Northeast Securities Co., Ltd v. Que, Xiaolan, Lin et al.

LEGAL STANDARD

Code of Civil Procedure section 387(d)(1)(B) provides for mandatory intervention when a nonparty claims an interest relating to the property or transaction that is the subject of the action, is so situated that disposition may impair or impede that person's ability to protect that interest, and the interest is not adequately represented by existing parties. Cal Code Civ Proc § 387.

To establish mandatory intervention, Song must demonstrate: (1) a timely application; (2) an interest relating to the property or transaction at issue; (3) that disposition may impair or impede her ability to protect that interest; and (4) that her interest is not adequately represented by existing parties.

For permissive intervention under section 387(d)(2), the court exercises discretion considering: (1) proper procedures; (2) direct and immediate interest; (3) whether intervention will enlarge the issues; and (4) whether reasons for intervention outweigh opposition.

ANALYSIS

A. Timeliness

Timeliness is measured from when the proposed intervenor knew or should have known their interests were not being adequately protected, not from when they learned of the litigation. Ziani Homeowners Assn. v. Brookfield Ziani LLC (2015) 243 Cal.App.4th 274, 282.

Song's motion is untimely. Plaintiff filed this action on August 3, 2023, challenging the same April 2023 deeds of trust and California properties that Song subsequently targeted in her own federal attachment motion filed October 12, 2023. Song's federal motion discussed the

identical transfers, identified defendant Lin, and provided the same background regarding Lin's business relationship with the judgment debtors—all matters alleged in plaintiff's complaint.

Plaintiff recorded Notices of Pendency of Action against all three California properties on September 8, 2023, providing constructive notice. Yet Song waited until January 14, 2026— more than two years—to seek intervention.

The complaint has remained substantively unchanged since filing. Song's vague assertion that intervention "became clear" as the action "progressed" is insufficient when the record establishes she knew of the challenged transactions by October 2023. The most important consideration is prejudice caused by delay, and here the delay exceeds two years despite Song's early knowledge. Truck Ins. Exchange v. Superior Court (1997) 60 Cal.App.4th 342, 351.

B. Lack of Direct and Immediate Interest

Song lacks the direct and immediate interest required for intervention. Her interest is that of a competing creditor seeking to collect from the same debtor—precisely the type of consequential interest California courts consistently hold insufficient. City and County of San Francisco v. State of California, (2005)128 Cal. App. 4th 1030, 1037.

An interest is consequential when the action does not directly affect it, although results may indirectly benefit or harm its owner. "An unsecured creditor of a defendant who will be rendered unable to pay the debt if he loses a lawsuit is held to only have a consequential interest not justifying intervention." Fireman's Fund Ins. Co. v. Gerlach (1976) 56 Cal. App. 3d 299, 303.

Song holds a separate judgment against Que arising from an entirely different 2014 transaction. Plaintiff holds its own judgment based on separate 2016 equity repurchase agreements. Both creditors seek to enforce their respective judgments against assets allegedly transferred by the common debtor. The fact that both target the same California properties does not transform Song's consequential interest into a direct one.

Any judgment determining the validity of the challenged transfers will affect Song only indirectly by potentially reducing or enlarging the pool of available assets. This is the hallmark of a consequential interest.

C. No Impairment of Ability to Protect Interests

Song cannot demonstrate that disposition of this action will impair her ability to protect her interests. Even if plaintiff prevails and the challenged transfers are avoided, Song retains all enforcement rights. She can pursue her own UVTA claims, obtain judgment liens, levy on assets, and pursue any other remedy available to a judgment creditor.

Conversely, if Plaintiff does not prevail, Song is not bound by that result under principles of res judicata or collateral estoppel. The standard asks whether disposition will, as a practical matter, impair the intervenor's ability to protect that interest. Hodge v. Kirkpatrick Development, Inc. (2005) 130 Cal. App. 4th 540, 555. Song points to no such practical

impairment. Her enforcement rights exist independently and will continue regardless of this litigation's outcome.

D. Permissive Intervention Also Fails

Permissive intervention requires consideration of whether intervention will enlarge the issues and whether reasons for intervention outweigh opposition. South Coast Air Quality Management Dist. v. City of Los Angeles (2021); 71 Cal.App.5th 314, 325; Reliance Ins. Co. v. Superior Court (2000) 84 Cal.App.4th 383, 386.

Song's proposed complaint would substantially expand this action by injecting her separate 2014 agreement, 2021 arbitration award, federal confirmation proceedings, and distinct $52 million-plus judgment. This would require the parties to address the validity and enforceability of Song's separate arbitration award and federal judgment, the merits of her independent UVTA claims, priority disputes between creditors, and Song's request for multiple forms of relief.

This expansion creates substantial prejudice. Written discovery is substantially complete. The action has been stayed pending defendant He's bankruptcy proceedings. Song's two-year delay compounds this prejudice.

Judicial efficiency is not served by consolidating separate creditor enforcement actions with distinct judgments, claims, and remedies simply because they target overlapping assets. Song's independent remedies remain available without burdening this litigation.

DISPOSITION

Song has failed to establish a right to mandatory intervention. Her motion is untimely, she lacks a direct and immediate interest, her ability to protect her interests will not be impaired, and her interests are adequately represented by plaintiff to the extent they overlap. Permissive intervention is likewise inappropriate. Intervention would substantially enlarge the litigation, prejudice existing parties who have substantially completed discovery and are subject to a bankruptcy stay, and would not serve judicial efficiency given Song's available independent remedies.

Accordingly, the motion to intervene is DENIED.

Plaintiff to prepare the final proposed order, accompanied by the necessary Form EFS-020 within 7 days of the hearing.

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