is a former minister of
the California church and a former president of the Davis mission. Plaintiff
served Hubbard by substituted service pursuant to an ex parte court order, but
Hubbard has not appeared. After the service, the California church and the
Davis mission moved to intervene as defendants. The trial court denied their
motions, and they appeal. We affirm.
Plaintiff moves to dismiss on the ground that an order denying a motion to
intervene is not appealable. ORS 19.010(2)(a) provides that appealable
orders include "[a]n order affecting a substantial right, and which in effect
determines the action or suit so as to prevent a judgment or decree therein."
(Emphasis supplied.) Other states with similar appeal statutes have
**702 held that an order denying intervention is final as to the party
seeking to intervene, because it prohibits a judgment in the main action on
that party's claim. They therefore treat such orders as immediately
appealable. Henry v. Travelers' Ins. Co., 16 Colo. 179, 26 P. 318 (1891);
Ousley v. Osage City, 95 Kan. 254, 147 P. 1110 (1915); Likover v.
Cleveland, 60 Ohio App.2d 154, 396 N.E.2d 491 (1978); James S. Jackson Co.
v. Horseshoe Creek Ltd., 650 P.2d 281 (Wyo.1982); see also Thorpe v. North
Moneta, etc. Water Co., 12 Cal.App. 187, 106 P. 1106 (1909) (intervenor could
not appeal from final judgment in the case; the time for an appeal was when
petition to intervene was denied).
Federal courts take a slightly different position. 28 U.S.C. s 1291
provides for appeals "from all final decisions" of the district courts. Final
decisions generally include orders that, as a practical matter, end the
litigation. Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 633,
89 L.Ed. 911 (1945); Weston v. The City Council of Charleston, 27 U.S. (2
Pet.) 449, 464-65, 7 L.Ed. 481 (1829); Matter of Glover, Inc., 697 F.2d
907, *484 909 (10th Cir.1983). An order denying a petition to intervene is
appealable under the federal statute if the petitioner had a right to intervene
or if the denial was an abuse of the trial court's discretion. If the decision
was discretionary and the trial court did not abuse its discretion, federal
courts take either of two positions. The traditional approach is to dismiss
the appeal. Wheeler v. American Home Products Corp., 582 F.2d 891, 896 (5th
Cir.1977); State of N.M. v. Aamodt, 537 F.2d 1102, 1106 (10th Cir.1976),
cert. den. 429 U.S. 1121, 97 S.Ct. 1157, 51 L.Ed.2d 572 (1977). However,
deciding whether to dismiss the appeal requires the appellate court to
determine the merits of the trial court's denial of intervention, just as it
would do if it had jurisdiction. Some commentators and other federal courts
have suggested that it is simpler to treat all denials of intervention as
appealable and to affirm those where the trial court properly exercised its
discretion. Reedsburg Bank v. Apollo, 508 F.2d 995, 997 (7th Cir.1975);
Levin v. Ruby Trading Corp., 333 F.2d 592, 594 (2nd Cir.1964); 3B Moore's
Federal Practice P 24.15. State courts whose appeal provisions are similar to
the federal generally take this latter position. Citibank, N.A., v.
Blackhawk Heating, Etc., 398 So.2d 984, 986 (Fla.App.1981); Mayflower
Development Corp. v. Dennis, 11 Mass.App. 630, 633-35, 418 N.E.2d 349 (1981);
Apodaca v. Town of Tome Land Grant, 86 N.M. 132, 520 P.2d 552 (1974).
In short, in most other jurisdictions, either some or all denials of
intervention are immediately appealable. If not all denials are immediately
appealable, the court must first decide the merits of the denial in order to
determine whether a particular order is appealable. Oregon has not yet clearly
decided the issue. In State Highway Com. v. Superbilt Mfg. Co., 200 Or.
478, 481-83, 266 P.2d 1072 (1954), the Supreme Court noted that a denial of
intervention of right may be final and therefore appealable. However, the
intervention at issue was premature, and denial of the motion to intervene was
without prejudice to a renewed motion later in the case. The court, therefore,
dismissed the appeal. In General Const. v. Fish Comm., 19 Or.App. 485, 490-
92, 528 P.2d 122 (1974), we dismissed an appeal from a denial of a motion to
intervene on the ground that the intervenor could assert its claim in a
separate action. In Brown v. Brown/Brown, 10 Or.App. 80, 82-83, 497 P.2d
671, rev. den. (1972), we dismissed an appeal because the trial court did not
abuse its discretion in denying *485 the motion to intervene. These cases
can best be seen as applications of the majority federal rule that, when the
decision on intervention is within the trial court's discretion and the trial
court did not abuse its discretion, the appellate court should dismiss the
appeal. In each case the court determined the merits of the appeal in order to
dismiss it; the Superbilt court indicated that it would not have dismissed
the appeal if it had been meritorious.
