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Brosnahan v. Pozgay

January 17, 2007

KATHERINE N. BROSNAHAN, AN INDIVIDUAL, PLAINTIFF,
v.
JON R. POZGAY, AN INDIVIDUAL, DEFENDANT.



The opinion of the court was delivered by: Hon. Dana M. Sabraw United States District Judge

ORDER GRANTING DEFENDANT'S MOTION TO DISMISS

[Doc. No. 7]

This matter comes before the Court on Defendant Jon R. Pozgay's motion to dismiss for failure to join indispensable parties under Fed.R.Civ.P. 19. On December 8, 2006, Plaintiff Katherine N. Brosnahan filed her opposition, and Defendant filed his reply on December 15, 2006. The matter was heard on January 5, 2007, at which time Plaintiff was represented by counsel and Defendant appeared pro se. Having considered the arguments and papers submitted by the parties, the Court GRANTS Defendant's motion to dismiss.

I. BACKGROUND

This case involves a debt collection matter between family members. Plaintiff Katherine N. Brosnahan (a.k.a. Kate Spade) is Defendant's former sister-in-law, i.e., Defendant was married to Plaintiff's sister Michele (Pozgay) Brosnahan. While Defendant and Michele were married, Plaintiff and her husband Andrew Spade lent them money on three separate occasions, totaling $345,000. The complaint alleges on June 15, 1999, in exchange for $25,000, Defendant signed a note promising to pay Plaintiff "upon demand" the borrowed sum plus interest at the annual rate of nine percent. (Complaint at 1.) On June 28, 1999, Defendant signed a second promisory note for an amount of $20,000. (Id. at 2.) On October 12, 1999, Defendant signed the third promisory note for $300,000. (Id.) Both the second and third promissory notes contain the same terms as the first note. On June 28, 2006, Plaintiff demanded that Defendant make payments on all the notes. (Complaint at 2.) On July 20, 2006, Defendant informed Plaintiff he was not liable for the promissory notes.

Defendant's moving papers state the following relevant facts. The promissory notes were made in Phoenix, Arizona and are payable jointly to the order of "Andrew and Kate Spade." (Memorandum of Points and Authorities in Support of Defendant's Motion to Dismiss by Reason of Failure to Join Indispensable Parties ("Motion") at 2.) At the time the "monies were paid and promissory notes executed, Defendant was married to" Michele. (Id. At 3.) As such, if the notes are valid and enforceable they are, according to Defendant, "community obligations." (Id.) "No part of the alleged transactions took place in California," and no interested parties resided in California when the transactions took place. (Id. at 3.) Michele resides in Arizona, and Plaintiff and her husband reside in New York. (Id. at 4.) Defendant and Michele resided in Arizona during the entirety of their 26 year marriage. Defendant was served with this action at his condominium rental in Del Mar, California, although he lives in Nevada. (Id.)

In 2003, Michele initiated divorce proceedings in Maricopa County, Arizona. (Motion at 3.) During the proceedings, Defendant and Michele entered into a stipulation making Michele solely responsible for the promissory notes at issue, in return for Defendant's quitclaim of his interest in the community residence. (Id. at 3-4.) On May 30, 2006, the stipulation was confirmed by the arbitrator retained to adjudicate the divorce. (Id. at 4.) At the hearing in this matter, Defendant represented that the divorce would be finalized within a matter of days, and that Michele had prepared an order for the Arizona court to sign confirming that Michele alone bears responsibility for the notes in question.

II. DISCUSSION

A. LEGAL STANDARD

A rule 12(b)(7) motion to dismiss for failure to join a party will be granted only if the court determines: (1) joinder of the party is not possible, and (2) the party is "indispensable." Shermoen v. United States, 982 F.2d 1312, 1317 (9th Cir. 1992). "To determine whether a party is "indispensable" under Fed.R.Civ.P. 19, a court must undertake a two-part analysis: it must first determine if an absent party is 'necessary' to the suit; if [the party is necessary but] cannot be joined, then the court must determine whether the party is 'indispensable' so that in 'equity and good conscience' the suit should be dismissed." Makah Indian Tribe v. Verity, 910 F.2d 555, 558 (9th Cir. 1990).*fn1

An absent party is "necessary" under Rule 19(a) when:

(1) in the person's absence 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.

Fed.R.Civ.P. 19(a). If a necessary party cannot be joined, the court must consider four factors under Rule 19(b) to determine if that ...


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