Supreme Court to Decide Whether Interveners Must Have Standing

Town of Chester v. Laroe Estates involves a long, complicated story and legal issue.

Steven Sherman sued the Town of Chester alleging an unconstitutional taking as the town refused to approve a subdivision on plots of land Sherman intended to sell to Laroe Estates. Laroe Estates advanced Sherman money for the land in exchange for a mortgage on the property. Sherman defaulted on a loan to a senior mortgage holder who foreclosed on the property.

Laroe Estates, claiming to be the owner of the property, sought to “intervene” in the takings lawsuit. The Federal Rule of Civil Procedure grant non-parties the right to intervene who “claim 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 its interest, unless existing parties adequately represent that interest.”  

The district court concluded that Laroe Estates lacked Article III “standing” under the U.S. Constitution to assert a takings claim against the Town. Laroe Estates argued that it was a “contract vendee” of the Sherman property. According to the district court, under longstanding circuit court precedent “contract vendees lack standing to assert a takings claim.”

The question the Supreme Court will decide in Town of Chester v. Laroe Estates is whether Laroe Estates may intervene in this case even though it lacks standing.

The Second Circuit held, based on prior circuit court precedent, Laroe Estates does not have to have standing to intervene in this lawsuit where there is a genuine case or controversy between the existing parties (here Sherman and the Town of Chester). Of the ten federal circuit courts of appeals to have ruled on this issue three have held interveners must have Article III standing.

As the Town of Chester’s certiorari petition points out intervenors have a lot of power. “Intervention gives an entity ‘equal standing with the original parties’ and the authority to ‘litigate fully on the merits’—including such privileges as the right to seek discovery, demand a jury trial, request remedies, block settlements, receive attorney’s fees, and (in some circumstances) raise new claims.”

In some instances states and local governments may seek to intervene in lawsuits or interveners may intervene on their side when states and local governments are sued. But most cases are like this one where an intervener has filed against a state or local government. The State and Local Legal Center will file an amicus brief in this case supporting the Town of Chester arguing that interveners must have standing even where there is a valid case or controversy between the named parties.