Graves et al v. Vitu et al

Filing 36

MEMORANDUM OPINION. Signed by District Judge Michael F. Urbanski on 2/7/2013. (jat)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF VIRGINIA
HARRISONBURG DIVISION

JOHN H.H. GRAVES, JAMES R. O.
GRAVES AND CORNELIA G. SPAIN, AS
CO-TRUSTEES OF THE H.T.N.
GRAVES TRUST AND THE REBECCA
JACKSON GRAVES TRUST,

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Plaintiffs,
v.
ELIZABETH GRAVES VITU,
AND
KATHERINE G. FICHTLER,
Defendants.

Civil Action No. 5:12cv065

By: Hon. Michael F. Urbanski
United States District Judge

MEMORANDUM OPINION
In this declaratory judgment action, defendants have moved to dismiss this case pursuant
to Federal Rules of Civil Procedure 12(b)(1) and Rule 12(b)(7) for failure to join a necessary and
indispensible party, the joinder of whom will destroy complete diversity between the parties and
deprive this court of subject matter jurisdiction. (Dkt. No. 6.) For the reasons set forth below,
the motion must be granted, and this case dismissed for lack of subject matter jurisdiction.
I.
This case involves the interpretation of a no-contest clause contained within two trusts,
the H.T.N. Graves Trust (“Ted Graves Trust”) and the Rebecca Jackson Graves Trust (“Mrs.
Graves Trust”). The litigants are the great-grandchildren of Colonel Theodore Clay Northcott,
the founder of Luray Caverns. For many years, the descendants of Colonel Northcott have been
embroiled in an ongoing struggle over the control and management of the family business,
consisting of the Luray Caverns Corporation and other closely held entities associated with it

(hereinafter collectively referred to as “Luray Caverns”). Currently, there are six surviving
great-grandchildren of Colonel Northcott and his wife Belle Brown Northcott: John H.H. Graves
(“John”), James R.O. Graves (“Rod”), Cornelia Spain (“Cornelia”), Elizabeth Graves Vitu
(“Elizabeth”), Katherine Fichtler (“Katherine”), and Rebecca Hudson (collectively the “Graves
Children”). Plaintiffs in this case are John, Rod, and Cornelia. Defendants in this case are
Elizabeth and Katherine. Rebecca Hudson has not been named in this action.1
The saga surrounding control of Luray Caverns does not begin with the current
generation. Rather, the family has sparred in state court many times over the last century. Issues
involving the distribution of assets and the construction of the trust agreements have been
regularly adjudicated in Page County Circuit Court. As this case is simply one skirmish in the
complicated and contentious battle that has been waged between the descendants of Colonel
Northcott over the distribution of stock and control of Luray Caverns, it is helpful to place the
current litigation in its historic context.
Luray Caverns, founded by Colonel Northcott in 1905, is a noted landmark and tourist
attraction located in Page County, Virginia. Colonel Northcott and his wife established two
trusts during their lifetimes: the Belle Brown Northcott Trust (“the Belle Trust”) and Theodore
Clay Northcott Trust (“the Colonel Trust”). The validity of these trusts was challenged in the
1920s in Page County Circuit Court, which ultimately upheld the trust’s bequest to the Colonel’s
daughter and her surviving children. After the death of the Colonel and his daughter, the
Colonel’s grandson, Henry Theodore Northcott Graves (“Ted Graves”), became the beneficiary
of these trusts and enjoyed the net income from them during his lifetime. The Belle Trust and
the Colonel Trust terminated at the death of Ted Graves in July 2010.

1

In this action, each plaintiff is a resident of Virginia. Defendant Elizabeth is a resident of France, and her codefendant, Katherine, is a resident of Montana. Rebecca Hudson is a resident of Virginia.

