Helix Investment Management, SLP v. Privilege Direct Corp. et al

Filing 88

ORDER: Defendants Oliphant Financial Group, LLC, Oliphant Financial Corporation and Robert A. Morris' Motion to Dismiss Plaintiff's Second Amended Complaint (Doc. # 54 ) is DENIED WITHOUT PREJUDICE AS MOOT. Plaintiff is authorized to file a Third Amended Complaint by December 10, 2018, failing which the case will be dismissed. Signed by Judge Virginia M. Hernandez Covington on 11/28/2018. (KAK)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
HELIX INVESTMENT MANAGEMENT, LP,
Plaintiff,
v.

CASE NO.: 8:18-cv-206-T-33AEP

PRIVILEGE DIRECT CORP., ET AL.,
Defendants.
_______________________________/
ORDER
This matter comes before the Court pursuant to Defendants
Oliphant Financial Group, LLC, Oliphant Financial Corporation
and Robert A. Morris' Motion to Dismiss Plaintiff's Second
Amended Complaint (Doc. # 54), which was filed on July 2,
2018.

Plaintiff Helix Investment Management, LP filed a

response in opposition to the Motion on July 17, 2018. (Doc.
# 56).

The Court held oral argument on the Motion on October

17, 2018. (Doc. # 69).

At the conclusion of the oral

argument, the Court requested supplemental briefing.
The

Court

specified

that

the

supplemental

briefing

discuss whether Plaintiff has failed to join an indispensable
party -- Privilege Wealth, PLC -- and whether the case should
be stayed due to the progression of related proceedings in
other courts. (Doc. # 71).

Specifically, Privilege Wealth is

in the midst of Chapter 15 Bankruptcy Proceedings.1

Both

parties have timely filed the required supplementation. (Doc.
## 78, 79).
Discussion
The

Court

required

supplemental

briefing

because

Defendants raise strong arguments regarding Privilege Wealth
being

an

Defendants

indispensable
that:

"The

party.
bulk

of

The

Court

Plaintiff's

agrees
entire

with
action

surrounds loans that Plaintiff claims it made to Privilege
Wealth, PLC, which Plaintiff also claims are in default."
(Doc. # 54 at 7).

Although Plaintiff neglected to name

Privilege Wealth as a party, it claims that Privilege Wealth
executed a financing agreement for up to $400,000,000.00, and
that Privilege Wealth's alleged default triggers the liability
of the named Defendants.

1

Chapter 15 of the United States Bankruptcy Code "was
enacted in 2005 to implement the Model Law on Cross-Border
Insolvency ('Model Law') formulated by the United Nations
Commission on Internal Trade Law . . . intended to increase
legal certainty, promote fairness and efficiency, protect and
maximize value, and facilitate the rescue of financially
troubled businesses." Ad Hoc Grp. of Vitro Noteholders v.
Vitro SAB De CV, 701 F.3d 1031, 1043 (5th Cir. 2012).
Defendants explain in their supplement that there are actually
three pending Chapter 15 bankruptcy cases for Privilege Wealth
- one in the District of New Jersey and two in the Southern
District of Florida. (Doc. # 78 at 2).
2

Rule 19 of the Federal Rules of Civil Procedure states:
(a)

PERSONS REQUIRED TO BE JOINED IF FEASIBLE.
(1) Required Party. A person 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.
(2) Joinder by Court Order. If a person has not been
joined as required, the court must order that the
person be made a party. A person who refuses to
join as a plaintiff may be made either a defendant
or, in a proper case, an involuntary plaintiff.
(3) Venue. If a joined party objects to venue and the
joinder would make venue improper, the court must
dismiss that party.

(b)

WHEN JOINDER IS NOT FEASIBLE. If a person who is required
to be joined if feasible cannot be joined, the court must
determine whether, in equity and good conscience, the
action should proceed among the existing parties or
should be dismissed. The factors for the court to
consider include:
(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
3

(4)

would be adequate; and
whether the plaintiff would have an adequate remedy
if the action were dismissed for nonjoinder.

