Opinion
No. 01-CV-72765
April 8, 2002
Defendant Laurence Levine moves to dismiss plaintiff MSX International Engineering Services, Inc.'s First Amended Complaint pursuant to the doctrines of forum non conveniens and abstention, and for failure to join an indispensable party under Federal Rule of Civil Procedure 19(b). Defendant Levine also moves to transfer venue to the United States District Court for the Southern District of Delaware pursuant to 28 U.S.C. § 1404(a). Plaintiff MSX moves to file a Second Amended Complaint to add Karen Suss as a party defendant. A hearing on the motions was held on February 25, 2002. For the reasons set forth below defendant's motion to dismiss will be GRANTED, IN PART, for failure to join an indispensable party. Defendant's motion to dismiss will be DENIED, IN PART, to the extent it is based on the doctrines of forum non conveniens and abstention. Defendant's motion to transfer venue will be DENIED as moot. Plaintiff's motion for leave to file a Second Amended Complaint will be DENIED as moot.
I. Background
Plaintiff MSX provides computer consulting and personnel services. Defendant Laurence Levine and proposed defendant Karen Suss own Karlar, Inc. (f/k/a Lexus Temporaries, Inc.) and Larkav, Inc. (f/k/a Lextra International, Inc.). MSX purchased Karlar's and Larkav's assets pursuant to an October 23, 1998 Asset Purchase Agreement, the critical assets allegedly being Karlar's and Larkav's client relationships. Levine and Suss became employed by MSX under separate contracts. Levine and Suss allegedly agreed to promote the purchased client relationships for MSX's benefit, with MSX paying $24.0 million and agreeing to pay additional "Earnouts" in 1998, 1999 and 2000 as a function of performance.
Non-party J. Diehl was formerly a 5% owner. MSX alleges Levine and Suss are currently the sole owners of Karlar and Larkav.
MSX filed their initial Complaint on July 24, 2001 naming Levine, Karlar and Larkav as defendants, and invoking the courts federal diversity jurisdiction. See 28 U.S.C. § 1332(a)(1). In lieu of filing an answer, Levine, Karlar and Larkav moved to dismiss for lack of subject matter jurisdiction asserting Karlar and Larkav are incorporated in Delaware, as is MSX, and therefore there is a lack of requisite complete diversity. MSX responded by filing a motion for leave to file a First Amended Complaint dropping Karlar and Larkav from the lawsuit. In an October 31, 2001 Opinion, the court determined that MSX was entitled to file its First Amended Complaint as of right in that Levine, Karlar and Larkav had yet to file a responsive pleading to the original Complaint. The court also instructed that Levine was not precluded from later moving to dismiss the First Amended Complaint for failure to join Larkav and Karlar as indispensable party-defendants.
In its September 24, 2001 First Amended Complaint, plaintiff MSX alleges that, during negotiations of the Asset Purchase Agreement, defendant Levine represented that he would remain employed by MSX after the asset purchase to ensure the transition of key clients to MSX. MSX alleges the importance of Levine's continuing employment with MSX is evidenced by § 7.09 of the Asset Purchase Agreement, which reads:
7.09 Employment Agreements. The employment agreements between (i) Buyer [MSX] and Laurence Levine and (ii) Buyer [MSX] and Karen Suss initiated by the parties to each agreement for identification shall have been executed and delivered and become effective.
Asset Purchase Agreement, § 7.09, at 23. MSX further alleges the economic importance of purchasing Larkav's and Karlar's client relationships is evidenced by the $24.0 million purchase price and § 2.02 of the Asset Purchase Agreement providing for the payment of "Earnouts" for 1998, 1999 and 2000:
2.02 Purchase Price. The aggregate purchase price for the Assets (the "Purchase Price") shall consist of a cash payment in connection with the Closing plus the potential for further cash consideration to be paid based upon future levels of performance ("Earnout") as follows:
(i) In connection with the Closing, Buyer [MSX] shall pay to Sellers [Lextra and Lexus], allocated as hereinafter provided, the sum of $24 million ($24,000,000) in the lawful money of the United States (the "Closing Payment") by wire transfer, subject to offset as set forth in Section 5.04. The Closing Payment shall be adjusted dollar for dollar upward (or downward) by the amount by which the Net Tangible Book Value is more than (or less than) $6.8 million at the date of Closing pursuant to Section 2.04 of this Agreement (such adjustments being referred to herein as the "Adjustment Payment"). "Net Tangible Book Value" means the net book value of stockholders' equity of the Combined Company (as defined in Section 2.03), less any goodwill included in any of the Assets.
