Ogden UT Soleco Return v. Soleco et al

Filing 54

MEMORANDUM DECISION AND ORDERgranting 41 Motion for Joinder of Wal-Mart as a Required Dft Party. Signed by Judge Tena Campbell on 3/1/16 (alt)

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH
NORTHERN DIVISION
OGDEN UT SOLECO RETURN, LLC,
Plaintiff,
vs.
SOLECO, INC.; HERITAGE EQUITY
FUNDING, LLC; DETENTION
EASEMENT PROPERTY, LLC; and
DOES 1–10,

MEMORANDUM DECISION
AND ORDER

Defendants.

HERITAGE EQUITY FUNDING, LLC
and DETENTION EASEMENT
PROPERTY, LLC,
Counterclaim-Plaintiffs,

Case No. 1:14-cv-00050-TC

vs.
OGDEN UT SOLECO RETURN, LLC
and DOES 1–10,
Counterclaim-Defendants.

This case centers on Plaintiff Ogden UT Soleco Return, LLC’s (Ogden Soleco)
claim of an easement for use of a “Detention Area.” The Detention Area is a storm-water
collection pond for a new shopping center in New Haven, Utah. After Ogden Soleco
filed its Amended Complaint, Defendant s Heritage Equity Funding, LLC (Heritage) and

Detention Easement Property, LLC (DEP) moved to join Wal-Mart Stores, Inc.
(Wal-Mart), as a necessary party under Rule 19 of the Federal Rules of Civil Procedure
because Wal-Mart owns and intends to use an easement over the Detention Area. 1 The
court agrees that Wal-Mart is a necessary party and grants Defendants’ motion.
BACKGROUND
In 2007, Defendant Soleco (and despite its similar name it is distinct from
Plaintiff Ogden Soleco) was working to develop a shopping center in New Haven. One
of the stores that would be part of this venture was a Wal-Mart. Wal-Mart owned some
land in the complex and worked with Soleco in the development project. As part of the
planned development, they set aside a “Detention Area” that would act as a storm-water
collection pond.
Wal-Mart and Soleco entered into a “Development Agreement” on the same day
they executed another agreement, “Easements with Covenants and Restrictions” (ECR).
Both agreements contemplate, describe, and budget for the creation of a “Detention
Area” or “Detention Pond.” Soleco’s engineer, in preparation for developing the
shopping center, prepared a plan called “Site Development Plan—Phase 1,” which
described storm water flowing from Wal-Mart’s land to the Detention Area. To
accommodate this flow, the ECR expressly granted an easement from Soleco to
Wal-Mart: “[T]he Developer [Soleco] hereby grants to Wal-Mart a nonexclusive

1

One of the three Defendants, Soleco, Inc. (Soleco), has appeared and filed an
Answer in this case, but has not weighed in on either the motion for joinder or filed
counterclaims against Plaintiff Ogden Soleco. For the remainder of this decision, the
court will continue to use “Defendants” even though the term will often not include
Defendant Soleco.
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easement for storm water discharge and detention on and over the Detention Area
together with the right to construct, maintain, repair and replace storm water and related
improvements thereon.” (ECR para. 5.4.)
Sometime after these 2007 agreements were signed, Soleco defaulted on a loan,
and Ogden Soleco became the new owner of some of Soleco’s property. One piece of
property that Soleco retained after the default was the Detention Area. Soleco later
transferred the Detention Area to Defendant Heritage, and Heritage then transferred title
to Defendant DEP.
Wal-Mart’s ownership of and intent to use an easement over the Detention Area
In the Motion to Join a Required Party, the Defendants claim that Wal-Mart
intends to exercise its right to use all of the capacity of the Detention Area leaving no
storm-water capacity for any other neighboring landowner. This assertion is supported
by the declaration of DEP’s Manager, Nathan G.S. Jensen. (ECF No. 41, at 25–30.)
Ogden Soleco objects to the consideration of DEP’s declaration and claims it is
based on unauthenticated documents and inadmissible, self-serving hearsay. Defendants,
in an attempt to buttress their factual assertions, submitted a declaration from the West
Haven City Planner and Engineer, Steve Anderson, P.E., which includes an updated
engineering plan that shows Wal-Mart’s intent to use the Detention Area. (ECF No. 48,

