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04/04/91 ERNEST C. RASKAUSKAS v. TEMPLE REALTY CO.

April 4, 1991

ERNEST C. RASKAUSKAS, JR., APPELLANT
v.
TEMPLE REALTY CO., ET AL., APPELLEES



Appeal from the Superior Court of the District of Columbia; Hon. William C. Gardner, Trial Judge

Rogers, Chief Judge. Schwelb and Farrell, Associate Judges.

The opinion of the court was delivered by: Rogers

This appeal involves the claim of appellant Ernest C. Raskauskas, Jr. that he was wrongfully deprived of the right to purchase two units (and parking spaces) in the Crestview apartment building, which was being converted to condominiums by Temple Realty Company, the owner and developer. Appellant originally sued the owner and its parent company and agent Hoskinson & Davis Inc., as well as appellee Crestview Tenants Association, which appellant claims wrongfully revoked his membership, and appellees Carol Fisch and Sylvia Stivelband, with whom the owner had contracted to sell the two units which appellant claimed he was entitled to purchase. The Crestview Tenants Association, which was formed to represent a group of tenants as the building was converted, entered into a development agreement with the owner whereby the tenants were given the right to purchase units and had, appellant claimed, arranged for these two units to be sold to appellees Fisch and Stivelband.

In his complaint, appellant sought (1) a declaratory judgment that he was a member in good standing in the Association entitled to purchase the two apartments, and (2) damages for tortious interference with the contract between him and the owner of the apartment building. He subsequently entered into a stipulation of settlement and dismissal with prejudice of his claims against Temple Realty Company and Hoskinson & Davis, Inc., for breach of contract, tortious interference with contract and a shareholders' derivative claim. Under the settlement, the owner agreed to convey the two units to appellant if the court determined that he had been wrongfully ejected as a member of the Tenants Association or was otherwise entitled to purchase the two units. Thereafter, the remaining defendants, appellees, filed a motion to dismiss appellant's declaratory judgment counts under Super. Ct. Civ. R. 19 for failure to join an indispensable party, and a motion for summary judgment on the tortious interference claims. The trial Judge granted the motions, dismissing appellant's declaratory judgment claims without prejudice, and granting summary judgment to appellees on the tortious interference claims. We conclude that both the dismissal of the declaratory judgment counts and the grant of summary judgment on the tortious interference counts were error, and we accordingly reverse and remand the case for further proceedings.

I.

In the mid-1980s, Temple Realty Company, the owner of the Crestview apartment building, began the process of converting the apartments to condominium units. Many of the tenants formed the Crestview Tenants Association to represent them in negotiations with the owner. Appellant was the first president of the Association, and drafted its articles of incorporation and bylaws, which were filed with the District of Columbia government pursuant to D.C. Code § 45-1640 (1989).

The Association and its members entered into a Development Agreement with the owner providing that each member of the Association could purchase one or two units at specified prices below fair market value. The Association originally granted appellant the right to purchase two units. For reasons that remain in dispute, the Association later terminated appellant's membership and reassigned the right to purchase the two units to appellees Fisch and Stivelband. Appellant contends that his membership in the Association was illegally revoked; appellees claim that they properly terminated appellant's membership after he failed to fulfill his obligations under the Association bylaws.

Appellant filed suit in 1986 against appellees and the owner. Although the original complaint included seven counts, *fn1 appellant voluntarily dismissed the three counts against the owner pursuant to a settlement which was approved by the court on May 1, 1989. Appellant moved for partial summary judgment on two of the counts, affecting the unit sold to appellee Fisch, citing D.C. Code §§ 45-1631, -1633 (1990), which was denied. Thus, the case came to trial on two counts seeking a declaratory judgment that appellant was a member in good standing in the Association entitled to purchase the two disputed units, and two counts seeking damages for tortious interference with contract. The trial Judge bifurcated the proceedings, and began trial on the declaratory judgment claims. After seven days of trial, the Judge dismissed appellant's declaratory judgment claims, without prejudice, for failure to join the owner, an indispensable party under Super.Ct.Civ.R.19. The Judge reasoned:

The rights and obligations of these parties arise out of the Development Agreement, of which they are all parties. . . . Inasmuch as the rights sued upon in these two Counts arise out of the Development Agreement, all parties to that Agreement are indispensable and should be joined in this action, for purposes of these Two Counts for Declaratory Judgment. . . .