(ii) Sellers [Lextra and Lexus] will be eligible to receive an Earnout if the AEBIT or EBIT (as hereinafter defined) reaches levels specified below in the calender years 1998, 1999, and 2000.
(A) In the event that AEBIT of the Combined Company exceeds $4.0 million in the calender year 1998, Buyer [MSX] shall pay to Sellers [Lextra and Lexus] (allocated as hereinafter provided) a sum which is six times the amount by which such AEBIT exceeds $4.0 million, subject to setoff as set forth in Section 5.04.
(B) In the event the EBIT of the Combined Company in calender 1999 exceeds the greater of $4.0 million or AEBIT of the Combined Company achieved in the calender year 1998, Buyer [MSX] shall pay to Sellers [Lextra and Lexus] (allocated as hereinafter provided) a sum which is the product of five and one-half times the amount by which 1999 EBIT exceeds the greater of $4.0 million or 1998 AEBIT.
(C) In the event the EBIT of the Combined Company in calender 2000 exceeds the greater of 1998 AEBIT or EBIT of the Combined Company achieved in the calender year 1999, Buyer [MSX] shall pay to Sellers [Lextra and Lexus] (allocated as hereinafter provided) a sum which is the product of five times the amount by which 2000 EBIT exceeds the greater of 1998 AEBIT or 1999 EBIT.
Asset Purchase Agreement, § 2.02, at 2-3. The Asset Purchase Agreement also provides:
9.03 Right of Setoff for Indemnification by Sellers. Buyer [MSX] shall have a right to setoff any amount owed or claimed to be owed to Buyer [MSX] by any Seller [Lextra and Lexus] pursuant to this Agreement against any amount payable or to become payable to any Seller [Lextra and Lexus]. In the event that Buyer [MSX] effects setoff for an indemnity claim which is later determined to be a claim that should have been satisfied by Buyer [MSX], Buyer [MSX] will pay interest at the rate of seven percent per annum on amounts wrongfully withheld from a Seller [Lextra and Lexus] under this Section 9.03.
Asset Purchase Agreement, § 9.03, at 25. The Asset Purchase Agreement further provides that "This Agreement shall be construed, interpreted and the rights of the parties determined in accordance with the laws of the State of Michigan." Asset Purchase Agreement, § 10.02, at 26.
MSX continues by alleging that Levine was employed by MSX from October 1998 until August 2001, acting also as the President of Larkav and Karlar. MSX alleges Levine's primary responsibility at MSX was to promote Larkav and Karlar client relationships on behalf of MSX, and to facilitate the transition of these client relationships to other MSX executives. MSX alleges that Levine refused to transition a key client, and failed to promote, and indeed undermined, client relationships, especially after MSX discharged Levine's daughter Julianne Levine in June 2000. MSX alleges Levine also disparaged MSX. In December 2000, Levine's daughter allegedly formed "Dogwood Hill Associates", a competing company, whom Levine allegedly assisted. MSX alleges that Levine's refusal to transition Larkav's and Karlar's client relationships to MSX, affirmative disparagement of MSX, and breach of his duties of loyalty and due care owing to MSX "effectively deprived MSX of its bargain under the Asset Purchase Agreement." First Amended Complaint, ¶ 22, at 6. MSX alleges Levine also attempted to inflate the year 2000 Earnout by fraudulently induing MSX to pursue a long-term "Call Center" project with a key New York client, and causing MSX to incur substantial costs, including a Manhattan, New York ten year office lease, even though Levine knew or should have known that a one-year renewable agreement with the key client would not be renewed. MSX alleges that, without warning, the key New York client terminated the Call Center project in 2001.
Specifically, MSX alleges defendant Levine is liable for breach of a duty of loyalty (Count I), breach of a duty of due care (Count II), fraud (Count III), and breach of Levine's employment contract (Count IV). With respect to the breach of a duty of loyalty and breach of a duty of due care claims, MSX also asks that the court:
Find a forfeiture of defendant Levine's compensation in all forms for the period beginning with Levine's disloyalty and ending as of the last compensation paid to him[.]
September 24, 2001 First Amended Complaint, at 9, 10.
II. Defendant Levine's Motion To Dismiss
Defendant moves to dismiss this lawsuit based on: (1) the doctrine of forum non conveniens; (2) abstention based on the bad faith exception to the first-to-file rule, and; (3) failure to join Larkav and Karlar as indispensable parties under Federal Rule of Civil Procedure 19(b).