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at 39–41.) They also submitted Ogden Soleco’s admission “that Wal-Mart has an express
easement over the Detention Area.” (Ans. Defs.’ 1st Disc. Reqs. 21, ECF No. 48). 2
Even if Odgen Soleco were correct that the declarations are founded on
inadmissible hearsay, the Defendant’s assertion is almost—if not entirely—supported by
Ogden Soleco’s allegations in the Amended Complaint: “Plaintiff and Wal-Mart, at this
time, would like to move forward with the development of the Shopping Center. As part
of the development, they are entitled to use the Detention Area as envisioned in the
Development Agreement, ECR[,] and Site Development Plan—Phase 1.” (Am.
Compl. 8, ECF No. 39.)
The relief Ogden Soleco and the Defendants seek from the court
In Ogden Soleco’s Amended Complaint, it seeks relief under eight causes of
action: (1) Slander on Title; (2) Intentional Interference with Economic Relations;
(3) Quiet Title of Easement by Implication of Prior Use; (4) Quiet Title of Easement by
Implication by Map, Boundary, or Plat; (5) Fraudulent Transfer; (6) Injunctive Relief;
(7) Breach of Covenant; and (8) Breach of Covenant of Good Faith and Fair Dealing. All
these causes of action involve the ownership, use, or control of the Detention Area or a
storm-drainage system.
Ogden Soleco argues that it is not challenging Wal-Mart’s claimed interest in the
Detention Area, but rather is trying to establish its ownership in relation to only the three
named Defendants. (Mem. Opp’n 7 (“In no way whatsoever does the Amended
2

Before admitting Wal-Mart’s ownership, Ogden Soleco objected to the
interrogatory because “it calls for a legal conclusion and seeks an admission from a nonparty to this litigation.” (Id.) Neither of these objections is persuasive.
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Complaint implicate Wal-Mart. . . . Plaintiff only seeks relief from Defendants . . . .”).)
But the Amended Complaint’s prayer for relief reveals that Ogden Soleco wants the court
to quiet 3 an easement against all others, including Wal-Mart.
When Defendants Heritage and DEP answered the original complaint, they filed
counterclaims against Ogden Soleco asking for a declaration that Ogden Soleco does not
own an easement. (Ans. & Countercls. 25–27, ECF No. 27.) In their prayer, Defendants
Heritage and DEP ask the court
[f]or a declaratory judgment declaring that no storm
water detention easement, other than that easement
expressly granted to Walmart in the ECR, exists on the
Detention [Area], and that Counterclaim Plaintiff is . . . the
owner in fee of the Detention [Area], free and clear of any
obligation to detain storm water from [Ogden Soleco’s]
Property, whether now or in the future, except as expressly
set forth in writing between the owners of the respective
properties, and that Counterclaim Plaintiff[s’] title be
established and quieted as against all persons, both
corporate and natural, including [Ogden Soleco].
(Id. at 36.) Although the Defendants do not ask the court to interfere with the easement
Wal-Mart might own based on the language in the ECR, the court’s potential ruling could
still affect an alternative basis for the easement (or a supplemental easement) that
Wal-Mart might have.

3

Black’s Law Dictionary defines “quiet” as “[t]o make (a right, position, title,
etc.) secure or unassailable by removing disturbing causes or disputes.” (10th ed. 2014).
5

DISCUSSION
Rule 19 of the Federal Rules of Civil Procedure “recognizes exceptional
circumstances in which the plaintiff’s choice of parties or forum must give way because
of an absent party’s interest in the outcome of the action or involvement in the underlying
dispute.” Marvel Characters, Inc. v. Kirby, 726 F.3d 119, 131 (2d Cir. 2013) (citing
7 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1602 (3d ed.
2008)); Cross Timbers Oil Co. v. Rosel Energy, Inc., 167 F.R.D. 457, 459 (D. Kan.
1996).
The court must join an absent person if any one of the following three tests is
satisfied: First, the court cannot accord complete relief among existing parties without the
absent person, Fed. R. Civ. P 19(a)(1)(A); second, when the absent person claims an
interest in the subject of the action and a disposition of the action in their absence may
impair their ability to protect their interest, Fed. R. Civ. P. 19(a)(1)(B)(i); or third, when
the absent person claims an interest in the subject of the action and a disposition of the
action in their absence may expose an existing party to a substantial risk of incurring
multiple, inconsistent obligations because of the interest, Fed. R. Civ. P. 19(a)(1)(B)(ii).
As the moving party under Rule 19, the Defendants bear the burden of proof. Davis v.
United States, 192 F.3d 951, 958 (10th Cir. 1999).
I.

