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Sagi v. Kubik

United States District Court, E.D. Michigan, Southern Division

November 2, 2016

ZEEV SAGI, Plaintiff,
v.
FREDRICK K. KUBIK, Defendant.

          OPINION AND ORDER DENYING “DEFENDANT'S MOTION TO DISMISS, FOR SUMMARY JUDGMENT AND/OR FOR ABSTENTION”

          LINDA V. PARKER U.S. DISTRICT JUDGE

         In this lawsuit, Plaintiff Zeev Sagi (“Sagi”) is suing Defendant Fredrick K. Kubik (“Kubik”) to recover money Sagi paid Kubik “to be utilized as credits against indebtedness on … real property transactions.” (Compl. ¶ 4, ECF No. 1.) Those real estate transactions were not between Sagi and Kubik individually. Instead, they were between “Sagi's business entities” and Kubik's trust. (Id. ¶ 3.) Contending that Sagi's business entities are the real parties in interest in this litigation and that they are necessary and indispensable parties who cannot be joined without defeating the Court's jurisdiction, Kubik moves for dismissal of the action pursuant to Federal Rule of Civil Procedure 19.[1] (Mot., ECF No. 5.) Alternatively, Kubik argues that “this Court should abstain from exercising jurisdiction in deference to contemporaneous state-court proceedings involving the exact same facts and circumstances.” (Id. at Pg ID 84.)

         Factual and Procedural Background

         Sagi is a citizen of California. (Compl. ¶ 1, ECF No. 1.) Kubik asserts, and Sagi does not dispute, that Sagi is the sole member of several Michigan limited liability companies: ASAF, LLC; The Home Apartments, LLC (“Home Apartments”); and Matan Real Estate, LLC (“Matan”) (collectively “LLCs”). Kubik is a citizen of Michigan. (Compl. ¶ 2, ECF No. 1.) He is the settlor and principal member of the Frederick L. Kubik Revocable Trust (“Trust”).

         The LLCs entered into land contracts to purchase apartment buildings from the Trust. (Mot., ECF No. 5, Exs. 2-4.) Alleging non-payment and other breaches of the contracts, the Trust filed separate forfeiture actions against each of the LLCs in Michigan state courts. (Id. Exs. 5-7.) According to Kubik, in each of the forfeiture actions, ASAF, Home Apartments, or Matan argued that it made the payments required under the applicable land contract. As proof, each LLC offered the documents attached as Exhibit A to Sagi's current Complaint. (Compl., Ex. A, ECF No. 1; see also Resp., Ex. E, ECF No. 7-6.) The documents include checks written by Sagi to Kubik, totaling $103, 000. (Id.) After a hearing in the actions against Matan and ASAF and a bench trial in the case against Home Apartments, Michigan state court judges entered judgments of possession after land contract forfeiture against each of the LLCs. (Mot., Exs. 5-7.)

         Sagi filed the instant lawsuit seeking to recover the $103, 000 he paid to Kubik. In his Complaint, Sagi alleges that Kubik improperly converted this money for purposes other than making payments on the land contracts. (See Compl. ¶ 17, ECF No. 1.) Sagi further alleges that Kubik's handling of the money constituted a breach of contract and/or unjust enrichment. (Id. ¶¶ 19-28.)

         Applicable Law and Analysis

         Joinder

         Rule 19 establishes a three-step process for a court to decide whether an absent party must be joined in the litigation. Fed.R.Civ.P. 19. First, the court must determine whether the absent party is a necessary party under Rule 19(a). If it is, the court next must decide whether joinder is feasible, or if a lack of subject matter or personal jurisdiction makes joinder impossible. Glancy v. Taubman Ctrs, Inc., 373 F.3d 656, 666 (6th Cir. 2004). Third, if joinder is not feasible, the court must consider the factors listed in Rule 19(b) to decide whether, “ ‘in equity and good conscience, ' ” the matter should be dismissed because the absent party “is indispensable.” Id. (quoting Fed.R.Civ.P. 19(b)).

         Rule 19(a) provides that a person or entity is a necessary party, and where feasible must be joined, 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 ...

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