[1] Although Oregon cases may apply the majority federal rule, they do not
constitute **703 a reasoned adoption of it. Other states have held, and we
agree, that a decision to deny a motion to intervene affects a substantial
right of the intervenor and, as a practical matter, determines the action so as
to prevent a judgment in that action on the intervenor's claim or defense. It,
therefore, comes within the language of ORS 19.010(2)(a). We also agree
with those courts which hold that it makes little sense to distinguish
procedurally between motions for intervention which are properly or improperly
denied. We must address the merits of the trial court's decision in either
situation, and it is less confusing simply to affirm a denial that was within
the court's discretion. We deny plaintiff's motion to dismiss the appeal.
ORCP 33 provides, in relevant part:
"B. At any time before trial, any person shall be permitted to intervene in
an action when a statute of this state, these rules, or the common law, confers
an unconditional right to intervene.
"C. At any time before trial, any person who has an interest in the matter in
litigation may, by leave of court, intervene. In exercising its discretion,
the court shall consider whether the intervention will unduly delay or
prejudice the adjudication of the rights of the original parties."
ORCP 33 is the first clear recognition in Oregon of a distinction between
intervention of right and permissive intervention. Some cases considering
intervention under former ORS 13.130 (repealed by Or.Laws 1979, ch. 284, s 199)
suggested that a party that met the requirements of that statute had a right to
intervene. See Barendrecht v. Clark, 244 Or. 524, 528, 419 P.2d 603
(1966); Duke v. Franklin, 177 Or. 297, 304-05, 162 P.2d 141 (1945). The
present rule, however, clearly limits intervention of right to the few
circumstances described in *486 ORCP 33 B. We review decisions on
motions based on those circumstances as matters of law. Other motions for
intervention must meet the requirements of ORCP 33 C and, even if they do,
the trial court has discretion whether to grant them. We review these latter
decisions only to determine whether they are within the court's discretion.
Intervenors assert both that they have a right to intervene under ORCP 33 B
and that they are permissive intervenors under ORCP 33 C.
The underlying assumption of many of intervenor's arguments is that a default
judgment against Hubbard would seriously prejudice them. [FN1] We do not
agree. Plaintiff's complaint alleges that Hubbard, through intervenors and
other of his agents, committed a number of torts. A judgment against him would
be conclusive between plaintiff and Hubbard, but it would not bind
intervenors. If, as they insist, they are independent entities over whom
Hubbard has influence only as the founder of their faith, the effect of a
judgment would at best be indirect and speculative. None of the allegations
proved against Hubbard would be deemed proved against intervenors. They would
remain free to deny that they are his agents or that he controls them.
Plaintiff could not use the judgment to hold intervenors liable in another
case.
FN1. Intervenors assert that Hubbard will not appear. The record shows
only that he has not yet appeared.
Plaintiff may try to satisfy a judgment against Hubbard by executing on
intervenors' property. To do so successfully, he would have to prove that some
property that intervenors hold is in fact Hubbard's property. That would
require a full trial of those issues, and the judgment would not aid plaintiff
in that regard. He may attempt to reach intervenors' property by showing that
Hubbard so dominates intervenors that they are his alter-egos. If he succeeds,
not only would intervenors' property be Hubbard's property, but intervenors
would have no interest in this proceeding different from Hubbard's, because
they would have no existence separate from Hubbard's. In those circumstances,
it would not be inappropriate to bind them to **704 the result of plaintiff's
action against Hubbard.
If plaintiff cannot show that Hubbard dominates intervenors, plaintiff will be
unable to use a judgment against *487 Hubbard to acquire their property.
