United States District Court, S.D. Mississippi, Southern Division
EVELYN HOPE HARWOOD LIEBKE; MARY BUIE HARWOOD; and R.H. FRITH HARWOOD PLAINTIFFS
CHARLES McREYNOLDS; SMI, INC.; TIDEWATER EXCHANGE GROUP; EI REALTY CORP.; JOHN McREYNOLDS; and JOHN DOES 1-10 DEFENDANTS
ORDER GRANTING PLAINTIFF'S SECOND MOTION TO
DISMISS FOR LACK OF JURISDICTION AND DENYING DEFENDANTS'
REQUEST FOR COSTS
GUIROLA, JR. UNITED STATES DISTRICT JUDGE.
THE COURT is the Second Motion to Dismiss for Lack
of Jurisdiction  filed by the plaintiffs Evelyn Hope
Harwood Liebke, Mary Buie Harwood, and R.H. Frith Harwood.
The Motion has been fully briefed. The defendants request an
order requiring the plaintiffs to pay the defendants'
costs in the event that the Court grants the plaintiffs'
Motion. After reviewing the submissions of the parties, the
record in this matter, and the applicable law, the Court
finds that the plaintiffs' Motion to Dismiss should be
granted pursuant to Fed.R.Civ.P. 19(b), and the
defendants' request for costs should be denied.
defendant Charles McReynolds organized the partnership
Raintree Associates Limited in 1982 in order to purchase an
apartment complex. The plaintiffs have owned limited
partnership interests in Raintree since its formation. The
plaintiffs claim that Equity Management Associates, an entity
in which McReynolds had a partnership interest, served as
Raintree's general partner. In 2000, Equity Management
Associates exchanged the apartment complex owned by Raintree
for a CVS pharmacy in a 1031 exchange. See 26 U.S.C.
§ 1031. The plaintiffs allege that the general partner
of Raintree was at some point changed to the defendant SMI,
Inc., another entity in which McReynolds allegedly has an
interest. In 2001, Raintree conveyed the CVS to Mitchell
Montgomery, LLC, and Mitchell Montgomery leased the
property to an entity called “Big B” before
conveying the CVS pharmacy to Patriot Equity Partners in a
1031 exchange. The CVS pharmacy was exchanged for an IHOP
restaurant in which McReynolds and his son allegedly held an
interest. The plaintiffs claim that some of Raintree's
limited partners received a distribution as a result of this
series of transactions, but the plaintiffs did not receive a
distribution in violation of the Raintree partnership
plaintiffs originally sued Charles McReynolds, SMI, Tidewater
Exchange Group, Mitchell Montgomery, EI Realty, and John
McReynolds. On June 7, 2016, this Court entered an Order 
requiring the plaintiffs to show cause why the case should
not be dismissed for lack of jurisdiction due to the presence
of a non-diverse defendant, Mitchell Montgomery. The
plaintiffs then filed a Second Amended Complaint  that
did not name Mitchell Montgomery as a defendant.
plaintiffs filed their first Motion  to Dismiss for Lack
of Jurisdiction on July 27, 2017, alleging that they had
determined during discovery that both Mitchell Montgomery and
Raintree are necessary and indispensable parties to this
action. It is undisputed that the presence of Mitchell
Montgomery and Raintree in this lawsuit would destroy the
Court's diversity jurisdiction. The Court denied the
Motion without prejudice because the plaintiffs did not
provide analysis of the factors relevant to a determination
of whether these entities are necessary and indispensable.
The plaintiffs have now filed a second Motion to Dismiss for
Lack of Jurisdiction.
RULE 19 JOINDER
conduct a two-step inquiry when determining whether to
dismiss a case for failure to join an indispensable party.
Hood ex rel. Miss. v. City of Memphis,
Tenn., 570 F.3d 625, 628 (5th Cir. 2009). The first step
involves analysis of Fed. R Civ. P. 19(a)(1), which provides
a person who is subject to service of process and whose
joinder will not deprive the court of subject-matter
jurisdiction be joined 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.
Id. (citing Fed.R.Civ.P. 19(a)(1)). If these factors
are satisfied, but the necessary party cannot be joined
without destroying subject matter jurisdiction, the court
then determines whether the party is indispensable by
analyzing the following factors set forth in Fed.R.Civ.P.
(1) the extent to which a judgment rendered in the
person's absence might prejudice that person or the
existing parties; (2) the extent to which any prejudice could
be lessened or avoided by: (A) protective provisions in the
judgment; (B) shaping the relief; or (C) other measures; (3)
whether a judgment rendered in the person's absence would
be adequate; and (4) whether the plaintiff would have an
adequate remedy if the action were dismissed for nonjoinder.
Id. at 629.
present case, the plaintiffs learned during discovery that
Mitchell Montgomery was the entity that made distributions to
some of Raintree's limited partners but not to
plaintiffs. As a result, the plaintiffs claim that Mitchell