United States District Court, E.D. Missouri, Eastern Division
MEMORANDUM AND ORDER
CHARLES A. SHAW UNITED STATES DISTRICT JUDGE.
matter is before the Court on defendant BMO Harris Bank,
N.A.'s Motion to Join Jo Ann Howard & Associates,
P.C., in its capacity as Special Deputy Receiver (the
“SDR”) for Lincoln Memorial Life Insurance
Company, Memorial Service Life Insurance Company, and
National Prearranged Services, Inc., pursuant to Rule 19(a)
or Rule 20 of the Federal Rules of Civil Procedure. Plaintiff
Winner Road Properties, LLC filed a response stating that it
does not oppose the motion. Also before the Court is a joint
motion to stay the Court's Order dated April 30, 2018,
referring this case to Alternative Dispute Resolution
(“ADR”). For the following reasons the Court will
deny, without prejudice, BMO Harris Bank N.A.'s motion to
join the SDR as a party to this suit, and the motion to stay
13, 2016, Plaintiff Winner Road Properties, LLC
(“Winner Road”) filed this action in the Circuit
Court of Jackson County, Missouri, against Defendant BMO
Harris Bank, N.A. (“BMO”), seeking declaratory
relief and restitution. BMO removed the case to the United
States District Court for the Western District of Missouri.
The case was transferred to this district on a motion for
change of venue pursuant to 28 U.S.C. § 1404(a), based
primarily on the fact that there has been ongoing, related
litigation in this district, including Jo Ann Howard
& Assocs., P.C. v. Cassity, 4:09-CV-1252 ERW (E.D.
Mo. filed Aug. 6, 2009) (the “Jo Ann
case at bar case arises from the aftermath of the criminal
prosecution of the Cassity family and their scheme to defraud
consumers through the sale of pre-need funeral contracts, and
the misuse of those proceeds. At issue in this case are three
preneed cemetery trusts from the Mount Washington Cemetery in
Kansas City, Missouri: the Third Amended and Restated
Agreement for Mount Washington Cemetery Preneed Trust (the
“Merchandise and Services Trust”); the Second
Amended and Restated Agreement for Mount Washington Cemetery
Endowed Care Trust (the “Endowed Care Trust”);
and the Mount Washington Forever, LLC Custody Account (5012)
(the “Special Care Trust”), together referred to
as “the Mount Washington Trusts.”
petition, Winner Road alleges that it is a beneficiary to the
Mount Washington Trusts, and defendant BMO is the trustee.
Winner Road claims that as trustee, BMO breached its
fiduciary duties, failed to maintain effective operations of
the trusts for their intended purposes, failed to ensure that
the trust corpuses were maintained, and failed to pay out on
contractual obligations. In its petition, Winner Road brings
the following claims against BMO: Determination of Rights in
and Representation for the Merchandise and Services Trust:
Request for Restoration of Trust Assets and Other Relief
(Count I); Determination of Rights in and Representation for
the Endowed Care Trust and Request for Trust Administration
Rulings (Count II); Determination of Rights in and
Representation for the Special Care Trust and Request for
Trust Administration Rulings (Count III); and Petition for
Restitutionary Award Against Trustees for Breaching Trustee
Duties Relating to the Mount Washington Trusts (Count IV).
answered the petition and filed a counterclaim against Winner
Road. In its counterclaim, BMO admits that it is trustee for
the Mount Washington Trusts but asks, pursuant to Mo. Rev.
Stat. § 456.2-202, that the Court approve BMO's
accounts, remove BMO as a trustee, and approve the
appointment of a successor trustee for the Mount Washington
Trusts. BMO also asks that the Court resolve whether Winner
Road is the only beneficiary of the Mount Washington Trusts,
and whether BMO must release the trusts from any purported
freeze by virtue of ongoing litigation in Texas state court.
background, in 2008 a Texas Court entered an order approving
a joint liquidation plan with respect to three Cassity family
businesses: Lincoln Memorial Life Insurance Company, Memorial
Service Life Insurance Company, and National Prearranged
Services, Inc. (Doc. 91 at 35). That plan and underlying
Texas statutes established the authority of the SDR, Jo Ann
Howard & Associates, P.C., to collect monies and pay
creditors as a result of the Cassity fraud scheme.
Id. Under the liquidation plan, state guaranty
associations, who had guaranteed payments under the insurance
policies, were assigned all claims by present or future
recipients of benefits under the insurance policies in trust
accounts. (Doc. 51, Ex. H at 13-14).
to BMO, the SDR has instructed BMO that the Texas liquidation
order operated as a freeze on all accounts associated with
the Mount Washington Cemetery, because they are potential
property of the estates of the three Cassity-owned
businesses. (Doc. 98 at 4-5). BMO complied with the SDR's
instructions and froze the Mount Washington Trusts. Despite
Winner Road's repeated requests, BMO has not allowed
withdrawals from or deposits to any of the trust accounts.
present motion, BMO moves to add the SDR as a party to this
suit pursuant to Federal Rule of Civil Procedure 19(a) or, in
the alternative, Federal Rule of Civil Procedure 20. (Doc.
97). In its motion, BMO argues that the SDR is a necessary
party to this suit, and in the SDR's absence, the Court
may not be able to grant complete relief because the SDR has
asserted claims to assets of the Mount Washington Trusts. BMO
also argues that without the SDR, there is a substantial risk
that BMO might be subject to conflicting obligations.
Rule of Civil Procedure 19(a) “governs when joinder of
a particular person is compulsory.” Gwartz v.
Jefferson Mem'l Hosp. Ass'n, 23 F.3d 1426, 1428
(8th Cir. 1994). There are three independent situations in
which this Court may find that a person or entity must be
joined as a party under Rule 19(a)(1): (1) complete relief
cannot be accorded among existing parties; (2) prejudice to
the absent person's interest; or (3) prejudice to an
existing party from the absent person's claimed interest.
Fed.R.Civ.P. 19(a)(1)(A), (B)(i), and (B)(ii). See also
Gwartz, 23 F.3d at 1428. The compulsory joinder analysis
is “predicated on the policies of ‘avoiding
multiple litigation, providing the parties with complete and
effective relief in a single action and protecting the absent
person from the possible prejudicial effect of deciding the
case without them.'” Lion Petroleum of Mo.,
Inc. v. Millennium Super Stop, LLC, 467 F.Supp.2d 953,
956 (E.D. Mo. 2006).
Rule of Civil Procedure 20(a), on the other hand, addresses
permissive joinder, that is, when an absentee party may be