Eastern Property Development LLC et al v. Gill

Filing 73

ORDER construing 65 Motion for Reconsideration as a Motion to Dismiss the Trust Counterclaims and granting the Motion to Dismiss without prejudice; denying 46 Motion to Intervene. Ordered by Judge Clay D. Land on 04/16/2012. (CGC)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
COLUMBUS DIVISION
EASTERN PROPERTY DEVELOPMENT
LLC and SOUTH EAST ENTERPRISE
GROUP LLC,
Plaintiffs,

*
*
*
CASE NO. 4:11-CV-62 (CDL)

vs.

*

LOREN C. GILL,

*

Defendant.

*
O R D E R

This action, which started as a straightforward action for
trespass, conversion and tortious interference by two plaintiffs
against one defendant, has “morphed” into a complex mess involving
counterclaims for breach of fiduciary duty, conversion of trust
assets and mismanagement of trust assets, with a total of three
counter-claimants and four counter-defendants.
additional parties seek to intervene.

In addition, two

The transformation of this

simple action into a convoluted morass of complicated claims began
with this Court’s December 27, 2011 Order, in which the Court
granted in part and denied in part Defendant Loren Gill’s (“Loren
Gill”) Motion for Joinder.

See generally Eastern Prop. Dev. LLC

v. Gill, No. 4:11-CV-62 (CDL), 2011 WL 6780130 (M.D. Ga. Dec. 27,
2011).
Plaintiffs Eastern Property Development LLC and South East
Enterprise Group (collectively, “Plaintiffs”) filed a Motion to

Reconsider (ECF No. 65) that Order.
reconsideration

is

that

Dan

Van

The focus of the motion for
Gasken,

one

of

the

counter-

defendants that the Court refused to join because his joinder
would

destroy

joined

under

subject
Federal

matter
Rule

of

jurisdiction,
Civil

is

Procedure

required
19.

to

be

Because

he

cannot be joined, Plaintiffs contend, the other counterclaims that
the

Court

previously

permitted

must

be

dismissed.

The

Court

construes this Motion to Reconsider as a motion to dismiss the
counterclaims of Loren Gill, Wallace Whitten, and Michael Gill
against

Eastern

Property

Development

LLC,

Southeast

Enterprise

Group LLC, Kevin Hartshorn, and Janet Smith for failure to join a
required party.
granted.

For the reasons explained below, that motion is

Also before the Court is the Motion to Intervene of

Karen Gill, on behalf of Kaitlyn Gill and Lauren Gill (ECF No.
46).

As discussed below, that motion is denied.1
The

Property

counterclaim

by

Loren

Development

LLC

and

Gill

against

Southeast

Plaintiffs

Enterprise

regarding Elm Properties, LLC shall remain pending.

Eastern

Group

LLC

Therefore,

the only claims remaining in this action are the claims asserted
in the original

Complaint and the counterclaim

related to Elm

Properties, LLC.

1

The Court will address Loren Gill’s motion for partial summary judgment
as to the Elm Properties counterclaim (ECF No. 68) in a separate order.

2

BACKGROUND
Plaintiffs

Eastern

Property

Development

LLC

and

Southeast

Enterprise Group LLC (“Plaintiffs”) operate a rental real estate
management business that manages numerous rental properties.
property

managed

by

Plaintiffs

is

owned

by

a

separate

Each
trust

(“property trust”) that was established by John Gill and has the
same beneficiary: the Gill Family Cornerstone Trust (“Cornerstone
Trust”).

Plaintiffs

contending

that

operations

without

he

filed

this

attempted
authority

action

to

and

against

assume

that

Loren
over

control

he

violated

Gill,
their

the

federal

trademark laws.
In

Counts

Counterclaims”),

1

through

Loren

Gill

6

of

his

asserts

that

Counterclaim
Plaintiffs

(“Trust

and

others

breached their fiduciary duties to the trusts and appropriated
trust

assets

additional
defendants.

for

themselves.

counterclaimants

Loren
and

Gill

several

sought

to

additional

join

two

counter-

Plaintiffs moved to dismiss the Trust Counterclaims,

contending that Loren Gill does not have standing to assert them
and that the Trust Counterclaims are subject to an arbitration
clause.

Based on the motion to dismiss, Plaintiffs opposed Loren

Gill’s motion for joinder, contending that none of the parties
Loren Gill sought to join were necessary to Plaintiffs’ action
against Loren Gill.

3

The Court found a fact question as to whether Loren Gill has
standing to pursue the Trust Counterclaims, Eastern Prop. Dev.
LLC,

2011

WL

6780130,

at

*4,

and

the

Court

determined

that

arbitration of the Trust Counterclaims is not required, id. at *7.
The

Court

further

concluded

that

the

Trust

Counterclaims

are

permissive counterclaims and granted Loren Gill’s motion to join
two additional counterclaimants, Wallace Whitten and Michael Gill,
and two counter-defendants, Kevin Hartshorn and Janet Smith.
at *8.

