a

Boelter argues that Abrams is a necessary party under all three
provisions of Rule 19(a).
A. Rule 19(a) (1)

First, Boelter argues that Abrams is a necessary party under
19(a) (1) because complete relief cannot be accorded without the
presence of Abrams. Boelter states that it has significant
counterclaims against BEC and thus, without joining Abrams, it
cannot be accorded complete relief. This argument is wrong for two
reasons. First, Boelter may be able to assert against Byczek as
assignee of BEC’s chose in action some or all of the counterclaims
it has against BEC. See First Nat’l Bank of Boston (Int’l) v.
Banco Nacional de Cuba, 658 F.2d 895, 902 (2d Cir. 1981) (“When a
plaintiff sues on a claim as an assignee, the defendant may assert
a counterclaim against the assignee based on a right of action
against the assignor.”). Second, to the extent that Boelter has
claims against BEC that cannot be asserted as counterclaims against
Byczek as assignee, this fact does not make Abrams a necessary
party under 19(a)(1). Rule 19(a) (1) refers to according complete
relief among those already parties. Here, only Byczek and Boelter
are already parties. The fact that Boelter has claims against BEC
that might be more conveniently litigated in the pending suit than
in a separate suit does not make Abrams a necessary party under
19(a) (1). See Morgan Guar. Trust Co. of New York v. Martin, 466

F.2d 593, 598 (7th Cir. 1972).



y

Wymer v. Wymer, 16 B.R. 497, 505 (9th Cir. 1980) (“[A]n assignor
{may not] maintain action on a claim after making an absolute
assignment of it to another.”). Because neither Abrams nor the BEC
creditors may maintain separate actions against Boelter on this
chose of action, Boelter is not subject to a substantial risk of
incurring. multiple or otherwise inconsistent obligations in the
absence of Abrams. Abrams is thus not a necessary party under Rule
19(a) (2) (ii).
IV. Conclusion

Because Boelter does not have standing to contest the validity
of the assignment agreement, the assignment is presumed valid and
Byczek is the proper party to bring the BEC claims. Further,
Abrams is not a necessary party to this litigation.? Boelter’s

motion to dismiss counts I and III-VII is therefore Dmnrep.

ENTER 0! 3

Coie L Bach

Elaine E. Bucklo
United States District Judge

Dated: November XY , 2002

? Even if Abrams were a necessary party, before I could
dismiss the BEC counts for failure to join him, Boelter would need
to show that his joinder is infeasible under Rule 19(a) and that he
is indispensable under Rule 19(b). Boelter fails to address either
of these issues.



of BEC, he may seek to secure his own recovery at the expense of
lower creditors of BEC. Boelter argues that these conflicts make
the assignment of the chose in action to Byczek invalid. Further,
in its reply brief, Boelter argues that the assignment was a sham
and should therefore be disregarded. Whatever merit there is to
these claims, they are claims that only the BEC creditors, not
Boelter, may raise. Boelter lacks standing to challenge the
validity of the assignment. See Liu v. fT & H Mach., Inc., 191 F.3d
790, 797-98 (7th Cir. 1999) (finding that a manufacturer lacked
standing to challenge the reassignment from a broker’s associates
back to the broker of a chose of action to recover unpaid
commissions from the manufacturer). For purposes of this
litigation, then, the assignment of the BEC creditors’ chose of
action from Abrams to Byczek is valid, and Byczek is thus the true
party in interest to pursue the BEC claims.
III. Is Abrams a Necessary Party?
Although Byczek is the true party in interest to pursue the
BEC claims, Abrams may still be a necessary party to the
litigation. Under Fed. R. Civ. P. 19(a), a party is necessary if
(1) in that person’s absence complete relief cannot be
accorded among those already parties, or (2) the person claims
an interest relating to the subject of the action and is so
situated that the disposition of the action in the person’s
absence may (i) as a practical matter impair or impede the
person’s ability to protect that interest or (ii) leave any of
the persons already parties subject to a substantial risk of

incurring double, multiple, or otherwise inconsistent
obligations by reason of the claimed interest.


Boelter also argues that complete relief cannot be afforded in
Abrams’ absence because there is a great risk that the BEC
creditors will set aside the assignment and seek to proceed in
their own behalf. Again, this argument relates to the ability to
accord complete relief between a party and a non-party. Such is
not encompassed under 19(a) (1), and is more properly addressed in
a discussion of 19(a) (2) (ii).

B. Rule 19(a) (2) (i)

Second, Boelter argues that Abrams is a necessary party under
19(a) (2) (i) because Abrams, as fiduciary for the BEC creditors, has
an interest in this litigation that would be adversely affected in
his absence. The assignment agreement between Abrams and Byczek
indicates that the BEC estate is to receive the balance of any
recovery from Boelter once administrative expenses and secured
creditors are paid. (Assignment 99 K, 4.) Boelter argues that
disposition of this action in the absence of Abrams would impair
Abrams’ ability to protect the interests of the BEC creditors
because of Byczek’s conflicts of interest with the BEC creditors.
This was a risk knowingly assumed by Abrams, however, when he
assigned the BEC creditors’ chose of action to Byczek. The
assignment agreement indicates that Byczek is pursuing claims
against Boelter on his own behalf (Assignment @1 K, 5), and that
Byczek is the first secured creditor of BEC (Assignment @ G).

Nonetheless, the agreement assigns Byczek “complete discretion with



Minute.Qrdee Form (06/97)

United States District Court, Northern District of Illinois

Name of Assigned Judge Elaine E. Bucklo Sitting Judge if Other
or Magistrate Judge than Assigned Judge
CASE NUMBER 02 C 5185 DATE 11/4/2002
CASE Byezek vs. Boetler Co. Inc., et al.
TITLE

[In the fotlowing box (a) indicate the party filing the motion, e.g,, plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
of the motion being presented.]

