Wolff v. ABN AMRO Mortgage Group, Inc. et al

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF MARYLAND
at Greenbelt
In Re: 	*
Firstpay, Inc., 	* 	Case No. 	03-30102 PM
* 	Chapter 	7
*
Debtor. 	*
************************************* 	*
Michael G. Wolff, Chapter 7 Trustee, 	* 	Adv. Proc. No. 	04-01221
*
*
Plaintiff, 	*
vs. 	*
ABN AMRO Mortgage Group, Inc., 	*
*
*
Defendant. 	*
MEMORANDUM OF DECISION
Plaintiff, the Chapter 7 Trustee, commenced this adversary proceeding by filing a
Complaint for Avoidance and Recovery of Fraudulent Conveyance. Defendant ABN AMRO
Mortgage Group, Inc. moved to dismiss the Complaint for failing to join necessary parties under
F.R.C.P. Rule 12(b)(7), made applicable in this adversary proceeding by F.R.B.P. Rule 7012(b).
Background
Plaintiff alleged in the Complaint that Defendant holds the note and mortgage to
improved real property located in Brookeville, Maryland. The real property was acquired in
Date signed May 10, 2004
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1 Defendant notes that both Anne S. Rothman and Mark Rothman are deceased and that
Sheldon Rothman is the sole owner of the real property and responsible for the debt, along with
the estates of Anne S. Rothman and Mark Rotham.
2 The Court notes that non-joinder of an absent party under F.R.C.P. Rule 19(a) does not
support dismissal of an action. Plaintiff acknowledges that F.R.C.P. Rule 19(b) is inapplicable
as joining the Rothmans is feasible; accordingly, this action was not susceptible to dismissal.
3 While joining the Rothmans would enable Defendant to file a cross-complaint against
them, the identical relief could be obtained by a third-party complaint filed pursuant to F.R.B.P.
7014(a). The burden would remain on Defendant to establish the requisite jurisdiction.
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1996 by Sheldon D. Rothman and Anne S. Rothman, as tenants by the entireties, and Mark
Rothman, as a joint tenant with the right of survivorship (“the Rothmans”). Plaintiff seeks by his
Complaint to avoid as fraudulent certain payments made to Defendant in connection with its loan
and to recover same on behalf of the estate.
Defendant’s motion asserts that F.R.C.P. Rule 19(a) requires the joinder of the
Rothmans 1 as necessary parties and requests that the adversary proceeding be dismissed as a
result.2 Plaintiff opposed asserting, among other things, that F.R.C.P. Rule 21 precludes
dismissal.3
Analysis
The compulsory joinder of parties under F.R.C.P. Rule 19 ensures just adjudication of
actions. CHARLES ALAN WRIGHT , ARTHUR R. M ILLER AND M ARY KAY KANE , FEDERAL
PRACTICE AND PROCEDURE , § 1604 (3d ed. 2004). F.R.C.P. Rule 19(a) requires joinder of a
person who is subject to service of process and whose joinder will not deprive the court of
jurisdiction over the subject matter of the action. FED .R.CIV . PROC . 19(a). If the absent party has
not been joined, F.R.C.P. Rule 19(a) directs joinder. F.R.C.P. Rule 19(a) sets forth a two-part
test as to whether a party must be joined – necessity as set forth in subsection (a) and, if joinder
is not feasible, indispensability as set forth in subsection (b). Nat’l Union Fire Ins. Co. of
Pittsburgh, Pennsylvania v. Rite Aid of South Carolina, Inc., 210 F.3d 246, 249 (CA4 2000). An
analysis under subsection (b) is not required as joining the Rothmans in this action is feasible.
Subsection (a)(1) of F.R.C.P. Rule 19 provides that a party shall be joined if “in the
person’s absence complete relief cannot be accorded among those already parties[.]” There is no
question that complete relief is available to the named parties. The Rothmans are not required to
adjudicate this matter.
Subsection (a)(2) of F.R.C.P. Rule 19 provides that a party shall be joined if there will be
a prejudicial effect on the absent party’s ability to protect her interest or will render named
parties susceptible to a substantial risk of incurring double, multiple or otherwise inconsistent
obligations. If not joined, the Rothmans may, if Plaintiff prevails, be adversely affected by
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avoidance of the transfers, however, they maintain the ability to defend their interests in any
subsequent litigation that may arise. Nonetheless, joining the Rothmans is desirable. See Cable
TV Fund 14-A, Ltd. d/b/a Jones Intercable v. Property Owners Assoc. Chesapeake Ranch
Estates, 706 F. Supp. 422 430 (DC MD 1989). “[T]he inquiry contemplated by Rule 19 is a
practical one. It is addressed to the sound discretion of the trial court.” Id. (citing Coastal
Modular Corp. v. Laminators, Inc., 635 F.2d 1102, 1108 (CA4 1980).
Accordingly, an appropriate order shall be entered denying Defendant’s Motion to
Dismiss and directing Plaintiff to amend his Complaint to add the Rothmans as defendants in this
matter.
cc: 	Debtor
Chapter 7 Trustee
Plaintiff
Counsel for Plaintiff
Defendant
Counsel for Defendant
End of Memorandum Decision
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