DEVELCOM FUNDING, LLC. v. AMERICAN ATLANTIC COMPANYCivil No. 09-1839(RMB).
DEVELCOM FUNDING, LLC, Plaintiff,
AMERICAN ATLANTIC COMPANY, Defendant.
AMERICAN ATLANTIC COMPANY, Defendant.
United States District Court, D. New Jersey, Camden Vicinage.
September 9, 2009.
Allison L. Kashon, Ronald Jay Shaffer, Fox Rothschild LLP, Atlantic City, NJ, Attorneys for Plaintiff. Alyson M. Weiss, Loeb & Loeb, LLP, New York, NY, Lawrence W. Lindsay, Loughry & Lindsay, LLC, Camden, NJ, Attorneys for Defendant.
Thomas R. Valen, Jennifer A. Hradil, Mara E. Zazzali, Gibbons, PC, Newark, NJ, William M. Tambussi, Brown & Connery, LLP, Westmont, NJ, Attorneys for Intervenor-Defendant.
RENÉE MARIE BUMB, District Judge.
This matter comes before the Court upon a motion to dismiss for failure to join an indispensable party, pursuant to Federal Rule of Civil Procedure 12(b)(7), by defendant American Atlantic Company (the "Defendant"). The Plaintiff, Develcom Funding, LLC, (the "Plaintiff") brought this federal action to enforce a contract of sale for a disposal facility, amidst ongoing state-court litigation between the parties arising from the same set of facts. The state action, however, includes a third party, Weeks Marine, Inc., ("Weeks") which is not named as a defendant in this proceeding. Because Weeks is an indispensable party whose joinder in this action would defeat the Court's subject-matter jurisdiction, the Court will grant the motion to dismiss.
For the past year, Plaintiff, Defendant, and Weeks have been embroiled in litigation in New Jersey state court relating to the ownership and operation of the Raccoon Island/Whites Basin confined disposal facility (the "Facility"). That action,
The facts underlying both suits, as set out in the Complaint, are as follows. Defendant owned and operated the Facility from the 1880s to 1993. (Compl. ¶¶ 5, 10.) In February 1993, Defendant sold the dredging operation located at the Facility to Weeks, but still retained ownership of the site. (
In January 2008, Plaintiff contracted to purchase the property from Defendant. (
In the ongoing State Court Action, Weeks alleges that Defendant breached, and Plaintiff tortiously interfered with, the SDA. The very dispute between Plaintiff and Defendant in the proceeding now before this Court is also being litigated by way of crossclaims in the State Court Action. (Def.'s Br. 2, 8-9.) Concerned about the burdens of litigating the same dispute in two fora, Defendant now moves to dismiss this action.
Federal Rule of Civil Procedure 12(b)(7) provides that defendants may, in lieu of filing an answer, assert by motion the defense of "failure to join a party under Rule 19." Fed. R. Civ. P. 12(b)(7). Under Rule 19, if joinder of an unnamed party would defeat federal subject-matter jurisdiction, and if the party is deemed both necessary and indispensable to the action, the complaint must be dismissed.
In reviewing a Rule 12(b)(7) motion to dismiss, the court must accept all allegations in the complaint as true and draw all reasonable inferences therefrom in favor of the non-moving party.
This case requires a straightforward application of Federal Rule of Civil Procedure 19. Defendant seeks dismissal of this action on the ground that a party indispensable to resolution of this case — namely, Weeks — cannot be joined without destroying the Court's subject-matter jurisdiction. Here, subject-matter jurisdiction is premised upon the parties' diversity of citizenship. (Compl. ¶ 3.) As both Plaintiff and Weeks are citizens of New Jersey, joinder of Weeks as a co-defendant would destroy diversity jurisdiction.
Rule 19 establishes a two-step inquiry. Before granting dismissal under the Rule, courts must first consider "whether an absent party is `necessary' under Rule 19(a), and then, if the party is necessary but cannot be joined, [they must] determin[e] whether the party is `indispensable' such that the action must be dismissed in [its] absence."
As to the first inquiry: Defendant argues that Weeks is a "necessary" party to this litigation because Weeks has "an interest relating to the subject of the action and is so situated that disposing of the action in [its] absence may . . . leave [Defendant] subject to a substantial risk of incurring . . . inconsistent obligations because of the interest." Fed. R. Civ. P. 19(a)(1)(A)(ii).
It cannot credibly be disputed that Weeks maintains an interest "relating to the subject of th[is] action . . . ."
Defendant further contends that resolving this litigation without Weeks's participation may create a substantial risk of imposing inconsistent obligations.
Since Weeks cannot be joined in this action, the Court must turn to whether Weeks is an "indispensable" party, such that the action must be dismissed in its absence. To make this determination, the Court must consider:
Fed. R. Civ. P. 19(b).
As to the first factor: Weeks would be severely prejudiced if the Court rendered judgment in its absence.
As to the second factor: One measure that might lessen the prejudice to Weeks is limiting the remedies Plaintiff may pursue in this action to money damages only.
As to the third factor: A judgment rendered in Weeks's absence would be inadequate. This factor "promotes judicial economy by avoiding going forward with actions in which the court may end up rendering hollow or incomplete relief because of the inability to bind persons who could not be joined."
Here, a finding of liability would almost certainly require further litigation to determine the consequences for Weeks. Indeed, Plaintiff's brief readily concedes this point. (Def.'s Br. 10-11 ("[After resolution of this case] [Defendant] and Weeks can and should litigate between them any remaining issues as to the expiration and termination of the SDA . . . .").) If, for example, the Court ordered specific performance of the sale contract, this would require removal of Weeks and its dredging operation from the property. (Compl. ¶ 141(e)-(g).) Weeks's entitlement to damages, if any, would, in turn, need to be resolved by an appropriate tribunal. If the Court awarded damages for breach or rescission of the sale contract, further litigation would be necessary to determine whether Defendant is entitled to indemnification by Weeks. Accordingly, the "risk of successive litigation," which would inevitably result in "the inefficient, piecemeal disposition of Plaintiff's claims," weighs in favor of dismissal.
As to the final factor: Plaintiff has offered the Court no reason why its claims cannot be fully vindicated in the ongoing State Court Action. The Court has no reason to conclude that the State Court provides Plaintiff with a less than adequate forum, particularly since the case will be resolved on state-law grounds.
The "public [has a] stake in settling disputes by wholes, whenever possible."
For the reasons stated herein, the Court will grant Defendant's motion to dismiss and, thus, deny as moot Weeks's motion to intervene. An accompanying Order will issue.
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