A. Forum Non Conveniens
Defendant's motion to dismiss based on the doctrine of forum non conveniens is without merit.
[T]he transfer of venue function of the forum non conveniens doctrine has been superseded by statute, see 28 U.S.C. § 1404(a); Piper Aircraft Co. v. Reyno, 454 U.S. 235, 253, 102 S.Ct. 252, 264-265, 70 L.Ed.2d 419 (1981), and to the extent we have continued to recognize that federal courts have the power to dismiss damages actions under the common-law forum non conveniens doctrine, we have done so only in "cases where the alternative forum is abroad."Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 722 (1996) (quotingAmerican Dredging Co. v. Miller, 510 U.S. 443, 449, n. 2 (1994)). Defendant's reliance upon Rustal Trading US. Inc. v. Makki, No. 00-1513, 2001 WL 1006176 (6th Cir. Aug. 21, 2001) is misplaced in that Makki involved Sierra Leone as the alternate forum. The case at bar does not involve an alternate forum abroad. Defendant's motion to dismiss based on the doctrine of forum non conveniens will be denied.
B. Abstention
Defendant moves for dismissal pursuant to the abstention doctrine and the bad faith exception to the first-to-file rule as articulated in Zide Sport Shop of Ohio, Inc. v. Ed Tobergte Associates, Inc., No. 00-3183, 2001 WL 897452 (6th Cir. July 31, 2001). Levine argues the court should dismiss this lawsuit in deference to a lawsuit filed by himself Karlar and Larkav in New York State Court on August 30, 2001 seeking a declaratory judgment that MSX must pay a year 2000 Earnout without setoffs, damages in excess of $100,000.00 for breach of a Second Employment Agreement, and damages of no less than $5,000,000.00 for the alleged tortious conduct of MSX in attempting to force Levine to surrender certain Earnouts and other compensation. Defendant maintains that, on July 24, 2001, MSX delivered to him a proposed "First Amendment to Asset Purchase Agreement", a proposed "Separation Agreement and Release", and a draft of the initial Complaint filed in this court, threatening to file the Complaint unless Levine agreed to sign the proposals when, in fact, MSX had already filed the Complaint. See December 13, 2001 Levine Affidavit, ¶ 13, at 6. Levine further states that he "refused to capitulate to MSX's demands . . . ." Id.
The first-to-file rule is used to promote judicial efficiency, and provides that, when two lawsuits involving substantially the same parties and purpose have been filed, "the court in which the first suit was filed should generally proceed to judgment." Plating Resources, Inc. v. UTI Corp., 47 F. Supp.2d 899, 903 (N.D. Ohio 1999) (citing Barber-Greene Co. v. Blaw-Knox Co., 239 F.2d 774, 778 (6th Cir. 1957) and quoting In re Burley, 738 F.2d 981, 988 (9th Cir. 1984)). Three factors used in applying the first-to-file rule are: (1) the chronology of events; (2) the similarity of the parties involved, and; (3) the similarity of the issues at stake Id, at 903. "For purposes of establishing the chronology, courts should focus on the date `a party filed its original, rather than its amended complaint.'" Id, at 904 (quoting Ward v. Follett Corp., 158 F.R.D. 645, 648 (N.D. Cal. 1994)).
The Zide Court held that the first-to-file rule need not be applied where "equity so demands", with factors such as bad faith, anticipatory suits and forum shopping weighing against application of the rule. Zide, 2001 WL 897452, at **3. In Zide, the parties were engaged in six months of pre-litigation negotiations when, on February 25, 1999, the eventual defendant ETA's counsel sent a letter to the eventual plaintiff Zide's counsel stating that ETA would file suit in seven days if it did not receive a serious offer. Zide's new counsel asked for a twenty-five day extension to review the matter, with ETA granting a "final extension" until March 26, 1999 "in the spirit of settlement." Zide, 2001 WL 897452, at **1. One day before the extension expired, Zide, the party granted the extension, filed suit in the Southern District of Ohio. Instead of serving ETA, Zide's counsel sent ETA a letter on March 26, 1999 listing reasons why Zide was not liable to ETA. The letter did not mention the Ohio federal lawsuit. ETA responded on May 11, 1999 by filing suit against Zide in the District of Kansas, serving the complaint upon Zide the same day. Zide, in turn, filed an amended complaint in the Ohio federal action on July 1, 1999, and served the original and amended complaints upon ETA on July 2, 1999. The Sixth Circuit affirmed the District Court's exercise of discretion in declining to enforce the first-to-file rule in favor of Zide, determining that "[a] finding of bad faith is overwhelmingly supported in the record." Id, at **4. The Zide court noted that ETA would likely have filed its lawsuit in early March if Zide had not asked for the twenty-five day extension, and that Zide incorporated parties and allegations first raised in ETA's complaint into Zide's amended complaint Id at **5.