Having removed the owner of these units which are in controversy, by entering into a settlement with it and dismissing his claim against that owner with prejudice, has removed an indispensable party, the owner of the property against whom all parties are asserting a right to purchase . . . .

Appellant contends that the trial Judge erred in dismissing his claims for a declaratory judgment for failure to join the owner as an indispensable party since the Judge misapplied the joinder rule and failed to acknowledge that appellant's claim to membership in the Tenants Association was based on a statutory entitlement under the Rental Housing Conversion and Sale Act of 1980 which made the owner's presence in the litigation unnecessary.

Joinder of necessary parties is governed by Rule 19, which "makes it clear that questions of compulsory joinder are to be resolved on the basis of practical considerations . . . ." 7 C. WRIGHT, A. MILLER & M. KANE, FEDERAL PRACTICE AND PROCEDURE § 1607 at 86 (2d ed. 1986) (hereinafter "WRIGHT, MILLER & KANE"); see also Provident Tradesmens Bank & Trust Co. v. Patterson, 390 U.S. 102, 116 n.12, 88 S. Ct. 733, 19 L. Ed. 2d 936 (1968) (encouraging courts to consider the "practical considerations" of each individual case). *fn2 Under the rule, a trial Judge is obliged to consider motions to dismiss for failure to join an indispensable party under a three-part procedure. First, the Judge should determine whether the absent person is one "whose joinder would be desirable for a just adjudication of the action" under Super. Ct. Civ. R. 19(a). 7 WRIGHT, MILLER & KANE, supra, § 1604 at 36. Second, the trial Judge "shall order that [such a] person be made a party" if feasible. Super. Ct. Civ. R. 19(a). Third, if such a person "cannot be made a party," the Judge should consider "whether in equity and good conscience the action should proceed among the parties before it, or should be dismissed, the absent person being thus regarded as indispensable." Super. Ct. Civ. R. 19(b). Although the trial Judge did not explicitly follow this procedure, *fn3 his decision can be read as implicitly concluding that (1) the owner's joinder was desirable for a just adjudication, (2) the owner could not feasibly be joined, and (3) "in equity and good conscience" the case could not proceed in the owner's absence. We find no error in the first ruling, but conclude that the Judge abused his discretion in the second and the third rulings. See Coastal Modular Corp. v. Laminators, Inc., 635 F.2d 1102, 1108 (4th Cir. 1980); see generally Johnson v. United States, 398 A.2d 354, 365 (D.C. 1979) (abuse of discretion by trial court not to consider appropriate factors). Accordingly, we reverse the dismissal of the declaratory judgment counts.

A. The Owner's Joinder Was Desirable.

Rule 19(a) describes several reasons why an absent person's joinder might be desirable for a just adjudication. The trial Judge relied on clause 19(a)(1), which states that a "person . . . shall be joined as a party in the action if . . . in the person's absence complete relief cannot be accorded among those already parties . . . ." This clause "is designed to protect those who already are parties by requiring the presence of all persons who have an interest in the litigation so that any relief that may be awarded will effectively and completely adjudicate the dispute." 7 WRIGHT, MILLER & KANE, supra, § 1604 at 42. Joinder under this provision is thus designed to protect those already parties from the possibility of multiple suits concerning the same dispute.

In the absence of any specification by appellees as to the nature of their likely claim against the owner if appellant prevailed in his lawsuit, the owner was in the position of a stakeholder. Cf. Habib v. Miller, 284 A.2d 56, 57 (D.C. 1971) (settlement agent "testified that the firm would pay the money to whomever the court directed"). Consequently, under this view the trial Judge would have erred in finding that the owner was a party whose presence was needed for a just adjudication. On the other hand, we are unable to conclude that the trial Judge abused his discretion in concluding that the declaratory judgment sought by appellant would impose on appellees the possibility of multiple litigation with the absent owner. Appellant sought a declaration that he was entitled to purchase the two disputed units to which the owner still held title. Two of the appellees, however, have contracts of sale with the owner concerning the same two units. Thus, the Judge could reasonably conclude that if appellant prevailed in the declaratory judgment action, litigation might ensue between the owner and appellees Fisch and Stivelband. So viewed, we would find no ...


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