United States District Court, M.D. Pennsylvania
LAMAR ADVANTAGE GP COMPANY, LLC and LAMAR CENTRAL OUTDOOR, LLC Plaintiffs
GERARD JOYCE Defendant
D. MARIANI UNITED STATES DISTRICT JUDGE
issue that has been placed before this Court is whether the
action of Plaintiffs, Lamar Advantage GP Company, LLC, and
Lamar Central Outdoor, LLC, (hereinafter "Lamar" or
"the Lamar Plaintiffs") must be dismissed pursuant
to Federal Rule of Civil Procedure 19 for failure to join
Landmark Infrastructure Holding Company, LLC, Bank of
America, N.A., and Wilmington Trust National Association, who
are the assignees of certain leases between Defendant Joyce,
as lessor, and Lamar, as the assignee of Chancellor Media
Corporation. For the reasons that follow, the Court finds
that the assignees of Joyce are indispensable parties whose
joinder would destroy complete diversity as among the parties
to this action, therefore requiring that Lamar's
complaint, and the entirety of the action, be dismissed.
order to engage in the required analysis of this issue, the
procedural history of this case must be recounted.
3, 2013, Lamar filed suit against Gerard Joyce, individually,
Lofts at the Mill, LP, and Lofts GP, LLC (Doc. 1).
31, 2013, the action against Lofts at the Mill, LP and Lofts
GP, LLC, was dismissed without prejudice pursuant to a
stipulation between the Plaintiff and all Defendants (Doc.
November 4, 2013, this Court granted Lamar's Motion for
Leave to File an Amended Complaint in this case. (Doc. 20).
Defendant Joyce then moved to dismiss the Amended Complaint.
(Doc. 23). The matter was fully briefed and this Court, by
Order dated June 16, 2014 (Doc. 33) denied Defendant's
motion to dismiss. In the Memorandum Opinion accompanying
this Court's Order, the Court referenced the allegations
of Lamar's Amended Complaint, specifically that on
October 23, 1998, Chancellor Media Corporation
("Chancellor") and Defendant Joyce entered into a
Settlement Agreement and Mutual Release
("Agreement") (Doc. 32, at 2). The Settlement
Agreement and Mutual Release whose provisions were alleged in
the Amended Complaint to have been breached, is of record in
this case (Doc. 85-2).
2D of that Agreement provides as follows:
Joyce agrees not to compete with Chancellor, either
separately or in association with others, as an owner,
employee, manager, operator, principal, partner, officer,
director, share-holder, consultant, representative, agent,
investor or private individual in connection with any outdoor
advertising business in the greater Scranton/Wilkes-Barre
Pennsylvania area and the greater Hartford-Connecticut area
for a period of thirty (30) years from the date of this
Agreement. The greater Scranton/Wilkes-Barre area shall mean
the counties of Lackawanna, Luzerne, Wayne, Pike, Wyoming,
Susquehanna, Monroe, Carbon and Schuylkill. For purposes of
this Agreement, outdoor advertising business shall mean the
construction, ownership and/or leasing of bulletins and
poster panels, including the sale of advertising on the same
and the leasing of land for the purposes of construction or
maintaining bulletins and poster panels, except as
contemplated in this Agreement. Notwithstanding the
foregoing, Joyce shall not be prohibited from: (i)
constructing, owning and leasing a sign structure and outdoor
advertising thereon on property owned by Joyce between Exits
55 and 56 on Interstate 81 which structure will be a 660'
setback structure; and (ii) purchasing properties on which
bulletin boards or poster panels are located at the time of
such purchase, provided that the pre-existing lease
agreements for such bulletins or poster panels, in effect at
the time of such purchase shall remain in effect, for a
period of thirty (30) years from the date of Joyce's
purchase of such property and shall be honored by Joyce for
the said thirty (30) year period (this language is understood
by the parties to expressly include the rental amounts as
stated in such preexisting leases at the time of Joyce's
purchase of any such property); or (iii) owning not more than
five percent (5%) of the outstanding shares of any
publicly-held corporation engaged in the outdoor advertising
business. For purposes of this subsection 2D, the term Joyce
shall include any corporation, partnership or other business
entity in which Joyce has an ownership interest.