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In the early 1950s, Ted Graves became president of Luray Caverns Corporation and held
that position from 1952 until 2008. During their lifetime, Ted Graves and Mrs. Graves
established two inter vivos trusts, the Ted Graves Trust and the Mrs. Graves Trust, and the
property subject to the trusts included certain shares of Luray Caverns Corporation owned
personally by Ted Graves, interests in affiliated Luray Caverns entities and other property.2
The management of the Belle Trust and the Colonel Trust and control over the business
operations of Luray Caverns has caused a great deal of strife between the children of Colonel
Northcott’s grandson, Ted Graves. During Ted Graves’ lifetime, the Belle Trust and the Colonel
Trust each had two Co-Trustees. Since 1956, Mrs. Graves has served as one of the Co-Trustees,
and Ted Graves has individually selected and nominated each successive Co-Trustee to serve
alongside her. Mrs. Graves served continuously until the trusts were terminated at her husband’s
death. The present scuffle between the children of Ted Graves and Mrs. Graves has its origin in
disagreements as to who should serve as Co-Trustees of the Belle Trust and the Colonel Trust.
According to the complaint, the quarrel came to a head in the fall of 2004. At that time,
Nathan H. Miller (“Miller”), who had served as Co-Trustee of both the Belle Trust and the
Colonel Trust, resigned and filed a series of lawsuits relating to the trusts. Ted Graves and Mrs.
Graves, along with plaintiffs in this action, opposed certain of the relief sought by Miller and
also sought the appointment of James C. Cropsey (“Cropsey”) as Miller’s successor Co-Trustee.
Katherine and Elizabeth, defendants in this case, opposed Cropsey’s nomination as successor.
On February 19, 2008, Katherine personally voiced her opposition to Cropsey’s nomination,
while Elizabeth filed her opposition in writing. The crux of the current dispute stems from the
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Luray Caverns Corporation issued a total of 494 shares of stock, 484 of which were controlled by the Belle Trust
and the Colonel Trust. Ted Graves personally owned the remaining ten shares of stock, seven of which are part of
the trust corpus at issue in this litigation. At oral argument, counsel for defendants represented that while the present
dispute involved the parties’ percentage interest in these seven shares of Luray Caverns Corporation’s stock, the
sibling’s respective interests in other Luray Caverns’ entities within the Ted Graves trust was of greater moment.

