Mrs. Edna Romero Doty et al., Plaintiffs-appellants, v. St. Mary Parish Land Company, Defendant-appellee, 598 F.2d 885 (5th Cir. 1979)

This appeal raises the question of whether a mineral lessee and certain royalty owners are indispensable parties within the meaning of Fed. R. Civ. P. 19 in a suit to try title to land. The district court found the absent parties to be indispensable and dismissed the action. Finding the dismissal to be a proper exercise of the district court's discretion, we affirm.

Appellants filed suit against appellee St. Mary Parish Land Company in the District Court for the Western District of Louisiana, seeking to be declared owners of two large tracts of land situated in St. Mary Parish, Louisiana. The complaint named twenty-six individual plaintiffs who were identified as being citizens of the states of Louisiana, Texas and California. St. Mary Parish Land Company, the only defendant named in the suit, is a Delaware corporation with its principal place of business in California.

The defendant filed a motion to dismiss the suit for failure to join as indispensable parties a mineral lessee, Atlantic Richfield Company, and thirty-eight mineral royalty owners. For purposes of diversity jurisdiction, it appears that Atlantic Richfield is a citizen of the state of California; the royalty owners are citizens of Texas, Pennsylvania, New York, Connecticut, California and Massachusetts. Both parties agree that the joinder of either of these absent parties would destroy complete diversity and therefore divest the district court of subject matter jurisdiction. See Strawbridge v. Curtis, 7 U.S. (3 Cranch) 267, 2 L. Ed. 435 (1806).

The district court granted the defendant's motion to dismiss, finding the action could not, "in equity and good conscience," proceed without the mineral lessee and the royalty owners. Appellants now bring their appeal, challenging the district court's conclusion that these parties are indispensable to the action.

Prior to the amendment to Rule 19, problems of joinder were determined by the "technical or abstract character of the rights or obligations of the persons whose joinder was in question . . . ." Notes of Advisory Committee on Rules, Fed. R. Civ. P. 19, 28 U.S.C.A. at p. 105. But under the current version of Rule 19,¹  a finding of indispensability is based upon pragmatic considerations. Provident Tradesmens Bank & Trust Co. v. Patterson, 390 U.S. 102, 88 S. Ct. 733, 19 L. Ed. 2d 936 (1968); Schutten v. Shell Oil Co., 421 F.2d 869 (5th Cir. 1970); Broussard v. Columbia Gulf Transmission Co., 398 F.2d 885 (5th Cir. 1968); 3A Moore's Federal Practice § 19.01(1). Thus, Rule 19 adopts an "equity and good conscience" test which rests upon the application of four practical considerations. An examination of these four factors shows that the district court correctly dismissed the present lawsuit, due to the absence of indispensable parties whose joinder would have deprived the trial court of jurisdiction.

The first factor calls for an assessment of the prejudicial effect of a judgment rendered in the absence of the party who cannot be joined. This factor requires the court to "consider the extent to which the judgment may 'as a practical matter impair or impede his ability to protect' his interest in the subject matter." Provident Tradesmens Bank & Trust Co. v. Patterson, 390 U.S. 102, 110, 88 S. Ct. 733, 738, 19 L. Ed. 2d 936 (1968). A district court may refuse to proceed with the action if prejudice would result to either the absent party or to parties already joined.

Here, it is apparent that the mineral lessee²  will be prejudiced, within the meaning of Rule 19, by a judgment rendered in its absence. Appellants correctly point out that the mineral lessee would not be bound, in the Res judicata sense, by an adjudication of the validity of the land company's title.³  Nonetheless, the fact that a party may not be bound by a judgment does not mean that an action may proceed without him. 390 U.S. at 110, 88 S. Ct. 733. If appellant's suit is successful, the resulting judgment, although not legally binding on the lessee, would certainly create doubt as to the validity of its title and probably some confusion about its obligations and rights with respect to the land. As a practical matter, a decision in favor of appellants would reduce the economic value of the lease, injecting an element of uncertainty into all of the lessee's business transactions concerning the lease. Moreover, in a subsequent suit between appellants and the lessee, an unfavorable judgment in the present case would constitute precedent adverse to the lessee's claims.⁴  These possibilities convince us that the lessee could be prejudiced if the suit were allowed to proceed in its absence.⁵ 

The second factor requires a consideration of the extent to which prejudice may be minimized by limiting the relief granted. Yet it is difficult to conceive of a method by which the relief given in this case could be tailored to avoid prejudice to the lessee. Appellants in their complaint seek to establish their ownership to the land by having the defendant's title declared null and void. To grant them any relief at all would engender the problems we have previously discussed. In view of the relief requested by appellants, we are unable to devise, and appellants have yet to suggest, a form of relief that would minimize the prejudice to the mineral lessee. Thus the present case is to be distinguished from those cases relied upon by appellant⁶  in which the courts were able to minimize prejudice to absent parties by carefully shaping the relief given.

Third, we must consider whether a judgment rendered in the lessee's absence will be adequate. Here we examine the possibility of multiple litigation and resulting inconsistent obligations. The present case only marks the beginning of litigation with respect to the two tracts of land. If successful against the defendant, appellants must then pursue the lessee in an action to cancel the lease. A subsequent action against the lessee could result in the inconsistent determination that the lessor's title was valid, thereby creating conflicting obligations for the parties involved. On the other hand, in the event that appellants were to succeed against the lessee, a suit by the lessee against the lessor would follow. In short, we find the prospects of multiple litigation and inconsistent obligations to be likely in the present case.

The final factor is one which, in the end, we find to be most persuasive the presence of an adequate forum if the action is dismissed. It is undisputed that the present action could be brought in a Louisiana state court, where complete relief would be afforded among All the parties. We have previously found the presence of a state forum to be compelling in these kinds of cases, See, e. g., Broussard v. Columbia Gulf Transmission Co., 398 F.2d 885 (5th Cir. 1968), and we summarily reject the suggestion by appellants that the state courts may not be competent to decide the present controversy.⁷  Indeed, real property disputes are particularly suited to resolution by state courts:

Since the courts of the state in which the land is situated are available to hear the action, dismissal by a federal court usually will not leave plaintiff without an opportunity to have the merits of his claim adjudicated. Indeed, unlike many other situations, a state court may be in a better position to entertain a real property action than is a federal court. In most cases one or more citizens of the forum state will be involved and local interests are always at stake when the forum state's land is in issue. For example, local title records may be affected by the judgment. Because the special concern of a state for the ownership and utilization of its land manifests itself in many ways, federal courts should not refrain from leaving particular controversies to the local courts when the analysis required by Rule 19(b) indicates that it should not go forward in the absence of someone described in Rule 19(a).

7 C. Wright & A. Miller, Federal Practice & Procedure § 1621 at 208-09 (1972).

In summary, we believe that a consideration of the factors set forth in Rule 19(b) leads inescapably to the conclusion that the present action should not proceed in the absence of the mineral lessee. The most complete and expeditious resolution of this controversy can be made in the state courts of Louisiana. See Tardan v. California Oil Co., 323 F.2d 717 (5th Cir. 1963).

AFFIRMED.