United States District Court, District of Columbia
Curtis A. Boykin, Douglas & Boykin PLLC, Washington, DC, for Plaintiff.
Thomas J. Hamilton, Byrne Goldenberg & Hamilton, Washington, DC, for Defendant.
COLLEEN KOLLAR-KOTELLY, District Judge.
On October 7, 2011, Plaintiff Thomas Wach (" Plaintiff" ), a citizen of Switzerland, commenced this action against the law firm Byrne, Goldenberg & Hamilton, PLLC (" Defendant" ), asserting his right to a share of settlement proceeds obtained by Defendant on behalf of third parties in connection with a separate litigation in New York. Presently before the Court is Defendant's  Motion to Dismiss, which seeks dismissal of Plaintiff's Complaint based upon the asserted failure of Plaintiff to join necessary parties as defendants in this action. Defendant's motion has been fully briefed and is therefore ripe for adjudication. Upon careful consideration of the parties' submissions, the relevant authorities, and the record as a whole, the Court shall GRANT Defendant's  Motion to Dismiss.
Plaintiff filed the Complaint in this breach of contract action against Defendant on October 7, 2011, alleging his entitlement to a share of settlement proceeds recovered in Schoeps v. Museum of Modern Art, a separate action litigated in federal court in New York by Defendant on behalf of heirs of the late Berlin art collector, Paul von Mendelssohn-Bartholdy (" Mendelssohn-Bartholdy" ), and/or his second wife, Elsa von Mendelssohn-Bartholdy (" the Schoeps litigation" ). See generally
Compl. Schoeps involved claims by the purported heirs of Mendelssohn-Bartholdy and/or his wife, Elsa, that certain Picasso paintings held by the Museum of Modern Art and the Solomon R. Foundation were transferred from Mendelssohn-Bartholdy and/or Elsa as a result of Nazi duress and therefore rightfully belong to the Schoeps plaintiffs. See Schoeps v. Museum of Modern Art, 594 F.Supp.2d 461 (S.D.N.Y.2009). As alleged by Plaintiff, the retainer agreements between Defendant and the Schoeps plaintiffs contain a waiver of all conflicts amongst the heirs as to their entitlement to the recovery. Compl. ¶ 1 & n. 1 (citing Schoeps, 594 F.Supp.2d at 463 n. 1). See also Schoeps, 594 F.Supp.2d at 463 n. 1 (noting that the Schoeps plaintiffs " entered into a side-agreement waiving any conflicts and agreeing to divide any recovery that any one or more of them may obtain in [the] lawsuit." ) (citing addendum to retainer agreement).
Plaintiff alleges that he is an " heir of Paul von Mendelssohn-Bartholdy ... who was overlooked by Defendant in the course of the [ Schoeps ] litigation." Plaintiff further alleges that since his existence has become known to Defendant (to whom the settlement funds were remitted as trustee), Defendant has " refused to distribute the portion of the settlement funds to which [Plaintiff] is entitled," and has " therefore breached the contract in which Defendant promised to represent all of the heirs in the recovery of works of art[.]" Compl. ¶ 2, 21. By way of relief, Plaintiff seeks a declaration from the Court that he is " a member of the settlement class as defined by Defendant— through both the retainer agreements and the side agreement waiving conflicts amongst the heirs— entitling him to share in the proceeds recovered in the [ Schoeps ] litigation." Id. ¶ 3. Plaintiff also asks the Court to enforce the retainer agreements and compel distribution to him of his proportionate share of the settlement funds. Id.
On November 23, 2011, Defendant moved pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(7) to dismiss Plaintiff's Complaint based upon Plaintiff's failure to join as codefendants with Defendant two individuals whom Defendant contends assert rights to the same portion of the settlement proceeds claimed by Plaintiff— Mikhail von Redlich (" Redlich" ) of Stockholm, Sweden, and Michel Snaije (" Snaije" ) of Paris, France. See generally Def.'s Mem. Defendant's brief in support of its motion refers throughout to the accompanying declaration of John J. Byrne, a partner of Defendant law firm with knowledge of the claims allegedly asserted by Wach, Redlich, and Snaije. See generally Byrne Decl. Succinctly stated, Defendant argues that because Redlich and Snaije assert conflicting, mutually exclusive claims to the same funds as Plaintiff, Plaintiff should have joined both Redlich and Snaije, as is required by Federal Rule of Civil Procedure 19. See Def.'s Mem. at 1-3, 10-13, 18. Defendant further contends that because Plaintiff is an alien, joinder of Redlich and Snaije in this action would destroy the diversity jurisdiction upon which this proceeding is based, as the federal diversity statute, 28 U.S.C. § 1332, does not confer federal jurisdiction when aliens are aligned on opposing sides of a lawsuit. Def.'s Mem. at 13-16. Accordingly, Defendant argues, Plaintiff's action must be dismissed in its entirety. For the reasons set forth below, this Court agrees.
II. LEGAL STANDARD
Federal Rule of Civil Procedure 12(b)(7) provides that a complaint may be dismissed for " failure to join a party under Rule 19." FED.R.CIV.P. 12(b)(7). As a general matter, courts are reluctant to grant Rule 12(b)(7) motions, finding " dismissal
[to be] warranted only when the defect is serious and cannot be cured." Direct Supply, Inc. v. Specialty Hosp. of Amer., LLC, 878 F.Supp.2d 13, 23 (D.D.C.2012) (citation omitted). As with other Rule 12 motions, a court must accept the allegations contained within the plaintiff's complaint as true for the purposes of a Rule 12(b)(7) motion to dismiss. 16th & K Hotel, LP v. Commonwealth Land Title Ins. Co., 276 F.R.D. 8, 12 (D.D.C.2011). Additionally, " courts may consider both exhibits to pleadings and materials outside the pleadings in resolving a motion to dismiss under Rule 12(b)(7), without converting the motion into a Rule 56 motion for summary judgment." Id. at 12 (noting also that " [t]he moving party may carry its burden by providing affidavits of persons having knowledge of the[ ] interests [of the alleged necessary party] as well as other relevant extra-pleading evidence" ) (citations and internal marks omitted). See also Three Affiliated Tribes of the Fort Berthold Indian Reservation v. United States, 637 F.Supp.2d 25, 29 (D.D.C.2009); Direct Supply, 878 F.Supp.2d at 23-24 (citing Anderson v. Hall, ...