Id.

Hartshorn is executive trustee of the Cornerstone Trust,

and Smith is a trustee of some or all of the property trusts.

The

Court denied Loren Gill’s motion to join Dan Van Gasken as a
counter-defendant because jurisdiction for the counterclaims was
based solely on 28 U.S.C. § 1332 and Van Gasken’s joinder would
have destroyed diversity jurisdiction.

Id. at *8-*9.

Van Gasken

is a trustee of some or all of the property trusts, and he and
Hartshorn manage Plaintiffs’ rental proceeds.
Now, Plaintiffs contend that Van Gasken is a required party
under
cannot

Rule

19

proceed

daughters
Cornerstone

and

that

without

(“Gill
Trust,

litigation

of

him.

addition,

children”),
seek

to

In
who

the

are

intervene

Trust

Counterclaims

John

Gill’s

beneficiaries
in

generally Mot. to Intervene, ECF No. 46.

this

of

action.

two
the
See

The Gill children’s

claims overlap substantially with the Trust Counterclaims, except

4

they contend that the Gill children—and not Loren Gill—are the
rightful beneficiaries of the Cornerstone Trust.2
DISCUSSION
I.

Plaintiffs’ Motion to Dismiss3
Plaintiffs

contend

that

the

Trust

Counterclaims

should

be

dismissed because the Court did not join Van Gasken as a counterdefendant.

“Federal Rule of Civil Procedure 19 provides a two-

step test for determining whether an action should proceed in the
absence of a non-party.”

United States v. Rigel Ships Agencies,

Inc., 432 F.3d 1282, 1291 (11th Cir. 2005) (per curiam) (internal
quotation

marks

omitted).

“First,

the

court

whether the person in question should be joined.”

must

determine

Laker Airways,

Inc. v. British Airways, PLC, 182 F.3d 843, 847 (11th Cir. 1999).
“If the person should be joined, but for some reason cannot be,
the court must analyze the factors outlined in Rule 19(b),” id.,
and determine whether “in equity and good conscience[,] the action

2

The Gill children assert claims for: (1) theft by deception, (2) theft
by conversion, (3) breach of fiduciary duty, (4) violation of the Georgia
Racketeer Influenced and Corrupt Organizations Act (“RICO”), O.C.G.A. §
16-4-1, et seq., and (5) violation of federal RICO, 18 U.S.C. § 1961, et
seq. See generally Mot. to Intervene Ex. A, Proposed Third Party Compl.,
ECF No. 46-1. The Gill children also seek construction and reformation
of the Cornerstone Trust declaration.
Id. ¶¶ 51-52.
Like Loren Gill,
the Gill children seek removal of the trustees of the Cornerstone Trust
and the property trusts, they seek an accounting from the current
trustees, and they seek the disgorgement of fees and profits paid to the
current trustees. Id. ¶¶ 58(a)-(c).
3
Given that Plaintiffs did not, in their original opposition to Loren
Gill’s motion for joinder, raise the arguments that are the subject of
their present “Motion to Reconsider,” the Court construes the motion as a
motion to dismiss for nonjoinder.

5

should proceed among the existing parties or should be dismissed.”
Fed. R. Civ. P. 19(b).
Under Rule 19(a), a party is “required” if “in that person’s
absence, the court cannot accord complete relief among existing
parties” or if “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 . . . as a practical matter
impair or impede the person’s ability to protect the interest[] or
. . . leave an existing party subject to a substantial risk of
incurring double, multiple, or otherwise inconsistent obligations
because of the interest.”
Gasken

is

the

executive

Fed. R. Civ. P. 19(a)(1).
trustee

of

most,

if

not

Here, Van

all,

property trusts at issue in the Trust Counterclaims.

of

the

The Trust

Counterclaims seek to remove Van Gasken as trustee and allege that
Van Gasken breached his fiduciary duties to the trusts.
thus

finds

existing

that

it

parties

in

cannot
Van

accord

Gasken’s

complete

absence

and

The Court

relief
that

among
Van

the

Gasken

claims an interest relating to the subject of the action and is so
situated that disposing of the action in his absence would impair
his ability to protect the interest.

Accordingly, Van Gasken is a

“required” party under Rule 19(a).
The next question is whether, “in equity and good conscience,
the

[Trust

Counterclaims]

should

6

proceed

among

the

existing

parties or should be dismissed.”

Fed. R. Civ. P. 19(b).

The

factors for the court to consider include:
(1) the extent to which a judgment rendered
person’s absence might prejudice that person
existing parties;

in
or

the
the

(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.
Fed. R. Civ. P. 19(b).

Here, Van Gasken has an interest in the

outcome of the Trust Counterclaims, particularly given that they
seek his removal as trustee of the property trusts.
judgment

rendered

in

prejudice Van Gasken.
absence

would

Whitten

and

Van

absence

would

potentially

Moreover, judgment rendered in Van Gasken’s

potentially
Janet

Gasken’s

Therefore,

Smith,

prejudice
because

the
Van

co-trustees,

Gasken’s

Wallace

acts

and

or

omissions are central to the Trust Counterclaims, and his absence
would prevent them from seeking contribution from him.

