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MARRA v. BURGDORF REALTORS

December 5, 1989

LAWRENCE MARRA, Sr., Plaintiff,
v.
BURGDORF REALTORS, INC., Defendant



The opinion of the court was delivered by: CAHN

 EDWARD N. CAHN, UNITED STATES DISTRICT JUDGE

 Lawrence Marra, Sr. ("Marra") *fn1" , has filed a complaint alleging that the defendant, Burgdorf Realtors, Inc. ("Burgdorf"), and its agent, Art Morgan, committed fraud and violated portions of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 Pa. Cons. Stat. Ann. §§ 201-1 to 209-6 (Purdon 1971 & Supp. 1989) ("UTPCPL"), and the Pennsylvania Real Estate Licensing and Registration Act, 63 Pa. Stat. Ann. §§ 455.101-.902 (Purdon Supp. 1989) ("RELA"). Burgdorf has moved to dismiss the complaint for failure to state a claim or, in the alternative, for failure to join an indispensable party. For the reasons below, this motion is granted.

 The facts, as alleged in Marra's complaint, are as follows. Marra, a Pennsylvania citizen and resident, has long engaged in the purchase, sale, rental, and development of real property. Complaint, paras. 1, 4. Many of the properties purchased by Marra have been held in trust for members of Marra's family; while they were the titleholders of record, they had executed deeds and other documents to Marra for all such properties. Complaint, paras. 4, 5. All proceeds from the sale of these properties were paid to Marra. Complaint, para. 5. Marra averages several sales each month. Complaint, para. 6.

 In March and April of 1985, Marra listed some properties with Art Morgan, a real estate broker then with Coldwell Banker Real Estate. Complaint, para. 8. The arrangement was ended shortly after. Complaint, para. 9. Sometime later, Morgan became associated with Burgdorf, a corporation incorporated under New Jersey law with its principal place of business in Cherry Hill, New Jersey. Complaint, paras. 3, 10. As a Burgdorf employee, Morgan proposed to Marra that Marra list certain properties with Burgdorf. Complaint, para. 11. Marra declined, advising Morgan that all properties titled in the names of Marra, Jr. and L.M.J., Inc. were in fact owned by Marra and that there was a lis pendens on all Lehigh County property titled in the names of Marra, Jr. and L.M.J., Inc. Id.

 The result is predictable to those who recall King Lear.2 On May 25, 1989, Marra, Jr. telephoned Marra's manager and told him that Morgan had sold two parcels of land titled in Marra, Jr.'s name but in fact owned by Marra. Complaint, para. 12. At least one other property owned by Marra is listed for sale by Burgdorf; though Burgdorf has been apprised of Morgan's conduct, it has made no attempt to prevent Morgan from listing or selling any properties owned by Marra. Complaint, paras. 13, 14.

 Fortunately for Marra, the American legal system spared him the fearful expedient of, Lear-like, wandering madly across the countryside (though he might, of course, have muttered "How sharper than a serpent's tooth it is/To have a thankless child!"). *fn3" Instead, he sued. The action here names Burgdorf as the sole defendant. In the first count, Marra alleges that Morgan's sale and attempted sale of properties owned by Marra constituted "gross negligence, willful fraudulent activity and reckless disregard of Plaintiff's rights." Complaint, para. 16. In the second count, Marra invokes the UTPCPL, averring that Burgdorf's decision to list Marra's properties without Marra's consent was fraudulent and created a likelihood of misunderstanding or confusion, which would violate the statute. Complaint, para. 18. Finally, in the third count Marra maintains that the defendant violated several clauses of section 455.604 of RELA. First, Marra alleges that Morgan, Burgdorf's agent, made "substantial misrepresentations as to the ownership of property." Second, Morgan allegedly made "a false promise of a character likely to influence, p[e]rsuade or induce another person to enter into a contract or agreement when it could not or did not intend or was not able to keep such promise." Third, Morgan pursued "a continued and flagrant course of misrepresentation or made up false promises through a salesperson." Fourth, Morgan made "misleading and untruthful advertising." Fifth, Morgan placed "a 'For Sale' sign on a property without the written consent of the owner or his authorized agent." Complaint, para. 21. Moreover, Marra alleges that Burgdorf failed "to exercise adequate supervision over the activities of their licensed salespersons or associated brokers[,] namely Art Morgan." Complaint, para. 22. *fn4" This court has jurisdiction under 28 U.S.C. § 1332.

 II. DISCUSSION

 A. Failure to Join an Indispensable Party

 Burgdorf argues that Marra, Jr. is an indispensable party to these proceedings because adjudication of this case would necessarily prejudice him, while dismissal would not deny Marra remedies. Since Marra, Jr. is concededly a Pennsylvanian, joinder would destroy diversity. Accordingly, it argues, all counts should be dismissed. This court substantially agrees with Burgdorf, though Marra, Jr. is dispensable from part of Count III.

 Fed.R.Civ.P. 12(b)(7) makes failure to join a party under Rule 19 a basis for a motion to dismiss. Rule 19, in turn, sets up a two-part test. See, e.g., Bank of Am. Nat'l Trust and Sav. Ass'n v. Hotel Rittenhouse Assocs., 844 F.2d 1050, 1053-54 (3d Cir. 1988); Bonar, Inc. v. Schottland, 631 F. Supp. 990, 998-99 (E.D. Pa. 1986). *fn5" First, under Rule 19(a), the court must determine whether the person in question should be joined. The standard is set out in the rule:

 
A person . . . shall be joined as a party in the action if (1) in the 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.

