This case stemmed from the tax sale of property known as “No. 5 Estate Sans Souci and Guinea Gut, No. 9 & 10 Cruz Bay Quarter, St. John, United States Virgin Islands.” (the "St. John Property”) in which Chief Justice Curtis V. Gomez of the District Court of the Virgin Islands, Division of St. Thomas and St. John, was asked to grant a motion to dismiss.
The St. John Property was originally owned by Julius and Harold Thomas. Upon their death, it became the subject of a probate action in which the court granted undivided 2/31 interests in the St. John Property to the decedents’ heirs. Upon his father’s death, one of the plaintiffs in this case, Hamilton Thomas, inherited an undivided 2/93 interest in the St. John Property. He also acquired another heir’s undivided 2/31 interest in the St. John Property. Likewise, plaintiff Hamilton Bryan was conveyed an undivided 2/93 interest in the Property.
In January of 2012, the Lieutenant Governor of the Virgin Islands (also a defendant in the action) sold the St. John Property at a tax sale for delinquent taxes. The purchaser was the defendant Joseph Bonanno. He allegedly assigned his interest in the St. John Property to the defendants West Essex Management Corporation (“West Essex”) and Turn Around Enterprises, LLC (“Turn Around”).
Thomas and Bryan brought suit in 2013 to set aside the tax sale and to assert a claim for slander of title. Bonanno, West Essex, and Turn Around moved to dismiss this matter for, among other things, failure to join indispensable parties.
Federal Rule of Civil Procedure 12(b)(7) allows for the dismissal of a complaint for failure to join a party under Rule 19. Federal Rule of Civil Procedure 19(a)(1) requires the joinder of certain parties under specific, enumerated circumstances. Rule 19(a)(1) provides that an individual who is subject to service of process and whose joinder will not deprive the court of subject-matter jurisdiction must be joined as a party if:
(A) in that person’s absence, the court cannot accord complete relief among existing parties; or
(B) that person claims an interest relating to the subject of the action and is so situated that disposing of the action in the person’s absence may:
(i) as a practical matter impair or impede the person’s ability to protect the interest; or
(ii) leave an existing party subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations because of the interest.
The party requesting joinder of a necessary party only has to establish that one of the grounds under Rule 19(a)(1) exists. Ordinarily, when a plaintiff has not originally joined a necessary party, the proper remedy is to order joinder. If there is no way to feasibly join a necessary party, a court may, in its discretion, order that the case be dismissed.
Turn Around, which was assigned Mr. Bonnano’s interest in the St. John Property, argued that the claim be dismissed for failure to join all the other individuals with interests in the St. John Property on the grounds that they were indispensable parties.
Judge Gomez cited Rule 19(a)(2)(ii), which states that "a court must decide whether continuation of the action would expose named parties to the ‘substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of the claimed interest." This risk, the Chief Justice explained, must be greater than the mere “possibility that a subsequent adjudication may result in a judgment that is inconsistent as a matter of logic.”
The Court wrote that although it was unaware of any other pending proceeding concerning the St. John Property, the risk of inconsistent judgments was acute. At the time the St. John Property was partitioned in 1988, there were 16 individuals with fractional interests. Since that time, at least two of these people died, devising their interests to Thomas and Bryan, as well as other unidentified heirs. All of these individuals could potentially bring the same claims against Turn Around as Thomas and Bryan did. If the District Court denied Thomas’s and Bryan’s claims, Turn Around could possibly be forced to defend its title in other actions. At the same time, if the District Court awarded Thomas and Bryan damages for their slander-title claim, Turn Around may exposed to redundant liability in similar actions brought by the co-owners of the St. John Property. "Judicial economy," Chief Judge Gomez decided, "…counsels in favor of the joinder of all those having interests in the Property."
Turn Around argued that this matter should be dismissed because “[i]f any of the parties or potential estates that could be joined reside in the Virgin Islands, this court cannot maintain subject matter jurisdiction as complete diversity would be lost.” However, Turn Around didn’t not identify which, if any, of the parties or estates which must be joined reside in the United States Virgin Islands. As noted above, at least two of the original owners died, and their heirs had not been identified. Even if these parties were residents of the Virgin Islands, the District Court would be required to determine if their presence in the litigation was “indispensable” under Rule 19(b) before dismissal could be ordered. Judge Gomez explained that given that the citizenship and even the identity of all the parties which must be joined was unclear, dismissal would be premature at this point.
In addition, Turn Around supplied no reason for the court to believe that allowing Thomas and Bryan to amend their complaint would be inequitable or futile. Significantly, Turn Around didn’t argue that Thomas’s and Bryan’s claim for slander of title was barred as a matter of law, but instead said that the two failed to make their claim with sufficient factual specifics.
Accordingly, Judge Gomez allowed Thomas and Bryan leave to amend their complaint. Thomas v. Bonanno, Slip Copy, 2013 WL 3958772 (D.V.I. July 30, 2013).