Plaintiff may also try to show that Hubbard, although he does not control
intervenors, has an interest in their property. If so, plaintiff could reach
that retained interest to satisfy a judgment against Hubbard. Such an action
would not harm intervenors, because the interest plaintiff receives would not
be theirs in the first place. They would be in the same position as any other
garnishee. Thus, intervenors have not shown direct prejudice to themselves
from a judgment against Hubbard. [FN2]
FN2. If Hubbard appears and obtains a judgment in his favor, intervenors
would benefit because of the judgment's collateral estoppel effects. See
Bahler v. Fletcher, 257 Or. 1, 474 P.2d 329 (1970).
[2] We turn to the specific bases on which intervenors claim the court erred
in denying their motions to intervene. They first assert that they are
entitled to intervene as of right under ORCP 33 B because they are persons
to be joined, if feasible, under ORCP 29 A. [FN3] We need not decide
whether a person who should be joined under ORCP 29 A is also entitled to
intervene as of right under ORCP 33 B, because intervenors are not persons
who must be joined. Their presence is not necessary for complete relief
between plaintiff and Hubbard. To the extent that the issues relate to
intervenors' activities, plaintiff and Hubbard may need their evidence, but
that evidence is available without joining them as parties. There is no danger
that intervenors, plaintiff or Hubbard would be exposed to a substantial risk
of double liability or inconsistent obligations as a result of proceedings in
intervenors' absence. Neither is this a case in which intervenors would be
bound by challenged rules or would be deprived of money from a challenged fund
if plaintiff's action is successful. See New York Pub. I.R.G., Inc., v.
Regents of Univ. of St. of N.Y., 516 F.2d 350 (2nd Cir.1975); Decker v.
United States Dept. of Labor, 473 F.Supp. 770 (E.D.Wis.1979), aff'd 661 F.2d
598 (7th Cir.1980). Therefore, intervenors are not entitled to intervene as
*488 of right under ORCP 33 B.
FN3. ORCP 29 A provides in part:
"A person who is subject to service of process shall be joined as a party
in the action if (1) in that person's absence complete relief cannot be
accorded among those already parties, or (2) that person claims an interest
relating to the subject of the action and is so situated that the
disposition in that person's absence may (a) as a practical matter impair
or impede the person's ability to protect that interest or (b) leave any of
the persons already parties subject to a substantial risk of incurring
double, multiple, or otherwise inconsistent obligations by reason of their
claimed interest."
[3] Intervenors' other arguments in support of intervention are in fact for
permissive intervention, although they label some of them as seeking
intervention as of right. They assert that the adoption of ORCP 33 C
expanded the bases for permissive intervention in Oregon from what they were
under former ORS 13.130. [FN4] They are incorrect. The first sentence of
ORCP 33 C is simply a repetition of the standard for intervention found in
former ORS 13.130. Although the second sentence of ORCP 33 C is derived
from FRCP 24(b), it merely states criteria that courts have traditionally
used in deciding whether to permit intervention. It does not adopt the broad
federal standard for permissive intervention. [FN5]
FN4. Those bases were strict. "[T]he right or interest which will allow a
third person to intervene must be of such a direct and immediate character
that the intervenor will either gain or lose by the direct legal operation
of the judgment[.]" Brune v. McDonald, 158 Or. 364, 370, 75 P.2d 10
(1938).
FN5. FRCP 24(b)(2) permits intervention whenever the intervenor's claim
or defense and the main action have an issue of law or fact in common. The
bases for permissive intervention in ORCP 33 C, rather than being
comparable to those in FRCP 24(b)(2), are closer to those for
intervention of right in FRCP 24(a)(2). The numerous federal cases
which intervenors cite are therefore of limited assistance in resolving
this case. Even those federal cases which hold that a party had a right to
intervene do little more than indicate that a similarly situated party
would qualify for permissive intervention under Oregon law. That
determination is of little assistance in deciding whether a denial of
permissive intervention exceeded the trial court's discretion. Intervenors
would have been better advised to seek authorities applying intervention
provisions similar to Oregon's rather than assuming that there is a federal
answer for every state problem.
**705 [4] Intervenors assert that disposition of the case in their absence
may, as a practical matter, impede their ability to protect their religious and
reputational interests. Assuming that those concerns give intervenors an
"interest in the matter in litigation," they are not significant enough that
the trial court's action was outside its discretion. Although there may be
extensive litigation between various Scientology organizations and their
opponents, we do not see how the exclusion of intervenors from this case would
damage their interests in others. There would be no res judicata as to them.
Despite their arguments to the contrary, there would also be no stare decisis
effect. The effect of a judgment against Hubbard on intervenors' reputation is
highly speculative.