 If the person must be joined but cannot be made a party, then the second part of the test, found in Rule 19(b), must be applied. Field v. Volkswagenwerk AG, 626 F.2d 293, 300 (3d Cir. 1980). Under it, "the court shall determine whether in equity and good conscience the action should proceed among the parties before it, or should be dismissed, the absent person being thus regarded as indispensable." Fed.R.Civ.P. 19(b). The rule lists four factors to consider.

 
First, to what extent a judgment rendered in the person's absence might be prejudicial to the person or those already parties; second, the extent to which, by protective provisions in the judgment, by the shaping of relief, or other measures, the prejudice can be lessened or avoided; third, whether a judgment rendered in the person's absence will be adequate; fourth, whether the plaintiff will have an adequate remedy if the action is dismissed for nonjoinder.

 Fed.R.Civ.P. 19(b). In deciding this motion, the court is, as in Rule 12(b)(6) motions, to consider all well-pled allegations true. Clements v. Holiday Inns, Inc., 105 F.R.D. 467 (E.D. Pa. 1984).

 1. Rule 19(a)

 The first prong of the Rule 19 test requires that this court determine whether, as Burgdorf argues, Lawrence Marra, Jr. is an indispensable party. Burgdorf does not argue that Marra, Jr. is indispensable within the ambit of Rule 19(a)(1); prudently, because Marra, Jr. is not. Marra claims monetary damages arising from various actions of Morgan and Burgdorf. While these might have been instigated by Marra, Jr., who presumably supplied the nameless purchaser of the land in question with what appeared to be good title, Marra claims nothing from Burgdorf that arises directly from any action by Marra, Jr.

  However, Rule 19(a)(2) poses quite a different problem. The rule is intended to ensure that all interested parties have both a chance to affect the outcome of an action and an opportunity to benefit from its finality. Rainbow Trucking, Inc. v. Ennia Ins. Co., 500 F. Supp. 96, 98 (E.D. Pa. 1980). As applied here, the central query is whether it is necessary to determine whether Marra or Marra, Jr. had clear title to the properties in question. If it is, then Marra, Jr. is an indispensable party for that count or part of a count. Under Rule 19(a)(2)(i), Marra, Jr. would be severely prejudiced were this court to rule in Marra's favor without Marra, Jr.'s inclusion. In so doing, this court would have resolved the very issue being litigated in several state court actions. Naturally, there would be no res judicata effect were Marra, Jr. not a party. However, the question under Rule 19(a)(2)(i) is whether such an action may "as a practical matter impair or impede the person's ability to protect that interest." As a practical matter, a decision of this court, though only of persuasive value, would provide support in other litigation for whatever position it espoused. Provident Tradesmens Bank, 390 U.S. at 110; Vasser v. Shilling, 93 F.R.D. 146, 150 (M.D. La. 1982), aff'd mem., 696 F.2d 994 (5th Cir. 1985). Certainly any future federal litigation would be heavily influenced by it. As the Court of Appeals for the Ninth Circuit observed, "Rule 19 speaks to possible harm, not only to certain harm." Aguilar v. Los Angeles County, 751 F.2d 1089, 1094 (9th Cir. 1985); see also McShan v. Sherrill, 283 F.2d 462, 463-64 (9th Cir. 1960) (for title disputes, all interested parties must be joined); F. James & G. Hazard, Civil Procedure § 10.12, at 534 (3d ed. 1985) (nonparty claimants to land should be joined in title disputes). Therefore, Rule 19(a)(2)(i) requires that Marra, Jr. be considered indispensable for any count in which title determination is necessary.

 This court must thus examine the elements of each cause of action presented by Marra to determine whether Marra, Jr. is indispensable as to them and thus whether this court needs to pursue the second prong of the test.

 a. Count I: Fraud, Deceit, and Negligent Misrepresentation

 Marra's claims in Count I for "gross negligence, willful fraudulent activity and reckless disregard of Plaintiff's rights" amount to claims for fraud, deceit, and negligent misrepresentation. The elements of fraud and deceit actions are (1) a misrepresentation, (2) uttered by the defendant (3) with intent that the recipient act on it, (4) resulting in justifiable reliance by the recipient and (5) damages therefrom. New York State Elec. & Gas Corp. v. Westinghouse Elec. Corp., 387 Pa. Supper. 537, 564 A.2d 919, 927 (1989); Woodward v. Dietrich, 378 Pa. Super. 111, 124, 548 A.2d 301, 307 (1988). *fn6" By definition, then, fraud and deceit require that there be a misrepresentation. If Marra, Jr. is the rightful titleholder, then Morgan and Burgdorf acted properly in selling or listing the properties in question. They would have made no misrepresentations. Since it is necessary to determine who owned the properties in question at the times in question, Marra, Jr. is an indispensable party for the fraud and deceit claims.

 In Pennsylvania, which follows the Restatement (Second) of Torts, the elements of negligent misrepresentation are stated as follows:

 
One who, in the course of his business . . . supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.

 Woodward, 378 Pa. Super. at 125, 548 A.2d at 308; Restatement (Second) of Torts § 552 (1977). Again, the information supplied must be false for the plaintiff to maintain a cause of action. Marra, Jr.'s ownership must thus be litigated, and so he is an indispensable party for this ...


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