In Claim IV, the fraudulent conveyance claim against Catalyst and Century, Plaintiff requests "a mandatory injunction directing Catalyst to repay Century all amounts transferred by Alamito to Catalyst following the sale and leaseback." Complaint at p. 31. Catalyst is a necessary party to that claim.
With respect to Claims I and II, Plaintiff may continue to assert breach of contract claims against Century and Tepco despite the dismissal of its breach of contract claim against Catalyst. There is no requirement that a suit against one party for breach of one contract requires the presence of another party who may have breached a different contract. See Marathon Int'l Petroleum Supply Co. v. I.T.I. Shipping, S.A., 740 F. Supp. 984, 987-88 (S.D.N.Y. 1990).
As for Claims VII and VIII, Plaintiff argues that because Catalyst, Century, Tepco, San Diego are joint and severally liable tortfeasors in its claims for common law fraud (Count VII) and for conspiracy to commit common law fraud (Claim VIII), Catalyst is not a necessary party. This is the holding of Temple. Defendant's suggestions to the contrary are predicated upon case law inconsistent with or overruled by Temple.
For example, defendants rely on Colon v. Six Flags Corp., No. 87 Civ. 7100, 1988 U.S. Dist. LEXIS 83, 1988 WL 3491 (S.D.N.Y. Jan. 11, 1988), where the Court held that an individual who committed an intentional battery on the plaintiffs at Six Flags' amusement park was a necessary party to an action against Six Flags. The Court ruled that the intentional tortfeasor and Six Flags were "not merely joint tortfeasors" as it was "alleged that all of plaintiffs' injuries stem directly from the intentional acts" of the individual defendant. Id. at *1. Thus, the Court found that "if the [individual defendant was] found not to be directly liable for plaintiffs' injuries, it would be illogical and indeed, unjust, to find Six Flags indirectly liable." Id.
The facts here, however, are distinguishable from those in Colon. Catalyst, Tepco, Century, and San Diego are all joint and severally liable tortfeasors with like liability. This Court did place great emphasis in its prior opinion on Plaintiff's allegation that Catalyst was the party which expected "to receive the largest immediate benefit by far" from the allegedly fraudulent transaction. Complaint P32. Nevertheless, there has been no claim that Catalyst is directly liable for Plaintiff's injuries while the other Defendants are only indirectly liable. Furthermore, Colon predated Temple, and to the extent that it is inconsistent with Temple, it was implicitly overruled.
Defendants also rely on Alpha Lyracom Space Communications, Inc. v. Communications Satellite Corp., 1990-2 Trade Cas. (CCH) P69,188 (S.D.N.Y. 1990), aff'd in part and rev'd in part 946 F.2d 168 (2d Cir. 1991), for the proposition that joint tortfeasors may be necessary parties when other requirements of Rules 19(a) and (b) are satisfied. In Alpha Lyracom, the district court dismissed plaintiff's antitrust claim for failure to join a necessary party. On appeal, however, the Second Circuit affirmed the dismissal of the antitrust claim, but remanded the case to allow the plaintiff to attempt to proceed with respect to other claims for which no necessary party was missing. Alpha Lyracom Space Communications, Inc. v. Communications Satellite Corp., 946 F.2d 168, 176 (2d Cir. 1991). That is exactly what Philip Morris seeks to do here: dismiss the two claims for which Catalyst is a necessary party and continue with its remaining claims for which no necessary party is missing.
Defendants further contend that the Rule 19(a) inquiry "focuses upon the practical effects of joinder and non-joinder, and the determination is heavily influenced by the facts and circumstances of each case." Forsberg v. Pacific Northwest Bell Telephone Co., 623 F. Supp. 117 (D.Or. 1986). See also Samaha, 757 F.2d at 531 (considering the "possibility of prejudice" in Rule 19 determination). Defendants argue that dismissal of Catalyst will prejudice the remaining defendants by forcing them to litigate this action in the absence of the party which Plaintiff alleges is the major wrongdoer. One or more of the remaining defendants may wish to avoid such prejudice, however, by impleading Catalyst under Rule 14(a) of the Federal Rules of Civil Procedure. The Court would have supplemental jurisdiction over claims asserted against Catalyst as a third-party defendant, despite its non-diversity, pursuant to 28 U.S.C. § 1367. See Associated Dry Goods Corp. v. Towers Financial Corp., 920 F.2d 1121, 1125 (2d Cir. 1990). Furthermore, in the prior opinion, the Court expressed concerns about possible prejudice to the minority shareholders of Century if this action were to continue in Catalyst's absence. Philip Morris, 778 F. Supp. at 147. The parties have since advised the Court that there are no longer any minority shareholders in Century. Therefore, the Court need no longer consider this issue.
Thus, this Court's determination that Catalyst was an indispensable party to this action was in error. The Court should have dismissed Catalyst and the claims to which it is a necessary party and permitted Plaintiff to proceed against the remaining defendants. Such a result is more consistent with the Second Circuit's admonition in Jaser v. New York Property Ins. Underwriting Ass'n, 815 F.2d 240, 242 (2d Cir. 1987):
As an alternative to dismissal, a court should take a flexible approach when deciding what parties need to be present for a just resolution of the suit. * * * As a consequence, very few cases should be terminated due to the absence of nondiverse parties unless there has been a reasoned determination that their nonjoinder makes just resolution of the action impossible.
For the reasons set forth above, the Court's prior Opinion is modified to deny Defendant's motion to dismiss for lack of subject matter jurisdiction. Catalyst and Claims III and IV of the Complaint are dismissed to create complete diversity of citizenship.
IT IS SO ORDERED.
Dated: New York, New York
April 6, 1992
Robert P. Patterson, Jr.