(Doc. 85-2 at 4-5).
moved to dismiss Lamar's Amended Complaint on a single
basis - that the Agreement bars competition only with
Chancellor, not Joyce. (Doc. 24, at 8).
Court denied Joyce's motion to dismiss on the following
Since the Amended Complaint alleges that the Agreement
contains a successors and assigns clause (Paragraph 7B),
Plaintiff satisfactorily pleads that Agreement obliges
Defendant to comply with its provisions, including the
non-compete clause of paragraph 2D, for the benefit of
Plaintiff as the successor and assignee of Chancellor.
(Doc. 32 at 5).
filed a Second Amended Complaint on December 23, 2014. (Doc.
55). Attached to the Second Amended Complaint is a document
entitled "Intercompany Transfer and Assignment."
(Doc. 55-1, Ex. K). That agreement recites that as of August
11, 1999, "Lamar Media Corp. acquired (directly or
indirectly) ownership of all subsidiaries of the Chancellor
Sellers then holding outdoor advertising assets
(collectively, 'Chancellor Outdoor Subsidiaries'),
and as a result Lamar Media Corp. acquired all outdoor
advertising assets and operations of the Chancellor Outdoor
Subsidiaries located in the Scranton, Pennsylvania
metropolitan area (collectively 'Chancellor's
Scranton Area Outdoor Assets')". Lamar Central
Outdoor, LLC, as assignor, then assigned all of its
"right, title and interest in, to and under
Chancellor's Scranton Area Outdoor Assets (and the
Agreement), to" Lamar Advantage GP Company assignee.
assignment between Lamar Central Outdoor, LLC, and Lamar
Advantage GP Company, LLC, was undertaken because a prior,
written assignment between these parties had not been located
and according to this transfer agreement "Lamar Media
Corp. desires that Assignor perfect the assignment of the
Chancellor's Scranton Area Outdoor Assets (including the
Joyce agreement) to Assignee herein." [Id.).
the claims of Lamar that Joyce had violated the non-compete
provisions of the Settlement Agreement and Release entered
into by Joyce and Chancellor which had been assigned to
Lamar, Lamar filed a motion for partial summary judgment on
January 22, 2015. (Doc. 58). Previously, Joyce had filed a
motion for summary judgment on September 26, 2014. (Doc. 38).
These motions were referred to Magistrate Judge Carlson for a
Report and Recommendation ("R&R").
Carlson issued his R&R on August 28, 2015. (Doc. 66).
Judge Carlson recommended that "Lamar's motion for
summary judgment (Doc. 58) be granted but only insofar as it
seeks a legal judgment that it is the successor-in-interest
to Chancellor and entitled to seek enforcement of its rights
under the 1998 Settlement Agreement." (Id. at
23). In all other respects, Judge Carlson recommended that
Lamar's motion be denied and that, likewise, the motion
for summary judgment of Joyce also be denied.
Court, by Order dated September 15, 2015 (Doc. 67), and in
the absence of objections from either plaintiffs or
defendant, adopted the R&R, granted plaintiffs'
motion for partial summary judgment insofar as it sought a
judicial determination that the plaintiffs are legally
entitled to seek enforcement of the Settlement Agreement that
provides the basis for this action. This Court further ruled
that "[a]s a matter of law, Plaintiffs have standing to
enforce their rights under the 1998 Settlement Agreement as
successor-in-interest to Chancellor's rights."
(Id. at 2). The plaintiffs' motion was denied in
all other respects and the defendant's motion for summary
judgment was likewise denied.
Order dated September 23, 2015, trial was scheduled to begin
in this case on February 22, 2016, and a final pretrial
conference was set for February 12, 2016. (Doc. 70). In
accordance with this Court's scheduling order, the
parties filed pre-trial memoranda on February 8, 2016. (Docs.
