Opinion ID: 6333570
Heading Depth: 2
Heading Rank: 2

Heading: jurisdiction

Text: We turn now to Simon’s main procedural objections to the trial court’s determination that the Lease and Property Agreements were invalid. 25 25 In addition to his main objections, which he raised at trial, Simon makes two procedural arguments for the first time in this appeal. We deal with them summarily in this footnote. First, Simon argues that because Smith challenged the enforceability of the agreements almost eight years after their creation, her claim is barred by the threeyear statute of limitations for actions on a contract. See D.C. Code § 12-301(7) (2021 Supp.). The short answer to this argument is that it is doomed by Simon’s failure to assert a statute of limitations defense in the trial court. See Mayo v. Mayo, 508 A.2d 114, 115-16 (D.C. 1986) (“A statute of limitation is an affirmative defense which must be asserted in a responsive pleading before the trial court. Failure to plead the limitation defense results in a waiver thereof. A statute of limitations defense, once waived (expressly or by nonassertion), may not be raised by a collateral attack upon an adverse judgment or for the first time on appeal.” (internal citations omitted)); accord In re Spinner, 717 A.2d 362, 366 (D.C. 1998). Allowing a statute of limitations defense to be raised for the first time on appeal is unfair to the opposing party, who may not have made the record it could and would have made had the defense been raised explicitly at trial. In this case, we perceive that Smith might have argued at trial and obtained a ruling that any otherwise applicable statute of limitations did not begin to run when the agreements were allegedly signed in 2010 (or for a long time thereafter), given her professed lack of awareness as to their terms. Second, Simon maintains Smith failed to plead fraud with particularity in her complaint for divorce. As the trial court’s ruling does not rely on fraud as a basis for invalidating the agreements, this argument is irrelevant. 28 A. Jurisdiction to Determine the Validity of the Agreements On the second day of trial, Simon argued, for the first time, that the trial court lacked jurisdiction to determine the validity of the Lease Agreement or the Property Agreement, because Smith had not raised the issue by means of a separate declaratory judgment action or pleading. The judge took this objection under advisement. On the next trial date, the judge began the proceeding by addressing Simon’s objection. The judge noted that, while both parties agreed the Virginia condo was Smith’s premarital property, Simon claimed to have used marital funds to improve it and claimed to have a $170,000 lien on it. He concluded that it would be “irresponsible not to address” the validity of the Property and Lease Agreements under the circumstances. The judge informed the parties that another trial date would be set to further and exclusively litigate the validity of the agreements, and determine what, if anything, Simon was owed under them. When the trial resumed six weeks later, Simon continued to assert what he characterized as a jurisdictional objection to determining the validity of the agreements in the divorce proceeding. The judge again disagreed, concluding that Simon could not undermine the court’s “wide latitude” to distribute property in a 29 divorce action by asserting that any agreement between the parties concerning the Virginia condo would have to be litigated in a different proceeding. We are not persuaded by Simon’s objection. The Lease and Property Agreements were postnuptial agreements concerning the parties’ rights and interests in the Virginia condo. The trial court was statutorily empowered and required, “in the absence of a valid antenuptial or postnuptial agreement resolving all issues related to the property of the parties,” to “assign to each party his or her sole and separate property acquired prior to the marriage,” and to “value and distribute all other property and debt accumulated during the marriage that has not been addressed in a valid antenuptial or postnuptial agreement . . . in a manner that is equitable, just, and reasonable, after considering all relevant factors.” 26 The authority to exercise these powers “in the absence of a valid antenuptial or postnuptial agreement” necessarily includes the authority to determine whether a valid agreement exists in the first place. 27 The trial court’s authority to interpret, modify, enforce, or 26 D.C. Code §§ 16-910(a)-(b) (2021 Supp.) (emphases added). “[T]he trial court has considerable discretion and broad authority in distributing marital property as part of a judgment of divorce.” Barnes v. Sherman, 758 A.2d 936, 939 (D.C. 2000). 