Steven L. Lombardo v. Mercantile Resource Group, Inc.
- Beth Freeman
- 5:20-cv-02153
- U.S. District Court · Northern District of California
- 3
In Lombardo v. Merchantile Resource Group, Judge Cousins ordered plaintiffs to join David Sanchez or explain by July 15 why Rule 19 dismissal should not occur.
Steven L. Lombardo and Life Force Trust must either join David Sanchez as a party or explain why the case should not be dismissed under Rule 19; the order also concerns Merchantile Resource Group, Inc. and Choctaw Indian Asset Recovery Trust dba Choctaw Management Group.
What happened
Steven L. Lombardo and Life Force Trust sued Merchantile Resource Group, Inc. and Choctaw Management Group over 82 bonds, alleging breach of contract and breach of fiduciary duty. The court had earlier questioned whether the complaint established federal jurisdiction and proper service.
The court said David Sanchez was a required party because the complaint identified him as Merchantile’s managing director and Choctaw Management’s trustee, and alleged that he had an interest in the bonds. The court did not know whether joining Sanchez would affect federal jurisdiction.
The court ordered the plaintiffs, by July 15, 2020, either to join Sanchez or to explain why the case should not be dismissed under Rule 19. Judge Nathanael M. Cousins issued the order; the opinion did not itself dismiss the case.
The detailed version
- Steven L. Lombardo v. Mercantile Resource Group, Inc. · No. 5:20-cv-02153
- Beth Freeman
- June 30, 2020
Background
Steven L. Lombardo and Life Force Trust sued Merchantile Resource Group, Inc. and Choctaw Management Group. The complaint asserted claims for breach of contract and breach of fiduciary duty. It alleged that Lombardo and David Sanchez entered into a written agreement concerning 50/50 ownership of 82 bonds, that Sanchez violated the agreement, and that Lombardo sought delivery of the bonds. The complaint stated that Choctaw Management Group held the bonds.
The court had previously ordered the plaintiffs to explain whether the court had subject-matter jurisdiction because the complaint did not identify every defendant’s citizenship and did not adequately allege that more than $75,000 was in dispute. The court also questioned whether service of process was proper because the defendants appeared not to have notice of the case.
Rule 19 Analysis
Federal Rule of Civil Procedure 19 generally requires joining a person who has an interest related to the lawsuit when resolving the case without that person could impair the person’s ability to protect that interest, so long as joinder is possible without eliminating subject-matter jurisdiction. The court may consider the absence of such a person even without a party’s request.
The court determined that David Sanchez was a required party under Rule 19(a)(1)(B)(i). According to the complaint, Sanchez was Merchantile’s managing director and Choctaw Management Group’s trustee. Because Sanchez allegedly had an interest in the bonds, resolving the case without him could impair that interest.
The court said it was unclear whether joining Sanchez was feasible. The complaint stated only that Lombardo had tried to contact Sanchez but could not locate him. The court also did not know Sanchez’s citizenship or how it might affect federal subject-matter jurisdiction. The court expressed concern that Sanchez might be indispensable, meaning the case might have to be dismissed if he could not be joined.
Order
The court ordered the plaintiffs, by July 15, 2020, to do one of two things: (1) join David Sanchez as a party, or (2) show cause—give a legally sufficient explanation—why the case should not be dismissed under Rule 19 for failing to join him. The order did not itself dismiss the case.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.