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fact that in the interim, on November 17, 2006, and allegedly unbeknownst to defendants
Katherine and Elizabeth, the Ted Graves Trust and the Mrs. Graves Trust were amended to
include a no-contest clause prohibiting any beneficiary thereunder from opposing the nomination
and continuation of a Co-Trustee of the Colonel Trust or the Belle Trust. The no-contest clause
reads as follows:
If any beneficiary under this Trust shall in any way, directly or indirectly,
challenge, contest or object to the nomination or selection by the Grantor or his
wife, or by any attorney-in-fact for either of them, of a trustee of the trust u/w
Belle Brown Northcott, deceased, or of the trust u/w Theodore Clay Northcott,
deceased, then and in each such case all provisions for such beneficiary or for his
or her issue above contained in this Trust shall be wholly void and ineffectual,
and the Trustee is hereby directed to distribute the portion of the Trust Fund to
which such beneficiary or his or her issue would have been entitled under the
provisions of this Trust in like manner as if such beneficiary and all of his or her
issue had predeceased the Grantor.
If any beneficiary under this Trust shall in any way, directly or indirectly,
challenge, contest or object to the continuation of Rebecca Jackson Graves as
Trustee or a Co-Trustee of the trust u/w Belle Brown Northcott, deceased, or the
Trust u/w Theodore Clay Northcott, deceased, or to any action by her as trustee of
either trust or seek or attempt to remove, directly or indirectly, Rebecca Jackson
Graves as a Trustee of either trust, or institute or prosecute, or be in any way,
directly or indirectly, interested or instrumental in the institution, or prosecution,
of any action, proceeding, challenge or contest, or give any notice or take any
action, for the purpose of such removal or to challenge, contest or object to any
action by her as Trustee of either trust, then and in each such case all provisions
for such beneficiary or for his or her issue above contained in this Trust shall be
wholly void and ineffectual, and the Trustee is hereby directed to distribute the
portion of the Trust Fund to which such beneficiary or his or her issue would have
been entitled under the provisions of this Trust in like manner as if such
beneficiary and all of his or her issue had predeceased the Grantor.
If any beneficiary under this Trust other than Cornelia G. Spain, John H. H.
Graves and James R. O. Graves shall in any way, directly or indirectly, institute or
prosecute, or be in any way, directly or indirectly, interested or instrumental in the
institution or prosecution of, any action or proceeding, or give any notice or take
any action, for the purpose of the appointment of a conservator or guardian for the
Grantor or his wife, then and in each such case all provisions for such beneficiary
or for his or her issue above contained in this Trust shall be wholly void and
ineffectual, and the Trustee is hereby directed to distribute the portion of the Trust
Fund to which such beneficiary or his or her issue would have been entitled under
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the provisions of this Trust in like manner as if such beneficiary and all of his or
her issue had predeceased the Grantor.
By operation of this clause, plaintiffs contend that Katherine’s and Elizabeth’s opposition to the
nomination of Cropsey as Co-Trustee renders their beneficial interest in the Ted Graves and Mrs.
Graves Trust “wholly void and ineffectual.”
Despite the opposition by Katherine and Elizabeth, Cropsey was appointed as the
successor Co-Trustee of the Belle Trust and the Colonel Trust. In the summer of 2009, Ted
Graves and Mrs. Graves petitioned the Page County Circuit Court to appoint Robert Lawler
(“Lawler”) as an additional Co-Trustee to the Belle Trust and the Colonel Trust. While John,
Rod, and Cornelia consented to the appointment, Katherine and Elizabeth challenged it. Shortly
before their challenge could be heard, Katherine and Elizabeth were notified of the no-contest
clause and withdrew their opposition. Lawler was appointed as an additional successor CoTrustee of the Belle Trust and the Colonel Trust, but did not qualify as such prior to the death of
Ted Graves. Ted Graves’ death on July 8, 2010 terminated the Belle Trust and the Colonel
Trust.
Upon Ted Graves’ death, the disposition of the Belle Trust was disputed, and a lawsuit
ensued in Page County Circuit Court. In that case, Katherine, Elizabeth and Rebecca Hudson
joined together in a position adverse to Mrs. Graves and their siblings. In a written opinion
handed down on August 26, 2011, Chief Judge Thomas J. Wilson, IV held that a remainder
interest in the next of kin found in the Belle Trust violated the rule against perpetuities and
ordered that the remaining shares in the Belle Trust be given to the Graves Children in equal
shares. Graves v. Graves et al., CL10000176-00 (Va. Cir. August 26, 2011). Relying in part on
the trail of bread crumbs left by the many years of litigation in Page County, the court also held

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that a certain inter vivos transfer of 170 shares to the Belle Trust did not violate the rule against
perpetuities and would be distributed equally to the Graves Children.
As a result of Ted Graves’ death, Mrs. Graves became the primary beneficiary of the Ted
Graves Trust to which the Graves Children were remainder beneficiaries. The Graves Children
remained the beneficiaries under the Mrs. Graves Trust. When Mrs. Graves passed away on
April 6, 2012, the question of the distribution of the corpus of the trusts arose and spawned the
current litigation which seeks to determine whether Katherine’s and Elizabeth’s actions triggered
the no-contest clause of the Ted Graves Trust and the Mrs. Graves Trust, vitiating their
beneficial interests.
II.
The litigation surrounding the control of Luray Caverns in Page County Circuit Court
dealt primarily with the Colonel Trust and the Belle Trust until their termination in 2010 at Ted
Graves’ death. 3 In the current round of litigation, plaintiffs John, Rod, and Cornelia, in their
capacities as Co-Trustees of the Ted Graves Trust and the Mrs. Graves Trust, have filed suit
against Elizabeth and Katherine for a declaration that defendants, as beneficiaries of their
parents’ trusts, triggered the no-contest clause contained within each trust and forfeited their
shares as beneficiaries. Specifically, plaintiffs allege that Katherine and Elizabeth violated the
no-contest clause by opposing the appointment of both Cropsey and Lawler as successor CoTrustees of the Belle Trust and the Colonel Trust.
On July 26, 2012, defendants filed a motion to dismiss for lack of jurisdiction pursuant to
Federal Rules of Civil Procedure 12(b)(1) and 12(b)(7). Defendants argue that plaintiffs have