27 This is true even where, as Simon contends, the agreements implicate the rights of a third party (i.e., one or both of his Trusts). As long as the third party’s interests are adequately represented, it is an unnecessary “duplication of effort” and 30 invalidate a disputed antenuptial or postnuptial agreement in an action for divorce has repeatedly been upheld. 28 Nor are we persuaded by Simon’s assertions that he was not on notice that the validity of the Lease and Property Agreements would be examined at trial, and that he was prejudiced in his ability to present evidence on the validity of the agreements by the last-minute inclusion of that issue at trial. As we have recounted, Simon had ample notice that the validity of the agreements would be litigated. Smith’s complaint for divorce contained allegations that Simon was exercising control over the Virginia condo with documents of questionable validity and that he “refused to return to [Smith] her premarital property.” It expressly requested that the court award her sole and separate property under D.C. Code § 16-910(a) and value and “not good judicial husbandry” to require a separate proceeding to litigate how that third party’s rights affect the division of property between the divorcing couple. Gore v. Gore, 638 A.2d 672, 676 (D.C. 1994) (internal quotation marks omitted) (holding that a separate proceeding was not required for trial court to impose a constructive trust or other equitable lien on property). 28 See, e.g., King v. King, 579 A.2d 659, 662-63 (D.C. 1990) (“[W]hen parties dispute the meaning of the [postnuptial] agreement, ‘the court must interpret it according to principles of contract law and the court’s statutory responsibilities.’”) (quoting Spencer v. Spencer, 494 A.2d 1279, 1286 (D.C. 1985)); In re Hope, 231 B.R. 403, 413-14 (Bankr. D.D.C. 1999) (“[D.C. Code §] 16-910 contemplates that courts must adjust and apportion property rights (or determine that a valid agreement exists that already does so) ‘in the same proceeding in which the divorce decree is entered.’”) (quoting Argent v. Argent, 396 F.2d 695, 696 (D.C. Cir. 1968)). 31 distribute the couple’s property under D.C. Code § 16-910(b). This was sufficient to put Mr. Simon on notice that the validity of the agreements encumbering the premarital property would be an issue for the court to resolve in the divorce action. Lest there be any doubt, the judge stated in his pendente lite order, five months before the start of trial, that the court would “resolve the issue of ownership and/or control of this [Virginia] condo at trial.” Where Smith alleged that she wanted the Virginia condo free and clear of the agreements, and where Simon countered during the pendente lite hearing and at trial that he had expended significant marital funds and maintained a lien on the Virginia condo, we agree with the trial judge that it would have been “irresponsible not to address” the validity of those agreements. B. The Absence of the GSS Trusts Simon also argues that because the GSS Revocable Trust and the GSS Irrevocable Trust were parties to the Lease and Property Agreements, the judge abused his discretion by holding those agreements invalid in their absence. Simon contends the Trusts were “indispensable” parties subject to mandatory joinder under 32 Superior Court Domestic Relations Rule 19. For the following reasons, we are not persuaded by this contention. 29 Simon raised the issue of the Trusts’ absence with the trial judge for the first time, orally only, on the final day of trial. In the extended discussion that followed, the judge questioned whether a showing had been made that the Trusts actually had an interest in the agreements at issue, what the trustees “could . . . possibly add to 29 Simon also asserts the failure to notify the trustees of the divorce action violated the Trusts’ rights to due process and the District’s Uniform Trust Code, which requires that notice of a judicial proceeding involving a trust “must be given as provided in the applicable rules of civil procedure.” D.C. Code § 19-1301.09(d) (2012 Repl.)). However, while we accept Simon’s standing to assert the rights of the Trusts, he forfeited these claims by failing to raise them in the trial court, see, e.g., Thornton v. Norwest Bank of Minn., 860 A.2d 838, 842 (D.C. 2004) (“It is fundamental that arguments not raised in the trial court are not usually considered on appeal.”). Moreover, as Smith points out, Simon’s due process and statutory notice arguments, and his related claim that the trial court lacked jurisdiction over the Trusts’ agreements, misapprehend the judgment on appeal. The trial court did not purport to enter any judgment against the Trusts or their trustees, and the question whether they should have been joined in the divorce action is appropriately addressed by the inquiry we undertake