Joyce's pre-trial memorandum made several assertions,
including that Joyce took no action that violated the terms
of the non-compete provisions set forth in the Settlement
Agreement and Mutual Release. (Doc. 94, at 6-8). Joyce also
presented his contentions that he did not engage in a
material breach of the non-compete provisions of the
Settlement Agreement and Mutual Release. (Id. at
addition, Joyce responded to the position taken by the
plaintiffs that it was their intention to rescind the
Settlement Agreement and to terminate the Site Leases and
Facility Lease entered into as part of the Settlement
Agreement by Joyce and Chancellor, with Chancellor's
interest having been assigned to Lamar. [Id. at
11-13). Lamar had contended that Joyce's violation of the
non-compete provisions of the Agreement constituted a
material breach which excused Lamar from further performance
under the Agreement. In response, Joyce argued that the site
leases and facility lease had been assigned by Joyce or his
companies to entities, who, if joined as defendants, would
destroy complete diversity as between the plaintiffs and
Joyce, and thus deprive the Court of jurisdiction.
Joyce's pre-trial memorandum stated in part:
However, if Plaintiffs establish a material breach of the
Agreement and if they elect to rescind the Agreement, it is
anticipated that they may seek to have the Site Leases and
the Scranton Facility Lease ("Facility Lease")
declared void. The Court does not have jurisdiction over such
a claim since its determination implicates indispensable
parties that are not parties to this litigation. Joyce's
interests under some of the Site Leases and the Facility
Lease have been assigned to third parties ("Third Party
Assignees") and were assigned to Third Party Assignees
at the time of filing this action and Plaintiffs were aware
of the same.
(Id. at 12).
issue of the non-joinder of indispensable parties having been
raised by Joyce, the Court, at the pretrial conference,
engaged in a discussion of the issue with counsel for the
parties. At the pretrial conference, an attempt was made to
identify the entities to which Joyce had assigned the Site
Leases and Facility Lease. Among the assignments which were
identified as being currently in effect were assignments to
Bank of America and Landmark Dividend. Counsel for Lamar
confirmed Lamar's position that if it were successful in
this action, it intended to terminate the Site Leases and
Facility Lease which Joyce had assigned to Bank of America
and Landmark Dividend. Counsel for Joyce described the nature
and purpose of these assignments as follows:
Mr. Weinschenk: Landmark Dividend is probably a private
equity company that purchases billboards, long-term leases
from individuals and gives them cash. They take an assignment
of that lease for the remainder of the term, and then when
the term is up, the lease goes back to the original --
The Court: So Landmark fully expects they would get the
benefit of that lease over its term.
Mr. Weinschenk: That's correct.
(Off. Pretrial Tr., Feb. 12, 2016, at 10).
extended discussion as to the application of Federal Rule of
Civil Procedure 19, as well as a discussion of Lamar's
knowledge of the assignment of these leases occurring after
the commencement of this litigation (id. at 10-15),
the Court inquired as to whether Lamar would agree that the
leases which had been assigned to the non-diverse third
parties would be unaffected by any verdict or judgment in
Lamar's favor. Counsel for Lamar did not agree to such an
The Court: ... But in any event, my suggestion here would be
that we have to postpone this trial and allow you to join
these people. I really do not see a way out of that, other
than you committing - it would have to be, again, formally on
the record, perhaps, even in documentary form from your
client -.-that these leases would be unaffected by
any verdict or judgment in your favor.
Mr. McDonough: No.
The Court: And you can't do that.
Mr. McDonough: We can't do that.
Court's Order entered February 12, 2016 (Doc. 99),
immediately following the pretrial conference, summarizes the
issue of joinder of the non-diverse third party assignees as
raised in the defendant's pretrial memorandum and as
discussed at the pretrial conference. The Order granted
Plaintiff thirty days "to make a determination of all
assignees of the Lamar-Joyce leases who shall be joined as
Defendants in this matter, as well as to identify any other
indispensable parties, who shall likewise be joined ('the
Supplemental Discovery Period')." (Id. at
Order further granted Plaintiffs an additional thirty days
"from the expiration of the Supplemental Discovery
Period ... within which to effect the joinder of all
indispensable parties." (/of. at ¶ 3).
the February 12, 2016, Order of this Court provided that
within sixty days of the date of the Order, "Plaintiff
shall submit of record a report of any assignee or other
indispensable party whose joinder will deprive the Court of
its jurisdiction. If any such indispensable parties exist,
the parties shall have fourteen (14) days from the date on
which Plaintiff submits its report to file briefs in support
of their respective positions as to 'whether, in equity
and good conscience, the action should proceed among the
existing parties or should be dismissed, ' Fed.R.Civ.P.