3

A brief overview of the online case system of Page County Circuit Court indicates that the Belle Trust and the
Colonel Trust have been interpreted by Page County Circuit Court seven times since 1995 (the start date of the
electronic records). See CH04000198-00, CL00000047-00, CL09000119-00, CH05000100-00, CH04000199-00,
CL00000048-00, CL09000120-00. Rebecca Hudson was a named as a defendant in three of those actions.

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failed to join a necessary party, namely Rebecca Hudson, pursuant to Federal Rule of Civil
Procedure 19(a)(1). Moreover, defendants contend that since Rebecca Hudson is an
indispensible party pursuant to Rule 19(b)(1), the court must join her. As plaintiffs and Rebecca
Hudson all are Virginia residents, joinder of Rebecca Hudson will defeat complete diversity of
citizenship and deprive the court of subject matter jurisdiction. Therefore, defendants argue that
the court should dismiss the action without prejudice to refile it in Page County Circuit Court,
where all of the interested parties, including Rebecca Hudson, may be joined.
At oral argument on the motion to dismiss held on October 18, 2012, defendants insisted
that Rebecca Hudson is a necessary and indispensible party for four reasons: (1) she is
inextricably involved in the contentious battle for control of the Luray Caverns, and the
triggering of the no-contest clause by defendants will further reduce her minority position
relative to plaintiffs; (2) she has traditionally taken a position adverse to the plaintiffs and cannot
be aligned with them in this matter; (3) non-joinder prejudices Rebecca Hudson’s ability to
protect her own interests; and (4) she will not be bound by the judgment of this court. Plaintiffs
respond by contending that: (1) the ultimate disposition of the interests of Katherine and
Elizabeth represents complete relief between the parties to this suit; (2) Rebecca Hudson has no
pecuniary interest in the interpretation of the no-contest provision, and, indeed, her financial
interest increases if the no-contest provision is applied against Katherine and Elizabeth;4 and (3)

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Article Five of the Ted Graves Trust and the Mrs. Graves Trust guides the disposition of the various assets of the
six children. First, Rebecca Hudson is the recipient of some specific tangible personal property, namely, a gold
bracelet and a diamond engagement ring. The other children share “all the rest of the Grantor’s personal property.”
Next, the trust instruments divide the balance of the property held in trust into a Credit Share and a Marital Share.
The Grantor’s wife had the option of exercising the special power of appointment to direct the disposition of the
Credit Share. Mrs. Graves did not. Therefore, 75% of the stock of the closely held corporations, including Luray
Caverns Corporation, as may be augmented by the Marital Share, would go to John, Rod, and Cornelia, and 25% of
shares of these same companies to Elizabeth and Katherine. Rebecca Hudson retains a 2.5% interest in the residue
of the remainder of the Credit Share, as augmented by the Marital Share. If the no-contest clause is triggered,
Katherine and Elizabeth will lose the 25% share which will be added to the Credit Share. Ultimately, 97.5% of the
25% share divested from Katherine and Elizabeth will flow to plaintiffs, and 2.5% to Rebecca Hudson. Thus, while

