Opinion ID: 169956
Heading Depth: 3
Heading Rank: 2

Heading: Indispensable Party Issue

Text: In his initial motion to dismiss and on appeal, M r. Hipple contends that EPI was a necessary party to this action, and that the district court should have dismissed this action pursuant to Rule 19(b) if joinder of EPI w as not feasible. Rule 19 requires the district court to “first determine whether the absent party is necessary to the law suit and, if so, whether joinder of the absent party is feasible.” Davis v. United States, 192 F.3d 951, 957 (10th Cir. 1999). If joinder -12- is not feasible, the court must then decide “whether in equity and good conscience the action should proceed among the parties before it, or should be dismissed.” Id. at 959. The factors to be weighed by the district court in making this decision are enumerated in Rule 19(b). Generally, we review a district court’s determination under Rule 19 for an abuse of discretion; although, underlying legal conclusions are reviewed de novo. See id. at 957. In this case, however, there are no legal or factual conclusions for us to review . The district court denied M r. Hipple’s Rule 19 motion summarily and without prejudice based on the Receiver’s representation that he intended to add IPA as a defendant in an amended complaint. After the amended complaint was filed, no one appears to have raised the issue of whether the law suit could proceed without EPI. Therefore, the district court never addressed the merits of M r. Hipple’s argument that EPI is both necessary and indispensable, which are questions that we have held should be decided by the district court in the first instance. See Davis, 192 F.3d at 961 (declining to perform the fact-finding function reserved for the district court to reach issue of indispensability under Rule 19). 3 3 W hile M r. Hipple’s neglect in failing to raise this issue in his second motion to dismiss might be blamed for the lack of a review able decision as to EPI’s status under Rule 19, we cannot conclude that the issue has been waived. See, e.g., Symes v. Harris, 472 F.3d 754, 760 (10th Cir. 2006) (“The issue of indispensability, generally, is not waivable, and is one which courts have an independent duty to raise sua sponte.”). -13- M r. Hipple has argued, and testified at his deposition, that after he arrived at M errill Scott, EPI became a completely separate entity, which M errill Scott and then IPA serviced pursuant to certain contracts. He further testified that clients had a direct relationship with EPI and made payments directly to EPI, which then compensated IPA for its services. The Receiver disputes that EPI was independent of M errill Scott, but nonetheless contends that M r. Hipple converted EPI’s earnings for the benefit of IPA and ultimately CGI. Either way it is clear that funds earned by EPI were ultimately transferred out of EPI and that EPI was eventually forced into bankruptcy. This alone is enough to convince us of the possibility that EPI may “claim[] an interest relating to the subject of [this] action.” Fed. R. Civ. P. 19(a). W hether it does, whether its interest is protected, and whether its absence leaves any of the defendants at risk of double or inconsistent obligations are fact questions that the district court is obligated to examine in the first instance. See Davis, 192 F.3d at 961. W e decline to undertake such a fact-intensive inquiry. Accordingly, we remand to the district court to conduct an analysis of all the factors articulated in Rule 19 and to make a review able determination as to whether EPI is an indispensable party in this action. On remand, it shall be M r. Hipple’s burden to establish that EPI has an interest relating to the Receiver’s claims. See id. at 958. -14-