Delta Coal Program v. Libman

554 F. Supp. 684, 1982 U.S. Dist. LEXIS 9885
CourtDistrict Court, N.D. Georgia
DecidedDecember 3, 1982
DocketCiv. A. C79-2009A
StatusPublished
Cited by13 cases

This text of 554 F. Supp. 684 (Delta Coal Program v. Libman) is published on Counsel Stack Legal Research, covering District Court, N.D. Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Delta Coal Program v. Libman, 554 F. Supp. 684, 1982 U.S. Dist. LEXIS 9885 (N.D. Ga. 1982).

Opinion

ORDER

FORRESTER, District Judge.

On September 20, 1982, this court ruled, after a conference with the parties, that Plaintiff Leonard’s motion for joinder is granted, the “Co-Owners’ ” motion for joinder is granted, Plaintiffs Leonard and Crum’s motion to dismiss voluntarily their complaint and that of Delta Coal Program is denied, the amended complaint and the amendment to the cross-claim is allowed filed, the joint motion of Leonard, Crum, Coopers & Lybrand, and Hecht to dismiss Leonard & Crum’s complaint against Coopers & Lybrand and Hecht is granted, and the motion of Defendant Universal Heritage Investment Corp. to be dropped as a party is denied.

This memorandum opinion focuses on the reasons why the motion for joinder was granted.

I. BACKGROUND OF LITIGATION

This lawsuit was filed on October 29, 1979, by Messrs. Crum and Leonard, suing on behalf of themselves individually and as representatives of the Delta Coal Program, a special type of limited partnership. Subject matter jurisdiction was based upon 15 U.S.C. § 77v, 15 U.S.C. § 78aa, and the doctrine of pendent jurisdiction. On January 11,1980, Defendants Libman, Southeast Energy Corp., Kentucky Eastern Coal Co., and Ford Energy Corp. filed a motion to dismiss for failure to join indispensable parties. The thrust of the motion was twofold: (1) that Crum and Leonard could not represent the Delta Coal Program (hereinafter referred to as “Delta” or “the Program”), since they themselves were potentially liable to the co-owners, and (ii) that Delta was not an entity capable of suit. Specifically, the Defendants argued: “In essence, the cause of action brought by Crum and Leonard, as representatives of the other co-owners, blocks those other Co-Owners out from participation in this action .... If this Court allows Crum and Leonard to represent the other Co-Owners and recover on their behalf, it will have allowed Crum and Leonard to avoid their duties under the Federal Securities Acts.” Memorandum of Authority in Support of Defendants’ Motion to Dismiss for Failure to Join Indispensable Parties and for Failure to State a Claim upon which Relief Can Be Granted, at 9-10.

On March 7, 1980, the attorney then representing Crum and Leonard and Delta, Mr. *686 John F. Deal, filed a Motion to Stay Proceedings for Ratification of Commencement of Action. Mr. Deal stated that because of the allegations of conflict of interest between Crum and Leonard and the other co-owners, he needed an opportunity to have the consent of the co-owners with respect to the conduct of the suit and stated that there was a possibility that he was subject to a conflict of interest under DR 5-105 of the Code of Professional Responsibility. On April 29, 1980, the court issued an order staying the action until June 1, 1980. The court stated: “Regardless of whether the plaintiffs’ motion properly invokes Rule 17(a), this court has ample authority to hear motions and enter orders pertaining to the proper management of cases.” Order of April 29, 1980, at 2. On May 29,1980, present counsel for Delta and the co-owners, Joseph R. Manning and the law firm of Morris & Manning, were'Substituted as counsel of record for Mr. Deal.' On June 10,1980, in response to Mr. Manning’s request to have an additional thirty (30) days in which to familiarize himself with this case, the court stayed the action until July 7,1980, and granted the motion of Mr. Deal to withdraw as counsel.

On July 7, 1980, Delta filed a motion to dismiss Crum and Leonard as plaintiffs in this action. Specifically, Delta argued: “In many of the pleadings, motions and other papers filed by the Defendants in this action, the Defendants have alleged the existence of conflicts-of-interests on the part of Messrs. Crum and Leonard. Neither the Delta Coal Program, nor Messrs. Crum and Leonard, nor anyone acting on their behalf has ever admitted the existence of any real conflicts-of-interest. In the interest of expediency and to deny to the Defendants the opportunity to further delay the proceedings in this action, Messrs. Crum and Leonard have requested that they be dismissed, without prejudice, as individually-named Plaintiffs in this action.” Memorandum in Support of Plaintiff’s Motion to Dismiss, at 1.

On October 29, 1980, a consent order granted the Plaintiff leave to amend the complaint, which added several state causes of action and a claim under the Racketeer Influenced and Corrupt Organizations Act (hereinafter referred to as “RICO”), and named Crum, Leonard, and the underwriter, Universal Heritage Investments Corporation, as defendants.

On December 15, 1980, the plaintiff filed a motion for class action certification and for leave to make its fourth amendment to the complaint, which would have had the effect of making the suit a class action. The gist of the motion was to substitute Mr. John G. Glover, a co-owner, as named plaintiff, suing on behalf of the other co-owners. On February 10, 1981, the court concluded that the class action motion was to be held in abeyance pending further order. Approximately eight (8) months later, on October 7, 1981, the court ruled that the Program generally had the capacity to maintain suit in this action, granted Crum and Leonard’s motion to withdraw their previous requests to be dismissed as plaintiffs, and deferred ruling on the class action motion. 1 The court directed the parties to *687 confer and prepare a proposed consolidated plan for the completion of discovery, including the class action aspects of discovery.

By an order dated January 29, 1982, this action was transferred to the undersigned. In a status conference held in April, 1982, the court indicates that it would rule on whether Delta was the proper party plaintiff and requested counsel for Delta to choose whether they would pursue the motion for class action certification or whether they would move for the joinder of the individual co-owners.

On June 7,1982, this court concluded that Delta did not have standing to assert violations of the Federal Securities Laws, that there existed no private cause of action for damages under Section 17(a) of the 1933 Securities Act, that Delta lacked standing to pursue its RICO claims, and that this court had jurisdiction over the state law claims through the doctrine of pendent jurisdiction. In addressing the issue of whether Delta had standing to assert violations of federal securities laws, this court carefully pointed out that it appears undisputed that any securities purchased were purchased by the individuals who made up the Program and not by Delta itself. Given, then, the Supreme Court’s holding in Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 95 S.Ct. 1917, 44 L.Ed.2d 539 (1975), the Program’s claims brought pursuant to Section 12(2) of the 1933 Securities Act, Section 10(b) of the 1934 Securities Exchange Act, and Rule 10b-5 were dismissed. Further, as the court indicated: “the issue whether the other purchasers of securities, the other co-owners of Delta Coal Program, will be added as plaintiffs in this action will be decided separately by this court.

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Bluebook (online)
554 F. Supp. 684, 1982 U.S. Dist. LEXIS 9885, Counsel Stack Legal Research, https://law.counselstack.com/opinion/delta-coal-program-v-libman-gand-1982.