The instant record does not support a finding that MSX filed its initial July 24, 2001 Complaint in bad faith. At worst, the evidence indicates MSX filed its Complaint on the same day Levine rejected MSX's proposed "First Amendment to Asset Purchase Agreement" and proposed "Separation Agreement and Release". Levine was provided with a copy of the Complaint, and was candidly instructed that MSX would file the Complaint in the Eastern District of Michigan if he did not accept the settlement offer. As stated in Plating Resources: "[u]nderstanding that negotiations to resolve this dispute were underway before the parties filed these actions, either party was in a position to file suit before the other." Plating Resources, 47 F. Supp.2d at 904 (internal quotations omitted). Unlike the circumstances in Zide, Levine has not proffered evidence that he delayed filing suit in New York due to representations made by MSX during pre-suit negotiations. Indeed, MSX filed suit immediately on July 24, 2001, as promised, consistent with Levine's "refusal to capitulate." Levine's affidavit does not establish, as argued, that he rejected MSX's offer after 1:18 pm on July 24, 2001, the time and date MSX filed its initial Complaint. Even if the Complaint was filed before Levine was presented with the settlement proposal, such would still not evidence bad faith; had Levine accepted the settlement offer on July 24, 2001, MSX could have immediately and unilaterally dismissed the July 24, 2001 lawsuit. See Fed.R.Civ.P. 41(a)(1)(i). Defendant has not proffered authority for its argument that the court should disregard the date MSX's original Complaint was filed because the Complaint named non-diverse parties Larkav and Karlar. Plating Resources, 47 F. Supp.2d at 904. Defendant does not maintain that Larkav and Karlar were named in the original Complaint in bad faith or for an improper purpose. Defendant's motion to dismiss under the abstention doctrine and the bad faith exception to the first-to-file rule will be denied.
C. Failure to Join an Indispensable Party
At the outset, it is undisputed that joining Larkav and/or Karlar to this action as defendants would destroy this court's federal subject matter jurisdiction as plaintiff MSX, and Larkav and Karlar, are each incorporated in Delaware. See 28 U.S.C. § 1332(a), (c)(1).
It is well settled that when federal jurisdiction is grounded on diversity of citizenship such diversity of citizenship must exist between all the plaintiffs on the one hand and all the defendants on the other. Indianapolis v. Chase National Bank, 314 U.S. 63, 62 S.Ct. 15, 86 L.Ed. 47. If one of the defendants is an indispensable party to the action, and his joinder in the suit destroys diversity of citizenship, he must nevertheless be joined as a party with the resulting loss of jurisdiction by the trial court. Baltimore Ohio R. v. Parkersburg, 268 U.S. 35, 45 S.Ct. 382, 69 L.Ed. 834.
Schuckman v. Rubenstein, 164 F.2d 952, 955-956 (6th Cir. 1947).
Rule 19(b) provides:
(b) Determination by Court Whenever Joinder not Feasible. If a person as described in subdivision (a)(1)-(2) hereof cannot be made a party, 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. The factors to be considered by the court include: 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.
"Where an initial appraisal of the facts reveals the possibility that an unjoined party is arguably indispensable, the burden devolves upon the party whose interests are adverse to the unjoined party to negate the unjoined party's indispensability to the satisfaction of the court."National Labor Relations Bd. v. Doug Neal Management Co., 620 F.2d 1133, 1138 (6th Cir. 1980) (quoting Boles v. Greenville Housing Authority, 468 F.2d 476, 478 (6th Cir. 1972)). The decision whether to dismiss under Rule 19(b) is committed to the district court's discretion. See M.C. Jenkins v. Reneau, 697 F.2d 160, 163 (6th. Cir. 1983).
The presence of an indispensable party "is required in order that the court may make an adjudication equitable to all persons involved." 3A Moore's Federal Practice P 19.05(2). Indeed, "it is not necessary that an absent person would be bound by the judgment in a technical sense. It is enough that as a practical matter his rights will be affected." Id. at P 19.07-1(2).-1). Further, "where such a community of interest exists that no decree can be rendered without affecting the interest of the absent party, that party is indispensable. And a community of interest may arise out of contracts which, while several in form, are interdependent in substance and operation." Id. at P 19.18(1).