under Rule 19. That Rule “is designed in no small part to protect” the rights of absent persons “to notice and an opportunity to be heard.” American Univ. in Dubai v. District of Columbia Educ. Lic. Comm’n (“AUD”), 930 A.2d 200, 208 (D.C. 2007); see also BAC Home Loans Servicing, LP v. Buggs, 39 A.3d 1281, 1285 (D.C. 2012) (Rule 19 “does not render the court powerless if an interested party is absent, but grants the court discretion to enter judgment in a fair manner. Thus, failure to join an allegedly indispensable party under Rule 19 does not preclude the trial court from exercising jurisdiction it otherwise has, even where the court's exercise of discretion may have been flawed[.]”) (internal footnote and citation omitted). 33 an evidentiary hearing,” and why, if the Trusts really were indispensable, Simon had not brought the trustees in as witnesses or sought to have them intervene, especially when he “had the notice of this hearing for about a month.” The judge observed that “the person with the most interest here is Mr. Simon and he’s here and he’s represented by counsel”; to the extent the trusts had interests in the case, “[their] interest is going to be parallel to Mr. Simon’s interest.” Simon did not dispute this, 30 nor did he claim he was prejudiced by the absence of the Trusts or a trust representative. Simon’s counsel argued that he had no obligation to notify the Trusts or seek their intervention, as the Trusts were not his clients. He had not spoken with any of the trustees and professed not to know why they had not intervened. He further argued that Simon could not represent the interest of the GSS Revocable Trust himself because he had resigned as a trustee in 2016, and that the trustees could protect the rights of the parties’ children (who, along with Simon, were beneficiaries of one of the trusts). 30 Simon’s counsel merely declined to agree that the trustees would “necessarily” do whatever Simon wanted them to do, if they thought it would be contrary to their fiduciary obligations to “act independently for the beneficiaries of the trust which they . . . served.” As we discuss below, counsel’s demurral on this point does not take account of Simon’s prerogatives as the settlor of a revocable trust. 34 Addressing the issue further after a recess, the judge expressed concern that the “documents of the actual formation of these trusts” had not been produced and he had not been able to review them. The Trust documents were relevant, in the judge’s view, because: the reason we took the break was that [Simon] said that there’s party and interests that are not here, and not represented. I would have to have evidence of that, one that there are other parties and two, that they are indispensable parties in the first place . . . . You’re saying we can’t go forward because there’s parties and interests, maybe and if that’s true, then we’ll get them in or we’ll give them the opportunity to come in. After further discussion, the judge expressed his continuing uncertainty whether the Trusts existed and had an interest of their own in enforcing the Property and Lease Agreements, but said that if it was shown they did, he would give them an opportunity to appear. Simon did not thereafter enter any trust documents into evidence, though he subsequently testified to the establishment of the Trusts in 2009 and the identities of their trustees and beneficiaries. Nor did anyone purporting to represent either Trust ever materialize to claim an interest in the proceeding. The judge did not address the joinder issue again. At the conclusion of Simon’s testimony, though, the judge questioned him about the Virginia condo. When the judge asked whether Smith could sell the 35 property, Simon responded, “[s]he can’t sell it without selling it subject to my lease.” (Emphasis added.) Noting also that the condo was security for a bank loan, Simon then volunteered that he would indemnify her and said, “I would surrender all interest in the property to [Smith]” if she were willing to put it aside for their sons’ college education; “I’ll do it tomorrow and she doesn’t have to pay anything now, she can manage her own property, I’ll assign the [tenant’s] lease . . . to her, she can do whatever she wants to do with that property, its hers, she owns it[.]” (Emphasis added.) In making that declaration, Simon said nothing about the Trusts having any interest in the Virginia condo under the Lease and Property Agreements or having to agree to his relinquishment of the property to Smith. As the party urging that the case could not proceed without the Trusts, Simon bore “the burden of producing evidence showing the nature of the interest possessed by an absent party and that the protection of that interest will be impaired by the absence.” 