. . . .
Fed. R. Civ. P. 19.
Courts in the Eleventh Circuit use a two-step approach
when analyzing motions to dismiss premised upon the failure to
join a required party:
First, the court must ascertain under the standards
of Rule 19(a) whether the person in question is one
who should be joined if feasible. If the person
should be joined but cannot (because for example,
joinder would divest the court of jurisdiction)
then the court must inquire whether, applying the
factors enumerated in Rule 19(b), the litigation
may continue.
Focus on Family v. Pinellas Suncoast Transit Auth., 344 F.3d
1263, 1280 (11th Cir. 2003)(quoting Challenge Homes, Inc. v.
Greater Naples Care Ctr., Inc., 669 F.2d 667, 669 (11th Cir.
1982)).
In Mid-Continent Casualty Co v. Basdeo, No. 08-61473,
2009 U.S. Dist. LEXIS 123981 (S.D. Fla. Aug. 7, 2009), the
court succinctly summarized the required analysis:
The first part of the test might be more clearly
understood as involving two questions: whether the
non-party should be joined and whether joinder is
feasible. Where both a nonparty should be joined
and joinder is feasible, the nonparty is "required"
or "necessary" but not necessarily "indispensable."
If so, then pursuant to Rule 19(a)(2), the Court
must order that the person be made a party, rather
4

than dismiss. Thus, dismissal for failure to join
an indispensable party is only appropriate where the
nonparty cannot be made a party.
Id. at *7-8 (internal citation omitted).
In addressing Defendants' arguments, the Court is mindful
that "pragmatic concerns, especially the effect on the parties
and the litigation, control." Challenge Homes, Inc., 669 F.2d
at 669.

Here, pragmatic concerns are especially poignant.

The Second Amended Complaint's allegations focus on non-party
Privilege Wealth and attach a financing agreement executed by
Privilege Wealth for $40 million.
Second

Amended

Complaint

is

A central theme of the

that

Privilege

Wealth

has

obligations to Plaintiff, which are currently in default.
Thus, it goes without saying that Privilege Wealth has an
interest, an overwhelming interest, in the disposition of this
action as currently framed.

What further complicates the

proceedings is that Privilege Wealth is in bankruptcy, and
"the

automatic

stay

imposed

in

the

bankruptcy

seemingly

prevents Privilege Wealth from being joined as a party." (Doc.
# 79 at 5).
Perhaps sensing that the Court would find that Privilege
Wealth

is

an

indispensable

party,

Plaintiff

has,

in

the

context of its supplemental brief, requested the opportunity
to amend the pleadings so as to eliminate concerns about
5

Privilege Wealth and to sharpen its focus to the actually
named Defendants.

The Court finds this solution acceptable.

Rather than tap dance around non-party Privilege Wealth, the
Court authorizes Plaintiff to file a Third Amended Complaint
by December 10, 2018.

The Court recognizes that Defendants

raise other arguments in the Motion to Dismiss in addition to
the argument that Privilege Wealth is an indispensable party
(for instance, that the Second Amended Compliant "failed in
basic pleading requirements"). (Doc. # 54 at 1).

However, the

Court contemplates that the amendment of the Second Amended
Complaint

to

eliminate

non-party

Privilege

Wealth

will

streamline the proceedings substantially.
Accordingly, it is
ORDERED, ADJUDGED and DECREED:
(1)

Defendants

Oliphant

Financial

Group,

LLC,

Oliphant

Financial Corporation and Robert A. Morris' Motion to
Dismiss Plaintiff's Second Amended Complaint (Doc. # 54)
is DENIED WITHOUT PREJUDICE AS MOOT.
(2)

Plaintiff is authorized to file a Third Amended Complaint
by December 10, 2018, failing which the case will be
dismissed.
DONE and ORDERED in Chambers in Tampa, Florida, this 28th

day of November, 2018.
6

7