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Rebecca Hudson’s interest in the matter is merely speculative, because she did not oppose any
nominees after the no-contest clause was inserted into the Ted Graves and Mrs. Graves Trusts.
At oral argument, defendants indicated their intent to seek to have the no-contest
provision declared void as a matter of law. Even if the provision is not deemed to be void,
defendants argue that they did not know of the provision until the time of the hearing to appoint
Lawler, at which time they withdrew their opposition. Thus, one of defendants’ defenses to this
action is that any violation was done unintentionally without knowledge of the no-contest clause.
In response to defendants’ theory of the case, plaintiffs seek to establish that defendants had
knowledge of the no-contest clause, specifically through their interactions and communications
with Rebecca Hudson. Plaintiffs have issued discovery directed to the issue of Rebecca
Hudson’s communications with defendants on this subject.
During argument, the court observed that the no-contest clause was broadly worded,
encompassing both direct and indirect challenges to the nomination of a Co-Trustee. Should
discovery reveal that Rebecca Hudson indirectly opposed the nomination of either Cropsey or
Lawler by supporting the position taken by her sisters, her beneficial interest could be in
jeopardy. At the hearing on October 18, 2012, counsel for plaintiffs responded to the court’s
inquiry by stating that Rebecca Hudson’s interest was “perhaps” at risk. Following the hearing,
plaintiffs sought to eliminate this potentiality by filing a stipulation that if the court retained
jurisdiction of this matter and adjudicated it on the merits, plaintiffs, in their capacities as CoTrustees and in their individual capacities, would not assert that Rebecca Hudson forfeited any
interest in either the Ted Graves Trust or the Mrs. Graves Trust.

both plaintiffs and Rebecca Hudson stand to gain if Katherine and Elizabeth are divested of their trust interests, the
relative gain to plaintiffs dwarfs that of Rebecca Hudson.

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This stipulation does not cure the insoluble problem posed by litigating this case without
the joinder of Rebecca Hudson. While the cleverly conceived stipulation may serve to immunize
Rebecca Hudson for any past breaches of the no-contest clause, it does not eliminate her interest
in the outcome of this lawsuit for two reasons. First, Rebecca Hudson historically has allied
herself with Katherine and Elizabeth, and, if plaintiffs prevail in reducing their siblings’ interest
in Luray Caverns by means of the no-contest clause, Rebecca Hudson would find herself even
more isolated. Second, because Rebecca Hudson’s share of the residue is so small, 2.5%, the
elimination of Katherine and Elizabeth would strengthen the majority ownership position of
plaintiffs, further reducing Rebecca Hudson’s relative interest.
III.
Under Rule 12(b)(7) of the Federal Rules of Civil Procedure, an action may be dismissed
for failure to join an indispensable party under Rule 19. Defendants, as the moving party, bear
the burden of demonstrating entitlement to dismissal under Rule 19 and must “show that the
person who was not joined is needed for a just adjudication.” Am. Gen. Life & Accident Ins. Co.
v. Wood, 429 F.3d 83, 92 (4th Cir. 2005) (internal citations omitted).
Rule 19 sets forth separate tests for determining whether a party is necessary and
indispensible. Owens–Illinois, Inc. v. Meade, 186 F.3d 435, 440 (4th Cir.1999). The Fourth
Circuit has noted:
It is a two-step inquiry in which courts must first ask whether a party is necessary
to a proceeding because of its relationship to the matter under consideration
pursuant to Rule 19(a). If a party is necessary, it will be ordered into the action.
When a party cannot be joined because its joinder destroys diversity, the court
must determine whether the proceeding can continue in its absence or whether it
is indispensable pursuant to Rule 19(b) and the action must be dismissed.
Id. (internal citations omitted). While “[c]ourts are loath to dismiss cases based on nonjoinder of
a party,” dismissal is warranted “when the resulting defect cannot be remedied and prejudice or
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inefficiency will certainly result.” Id. at 441. Nonetheless, the “decision [to dismiss] must be
made pragmatically, in the context of the substance of each case, rather than by procedural
formula, by considering the practical potential for prejudice to all parties, including those not
before it.” Id. (internal citations omitted). See also Nat'l Union Fire Ins. Co. of Pittsburgh, PA v.
Rite Aid of South Carolina, Inc., 210 F.3d 246, 250 (4th Cir. 2000). Thus, the trial court’s
considerations regarding the joinder of nonparties must be case specific and fact specific.
Simply put, “[w]hen an action will affect the interests of a party not before the court the ultimate
question is this: Were the case to proceed, could a decree be crafted in a way that protects the
interests of the missing party and that still provides adequate relief to a successful litigant?”
Teamsters Local Union No. 171 v. Keal Driveaway Co., 173 F.3d 915, 918 (4th Cir. 1999).
A.
The court must first consider whether Rebecca Hudson is necessary, or under the current
version of the rules, “required,”5 because of her relationship to the matter under consideration.
Fed. R. Civ. P. 19(a)(1). A party is required if, without her, (1) the court cannot accord complete
relief among the existing parties, or (2) the party (A) is so situated that disposing of the action in
her absence may, as a practical matter, impair or impede her ability to protect her interest, or (B)
leave an existing party subject to substantial risk of incurring double, multiple, or otherwise
inconsistent obligations. Fed. R. Civ. P. 19(a)(1).
Rebecca Hudson is required as a party to this litigation because permitting the action to
proceed without her may impair her ability to protect her interests. As counsel for plaintiffs
recognized at the hearing, Rebecca Hudson “perhaps” would be in jeopardy of losing her interest
in the trusts if discovery revealed, consistent with her historic alliance with Katherine and
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The 2007 Amendments to Rule 19(a) replaced the word “necessary” with the word “required.” The change in
words was stylistic and did not affect the substance or operation of the rule. See Republic of the Phillipines v.
Pimentel, 553 U.S. 851, 855-56 (2008).

