Conterra Agricultural Capital, LLC vs. Prosperity Farms, LLC et al

Prior to commencement of the cross-complainants' action in this case, the Grahams filed a complaint for declaratory relief in TCSC Case No. VCU324716, naming, as defendants, Ron Cook, CA Farms, and Prosperity R20. The Grahams alleged that CA Farms and Mr. Cook were attempting to secure a loan or other financing against real property owned by Prosperity R20 without the Grahams' knowledge. The Grahams sought (and still seek) "a declaration that any encumbrance on the Property [in Prosperity R20] without [the Grahams'] consent is invalid and void." Notable here, the only real property identified as owned by Prosperity R20 by any party to this or any other relevant case is Tulare 20.

Incident to the close relationship of the claims in the declaratory relief action and the Grahams' claims concerning Tulare 20 in their cross-complaint in this case, VCU324716 was recently consolidated with this case, with VCU324716 designated as the lead case, on unopposed motion by the Grahams.

TCWA's motion to intervene

TCWA states it has a groundwater account involving Prosperity R20, for groundwater used at Tulare 20, with an outstanding balance of $151,511.52 and that it is unclear when TCWA will be paid or by whom. TCWA asserts it filed a lien against properties held by Prosperity R20 (i.e., against Tulare 20). TCWA asserts that "[a]s such, TCWA has an interest in the property of the Defendants and is entitled to intervene as a matter of right in the case at bar." "Alternatively," TCWA asserts, "TCWA should be permitted to intervene in this lawsuit because it also meets the standard of having 'an interest in the matter in litigation, or in the success of either (or any) of the parties, or an interest against both.' (CCP Sec. 387 (d)(2))."

The court briefly notes that TCWA references another account involving Prosperity, for groundwater used at Tulare 22, as well as, amongst other things, an associated lien against "properties held by Compeer." By "properties held by Compeer," TCWA is referring to Tulare 22, which--according to a receivership report by Focus recently filed in this case--is, or soon should be, actually held by Prosperity. The circumstances of that title matter are not pertinent here, but the court highlights TCWA's reference to the Prosperity/Tulare 22 account for the purpose of making clear that that account is irrelevant to TCWA's instant motion. That is because, by TCWA's own admission, the Prosperity/Tulare 22 account has been "paid in full and the lien [on Tulare 22] is being released."

Accordingly, TCWA's motion for leave to intervene stands or falls based solely on the relationship of its claims relating to the Tulare 20/Prosperity R20 account and the subjects at issue in this now consolidated action, specifically as to the matters raised in the cross-complaint in this case and the Grahams' declaratory relief action concerning Tulare 20 and Prosperity R20.

Opposition by CAL, CA Farms, and Ron and Jennifer Cook

TCWA's motion is opposed solely by Ron and Jennifer Cook, CAL, and CA Farms. They collectively assert the subject matter of this action (referencing both the underlying receivership action and the Grahams' cross-complaint) have "no relation to TCWA and its claim for alleged unpaid water fees" and that TCWA fails "to show how the disposition in this action will impair or impede its interest in collecting alleged unpaid water fees."

ANALYSIS

Code of Civil Procedure section 387 permits a nonparty to seek leave to file a complaint in an action "[d]emanding anything adverse to both a plaintiff and a defendant" (and/or adverse to both a "cross-complainant" and "cross-defendant"). (Id., subds. (a)-(c).) The nonparty is entitled, as a matter of right, to intervene if "[t]he person seeking intervention claims an interest relating to the property or transaction that is the subject of the action and that person is so situated that the disposition of the action may impair or impede that person's ability to protect that interest, unless that person's interest is adequately represented by one or more of the existing parties." (Id., subd (d)(1)(B).)

Alternatively, a nonparty may be permitted to intervene "if the person has an interest in the matter in litigation, or in the success of either of the parties, or an interest against both." (Id., subd. (d)(2).)

TWCA does not have a mandatory right to intervene

"In determining whether an unconditional right to intervene exists under section 387, subdivision (b), the threshold question is whether the person seeking intervention has 'an interest relating to the property [or] transaction which is the subject of the action.' [Citations.]" (Siena Court Homeowners Assn. v. Green Valley Corp. (2008) 164 Cal.App.4th 1416, 1423 [79 Cal.Rptr.3d 915].) "In addition to demonstrating an interest in the property or transaction that is the subject of the action, a person seeking intervention must also show that he or she 'is so situated that the disposition of the action may as a practical matter impair or impede that person's ability to protect that interest.' [Citations.]" (Id., at p. 1424.)

