Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_15-cv-00604/USCOURTS-azd-2_15-cv-00604-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Devon Investment, Inc., 

Plaintiff, 

v. 

Andes Industries, Inc., 

Defendant.

No. CV-15-00604-PHX-NVW 

ORDER 

Before the Court is Defendant’s Motion to Dismiss or in the Alternative Join 

Required Parties and supporting memorandum (Docs. 24, 25), Plaintiff’s response (Doc. 

26), and Defendant’s reply (Doc. 27). 

I. BACKGROUND 

On April 3, 2015, Plaintiff initiated this lawsuit claiming breach of contract under 

a Promissory Note dated March, 2009 (“the Note”). Plaintiff alleged that under the Note 

Defendant promised to pay Dennis Lan the principal sum of US $4,700,507.00 plus 

interest and that Defendant has failed to pay all amounts due under the Note. Plaintiff 

further alleged that Dennis Lan fully performed under the Note and that on or about 

March 19, 2015, Dennis Lan “indorsed, assigned, contributed, and transferred” to 

Plaintiff all his rights, title, and interest in and to the Note, “including but not limited to 

all claims arising therefrom and all rights to enforce the [] Note and to recover and collect 

all amounts due under or arising from enforcement of the [] Note.” 

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Defendant contends Dennis Lan is an affiliate and agent of Cheng-Sun Lan and 

both are residents of Taiwan. Defendant further contends that if Dennis Lan assigned the 

Note to Plaintiff, he did so to avoid Defendant’s claim for offset against the Note in a 

lawsuit filed by Defendant on March 18, 2014, in the U.S. District Court for the District 

of Nevada against Cheng-Sun Lan, Dennis Lan, and entities controlled by Cheng-Sun 

Lan. Defendant has been unsuccessful in serving process on Cheng-Sun Lan and Dennis 

Lan in Taiwan. Defendant contends that if Cheng-Sun Lan and Dennis Lan are not 

parties in this lawsuit, Defendant may be found liable for repayment of the debt 

memorialized by the Note in the present lawsuit without opportunity for offset, and it 

may be unable to obtain a judgment against Cheng-Sun Lan and Dennis Lan in the 

Nevada lawsuit because it has been unable to serve them. In other words, the absence of 

Cheng-Sun Lan and Dennis Lan in both cases precludes Defendant from any recovery on 

its claims against Cheng-Sun Lan and Dennis Lan.1

 

Therefore, Defendant contends that Cheng-Sun Lan and Dennis Lan are necessary 

and indispensable parties, it is not feasible for Plaintiff to add them to this lawsuit, and 

the case should be dismissed under Rule 12(b)(7) of the Federal Rules of Civil Procedure 

for failure to join a party under Rule 19. Alternatively, Defendant asks that Plaintiff be 

required to add Cheng-Sun Lan and Dennis Lan to this lawsuit. 

II. LEGAL STANDARD 

Under Rule 19, the Court must determine: 

(1) whether an absent party is necessary to the action; and then, (2) if the 

party is necessary, but cannot be joined, whether the party is indispensable 

such that in “equity and good conscience” the suit should be dismissed. 

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 Defendant also has filed in this Court a lawsuit against two entities allegedly 

controlled by Cheng-Sun Lan, alleging the same claims as those alleged in the Nevada 

case. See Andes Indus., Inc. v. EZconn Corp., CV-15-01810-PHX-NVW. 

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Dawavendewa v. Salt River Agric. Improvement & Power Dist., 276 F.3d 1150, 1155 

(9th Cir. 2002). “The inquiry is a practical, fact-specific one, designed to avoid the harsh 

results of rigid application.” Id. at 1154. 

To determine whether the absent party is necessary to the action, the Court must 

decide whether (A) complete relief is possible among those already parties to the action 

or (B) the absent party has a legally protected interest in the action that will (1) be 

impaired or impeded by the action or (2) “leave an existing party subject to a substantial 

risk of incurring double, multiple, or otherwise inconsistent obligations” because of the 

absent party’s interest. Makah Indian Tribe v. Verity, 910 F.2d 555, 558 (9th Cir. 1990); 

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

III. ANALYSIS 

A. Complete Relief Is Possible Among the Existing Parties. 

Defendant contends that complete relief requires joinder of Cheng-Sun Lan and 

Dennis Lan, but Defendant actually means that it cannot obtain relief on its claims 

against them without them in this lawsuit because it cannot serve them in the Nevada 

lawsuit. Among the existing parties in this lawsuit, however, it is possible to accord 

complete relief. 

In order to prevail in this lawsuit, Plaintiff must prove, among other things, that it 

has the right to enforce the Note executed by Dennis Lan and Defendant. Dennis Lan’s 

absence in this lawsuit does not prevent Defendant from showing that Plaintiff does not 

have the right to enforce the Note or from proving any other defenses. 

B. Defendant Will Not Be Subject to Inconsistent Obligations Because of 

Dennis Lan’s Interest in the Note. 

Defendant can be found liable to Plaintiff for breach of contract only if Plaintiff 

proves that Dennis Lan assigned his interest in the Note to Plaintiff. The evidence 

establishing Plaintiff’s right to enforce the Note would disprove Dennis Lan’s right to 

subsequently enforce the Note against Defendant. Moreover, either Dennis Lan or 

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Plaintiff is the current holder of the original Note. Plaintiff may be obligated to pay 

Dennis Lan or Plaintiff, but not both. 

IV. CONCLUSION 

The Federal Rules of Civil Procedure do not require that Cheng-Sun Lan and 

Dennis Lan be joined as parties in this case to protect Defendant’s possible offset against 

its debt based on unliquidated claims against Cheng-Sun Lan and Dennis Lan. After 

obtaining some discovery, Defendant may be able to show that Dennis Lan, not Plaintiff, 

is the real party in interest. Or it may be able to join Cheng-Sun Lan and Dennis Lan as 

counterdefendants in this case or add them as defendants in CV-15-01810-PHX-NVW. 

Meanwhile, this case should proceed in the normal course. 

IT IS THEREFORE ORDERED that Defendant’s Motion to Dismiss or in the 

Alternative Join Required Parties (Doc. 24) as presented is denied without prejudice. 

IT IS FURTHER ORDERED that Defendant file its response to the Complaint by 

December 18, 2015. 

Dated this 25th day of November, 2015. 

Case 2:15-cv-00604-NVW Document 32 Filed 11/25/15 Page 4 of 4