31 The trial judge was obligated to evaluate the claim and base his decision 31 Citizen Band Potawatomi Indian Tribe v. Collier, 17 F.3d 1292, 1293 (10th Cir. 1994); see also Ilan-Gat Eng’rs, Ltd. v. Antigua Int’l Bank, 659 F.2d 234, 242 (D.C. Cir. 1981); 16th & K Hotel, LP v. Commonwealth Land Title Ins. Co., 276 F.R.D. 8, 12 (D.D.C. 2011). “The moving party may carry its burden by providing affidavits of persons having knowledge of these interests as well as other relevant extra-pleading evidence.” Id. (internal quotation marks omitted). 36 only on the evidence as it “appear[ed] at the time of the proposed joinder.” 32 We review a trial court’s decision that an absentee need not be joined for abuse of discretion, and reverse “only if we find that its exercise of discretion was clearly against reason and the evidence.” 33 We are not persuaded the trial judge abused his discretion by failing to order that the GSS Trusts be joined as parties. “Joinder of necessary parties is governed by Rule 19, which makes it clear that questions of compulsory joinder are to be resolved on the basis of practical considerations.” 34 The question before us comes down to whether Simon demonstrated that the Trusts “claim[ed] an interest relating to the subject of the action and [were] so situated that disposing of the action in 32 Associated Dry Goods Corp. v. Towers Fin. Corp., 920 F.2d 1121, 1124 (2d Cir. 1990). 33 Dist. Cablevision Ltd. v. McLean Gardens Condo. Unit Owners’ Ass’n, 621 A.2d 815, 816 (D.C. 1993) (citing Johnson v. United States, 398 A.2d 354, 363 (D.C. 1979)). 34 Raskauskas v. Temple Realty Co., 589 A.2d 17, 20 (D.C. 1991) (quotation marks omitted); accord, District of Columbia v. Am. Univ., 2 A.3d 175, 184 (D.C. 2010). 37 [their] absence [might] . . . as a practical matter impair or impede [their] ability to protect the interest.” 35 We answer that question in the negative for several reasons. 36 35 Dom. Rel. Rule 19(a) provides that “the court must order the joinder of all indispensable persons.” As it does not define what makes a person “indispensable,” we look for guidance to the corresponding Rule of Civil Procedure, Civil Rule 19(a)(1). See Graves v. Graves, 51 A.3d 521, 526 & n.9 (D.C. 2012); Raskauskas, 589 A.2d at 20 n.2. Civil Rule 19(a)(1) clarifies that a person whose joinder is feasible must be joined as a party if: (A) in that person’s absence, the court cannot accord complete relief among existing parties; or (B) that person claims an interest relating to the subject of the action and is so situated that disposing of the action in the person’s absence may: (i) as a practical matter impair or impede the person’s ability to protect the interest; or (ii) leave an existing party subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations because of the interest. Only subparagraph (B)(i) is in issue here, as neither party before us credibly claims to have been prejudiced in any manner described in the other subparagraphs of Rule 19(a)(1) by the absence of the GSS Trusts from the proceeding. 36 As set forth in Dom. Rel. Rule 19(b), when “a person who is required to be joined if feasible cannot be joined, the court must determine whether, in equity and good conscience, the action should proceed among the existing parties or should be dismissed.” See also Super. Ct. Civ. Rule 19(b). Because we conclude Rule 19(a) did not require joinder of the GSS Trusts, we do not reach the question of whether dismissal or other ameliorative measures set forth in Rule 19(b) were necessary or appropriate. See Associated Dry Goods Corp., 920 F.2d at 1123 (“Unless Rule 19(a)’s threshold standard is met, the court need not consider whether dismissal under Rule 19(b) is warranted.”); see also Raskauskas, 589 A.2d at 20 & n.3. We emphasize, however, that to “facilitate appellate review,” trial judges confronted 38 First, in point of fact, no representative of the Trusts themselves ever did “claim[] an interest” that might have been endangered due to their absence from the divorce action. That the trustees did not seek to participate further signals the likelihood that they were satisfied with Simon’s representation of the Trusts’ interests (if, indeed, the Trusts had any real stake in this case at all). 37 Second, the possibility that the trustees were unaware of the challenge to the Lease and Property Agreements in the divorce action does not suffice to explain away the significance of the trustees’ failure to seek to intervene or otherwise protect the Trusts’ interests. Given that Simon was the settlor of each Trust and either he or his minor children were the beneficiaries, he had every incentive (and ample time) to alert the trustees if he genuinely believed they had an interest in the Virginia condo their presence was needed to protect. If it is true that neither Simon nor his counsel deemed it necessary to notify the trustees and encourage them to intervene to protect with Rule 19 joinder questions ordinarily are “obliged” to consider motions to dismiss for failure to join an indispensable party under all the criteria set forth in subsections (a) and (b) of Rule 19. Id. 37 See, e.g., Smith v. State Farm Fire & Cas. Co., 633 F.2d 401, 405 (5th Cir. 1980) (absent party’s failure to intervene was evidence that, as a practical matter, its interests were not at stake). 