Without Wal-Mart, the court cannot accord complete relief to the existing
parties.
The first test to determine the necessity of Wal-Mart’s presence in this suit is

whether the court can accord complete relief among the existing parties without WalMart. Fed. R. Civ. P. 19(a)(1)(A). For quiet title actions, “the general rule is that ‘[a]
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party who seeks to quiet title to a piece of land must join all known persons who are
claiming title in order to settle the property’s ownership without additional litigation.’”
Valley View Dev., Inc. v. United States ex rel. U.S. Army Corps of Eng’rs, No. 08-CV363-TCK-FHM, 2011 WL 2560215, at *6 (N.D. Okla. June 28, 2011) (alteration in
original) (quoting 7 Wright & Miller, supra, § 1621); see also Cross Timbers, 167 F.R.D.
at 460; Hugoton Energy Corp. v. Plains Resources, Inc., 141 F.R.D. 320, 322 (D. Kan.
1991) (holding that royalty-interest holders were required under Rule 19(a) and
indispensable under Rule 19(b) in a suit over the validity of an oil-and-gas lease).
In its Amended Complaint, Ogden Soleco moved to quiet title to an easement
“against all persons and parties, both corporate and natural” (Am. Compl. 18), which
would include Wal-Mart. Ogden Soleco acknowledges that the Defendants’ predecessor
in interest, Soleco, granted an easement to Wal-Mart (id. at 5), and the ECR language
expressly granted an easement to Wal-Mart (id. Ex. 2 para. 5.4, ECF No. 39-2). And
Ogden Soleco admitted that Wal-Mart owns an easement over the Detention Area. (Ans.
Defs.’ First Disc. Requests 21.)
The court could not declare that Ogden Soleco owns a quieted title over an
easement—or in other words, grant the Plaintiff the complete relief it seeks—without
Wal-Mart being under the court’s jurisdiction. Even if Ogden Soleco is only seeking an
easement that would co-exist with Wal-Mart’s, a declaration by the court about the size
and contours of such an easement would still require Wal-Mart’s presence, especially if
that interest were to be quieted against Wal-Mart. Similarly, some of Defendants’
counterclaims could not be fully granted without Wal-Mart’s presence.
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II.

A decision in Wal-Mart’s absence may impair Wal-Mart’s ability to protect
its interest in the Detention Area.
The court must order joinder if Wal-Mart claims an interest in the subject of the

action and a disposition of the action in its absence may impair its ability to protect its
interest. Fed. R. Civ. P. 19(a)(1)(B)(i). Rule 19 “does not require the absent party to
actually possess an interest; it only requires the movant to show that the absent party
‘claims an interest relating to the subject of the action.’” Davis, 192 F.3d at 958–59
(emphases in original) (quoting Fed. R. Civ. P. 19(a)(2)). The court should recognize
absent parties’ claims unless they are fabricated or frivolous. Id. (holding that to require
proof that the absent person would effectively prevail on the merits “would render the
Rule 19 analysis an adjudication on the merits.”).
In this case, Ogden Soleco admits that Wal-Mart has an interest in the subject of
the action, so unless Wal-Mart is in some way disclaiming its interest, it is highly
probable that Wal-Mart is claiming a non-frivolous interest. The potential effect of a
disposition in favor of Ogden Soleco—that is, a judgment declaring that Ogden Soleco
owned an easement quieted against Wal-Mart—would directly affect Wal-Mart’s
easement claim. Whether the Detention Area includes only the Wal-Mart easement as
opposed to two similar easements has significant implications for the management of the
land. This is especially true if Wal-Mart intends to use all the Detention Area without
leaving any room for another potential owner. This putative effect on Wal-Mart’s
interest is more than speculative. It would be the same if the Defendants’ counterclaims
prevailed, although to a lesser degree.

