Helzberg’s Diamond Shops v. Valley West Des Moines Shopping Center

Brief Fact Summary.

Plaintiff entered a contract with Defendant. Plaintiff sued Defendant when they breached the contract by entering a separate contract with another full-line jewelry store. Defendant moved to dismiss the case for failure to join parties.

Synopsis of Rule of Law.

A party is not considered indispensable under Rule 19(b) to a lawsuit concerning a contract just because the party’s rights or obligations under a separate contract may be affected by the results of the action.

Facts.

Helzberg’s Diamond Shops, Inc. (Plaintiff), a Missouri corporation, entered into a written contract with the Valley West Des Moines Shopping Center, Inc. (Defendant), an Iowa corporation, requiring Defendant not allow more than two other full-line jewelry stores to move into the shopping center. When Defendant entered a contract with Lord’s Jewelers, a third full-line jewelry store, Plaintiff sued Defendant in federal court under diversity jurisdiction seeking injunctive relief. Defendant moved to dismiss the action for failure to join Lord’s Jewelers in the lawsuit as an indispensable party under Rule 19(b).

Issue.

Is Lord’s Jewelers an indispensable party under Rule 19(b)?

Held.

No, Lord’s Jewelers is not an indispensable party under Rule 19(b). The motion to dismiss was properly denied.

Discussion.

The Court found that Lord’s Jewelers was a necessary party under Rule 19(a) because its contract with Defendant would be affected by the lawsuit. However, the Court found that Lord’s Jewelers was not an indispensable party under Rule 19(b). Lord’s Jewelers will not be prejudiced by the lawsuit because none of its rights and obligations under its contract with Defendant will not be adjudicated in the lawsuit. Defendant will not be prejudiced by Lord’s Jewelers absence from the lawsuit, because only the rights and obligations pertaining to Defendant’s contract with Plaintiff will be adjudicated by the lawsuit.