Arguably, TWCA makes a showing that it has an interest relating to property that is amongst the subjects of the Grahams' cross-complaint, as well as their declaratory relief action. TCWA claims an interest relating to Tulare 20 and Prosperity R20 and the court notes that the Grahams' cross-complaint includes claims for judicial dissolution of Property R20 (which owns Tulare 20); declaratory relief concerning the entitlement of various parties to crop proceeds from the 2025 harvest at Tulare 20; for money had and received, seeking recovery of the 2025 Tulare 20 crop proceeds; and a prayer for a constructive trust over the 2025 Tulare 20 crop proceeds.

TWCA, however, fails to show that disposition of the consolidated action in its absence will impair or impede its ability to protect its interest in the past due Prosperity R20/Tulare 20 account. TWCA's interest in the payment of its outstanding balance for the Prosperity R20/Tulare 20 account arises from its authority under the Sustainable Groundwater Management Act (SGMA) to assess fees and penalties against landowners within its jurisdictional area. The obligations of the defendants identified in the proposed complaint to pay groundwater fees are independent of the various issues asserted in the Grahams' cross-complaint and declaratory relief action. TWCA fails to show how a judgment in the Grahams' consolidated actions will affect TWCA's ability to protect its interest in payment of groundwater fees it has assessed under SGMA.

TWCA has an interest, as a creditor, in the consolidated actions of the Grahams, by virtue of its interest in recovery of the account balance from any judgment for damages, but that interest does not give it the right to intervene in the action. (See Olson v. Hopkins (1969) 269 Cal.App.2d 638, 642 [75 Cal.Rptr. 33].) TWCA contends "resolution of the case at bar may, as a practical matter, determine how or whether TCWA is able to recover the fees owed, particularly where payment sources or priorities may be adjudicated in TCWA's absence." TWCA, though, fails to explain how resolution of any of the Grahams' several claims in the consolidated action will determine any of the matters indicated. While it may be true that these issues might somehow indirectly be affected by the resolution of this matter, there is no direct relationship.

" 'The right broadly granted by the code has, however, been strictly limited by the decisions defining "interest," a word that is of crucial significance and that has a definite legal meaning in intervention proceedings. The interest referred to must be in the matter in litigation and of such a direct or immediate character that the intervener will either gain or lose by the direct legal operation and effect of the judgment.' [Citation.]" (Muller v. Robinson (1959) 174 Cal.App.2d 511, 515 [345 P.2d 25].) If TWCA has a claim based on SGMA as against Prosperity R20, or any other defendant identified in its proposed complaint, with respect to the alleged outstanding Prosperity R20/Tulare 20 account balance, it may bring a separate action for that claim, but such a claim, as a creditor, does not supply grounds for mandatory intervention in the consolidated action here.

Discretionary intervention is not warranted

"Pursuant to section 387 the trial court has discretion to permit a nonparty to intervene where the following factors are met: (1) the proper procedures have been followed; (2) the nonparty has a direct and immediate interest in the action; (3) the intervention will not enlarge the issues in the litigation; and (4) the reasons for the intervention outweigh any opposition by the parties presently in the action. [Citation.]" (Reliance Ins. Co. v. Superior Court (2000) 84 Cal.App.4th 383, 386 [100 Cal.Rptr.2d 807].) " 'The requirement of a direct and immediate interest means that the interest must be of such a direct and immediate nature that the moving party " 'will either gain or lose by the direct legal operation and effect of the judgment.' [Citation.]" [Citations.]' [Citation.]" (Siena Court Homeowners Assn., supra, 164 Cal.App.4th at p. 1428.)

TWCA does not have a direct and immediate interest in the consolidated action incident to the outstanding balance on the Prosperity R20/Tulare 20 groundwater fee account. TWCA will not gain or lose as a result of any judgment in the consolidated action because the judgment will not affect its entitlement to collect the claimed groundwater fees due. TWCA, in any event, has failed to identify how any such judgment might affect its interests. What's more, TWCA's intervention, if permitted, would needlessly enlarge the issues in litigation to include matters concerning the person(s) or entity(ies) obligated to pay the outstanding debt to TWCA, and the enforceability of those obligations, which matters have nothing to do with the claims in the consolidated action.

Conclusion

Based on the foregoing, TWCA's motion for leave to intervene is denied. If no one requests oral argument, under Code of Civil Procedure section 1019.5(a) and California Rules of Court, rule 3.1312(a), no further written order is necessary. The minute order adopting this tentative ruling will become the order of the court and service by the clerk will constitute notice of the order. Court reporters are usually not available for law and motion matters in the civil division. The parties and counsel must provide their own reporter if they want a transcript of the proceedings. Re: Bank of the Sierra vs. Sierra Forest Products