39 the Trusts’ interests under the Lease and Purchase Agreements, that only confirms that the Trusts were not necessary parties. Third, after the trial judge expressed skepticism about the existence and bona fide interests of the Trusts and asked to see Trust documents or other verification, those documents were not proffered, nor did Simon call a trustee or other Trust witness to dispel the judge’s doubts. 38 If he could have satisfied the judge’s concerns, it is hard to see why he did not do so unless he thought the Trusts’ joinder would have accomplished nothing. Fourth, as far as the GSS Irrevocable Trust is concerned, the Lease and Property Agreements do not purport to provide it with any interest at stake in this case. The Irrevocable Trust is not a party to the Lease Agreement and has no rights or duties under it. Although it is named as a party in the Property Agreement, it is 38 The existence of such legitimate and unresolved doubts about the absent party’s existence and interests distinguishes this case from cases such as Graves, 51 A.3d at 524-25 (holding that marital home could not be distributed without joining the wife’s absent father where it was established that the father was a co-owner of the marital home), and AUD, 930 A.2d at 207-08 (holding that trial court abused its discretion in failing to join AUD as a party where it was established that AUD stood to lose its educational license, a property interest, and that no existing party had an interest in defending that license). 40 not a signatory thereto and it has no rights or duties under that agreement either. The Property Agreement does not purport to bestow or recognize any property interest in the Irrevocable Trust that is at issue in the present case. 39 Fifth, as for the GSS Revocable Trust, the Lease Agreement did grant it a long-term lease on the Virginia condo, along with an option (now expired) to purchase the condo during the initial ten-year term. But this does not mean the Trust was an indispensable party. Rule 19 compels the joinder of absent persons with an interest in the action in order to avoid any prejudice that may befall them if they cannot assert their interest. 40 The specter of such prejudice dissipates, however, where the absent person’s interests do not diverge from, but rather are shared by, the interests of an existing party. When that is so, the absentee’s participation is not required, as its interests are adequately represented and protected despite its absence. 39 Rather, as mentioned above, the Property Agreement merely confirms Smith’s acquiescence in Simon’s power to alter the status of that Trust as the beneficiary of a life insurance policy on his person. That insurance policy is not involved in the present case. 40 See Graves, 51 A.3d at 526; 4 MOORE’S FEDERAL PRACTICE § 19.03[1] (3d ed., 2020 update). 41 Our decision in District of Columbia v. American University 41 is instructive. In that litigation, American University sued the District of Columbia Educational Licensure Commission and the American University in Dubai (AUD) in Superior Court. Granting summary judgment to the plaintiff, the trial court ordered the Commission to revoke both AUD’s license and the license of AUD’s agent in the District, Mr. Goldstein, who was not a party to the suit. In upholding the revocation of Mr. Goldstein’s license, we rejected the District’s argument that he was a necessary party under Civil Rule 19(a). Pointing out that AUD “has the most to lose from a holding that the Commission abused its discretion in granting Goldstein an agent’s license,” we explained that: Although Goldstein plainly has an interest in this case, his interests and AUD’s interests are for all intents and purposes identical. Therefore, and because AUD adequately represents Goldstein’s interest, Goldstein was not a necessary party. See Ramah Navajo Sch. Bd., Inc. v. Babbitt, 87 F.3d 1338, 1351 (D.C. Cir. 1996) (“If the nonparties’ interests are adequately represented by a party, the suit will not impede or impair the nonparties’ interests, and therefore the nonparties will not be considered ‘necessary.’”); see also Vale Props., Ltd. v. Canterbury Tales, Inc., 431 A.2d 11, 15 (D.C. 1981) (trial court may deny motion to intervene under Rule 24(a)(2) “when an existing party seeks the same ultimate objective as the [absent party]”). This is not a case where the absent party “is without a friend in [the] litigation.” Atlantis Dev. 41 2 A.3d 175 (D.C. 2010). 