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Elizabeth, that she provided indirect support to her sisters’ challenge to the Co-Trustee
nominations. In that case, Rebecca Hudson plainly would have an interest in the outcome of this
litigation and any determination the court makes as to the validity of the no-contest clause.
Plaintiffs cleverly seek to sidestep this issue by stipulating that they will not seek to enforce the
no-contest clause against Rebecca Hudson. But the immunity afforded by this litigation tactic
does not render Rebecca Hudson a disinterested bystander to this litigation. For years, Rebecca
Hudson has allied herself with Katherine and Elizabeth in the family dispute over control of
Luray Caverns. Indeed, the complaint acknowledges that “Becca [Rebecca Hudson], Katherine
and Elizabeth generally took adverse position to their parents with respect to various issues
related to the Luray Caverns Corporation.” Compl. ¶ 15. Abolition of Katherine’s and
Elizabeth’s trust interests is the purpose of this lawsuit, and a victory by plaintiffs would reduce
their voice in the management and control of Luray Caverns and erode the historic support
provided to Rebecca Hudson by her sisters in the war that has waged over the family business.
Plaintiffs argue that Rebecca Hudson stands to financially gain if the no-contest provision is
triggered by Katherine’s and Elizabeth’s actions, but this argument misses the point. While it is
true that Rebecca Hudson’s actual monetary interest will increase ever so slightly if plaintiffs
prevail, any increase pales in comparison to the increase in control plaintiffs would enjoy if
Katherine’s and Elizabeth’s trust interests are vitiated. In short, permitting this case to continue
without Rebecca Hudson’s presence may as a practical matter affect her ability to protect an
“interest relating to the subject of the action,” Rule 19(a)(1)(B)(i), as a victory by plaintiffs
would strengthen the hand of the interests she has historically opposed and weaken the position
of her historic allies.