Id. In contrast, simply because a person's rights under an entirely separate contract will be affected by the result of a lawsuit does not, of itself, make that person an indispensable party to that lawsuit.Professional Hockey Club Central Sports Club of the Army v. Detroit Red Wings, Inc., 787 F. Supp. 706, 714-715 (citing Helzberg's Diamond Shops, Inc. v. Valley West Des Moines Shopping Center, Inc., 564 F.2d 816, 820 (8th Cir. 1977)).
Levine's employment agreements, and the Asset Purchase Agreement, are not simply separate contracts, but are interdependent in substance and operation. Levine's initial employment agreement was an express condition precedent to the Asset Purchase Agreement. Asset Purchase Agreement, Section VII, at 21, § 7.09, at 23. MSX candidly alleges in its First Amended Complaint that "Levine's continued employment for the purpose of transitioning key clients to MSX was a central component of the asset purchase", and that "Levine's breach of his duties of loyalty and due care, has effectively deprived MSX of its bargain under the Asset Purchase Agreement." First Amended Complaint, ¶ 11, at 3; ¶ 22, at 6. Levine's MSX employment contracts share a community of interest with the Asset Purchase Agreement. Reneau, 697 F.2d at 163.
This shared community of interests is further demonstrated by Levine's dual capacity as an MSX employee, and as the President of both Larkav and Karlar. The First Amended Complaint acknowledges that, while Levine was employed by MSX, he also "acted in the capacity of President of [Karlar] and [Larkav]." First Amended Complaint, ¶ 14, at 4. To support its breach of fiduciary duty claim, MSX alleges Levine "fraudulently induced MSX to incur substantial expenses associated with the Key Client Call Center project in order to inflate the 2000 Earnout". Id. ¶ 34, at 9. An inflated 2000 Earnout resulting from Levine's alleged fraud and breach of fiduciary duties would directly benefit Larkav and Karlar as the sole shareholders and only "Seller" signatories to the Asset Purchase Agreement. The allegation also begs the question of whether Levine was acting in his capacity as an agent of MSX, an agent of Larkav and Karlar, or both, when he allegedly made his fraudulent inducements.
Michigan corporate officers and directors owe a strict duty of good faith to the corporations they serve. Production Finishing Corporation v. Shields, 158 Mich. App. 479, 485, 405 N.W.2d 171 (1987). See also Foley v. D'Agostino, 21 A.D.2d 60, 66, 248 N.Y.S.2d 121, (1964) (recognizing that, under New York law, corporate officers and directors owe a fiduciary duty to discharge their duties in good faith). An employee/fiduciary is not permitted to act for his own benefit at the expense of his principal. Central Cartage Co. v. Fewless, 232 Mich. App. 517, 524, 591 N.W.2d 422 (1999). See also American Baptist Churches of Metropolitan New York v. Galloway, 271 A.D.2d 92, 98-99, 710 N.Y.2d 12 (2000) (Slip Op.) (recognizing that, under New York law, a corporate agent breaches a fiduciary duty if he secretly establishes a competing entity or otherwise defrauds the corporation). Consistent with MSX's allegations, Levine arguably owed fiduciary duties to Larkav and Karlar as their President, as well as to MSX as their employee.
Both the Asset Purchase Agreement and Levine's MSX employment contracts contain Michigan choice of law provisions. See Asset Purchase Agreement, § 10.02, at 26; Levine's December 18, 2001 Exhibit B, Employment Agreement, ¶ 13, at 7; Levine's December 18, 2001 Exhibit C, Employment Agreement, ¶ 13, at 9.
Levine's competing roles could affect the scope of Karlar's and Larkav's separate corporate liability. The Asset Purchase Agreement provides:
In the event that Buyer [MSX] effects setoff for an indemnity claim which is later determined to be a claim that should have been satisfied by Buyer [MSX], Buyer [MSX] will pay interest at the rate of seven percent per annum on amounts wrongfully withheld from a Seller [Larkav and Karlar] under this Section 9.03.
