Tick v. Cohen

787 F.2d 1490, 5 Fed. R. Serv. 3d 614, 1986 U.S. App. LEXIS 24719
CourtCourt of Appeals for the Eleventh Circuit
DecidedApril 28, 1986
DocketNo. 85-5259
StatusPublished
Cited by38 cases

This text of 787 F.2d 1490 (Tick v. Cohen) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eleventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Tick v. Cohen, 787 F.2d 1490, 5 Fed. R. Serv. 3d 614, 1986 U.S. App. LEXIS 24719 (11th Cir. 1986).

Opinion

PER CURIAM:

This is an interlocutory appeal pursuant to 28 U.S.C. 1292(b) (1982) from the district court’s order denying appellant’s motion to dismiss for failure to join indispensable parties. The only issue presented on appeal is whether the beneficiaries of certain land trusts are indispensable parties within the meaning of Fed.R.Civ.P. 19(b). The district court found that although the absent beneficiaries were proper parties to this litigation, they were not indispensable. We reverse.

I.

Jerome H. Tick and his wife Bernice J. Tick, as beneficiaries of certain land trusts, brought this action against Norman Cohen, individually and as trustee of the land trusts; Murray Blattman, individually and as trustee of Trust No. 75-LT-21; 1 Selma Blattman; Michele Kapp; Sand Hill Lake, Inc.; Century 21 Admiral’s Port, Inc.; Admiral’s Port North, Inc.; and Admiral’s Port Town Homes, Inc. (“appellants”). The Ticks filed suit in the United States District Court for the Southern District of Florida alleging mismanagement, self-dealing and breach of fiduciary duty on the part of Norman Cohen. They also allege that Norman Cohen, in concert with the other appellants, diverted assets for his own benefit and the benefit of the other appellants.2 The Ticks have requested numerous forms of relief including: accountings for each trust; appointment of a receiver for each trust of which Jerome Tick is a beneficiary; removal of Norman Cohen as trustee and appointment of a substitute trustee; establishment of constructive or resulting trusts as to assets of the appellants acquired or improved with diverted funds; distribution of trust income and assets due the Ticks; and, compensatory and punitive damages against Norman Cohen and Murray Blattman, individually. In addition to the above relief, the Ticks have requested reimbursement for attorneys’ fees, accountants’ fees, and the reasonable costs and expenses incurred in bringing this action.

The appellants filed a motion to dismiss the action for failure to join indispensable parties, namely, the absent beneficiaries of the land trusts. Jurisdiction in this action [1493]*1493is based on diversity of citizenship. The Ticks are citizens of New Jersey. The appellants are all citizens of Florida or Florida corporations whose principal place of business is in Florida. However, at least three of the absent beneficiaries are citizens of New Jersey. Joinder of these absent beneficiaries would therefore destroy complete diversity.

On December 3, 1984, the district court denied the appellants’ motion to dismiss, finding that although the absent beneficiaries were proper parties to the litigation, they were not indispensable parties. Thereafter, on February 8, 1985, the district court amended its order to certify to this court, pursuant to 28 U.S.C. § 1292(b) (1982), the issue of whether the absent beneficiaries of the land trusts were indispensable. The appellants thereupon petitioned this court for leave to appeal which was granted.

II.

The Supreme Court, in Provident Tradesmens Bank & Trust Co. v. Patterson, 390 U.S. 102, 125 n. 22, 88 S.Ct. 733, 746 n. 22, 19 L.Ed.2d 936 (1968) (citation omitted), has established that the question of joinder in a diversity case must be resolved in accordance with federal law. As the Court stated in that case:

[I]t [is] clear that in a diversity case the question of joinder is one of federal law. To be sure, state-law questions may arise in determining what interest the outsider actually has, but the ultimate question whether, given those state-defined interests, a federal court may proceed without the outsider is a federal matter.

Id. (citations omitted). The issue of whether joinder of the absent beneficiaries is required must therefore be decided within the framework of Fed.R.Civ.P. 19. See Morrison v. New Orleans Public Service Inc., 415 F.2d 419, 423 (5th Cir.1969).3

Joinder pursuant to Rule 19 involves a two-step inquiry.4 3A J.W. Moore & J.D. Lucas, Moore’s Federal Practice ¶ 19.07-1[0] at 19-90 (2d ed. 1985). Subsection (a) of Rule 19 requires that “persons whose joinder is desirable from the standpoint of complete adjudication and elimination of relitigation” be joined where feasible. Schutten v. Shell Oil Co., 421 F.2d 869, 873 (5th Cir.1970). See also Fed.R. Civ.P. 19 note on 1966 amendment general considerations. Limitations on service of process, subject matter jurisdiction, and venue, however, may bar joinder in some [1494]*1494cases. See Fed.R.Civ.P. 19 note on 1966 amendment general considerations. Where joinder is not feasible, a court must proceed under subsection (b) of Rule 19 to examine the situation “pragmatically” and to make a choice “between the alternatives of proceeding with the action in the absence of particular interested persons, and dismissing the action.” Id.

Accordingly, we must first determine whether the absent beneficiaries of the land trusts are materially interested in the litigation and therefore should be joined as parties pursuant to subsection (a). See id. “As a general rule, all beneficiaries are persons needed for just adjudication of an action to remove trustees and require an accounting or restoration of trust assets.” Walsh v. Centeio, 692 F.2d 1239, 1243 (9th Cir.1982) (citations omitted). See also Carey v. Brown, 2 Otto 171, 172, 92 U.S. 171, 172, 23 L.Ed. 469 (1875) (citation omitted) (“The general rule is, that in suits respecting trust-property, brought either by or against the trustees, the cestuis que trust as well as the trustees are necessary parties.”); Griley v. Marion Mortgage Co., 132 Fla. 299, 182 So. 297, 300 (1937) (citing Carey). In this action, the Ticks seek broad relief including, the removal of Norman Cohen as trustee, an accounting of all trusts, and the restoration of trust assets. In the event that the Ticks succeed on the merits, it is likely that the trusts will be affected. Therefore, in view of the fact that a judgment in favor of the Ticks could adversely affect the absent beneficiaries interests, we find that the absent beneficiaries are persons to be joined if feasible. It is undisputed, however, that joinder of the New Jersey beneficiaries cannot be accomplished without destroying diversity jurisdiction.

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Bluebook (online)
787 F.2d 1490, 5 Fed. R. Serv. 3d 614, 1986 U.S. App. LEXIS 24719, Counsel Stack Legal Research, https://law.counselstack.com/opinion/tick-v-cohen-ca11-1986.