42 Corp., Ltd. v. United States, 379 F.2d 818, 825 (5th Cir. 1967).[42] In the present case, the GSS Revocable Trust certainly did have “a friend” representing and seeking to protect its interests as much as his own in the Virginia condo. Like AUD in the American University litigation, it is Simon here who “has the most to lose” from the order cancelling the lease of the condo. “[F]or all intents and purposes,” Simon’s interests and the Trust’s interests are identical, and he was an adequate representative of the Trust’s interests. This is so not only because of the management privileges he enjoyed under the Property Agreement, but also — as his trial testimony offering to relinquish the Virginia condo to Smith vividly illustrated — because the trustees of the GSS Revocable Trust owe their allegiance to Simon and are under his direct and total control. Simon is owed such allegiance and has such control because he was the settlor of the GSS Revocable Trust. “While a trust is revocable, rights of the beneficiaries 42 Id. at 185. See also, e.g., Washington v. Daley, 173 F.3d 1158, 1167 (9th Cir. 1999) (“As a practical matter, an absent party’s ability to protect its interest will not be impaired by its absence from the suit where its interest will be adequately represented by existing parties to the suit.”); Ohio Valley Envt’l Coalition v. Bulen, 429 F.3d 493, 504 (4th Cir. 2005) (“A litigant may serve as a proxy for an absent party if the interests of the two are identical.”). 43 are subject to the control of, and the duties of the trustee are owed exclusively to, the settlor.” 43 The trustee of the GSS Revocable Trust is, in effect, Simon’s agent, doing his bidding and carrying out his wishes in dealing with the Trust’s assets, including its lease of the Virginia condo. As the settlor, Simon has the power to instruct the trustee of the GSS Revocable Trust to relinquish whatever interests it might hold in the Virginia condo or otherwise dispose of that property in accordance with Simon’s own obligations or wishes. 44 If Simon exercises that power (in compliance with the trial court’s judgment ordering him to “cease exercising any control over the property immediately”), the trustee must obey his commands. 45 Simon thus was the proxy of the GSS Revocable Trust in this litigation; the Trust could not have asserted 43 D.C. Code § 19-1306.03(a) (2012 Repl.). 44 See RESTATEMENT (THIRD) OF TRUSTS § 74(1)(a)(i) (2007) (The trustee of a revocable trust “has a duty to comply with a direction of the settlor even though the direction is contrary to the terms of the trust or the trustee’s normal fiduciary duties” so long as that direction is made “in writing in a manner by which the settlor could properly amend or revoke the trust.”); see also id. § 74(1)(b) (In a revocable trust, “[t]he rights of the [trust] beneficiaries are exercisable by and subject to the control of the settlor.”). Thus, it is immaterial that persons other than Simon (i.e., his minor children) are beneficiaries of the GSS Revocable Trust. 45 Simon’s legal control over the GSS Revocable Trust also removes any concern that joinder was necessary to enable the court to “accord complete relief among existing parties” or avoid “leav[ing] an existing party subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations.” See Super. Ct. Civ. R. 19(a)(1)(A), (B)(2). 44 interests with respect to the Virginia condo that he himself did not share and seek to protect. Finally, Simon has identified no interest or argument the GSS Revocable Trust, had it been joined, would have asserted that he was incapable of making himself. And there is no serious dispute that Simon did vigorously assert his and the Trust’s interests at trial. 46 We conclude that, as a practical and legal matter, the absence of the Trusts did not impair or impede the protection of their interests. Simon was their wholly adequate surrogate. The trial court therefore did not abuse its discretion by failing to require that the Trusts be joined or that the action be dismissed or truncated. 46 During oral argument before this court, Simon asserted that the Trusts’ representatives could have put on (1) evidence showing that for years, he, Smith, and the Trusts performed under the terms of both agreements and (2) evidence of the value of the Virginia condo. We see no reason why Simon could not have introduced such evidence himself or, as a proponent of the validity of the agreements, might have had no interest in doing so. (In fact, Simon did testify at trial to his performance and appropriate management of the Virginia condo and to its market value.) 45