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In addition, as a nonparty, Rebecca Hudson would not be bound by any judgment
rendered in this case and could, should she so desire, bring a state court action on the same
grounds yielding the possibility of inconsistent results.
B.
Because Rebecca Hudson and the three plaintiffs are Virginia residents, her joinder
would defeat complete diversity and thus the subject matter jurisdiction of the court. As such,
Rebecca Hudson’s joinder is not feasible under Rule 19(a). The court therefore turns to Rule
19(b). Four factors must be considered in determining whether “in equity and good conscience”
this action should be dismissed for non-joinder of Rebecca Hudson: first, to what extent a
judgment in Rebecca Hudson’s absence might be prejudicial to her interest and the interests of
the existing parties; second, the extent to which by protective provisions in the judgment, by the
shaping of relief, or other measures, the prejudice can be lessened or avoided; third, whether a
judgment rendered in Rebecca Hudson’s absence will be adequate; and fourth, whether plaintiffs
will have an adequate remedy if this action is dismissed for non-joinder of Rebecca Hudson.
This “Rule 19(b) analysis is not mechanical; rather it is conducted in light of the equities of the
case at bar.” Schlumberger Indus. Inc., v. Nat’l Surety Corp., 36 F. 3d 1274, 1286 (4th Cir.
1994).
First, an analysis of this case under the first and third factors of Rule 19(b) – the extent to
which a judgment rendered in Rebecca Hudson’s absence might prejudice her or the existing
parties, or be adequate – addresses many of the same concerns as discussed above under the Rule
19(a)(1)(B)(i) analysis. Owens–Illinois, 186 F.3d at 441; see, e.g., OBOWU Dev. Union USA,
Inc. v. Igwe, BPG-10-3554, 2012 WL 4324896 (D. Md. Sept. 18, 2012). Any disposition of this

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case rendered in the absence of Rebecca Hudson would be inappropriate given her inability to
protect her interests in the outcome of this lawsuit.
With regard to Rule 19(b)'s second factor, “the extent to which any prejudice could be
lessened or avoided” by modifying the relief or the judgment in the case, this court’s
determination as to the validity of the no-contest provision and its application to the actions of
Katherine and Elizabeth undoubtedly will impact Rebecca Hudson. Given the historic interests
of the parties, the nature of this case, and the relief sought, the court cannot craft a judgment
without affecting Rebecca Hudson’s rights. The court frankly cannot conceive of any plausible
remedy to avoid or lessen the risk of prejudice other than joining Rebecca Hudson in this action.
See, e.g., Owens–Illinois, 186 F.3d at 442 (observing “it is hard to see how the district court
could have tailored a remedy to lessen or avoid the potential for prejudice in this case [other than
joining non-diverse plaintiffs]” where non-diverse plaintiffs were subject to contractual
arbitration provision, and “in order to reach a judgment on the merits of the Petition to Compel
Arbitration, the district court could not have avoided addressing the validity and applicability of
the [contractual] arbitration provision”).
The fourth factor is concerned with the interest of the courts and the public in complete,
consistent, and efficient settlement of controversies. Notable in this regard is the fact that, absent
joinder of Rebecca Hudson, any judgment in this case would not be binding on her, and she
would be free to litigate the same issue in state court. Piecemeal resolution of the latest chapter
of this saga is not only inefficient, but it also could yield inconsistent results. Moreover, these
parties have been warring with each other over the interpretation of various trust instruments and
the control of Luray Caverns for years in Page County Circuit Court. This is a state law matter,

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and the plaintiffs’ effort to invoke federal diversity jurisdiction by leaving out an interested
party, Rebecca Hudson, is unavailing.
In sum, consideration of the Rule 19(b) factors supports a finding that Rebecca Hudson is
an indispensable party, and the court cannot, “in equity and good conscience,” allow this action
to proceed in her absence. Fed. R. Civ. P. 19(b).
IV.
Because Rebecca Hudson is a necessary and indispensable party to this action, her
joinder is mandated under Rule 19. Rebecca Hudson’s joinder as a defendant in this case,
however, destroys complete diversity of citizenship, the only basis for this court's subject matter
jurisdiction. Therefore, defendants’ motion to dismiss this action without prejudice must be
granted. An appropriate order will be entered this day.
Entered: February 7, 2013

/s/ Michael F. Urbanski
Michael F. Urbanski
United States District Judge

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