19 (b), pursuant to Federal Rule 19 and applicable case
law." (Id. at ¶ 4).
Order dated March 4, 2016, the Supplemental Discovery Period
was extended to April 14, 2016, and Plaintiffs were granted
until May 14, 2016 "to effectuate the joinder of
indispensable parties" as well as "to submit a
report to the Court identifying the assignees and/or
indispensable parties whose joinder will deprive the Court of
its jurisdiction in this matter." (Doc. 102, at
¶¶ 2, 3). The parties were further granted 14 days
from the date Plaintiffs submitted the aforementioned report
to file briefs on the issue of whether, "in equity and
good conscience, the action should proceed among the existing
parties or should be dismissed .. ."(Id..
10, 2016, the Lamar Plaintiffs moved to amend their Second
Amended Complaint to permit the addition of certain
"Joyce affiliated entities" who were identified as
Lofts at the Mills, LP., Lofts GP, LLC, AMB Investments of
Pennsylvania, Inc. and May Acquisition, LLC. (Doc. 104).
Thus, the Lamar Plaintiffs sought leave to file the Third
Amended Complaint attached to their motion (Doc. 104-1).
motion seeking leave to file a Third Amended Complaint,
The Lamar Entities now seek to include the parties which it
previously stipulated to dismiss without prejudice, as well
as AMB Investments of PA, Inc., (a closely held Joyce entity)
as well as May Acquisition, an entity recently formed by
Joyce and an assignee of a site lease subject to the 1998
Settlement Agreement. These joinders will not destroy this
Honorable Court's jurisdiction and will permit a merits
determination as to the issues which have been pending in
this Court for nearly three years.
(Doc. 104, at ¶ 12).
same motion, the Lamar Plaintiffs asserted that "Joyce
had also made an assignment of the lease payments for the
Scranton facility lease which was at issue in this litigation
on February 24, 2015. The assignment of the facility lease
was to Bank of America, N.A. Bank of America, N.A. in turn
assigned its interest in the leases and rents subject to the
1998 Settlement Agreement to Wilmington Trust, National
Association on August 5, 2015." (Id. at ¶
9). The Lamar Plaintiffs, however, did not seek in their
motion for leave to file a Third Amended Complaint leave to
add Bank of America, Landmark Infrastructure Holdings
Company, LLC ("Landmark") or the Wilmington Trust.
Plaintiffs, in their brief in support of their motion to file
a Third Amended Complaint (Doc. 107) offered:
The entry of an Order to permit the filing of the Third
Amended Complaint will accomplish the objectives and conform
with the procedure outlined by this Honorable Court in its
February 12, 2016 Order. Consistent with that Order, Lamar
will advise the Court as to the assignees not sought to be
joined that will deprive this court of its jurisdiction.
Under this procedure, this court can retain jurisdiction in
order to make the requisite finding under F.R.C.P. 19(a) and
F.R.C.P. 19(b), if necessary.
(Id. at 6).
filing by the Lamar Plaintiffs of a motion for leave to file
a Third Amended Complaint without joining the non-diverse
third party assignees of Joyce prompted this Court to issue
an Order on May 23, 2016. (Doc. 112). In that Order, this
Court noted that "the submissions thus far from
Plaintiffs have not complied with the framework set forth in
the Court's Order for identifying the 'assignee or
other indispensable party whose joinder will deprive the
Court of its jurisdiction [i]f any such indispensable parties
exist.'" [Id. at 1). The Court's Order
Until the issue of the necessary joinder of any indispensable
party is resolved, the Court will not consider
Plaintiffs' Motion to Add Additional Parties (Doc. 104)
in that a review of the documents submitted reveals no
attempt to join any indispensable party listed in Plaintiffs
letter to the Court on May 13, 2016.
