Pennsylvania International Education Service Group v. Xie et al
Filing
40
MEMORANDUM OPINION - For the foregoing reasons, the Court will grant Defendants Motion for Joinder. An appropriate Order shall issue. Signed by District Judge James C. Cacheris on 05/11/2015. (dvanm, )
IN THE UNITED STATES DISTRICT COURT FOR THE
EASTERN DISTRICT OF VIRGINIA
Alexandria Division
PENNSYLVANIA INTERNATIONAL
EDUCATION SERVICE GROUP, LLC,
Plaintiff,
v.
PETER XIE, et al.,
Defendants.
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M E M O R A N D U M
1:14cv1203 (JCC/MSN)
O P I N I O N
This matter is before the Court on the collective
Defendants’ Motion for Joinder.
[Dkt. 25.]
For the following
reasons, the Court will grant the motion.
I. Background
Plaintiff Pennsylvania International Education Service
Group, LLC d/b/a PIESG China (“PIESG China”) filed this lawsuit
against Defendants Peter Xie (“Mr. Xie”), Pennsylvania
International Education Service Group, LLC (“PIESG US”), and UC
Educations, LLC (“UC Educations”) (collectively “Defendants”),
alleging, inter alia, that Defendants breached a partnership
agreement with PIESG China, a Limited Liability Company, which
was entered into for the purpose of operating an international
exchange student program between China and the United States.
1
(Compl. [Dkt. 1] at ¶¶ 7-10.)
PIESG China claims 1 that
Defendants breached the agreement when they failed to pay net
profits owed, and requests monetary damages, in addition to
other equitable relief.
(Id. at 3, 10-12.)
On March 18, 2015, after the Court denied Defendants’
motion to dismiss, Defendants filed an Answer to the Complaint
with Counterclaims, 2 alleging generally that there never was a
partnership agreement, but that instead, PIESG China conspired
with others to interfere with Defendants’ international exchange
student business.
(Answer & Countercl. [Dkt. 24] at 5-11.)
Specifically, Defendants filed counterclaims against namedPlaintiff PIESG China and Ms. Mary Ma, a non-party.
Defendants
request compensatory and punitive damages and both PIESG China
and against Mary Ma.
(Id. at 11.)
On March 27, 2015, Defendants filed a Motion for
Joinder “pursuant to Rule 19 of the Federal Rules of [Civil]
Procedure . . . request[ing] that the Court join Mary Ma as the
proper plaintiff to this action and, if Ms. Ma refuses to join
1
Specifically, PIESG China pleads seven “causes of action” under
Virginia law against Defendants: breach of the partnership
agreement, breach of fiduciary duties, accounting of partnership
expenses and net profits and/or judicial accounting, restitution
as a remedy for unjust enrichment, constructive trust,
declaratory judgment on dissociation and dissolution of
partnership, and injunctive relief. (Id. at ¶¶ 7-45.)
2
Defendants plead three counts: tortious interference with
contract, breach of fiduciary duty, and conspiracy to injure
another in trade, business, or profession. (Answer & Countercl.
at 5-11.)
2
the action as a party, that the Court dismiss the action because
Ms. Ma is necessary and [an] indispensable party to this
action.”
(Defs.’ Mot. [Dkt. 25] at 1.)
PIESG China, for
reasons not clear to the Court, opposes Defendants’ motion,
argues that Ms. Ma is neither necessary nor indispensable, and
asks that the Court deny the motion.
(Pl.’s Opp’n [Dkt. 30].)
Defendants filed a reply brief in support of their motion.
(Defs.’ Reply [Dkt. 31].)
For the reasons discussed below, the
Court will grant the motion because Mary Ma should be and can be
joined in this action.
II. Standard of Review
“When a party to a federal lawsuit moves to join a
nonparty resisting 3 joinder, the district court must answer three
questions: Should the absentee be joined? If the absentee should
be joined, can the absentee be joined? If the absentee cannot be
joined, should the lawsuit proceed without her nonetheless?”
W.
Md. Ry. Co. v. Harbor Ins. Co., 910 F.2d 960, 961 (D.C. Cir.
1990) (citations omitted).
Rule 19 of the Federal Rules of
Civil Procedure mirrors this “analytical sequence that district
courts follow in deciding a party-joinder question.”
7 Charles
A. Wright & Arthur R. Miller, Federal Practice and Procedure §
1604 (3d ed. 2015).
To determine whether an absentee party is
3
Without an affirmative statement from Defendants, and given
PIESG’s opposition to the motion for joinder, the Court assumes
that Mary Ma resists joinder in this action.
3
necessary and should be joined, Rule 19 provides in relevant
part:
(a)
Persons
Feasible.
Required
to
Be
Joined
if
(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 . . . .
Fed. R. Civ. P. 19 (emphasis added).
“‘Complete relief’ is any
relief that ‘will effectively and completely adjudicate the
dispute.’”
Pettiford v. City of Greensboro, 556 F. Supp. 2d
512, 518 (M.D.N.C. 2008) (citing Wright & Miller, at § 1604).
If the party should be joined and can be joined without
depriving the court of subject-matter jurisdiction, the Court
must order joinder.
Teamsters Local Union No. 171 v. Keal
Driveway Co., 173 F.3d 915, 917-18 (4th Cir. 1999).
If the party cannot be joined, either because the
absentee is not subject to service of process or because joinder
would destroy complete diversity, only then must the Court
determine whether the absentee party is “indispensable” under
Rule 19(b).