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Ogden Soleco argues that the Defendants can adequately represent Wal-Mart’s
interests and that would resolve any need for joinder. The Court of Appeals for the Tenth
Circuit recognizes that when a present party’s interests are so substantially or virtually
similar to the absent party, the present party may adequately represent the absentee.
Kansas v. United States, 249 F.3d 1213, 1226–27 (10th Cir. 2001); Sac & Fox Nation v.
Norton, 240 F.3d 1250, 1259 (10th Cir. 2001). The advocacy of the present party would
ameliorate the prejudice or impairment of the absentee’s interests. Rishell v. Jane
Phillips Episcopal Mem’l Med. Ctr., 94 F.3d 1407, 1411 (10th Cir. 1996). And because
the moving party bears the burden of proof, the Defendants must prove that their interests
are not similar to Wal-Mart’s.
The Defendants declare that they “have little reason to expend resources
protecting the interests of Wal-Mart against Plaintiff’s conflicting claims in this case.”
(Reply Mem. 11, ECF No. 48.) The Defendants also claim Wal-Mart has an easement
where it can use the full capacity of the Detention Area, so the Defendants seem to have
no advantage one way or the other whether Wal-Mart is the sole owner of an easement.
The Defendants’ and Wal-Mart’s interests are not sufficiently aligned to conclude that the
Defendants can adequately represent Wal-Mart’s interest.
III.

A decision in Wal-Mart’s absence may expose the Defendants to a real risk of
incurring multiple, inconsistent obligations.
Joinder is required if Wal-Mart, as an absent entity, claims an interest in the

subject of the action and a disposition of the action in their absence may expose an
existing party to a substantial risk of incurring multiple, inconsistent obligations. Fed. R.
Civ. P. 19(a)(1)(B)(ii). Whether the absentee claims an interest in the subject of the
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action is resolved by the same test discussed above. See supra Part II (citing Davis, 192
F.3d at 958–59). And any risk of multiple, inconsistent obligations must be a real
possibility; an unsubstantiated or speculative risk does not satisfy Rule 19(a)(1). N.
Arapaho Tribe v. Harnsberger, 697 F.3d 1272, 1280 (10th Cir. 2012); Sac & Fox Nation,
240 F.3d at 1259 (quoting Wright & Miller, supra, § 1604).
If Ogden Soleco were to prevail in this suit, the risk of the Defendants facing a
subsequent claim from Wal-Mart would be real and substantial. Ogden Soleco alleges
and admits that Wal-Mart has an easement, and if this court were to force the Defendants
to recognize an easement owned by Ogden Soleco, the potential for another suit to
resolve how the two easements would interact would be more than mere speculation.
Under any one of the three Rule 19(a)(1) tests, the court is required to order the
joinder of Wal-Mart.
IV.

Wal-Mart’s lack of intervention does not resolve the question of whether to
join.
Ogden Soleco argues that Wal-Mart is a sophisticated party that knows how to

protect its interests and it can sit on the sidelines if it so chooses. The Court of Appeals
for the Tenth Circuit has already heard this argument and 0rejected it. Navajo Tribe of
Indians v. New Mexico, 809 F.2d 1455, 1472 n.25 (10th Cir. 1987) (“To argue, as the
Tribe does, that the [absent party] can protect its interest through voluntary intervention
would render Rule 19(b) almost completely nugatory. . . . Under the Tribe’s argument, a
court could never find a Rule 19(a)(2)(i) party indispensable under Rule 19(b), because
such a party could always protect his interest by intervening.” (emphasis in original)). As

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Tenth Circuit precedent makes it clear, the court cannot assume by Wal-Mart’s failure to
join on its own volition that it is essentially waiving its rights.
Based on the pleadings and their attached exhibits, the admissions made through
discovery, and the legal arguments made in the briefing of this motion, it is clear that
Wal-Mart should no longer be absent from this suit. All three tests of Rule 19(a) instruct
the court to require Wal-Mart’s presence.
For these reasons, the court GRANTS the Motion to Join Wal-Mart as a Required
Party.
DATED this 1st day of March, 2016.
BY THE COURT:

TENA CAMPBELL
U.S. District Court Judge

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