(Id. at 2).
letter of counsel for the Lamar Plaintiffs dated May 13, 2016
(Doc. 108) identified "the following potential parties
as assignees of Joyce/Lofts/ABM Investments of Pennsylvania,
Inc., and May Acquisition, LLC, as assignees of those
entities: (1) Landmark Infrastructure Holding Company, LLC;
(2) Bank of America, N.A., and (3) Wilmington Trust, National
Association, As Trustee for Morgan Stanley Bank of America
Merrill Lynch Trust 2015-C24, Commercial Mortgage
Pass-Through Certificates, Series 2015-C24."
letter further stated that "[t]he Lamar Entities wish to
inform the Court that they will submit their brief consistent
with the Court's directive which will include analysis
under Federal Rule of Civil Procedure 19 as to whether the
foregoing parties are indispensable so that the Court can
make a determination as to whether it will relinquish
jurisdiction in this matter." (Id.).
for the Lamar Plaintiffs, by letter dated May 31, 2016 (Doc.
113), identified the non-diverse assignees of Joyce whose
joinder, Plaintiffs' counsel acknowledged, would deprive
this Court of jurisdiction over this matter. Specifically,
Plaintiffs' counsel wrote:
In addition to the above identified indispensable parties,
the Plaintiffs identified the following assignees of the
Defendants who the Court may also consider to be
1.Landmark Infrastructure Holding Company, LLC
2.Bank of America, N.A., and
3.Wilmington Trust National Association, as Trustee for
Morgan Stanley Bank of America Merrill Lynch Trust 2015-C24,
Commercial Mortgage Pass-Through Certificates, Series
The three assignees identified above are Delaware entities.
Therefore, the joinder of any of these entities would deprive
the Court of jurisdiction over this matter. For this reason
and in accordance with Fed.R.C.P. 19 (a) and (b), the
Plaintiffs made no attempt to join any of these three
assignees as party Defendants in this matter. However, as
required by Fed.R.C.P. 19 (c), the Plaintiffs set forth in
their proposed Third Amended Complaint (attached as an
Exhibit to their Motion for Joinder) the reasons why they
were not attempting to join the three assignees identified
the Lamar Plaintiffs filed a "Memorandum of Law in
Opposition to Compulsory Joinder of Parties". (Doc.
114). Defendant Joyce, in turn, filed a brief "in
Support of his Position that Dismissal of Plaintiffs'
Claims is Merited since Equity and Justice require Joinder of
Indispensable Parties that Would Deprive the Court of
Jurisdiction." (Doc. 115).
the Court lifting the stay of briefing on Plaintiffs Motion
to Add Parties (Doc. 116), Defendant Joyce filed his brief in
opposition to Plaintiffs' motion to file a Third Amended
Complaint (Doc. 117).
POSITIONS OF THE PARTIES ON THE ISSUE OF WHETHER THE
NON-DIVERSE THIRD PARTY ASSIGNEES OF JOYCE ARE INDISPENSABLE
PARTIES SUCH THAT THEIR JOINDER WOULD DESTROY DIVERSITY
JURISDICTION AND THUS REQUIRE THAT PLAINTIFFS' COMPLAINT
The Position of Defendant Joyce
Brief in Support of his Position that Dismissal of
Plaintiffs' Claims is Merited since Equity and Justice
require Joinder of Indispensable Parties that Would Deprive
the Court of Jurisdiction (Doc. 115), Joyce begins by
asserting that the Lamar Plaintiffs have made it clear to the
Court that they are pursuing rescission of the Settlement
Agreement and that "such rescission would result in
Plaintiffs' termination of the site leases and facility
leases (collectively, the "Leases"), that were
contemplated in the Settlement Agreement and eventually
entered into with Joyce." [Id. at 1). Quoting
Krupa v. Hilcorp Energy I LP, 2014 WL 2506144, at
*13 (W.D. Pa. 2014) and Fluent v. Salamanca Indian Lease
Authority, 928 F.2d 542, 547 (2d Cir. 1991), for the
proposition that "it is well settled that 'in an
action to set aside a lease or a contract, all parties who
may be affected by the determination of the action are
indispensable"', Joyce argues:
If the joinder of any assignee divests the district court of
subject matter jurisdiction (i.e., destroy diversity), the
court must determine whether "in equity and good
conscience" the action should proceed without that
party, or whether the court should dismiss it, "the
absent person being thus regarded as indispensable."