Home Buyers Warranty Corp. v. Hanna, 750 F.3d 427,
434 (4th Cir. 2014) (determining “whether the proceeding can
continue in that party’s absence”) (quoting id.).
Rule 19 also
governs the joinder of additional parties to a counterclaim or
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crossclaim.
See Fed. R. Civ. P. 13(h) (“Rules 19 and 20 govern
the addition of a person as a party to a counterclaim or
crossclaim.”); see also .
“[I]ndividuals jointly and severally
liable and parties conspiring with an original party to the suit
have been permitted to be joined.”
Independence Tube Corp. v.
Copperweld Corp., 74 F.R.D. 462, 467 (N.D. Ill. 1977) (citations
omitted).
III. Analysis
Defendants contend that Mary Ma is a necessary party
to this litigation and that the Court cannot accord complete
relief against the existing parties without Mary Ma.
Mem. at 2.)
(Defs.’
In their Counterclaims against PIESG China and Mary
Ma, Defendants claim that as an employee of PIESG US and UC
Educations, Mary Ma tortuously interfered with various
contracts, breached fiduciary duties owed to the LLCs, and
conspired with others to cause damage to the business of
Defendants.
(Answer & Countercl. ¶¶ 47-82.)
Defendants request
compensatory and punitive damages against PIESG China and Mary
Ma.
(Id. at 11-12.)
Consequently, Defendants argue under Rule
19(a)(1)(A) that the Court cannot accord complete relief among
the existing parties and instead needs to join Mary Ma as a
party.
(Defs.’ Mem. at 2-4.)
should be joined.
The Court agrees that Mary Ma
See Harbor Ins. Co., 910 F.2d at 961.
5
Not only do Defendants bring three Counterclaims
against PIESG China and Mary Ma, but the original complaint
references Mary Ma no less than seven different times.
Compl. at 1, 2, 4, 10, 12, 14.)
(See
Indeed, Mary Ma is the
principal and sole member of PIESG China.
(Id. at ¶ 1.)
This
initial decision is “predicated on the policies of ‘avoiding
multiple litigation, providing the parties with complete and
effective relief in a single action and protecting the absent
persons from the possible prejudicial 4 effect of deciding the
case without them.’”
Lion Petroleum of Mo., Inc. v. Millennium
Super Stop, LLC, 467 F. Supp. 2d 953, 956 (E.D. Mo. 2006)
(quoting 7 Charles A. Wright & Arthur R. Miller, Federal
Practice and Procedure § 1064 (3d ed. 2015)).
Here, denying
joinder of Mary Ma would require Defendants to file a separate
legal action against her, thus causing duplicitous litigation
when ultimately, this dispute arises out of the same transaction
and occurrence of facts that should be resolved in this single
action.
Moreover, it is feasible for the Court to join Mary
Ma, a resident of the People’s Republic of China, because she is
subject to service of process and her joinder will not destroy
complete diversity in this action.
4
Fed. R. Civ. P. 19(a)(1).
Defense counsel admitted during oral argument that there was no
prejudice to Mary Ma joining this action as a counter-defendant.
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First, China is a signatory to the Hague Convention on the
Service Abroad of Judicial and Extrajudicial Documents.
See
Convention on Service Abroad of Judicial and Extrajudicial
Documents, T.I.A.S. No. 6638, 20 U.S.T. 361, 2969 WL 97765; see
also China (Hong Kong) - Other Authority (Art. 18) & Info.,
http://www.hcch.net/index_en.php?act=authorities.details&aid=393
(last visited April 23, 2015) (listing practical information for
effectuating service in China).
Thus, Defendants could serve
process on Mary Ma, a resident of China, in accordance with Rule
4(f)(1) of the Federal Rules of Civil Procedure.
Second, Mary Ma’s citizenship in China maintains
complete diversity in this action.
PIESG China is an LLC
registered under the laws of Pennsylvania, Mary Ma is a resident
of China, and Defendants are all residents of Virginia: Peter
Xie is a resident and citizen of Virginia, PIESG US is a
Virginia LLC, and UC Educations is a de-registered Virginia LLC.
(See Compl. ¶¶ 1-4.)
Accordingly, because Mary Ma should be
joined as a party to this action and because such joinder will
not destroy subject matter jurisdiction, the Court will grant
Defendants’ motion and join Mary Ma as a Counterclaim Defendant. 5
Teamsters Local Union No. 171 v. Keal Driveway Co., 173 F.3d
5
In the alternative, even though the requirements of Rule
19(a)(1)(A) have been satisfied, the Court would find that Mary
Ma is indispensable to this proceeding under the Rule 19(b)(2)
factors. See Home Buyers Warranty Corp. v. Hanna, 750 F.3d 427,
434 (4th Cir. 2014).
7
915, 917-18 (4th Cir. 1999).
For the benefit of all parties,
the Court notes that “[a] court with proper jurisdiction may
also consider sua sponte the absence of a required person and
dismiss for failure to join.”
Republic of Philippines v.
Pimentel, 553 U.S. 851, 861 (2008) (citing Minnesota v. N. Sec.
Co., 184 U.S. 199, 235 (1902); Provident Tradesmens Bank & Trust
Co. v. Patterson, 390 U.S. 102, 111 (1968)).
Accordingly, if
either party fails to comply with the Court’s directives in the
accompanying Order, that party’s claims will be dismissed.
IV. Conclusion
For the foregoing reasons, the Court will grant
Defendant’s Motion for Joinder. An appropriate Order shall
issue.
May 11, 2015
Alexandria, Virginia
/s/
James C. Cacheris
UNITED STATES DISTRICT COURT JUDGE
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