Finally,

Loren Gill has an adequate remedy if the case is dismissed for
nonjoinder.

First,

Counterclaims
defendant.

in

state

Loren
court

Gill

could

and

include

pursue
Van

his
Gasken

Trust
as

a

Second, Loren Gill could seek to pursue his claims in

7

an

action

that

was

recently

Hartshorn, 4:12-CV-77-CDL.4

brought

in

this

Court:

Gill

v.

For all of these reasons, the Court

concludes that the Trust Counterclaims in this action cannot, in
equity and good conscience, proceed among the existing parties.
Therefore,

the

Court

dismisses

the

Trust

Counterclaims

for

nonjoinder.5
II.

Gill Children’s Motion to Intervene
Given that the Court has dismissed the Trust Counterclaims,

the Court concludes that the Gill children may not intervene in
this

action.

overlap
Gill

As

discussed

substantially

children

contend

with

above,
the

that

the

Trust

they—and

Gill

children’s

Counterclaims,
not

Loren

claims

except

the

Gill—are

the

rightful beneficiaries of the Cornerstone Trust.
Under Federal Rule of Civil Procedure 24(a)(2), “On timely
motion, the court must permit anyone to intervene who . . . claims
an interest relating to the property or transaction that is the
subject of the action, and is so situated that disposing of the
action may as a practical matter impair or impede the movant’s
ability

to

protect

its

interest,

adequately represent that interest.”
4

unless

existing

parties

Fed. R. Civ. P. 24(a)(2).

The Court recognizes that Loren Gill is named as a defendant in that
action, but if Loren Gill can establish standing to pursue the Trust
Counterclaims and that his interests are aligned with the plaintiffs in
that case, then it is possible that he could seek realignment of the
parties in that action.
5
Van Gasken is not a required party for the Elm Property Counterclaim
against the original Plaintiffs. Therefore, that counterclaim shall not
be dismissed.

8

Accordingly, to intervene “of right under Rule 24(a)(2), a party
must establish that ‘(1) his application to intervene is timely;
(2) he has an interest relating to the property or transaction
which is the subject of the action; (3) he is so situated that
disposition of the action, as a practical matter, may impede or
impair his ability to protect that interest; and (4) his interest
is represented inadequately by the existing parties to the suit.’”
Fox v. Tyson Foods, Inc., 519 F.3d 1298, 1302-03 (11th Cir. 2008)
(quoting

Chiles v. Thornburgh, 865 F.2d 1197, 1213 (11th Cir.

1989)).
The key question here is whether the Gill children have an
interest relating to the property or transaction which is the
subject of the action.
down, they do not.

Now that the action has been whittled

In the absence of the Trust Counterclaims,

Plaintiffs’ claims against Loren Gill are very narrow: the issue
raised by Plaintiffs’ Complaint is whether Loren Gill committed
various torts when he attempted to take over Plaintiffs’ offices.
Eastern

Prop.

asserted

in

Dev.

LLC,

Plaintiffs’

2011

WL

6780130,

Complaint

did

at

not

*7.

arise

The
out

claims
of

the

transactions, such as trust mismanagement, that are alleged in the
Trust Counterclaims and the Gill children’s proposed Complaint in
Intervention.

Id.

Rather, Plaintiffs’ original claims are not

directly related to the operation of the trusts at all; the only
connection

between

the

original

9

claims

and

the

Trust

Counterclaims/the Gill children’s claims is that Loren Gill took
the actions he did because he claims that he had the authority to
take action to protect the trusts from mismanagement.

For these

reasons, the Court concludes that the Gill children do not have an
interest relating to the

property or transaction which is the

subject of Plaintiffs’ action against Loren Gill.

Furthermore,

the Gill children will be able to pursue all of their claims in
the separate action they have recently filed in this Court.

Based

on the foregoing, the Court denies the Gill children’s Motion to
Intervene.
CONCLUSION
For the foregoing reasons, Plaintiffs’ Motion to Reconsider
(ECF

No.

65)

Counterclaims,

is

construed

which

the

as

Court

a

Motion

grants

to

Dismiss

without

the

Trust

prejudice.

The

Court denies the Gill children’s Motion to Intervene (ECF No. 46).
Accordingly, the only claims remaining in this action are the
original claims of Eastern Property Development LLC and Southeast
Enterprise
Counterclaim

Group

LLC

regarding

against
Elm

Loren

Properties

Gill,
LLC,

and
which

Loren
is

Gill’s
against

Eastern Property Development LLC and Southeast Enterprise Group
LLC.
IT IS SO ORDERED, this 16th day of April, 2012.
S/Clay D. Land
CLAY D. LAND
UNITED STATES DISTRICT JUDGE

10