Fed.R.Civ.P. 19(b). If joinder of any of the assignees
precludes the Court from exercising diversity jurisdiction
then the Court may not properly dismiss that assignee and
instead must dismiss the entire action for lack of
subject-matter jurisdiction. Second State Enterprises,
Inc. v. Mid-Atl. Investments, LLC, 2014 WL 4091846, at
*3 (M.D. Pa. August 18, 2014). Put another way, a finding of
indispensability under Rule 19(b) necessitates dismissal for
lack of subject matter jurisdiction. Gen. Refractories
Co. v. First State Ins. Co., 500 F.3d 306, 319 (3d Cir.
(Doc. 115, at 6-7).
Joyce then argues that "each assignee is a party to at
least one of the Leases which Plaintiffs seek to invalidate,
" and that "[i]f a judgment is granted in
Plaintiffs' favor then they intend to terminate the
Leases[; t]ermination of the Leases will directly impact the
rights of the assignees, who are parties to the Leases."
(Id. at 8). Joyce further argues that if the
Plaintiffs are successful they will either "simply cease
making rental payments pursuant to the Leases or Plaintiffs
will notify the assignees of the judgment in this matter and
seek to enforce it as to them. Either of these options
directly implicates the rights of the assignees and more than
likely results in secondary litigation involving Plaintiffs,
the assignees, and potentially Joyce." (Id. at
further argues that the non-diverse third party assignees of
his assignments will be unavoidably prejudiced if this action
were to proceed in their absence. Joyce maintains that if
Plaintiffs are successful in obtaining the rescission of the
Settlement Agreement and the concomitant invalidation of the
Leases entered into under the Settlement Agreement,
termination of those Leases will be to the prejudice of the
assignees whose rights will have been unprotected throughout
the litigation. (Id. at 10).
also contends that should this Court dismiss this action for
lack of complete diversity, the Plaintiffs will have an
adequate remedy in state court since the Settlement Agreement
is governed by Pennsylvania law and all issues as to
necessary and indispensable parties "could be decided in
one matter." This, Joyce argues, "eliminates the
risk of duplicative or inconsistent litigation."
(Id. at 11).
Joyce, in his Brief in Opposition to Plaintiffs' Motion
to File a Third Amended Complaint (Doc. 117), asserts that
Landmark, Bank of America, N.A., and Wilmington Trust are
necessary and indispensable parties under Rule 19
"because they are the present holders of the Leases, and
are entitled to be a party to an action where the validity of
those Leases is being challenged." (Id. at
4-5). Thus, Joyce argues "because these parties are
indispensable and must be joined, such joinder would deprive
this Court of jurisdiction." (Id. at 5).
also defends the timing of his assertion that the non-diverse
third party assignees are indispensable parties, stating
first that Lamar proceeded through the discovery phase of
this case without ever asserting or otherwise indicating that
they intended to seek termination of the Leases if they were
successful in their claims that Joyce engaged in a material
breach of the Settlement Agreement by violating the
non-compete provisions therein. Thus, Joyce argues that he
"did not know of any issue that would potentially
implicate indispensable parties. Upon the first notification
of Plaintiffs' intent to seek rescission of the
Settlement Agreement and resultant intent to terminate the
Leases, Joyce promptly raised the issue of indispensable
parties." (Id. at 5). Joyce also notes that the
failure to join a party under Rule 19(b) is a defect that
"is so basic that it can ...