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Reddy v. Morrissey

United States District Court, D. Oregon, Portland Division

September 17, 2018




         Rajashakher P. Reddy (“Reddy”) has filed this action against Manju Morrissey (“Morrissey”) seeking a declaratory judgment (first claim), and alleging breach of contract (second claim), unjust enrichment (third claim), promissory estoppel (fourth claim), and fraud (fifth claim), arising from a dispute concerning the ownership of Piper and Associates, LLC (“Piper”). Compl., ECF #1. Morrissey moves this court for an order dismissing the first claim for failure to join an indispensable party under FRCP 12(b)(7).[1] ECF #5. The court has subject matter jurisdiction over this case pursuant to 28 U.S.C. § 1332(a)(1). For the reasons that follow, Morrissey's motion to dismiss should be denied.


         As alleged in the complaint, Reddy formed Piper, a limited liability company, for the purpose of acquiring beachfront property in Walton County, Florida. Compl. ¶¶ 7-8, EFC #1. Reddy executed the Operating Agreement of Piper and Associates, LLC (“Operating Agreement”) as the sole member of Piper. Id. at ¶ 9. On or about February 25, 2011, Piper purchased the property for $123, 895 using funds contributed by Reddy. Id. at ¶ 10.

         After the purchase of the property, Reddy was convicted of criminal charges and, concerned he would be sent to prison, assigned his membership interest in Piper to his sister, Morrissey. Id. at ¶ 15. Reddy alleges that Morrissey agreed to return the membership interest to him when he was able to resume his duties, subject to Reddy repaying Morrissey for all expenses she incurred related to the property. Id. at ¶¶ 13-15. The parties dispute whether the assignment also required Reddy to pay an additional $90, 000 owed to Morrissey as part of a separate, unrelated transaction. Id. at ¶¶ 21-22. Reddy alleges that he reimbursed Morrissey for taxes and homeowner's association fees, and offered to reimburse her expenses, but Morrissey refused to return the membership interest in Piper and instead demanded $350, 000. Id. at ¶¶ 17-19, 23.

         In addition to claims for breach of contract, unjust enrichment, promissory estoppel, and fraud, Reddy asks this court to issue a declaratory judgment that he is the owner and sole member of Piper because Morrissey failed to execute Piper's Operating Agreement, a necessary condition for the transfer of membership. Id. ¶¶ 26-30.

         In 2016, Reddy filed suit in Walton County Circuit Court, Florida, alleging claims of breach of contract and promissory estoppel against Morrissey, and claims of constructive trust, unjust enrichment, and unjust enrichment-equitable lien against Morrissey and Piper.[2] ECF #6, Exs. 1 & 4, at 3. On January 3, 2017, the case was removed to the Northern District of Florida. Id., Ex. 4. The district court dismissed Morrissey for lack of personal jurisdiction on September 15, 2017. Id., Ex. 4, at 7. On March 15, 2018, the district court granted summary judgment in Piper's favor, holding there was no genuine issue of material fact regarding Reddy's unjust enrichment, equitable lien, and constructive trust claims against Piper. Id., Ex. 2, at 6. In doing so, the district court recognized that to the extent Reddy had valid claims, it would be against Morrissey:

To the extent that the plaintiff has a valid claim, it is for fraud or breach of contract, or for something related to Morrisey's actions. But he has not asserted such a claim against Piper (nor could he). The only breach of contract claim that he raised was against Morrisey, and that claim has been dismissed from this lawsuit and either is currently or will be part of the Oregon case.


         Reddy filed this action against Morrissey in the District of Oregon on May 30, 2018. ECF #1.


         Morrissey contends that Reddy's first claim for declaratory judgment must be dismissed pursuant to Rule 12(b)(7) because Reddy has failed to join Piper, which is a necessary and indispensable party. Morrissey also contends that Reddy cannot cure this defect, because the Northern District of Florida has granted summary judgment in favor of Piper and claim preclusion applies. Mot. 6-7, ECF #5.

         Under FRCP 12(b)(7), a party may move to dismiss a case for “failure to join a party under Rule 19.” EEOC v. Peabody Western Coal Co., 400 F.3d 774, 778 (9th Cir. 2005). The court must determine whether a non-party should be joined, whether such joinder is feasible, and, if not, whether the action should be dismissed in the absence of that party. Id. at *779. The burden of persuasion is on the party moving to dismiss for failure to join. Makah Indian Tribe v. Verity, 910 F.2d 555, 558 (9th Cir. 1990); Sulit v. Slep-Tone Entm't, No. C06-00045 MJJ, 2007 WL 4169762, at *2 (N.D. Cal. Nov. 20, 2007).

         To determine whether a party is necessary under Rule 19(a), the court “must consider whether ‘complete relief' can be accorded among the existing parties, and whether the absent party has a ‘legally protected interest' in the subject of the suit.” NovelPoster v. Javitch Canfield Group, No. 13-cv-05186-WHO, 2014 WL 1312111, at *5 (N.D. Cal. Apr. 1, 2014) (quoting Shermoen v. United States, 982 F.2d 1312, 1317 (9th Cir. 1992)). There is no precise formula for determining whether a particular nonparty should be joined under Rule 19(a). “The determination is heavily influenced by the facts and circumstances of each ...

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