Asset Purchase Agreement, § 9.03, at 25. If MSX has effected a setoff against the 2000 Earnout due to the alleged fraudulent conduct of Levine, and the court hereafter determines that the full 2000 Earnout was wrongfully withheld by MSX because Levine did not commit fraud or breach duties owing to MSX, Larkav and Karlar (as opposed to Levine) will be entitled under § 9.03 of the Asset Purchase Agreement to claim interest on the amount withheld by MSX. The competing roles of Levine as alleged in this lawsuit demonstrate that no meaningful decree can been entered here without affecting the substantial rights of Karlar and Larkav. Reneau, 697 F.2d at 163. Indeed, MSX's First Amended Complaint hints at directly affecting Larkav's and Karlar's right to receive the 2000 Earnout by seeking compensatory and punitive damages from Levine and "a forfeiture of defendant Levine's compensation in all forms . . . ." First Amended Complaint, ¶(c), at 9 and 10. Reading the First Amended Complaint as a whole, MSX ultimately seeks an adjudication in this lawsuit of the amount owed by MSX to non-parties Larkav and Karlar vis-a-vis an adjudication that Levine's alleged fraud and breach of fiduciary duties bar Levine, and as a result Larkav and Karlar, from recovering further compensation under the Asset Purchase Agreement including a 2000 Earnout.
MSX has failed to meet its burden of negating Larkav's and Karlar's indispensability to this lawsuit. A judgement rendered in favor of MSX in this lawsuit against Levine would most certainly prejudice Larkav's and Karlar's contractual rights under the Asset Purchase Agreement; Levine is not a party to the Asset Purchase Agreement. MSX has not proffered acceptable solutions to the problem of drafting a judgment in this case that would lessen or avoid prejudice to Larkav's and Karlar's corporate positions should MSX succeed against Levine in this lawsuit. If a judgment entered in this case would not affect Larkav's or Karlar's position, as MSX argues, the issue then becomes how a judgment rendered here in Larkav's and Karlar's absence could be considered adequate in that Larkav and Karlar could legitimately continue to demand payment of the 2000 Earnout from MSX for eventual payment to Larkav's and Karlar's owners Levine and Suss. MSX's argument that Levine could protect Larkav's and Karlar's interests in this lawsuit, as a substantial owner of Larkav and Karlar, ignores the separate entity status of the corporations. Although the separate status of a corporation may be pierced on a showing of fraud or other improper use of the corporate form, Williams v. American Title Ins. Co, 83 Mich. App. 686, 269 N.W.2d 481, 486 (1978), Morris v. New York State Dept. of Taxation and Finance, 82 N.Y.2d 135, 141, 623 N.E.2d 1157 (1993), certainly the corporate entity to be pierced must be a party to the lawsuit. A conflict of interest could also develop between Levine and the Larkav and Karlar corporations, with Levine actually arguing in favor of piercing the corporate veil to limit his own personal liability. Plaintiff MSX has an adequate alternative remedy at law as MSX may pursue its present claims in the New York State Court action filed by Levine, Larkav and Karlar. See Lykins v. Westinghouse Electric, 710 F. Supp. 1122, 1125 (E.D. Ky. 1988).
The court concludes that, in equity and good conscience, this lawsuit should be dismissed because corporate defendants Larkav and Karlar are indispensable parties that, if joined, would destroy this court's subject matter jurisdiction. Fed.R.Civ.P. 19(b); Rubenstein, 164 F.2d at 955-956, Reneau, 697 F.2d at 163. MSX's claims will be dismissed without prejudice pursuant to Rule 19(b).
III. Defendant Levine's Motion to Transfer Venue and Plaintiff MSX's Motion For Leave to Add Karen Suss as a Defendant
Consistent with the court's ruling that this matter should be dismissed for lack of subject matter jurisdiction under Rule 19(b) resulting from the inability to join indispensable parties Larkav and Karlar to this lawsuit, Rubenstein, 164 F.2d at 955-956, defendant Levine's motion to transfer venue of this lawsuit to the United States District Court for the Southern District of Delaware, and plaintiff MSX's motion for leave to add Karen Suss to this lawsuit as a party-defendant, are moot. Accordingly, these motions will be denied.
IV. Conclusion
Defendant Laurence Levine's motion to dismiss is hereby GRANTED, IN PART, under Federal Rule of Civil Procedure 19(b) for failure to join the indispensable parties Larkav, Inc. and Karlar, Inc., MSX's claims are hereby DISMISSED WITHOUT PREJUDICE. The remainder of defendant Levine's motion to dismiss is hereby DENIED. Defendant's motion to transfer venue is hereby DENIED as MOOT. Plaintiff MSX's motion for leave to file a Second Amended Complaint is also hereby DENIED as MOOT.