United States District Court, W.D. North Carolina, Asheville Division
L. Howell United States Magistrate Judge
matter is before the Court on the Motion for Leave to Join
Additional Parties and Claims (# 13) filed by Lake Toxaway
Community Association, Inc. (“LTCA”). The issues
have been fully briefed, and the matter is now ripe for
ruling. For the reasons addressed below, LTCA's motion is
GRANTED in part and DENIED in part.
Factual and Procedural Background
February 19, 2017, EFA Properties, LLC (“EFA”),
filed a Complaint to Quiet Title and for a Declaratory
Judgment. See Compl. (# 1). EFA seeks to establish
its rights with respect to its property along the shore of
Lake Toxaway. Id. at 1.
a Louisiana Limited Liability Company, which is licensed with
its principal headquarters and place of business in Jefferson
Parish, Louisiana. Id. ¶ 1. LTCA is a North
Carolina corporation with its headquarters and principal
place of business in Transylvania County, North Carolina.
Id. ¶ 2. Jurisdiction for this action is based
on diversity of citizenship, pursuant to 28 U.S.C. §
1322. Id. ¶ 7.
Complaint, EFA raised the following claims: (1) equitable
estoppel/laches/waiver (id. ¶¶ 76-105);
(2) declaratory judgment as to EFA's easement appurtenant
(id. ¶¶ 106-121); (3) quiet title as to
EFA's easement appurtenant (id. ¶¶
122-24); (4) declaratory judgment as to disputed property
(id. ¶¶ 125-28); and (5) quiet title as to
disputed property (id. ¶¶ 129-31).
29, 2017, LTCA filed an Amended Motion to Dismiss, Answer,
and Counterclaims (# 10), in which it raised the following
counterclaims: (1) declaratory relief; quiet title
(id. ¶¶ 41-45); (2) trespass (id.
¶¶ 46-53); (3) breach of restrictive covenants
(id. ¶¶ 54-57); (4) nuisance (id.
¶¶ 58-63); (5) violation of North Carolina
Sedimentation and Pollution Control Act (“SPCA”)
(id. ¶¶ 64-74); and (6) punitive damages
(id. ¶¶ 75-78). On July 28, 2017, EFA
filed a Motion to Dismiss and Answer to Counterclaims (# 11).
August 4, 2017, LTCA filed the instant Motion for Leave to
Join Additional Parties and Claims (# 13), in which it
requests leave to file its Second Amended
Counterclaims. Id. at 1. In particular, LTCA
seeks to join the following parties as additional defendants
for purposes of its counterclaims and the assertion of
additional counterclaims: Suzanne Terrell and Lee Terrell
(the “Terrells”), Holbrook and Nichols
Construction Co., Inc. (“Holbrook &
Nichols”), and John F. Holbrook
(“Holbrook”). Br. Supp. (# 14) at 1-2.
also seeks to expand or add the following counterclaims: (1)
Count One for declaratory relief/quiet title, which is
currently made against EFA, will be expanded to include the
Terrells, Holbrook & Nichols, and Holbrook; (2) Count Two
for trespass, which is currently made against EFA, will be
expanded to include the Terrells, Holbrook & Nichols, and
Holbrook; (3) Count Three for breach of restrictive
covenants, which is currently made against EFA, will be
expanded to include the Terrells, Holbrook & Nichols, and
Holbrook; (4) Count Four for nuisance, which is currently
made against EFA, will be expanded to include the Terrells,
Holbrook & Nichols, and Holbrook; (5) Count Five for
violation of the SPCA, which is currently made against EFA,
will be expanded to include the Terrells, Holbrook &
Nichols, and Holbrook; (6) Count Six for punitive damages,
which is currently made against EFA, will be expanded to
include the Terrells, Holbrook & Nichols, and Holbrook;
(7) A new Count Seven for conspiracy will be added
against all counterclaim defendants; and (8) a new
Count Eight for piercing the corporate veil will be added
against the Terrells. Id. at 3-4.
September 1, 2017, EFA filed a Response (# 19) in opposition.
LTCA filed a Reply (# 23) on September 15, 2017.
Amendments to Pleadings
the Fourth Circuit, “leave to amend a pleading should
be denied only when the amendment would be prejudicial to the
opposing party, there has been bad faith on the part of the
moving party, or the amendment would be futile.”
Johnson v. Oroweat Foods Co., 785 F.2d 503, 509 (4th
Cir. 1986) (citing Foman v. Davis, 371 U.S. 178, 182
(1962)). Denial on the basis of futility is appropriate only
“when the proposed amendment is clearly insufficient or
frivolous on its face.” Johnson, 785 F.2d at
510; accord Joyner v. Abbott Labs., 674 F.Supp. 185,
190 (E.D. N.C. 1987). Denial on the basis of futility is also
appropriate when the proposed amendment could not withstand a
motion to dismiss. Perkins v. United States, 55 F.3d
910, 917 (4th Cir. 1995) (citing Glick v. Koenig,
766 F.2d 265, 268-69 (7th Cir. 1985)).
survive a motion to dismiss, the factual allegations in the
complaint, or in this case, the Counterclaim, must
“state a claim to relief that is plausible on its
face” and that “permit[s] the court to infer more
than the mere possibility of misconduct.” Ashcroft
v. Iqbal, 556 U.S. 662, 678-79 (2009) (citation
omitted). The pleading party must rely on “more than
labels and conclusions, and a formulaic recitation of the
elements of a cause of action will not do.” Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).
Additionally, the pleading party is not required to
“plead facts that constitute a prima facie case in
order to survive a motion to dismiss.” Coleman v.
Maryland Court of Appeals, 626 F.3d 187, 190 (4th Cir.
2010); Owen v. County of Franklin, Va., No.
7:17CV205, 2017 WL 6391486, at *2 (W.D. Va. Dec. 14, 2017).
Joinder of Additional Parties
to Federal Rule of Civil Procedure 13, the joinder of
additional parties to a counterclaim is governed by Federal
Rules of Civil Procedure 19 and 20. Fed.R.Civ.P. 13(h);
Pennsylvania Intern. Educ. Serv. Grp., LLC v. Xie,
No. 1:14CV1203(JCC/MSN), 2015 WL 2195183, at *2 (E.D. Va. May
Rule of Civil Procedure 19 establishes a two-step inquiry for
assessing the joinder of parties. In re N.C. Swine Farm
Nuisance Litigation, No. 5:15CV13-BR, 2017 WL 2312883,
at *4 (E.D. N.C. May 25, 2017) (citing Owens-Illinois,
Inc. v. Meade, 186 F.3d 435, 440 (4th Cir. 1999)). Under
the first step, Rule 19(a) refers to persons that are
required to be joined if feasible.
Civ. P. 19(a). A “required party” is “[a]
person who is subject to the service of process and whose
joinder will not deprive the court of subject-matter
jurisdiction.” Fed.R.Civ.P. 19(a)(1). A “required
party” must be joined as a party 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 substantial risk of
incurring double, multiple, or otherwise inconsistent
obligations because of the interest.
person has not been joined when required, the court must
order that the person be made a party. Fed.R.Civ.P. 19(a)(2).
On the other hand, if the person is not a required
party, the analysis ends. Mainstream Constr. Grp., Inc.
v. Dollar ...