Intervenors allege that the actions of which plaintiff complains, to the
extent that they occurred at all, were part of *489 intra-church religious
discipline and that the secular authorities may not interfere with that
discipline. A judgment against Hubbard in this case neither decides this point
nor impairs intervenors' ability to raise it in another proceeding.
Plaintiff's complaint alleges a number of intentional torts. It does not by
its terms implicate intervenors' ecclesiastical concerns. Those concerns are
matters of defense. If Hubbard does not control intervenors, his failure to
raise these defenses cannot affect intervenors. If intervenors are his alter-
egos, it is not improper for them to bear the results of his decision not to
appear (if he does not) or not to raise those issues (if he does not). [FN6]
To the degree that intervenors are in fact separate entities from Hubbard,
failure to join them would not as a practical matter affect their ability to
protect their separate interests. [FN7]
FN6. As we discuss below, intervenors as Hubbard's indemnitors may be able
to insist that he raise those defenses.
FN7. Intervenors' assertion that certain property which plaintiff alleges
Hubbard converted actually belonged to them does not meet the requirements
of ORCP 33 C. Plaintiff seeks damages for conversion, not replevin of
the property, and therefore intervenors do not have an interest in the
subject matter of that claim.
Intervenors' strongest argument is that their position as Hubbard's
indemnitors makes intervention necessary. The indemnity obligation arises from
contracts between intervenors and the Church of Scientology International and
Scientology Missions International. Under those contracts intervenors must
indemnify Hubbard from all claims against him which arise from their practice
of Scientology. The contracts were executed in July and September, 1982, after
many of the events of which plaintiff complains had occurred. However, each
claim for relief refers to events in October, 1982, or later, so we will assume
that intervenors may be required to indemnify Hubbard for at least some of
plaintiff's alleged damages. The indemnity agreements give intervenors a
sufficient interest in the matter in litigation that the court would not have
erred by permitting them to intervene. See Barendrecht v. Clark, supra.
Whether the court's denial of intervention was beyond its discretion depends on
whether intervenors would be prejudiced in defending against Hubbard's demand
for indemnity if they are not allowed to intervene. If they would not, the
court's action was permissible.
*490 If intervenors are not permitted to intervene, Hubbard may refuse to
defend the case or may do so inadequately. Intervenors express particular
concern that he may not raise their ecclesiastical defenses. However, under
California law, which governs the interpretation of the agreements according to
their express terms, intervenors can control Hubbard's defense to the extent
that the issues involve their indemnity liability. If they do not, they will
have **706 a defense to any indemnity claim Hubbard may bring against them.
Cal.Civ.Code s 2778 provides in relevant part:
"In the interpretation of a contract of indemnity, the following rules are to
be applied, unless a contrary intention appears:
" * * *
"6. If the person indemnifying, whether he is a principal or a surety in the
agreement, has no reasonable notice of the action or proceeding against the
person indemnified, or is not allowed to control its defense, judgment against
the latter is only presumptive evidence against the former;
"7. A stipulation that a judgment against the person indemnified shall be
conclusive upon the person indemnifying, is inapplicable if he had a good
defense upon the merits, which by want of ordinary care he failed to establish
in the action."
Subsection 7 apparently applies to all situations in which an indemnitee may
claim that a judgment is conclusive. See Nicholson-Brown, Inc. v. City of
San Jose, 62 Cal.App.3d 526, 133 Cal.Rptr. 159 (1976). California courts have
gone beyond the statute to hold that an action against an indemnitee is in
substance an action against the indemnitor. The indemnitor, they hold, is the
real party in interest and has an opportunity in defending the indemnitee to
make any defense which may exist. Dutil v. Pacheco, 21 Cal. 438 (1863);
Sunlight Elec. Supply Co. v. McKee, 226 Cal.App.2d 47, 37 Cal.Rptr. 782
(1964); see also 14 Cal.Jur.3d 734-38, Contribution and Indemnification ss 70-
71; Restatement (Second) Judgments, s 57(1)(b)(ii).
If Hubbard appears in this case, intervenors on his behalf may raise all the
defenses that they could raise if they were parties. If he does not appear and
does not permit intervenors to appear for him, they may have a defense to his
*491 indemnification claim. Although the trial court could have allowed
intervention, its refusal to do so does not so damage intervenors that it was
an abuse of the court's discretion.
Affirmed.