MOTION:

DOCKET ENTRY:

(ep) oO Filed motion of [ use listing in “Motion” box above,]

(2) oO Brief in support of motion due

(3) im Answer brief to motion due___. Reply to answer briefdue___.

(4) oOo Ruling/Hearing on___setfor___at

(5) Oo Status hearing[{held/continued to] [set for/re-set for] on__—sset for at

(6) oO Pretrial conference[held/continued to] [set for/re-set for]on__setfor_—ss_at__

(7) Oo Trial[set for/re-set for] on___aat.

(8) oO [Bench/Jury trial] [Hearing] held/continued to ____at

(9) oO This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to}
OFRcP4(m) OLocal Rule 41.1 OOFRCP41(a)(1) [OFRCP41(a)(2).

ao [Other docket entry] | Enter Memorandum Opinion and Order denying defendants’ motion to

dismiss (5-1) counts I and III-VIL.

adi) ff [For further detail see order attached to the original minute order-]

No notices required, advised in open court.
2

No notices required.
quired. number of notices

v Notices mailed by judge’s staff.

Notified counsel by telephone,

Docketing to mail notices.

Mail AO 450 form.

Copy to judge/magistrate judge.

date mailed noise \
courtroom r
MPI deputy’s

initials

Date/time received in
central Clerk’s Office ‘mailing deputy initials



regard to all litigation decisions, strategy, and settlement
authority.” (Assignment 7 3.) Because Byczek has complete
discretion over the litigation of the BEC claims, Abrams’ presence
or absence from this action is immaterial to his ability to protect
the BEC creditors’ interests.’ Abrams ability to protect the
interests of the BEC creditors is thus not impaired or impeded, and
he is therefore not a necessary party under 19(a) (2) (i).
C. Rule 19(a) (2) (ii)

Finally, Boelter argues that Abrams is a necessary party under
19(a) (2) (ii) because, absent Abrams, any disposition will not be
binding on the BEC creditors, and Boelter thus runs the significant
risk that the BEC creditors will be able to bring subsequent suits
against it. This claim is simply wrong. Because for purposes of
this litigation the assignment agreement is valid, Byczek is the
real party in interest to pursue BEC claims against Boelter. Thus,
neither Abrams nor any BEC creditor will be able to pursue a claim
against Boelter relating to this chose in action. See Falvey v.
Foreman-State Nat’l Bank, 101 F.2d 409, 415 (7th Cir. 1939
(holding that assignor of a cause of action could not maintain suit

against defendant because assignee was the real party in interest);

1 If the assignment itself represents a failure to protect the
BEC creditors’ interests, Abrams may be liable to the BEC creditors
for a breach of fiduciary duty. Whether Abrams breached his
fiduciary duty to the creditors, however, is not relevant to the
present determination of whether Abrams is a necessary party in
this action between Byczek and Boelter.

6


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

JOHN L. BYCZEK,
Plaintiff,

v.
No. 02 C 5185
THE BOELTER COMPANIES, INC., a
Wisconsin corporation, and F.
WILLIAM BOELTER,

Defendants.

DOCKETED

MEMORANDUM OPINION AND ORDER wov 95 2002

I. Background

Plaintiff John L. Byczek (“Byczek”) was president and sole
shareholder of Byzcek Equipment Company (“BEC”). In May 2001, BEC
entered into an asset purchase agreement with defendants The
Boelter Companies, Inc. and its president F. William Boelter
(collectively “Boelter”). According to the agreement, Boelter was
to purchase BEC and create a new company to carry on its
operations. Boelter allegedly breached this agreement. In July
2001, all of BEC’s assets were assigned to David Abrams, Abrams &
Jossel Consulting, Inc. (“Abrams”), as assignee for the benefit of
creditors of the estate of BEC. In January 2002, Abrams assigned
BEC’s chose in action for claims relating to the May 2001 agreement
to Byczek. Byczek filed this suit against Boelter in Illinois
state court, making six claims as assignee of BEC’s claims (counts

I and III-VII), and one claim on his own behalf (count If).



Boelter removed the case to federal court pursuant to 28 U.S.C.
§§ 1441 and 1332. Boelter now moves to dismiss the BEC counts for
failure to state a claim pursuant to Fed. R. Civ. P. 12(b) (6) or
for failure to join Abrams as a necessary party pursuant to Fed. R.
Civ. P. 12(b) (7). I deny the motion.

Boelter makes two arguments for dismissal. First, it argues
that the assignment of BEC’s chose of action from Abrams to Byczek
was invalid, and Abrams thus retains the chose in action. In that
case, Abrams, not Byczek, is the true party in interest and the BEC
counts must be dismissed if he is not joined to pursue them.
Second, Boelter argues that even if the assignment was valid,
Abrams is still a necessary party to the litigation of the BEC
counts, and failure to have him joined should result in dismissal.

II. Is the Assignment from Abrams to Byczek Valid?

Boelter is correct in stating that if the assignment from
Abrams to Byczek was invalid, Byczek cannot pursue the BEC claims.
It argues that the assignment is invalid because Abrams, as a
fiduciary to the creditors of BEC, could not assign the creditors’
chose in action to Byczek because Byczek has significant conflicts
of interest with the BEC creditors that preclude such an
assignment. First, because Byczek is pursuing a direct claim
against Boelter on his own behalf, he would not be able to
adequately represent the interests of BEC creditors in the same

litigation. Second, because Byczek is the first secured creditor