Baring Industries, Inc. v. Rosen
1:24-cv-05606
| S.D.N.Y. | Jan 27, 2025Background
- Baring filed a mechanic’s lien related to kitchen equipment it supplied, which 3BP challenged, arguing the equipment was not a fixture.
- The district court held for 3BP, voided the lien, and awarded damages and attorneys’ fees against Baring; the Second Circuit affirmed.
- Baring then sued its former legal counsel in federal court for malpractice, alleging advice contrary to clear New York law and a severe breach of attorney standards.
- Defendants moved to dismiss, arguing lack of diversity jurisdiction and failure to join Rosen Law, alleging Rosen Law was a necessary and indispensable party.
- Joinder of Rosen Law—whose members (like Baring) are citizens of Florida—would destroy diversity jurisdiction under Carden v. Arkoma Assocs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is Rosen Law a necessary party under Rule 19(a)? | Malpractice claim is in tort; joint tortfeasors need not be joined | Rosen Law was party to contract; fees sought were paid to Rosen Law | Not necessary under Rule 19(a); tortfeasors need not all be joined |
| Does Rosen Law’s absence prevent complete relief? | Relief can be provided by judgment against current defendants | Complete relief not possible because fees went to Rosen Law | Relief is possible without Rosen Law |
| Would Rosen Law be prejudiced by its absence? | Defendants’ interests are virtually identical to Rosen Law’s | Rosen Law has substantial interest likely to be prejudiced | No prejudice; its interests are adequately represented |
| Would parties face inconsistent obligations? | No substantial risk | Did not articulate specific risk | No inconsistent obligations shown |
Key Cases Cited
- Carden v. Arkoma Assocs., 494 U.S. 185 (diversity jurisdiction turns on citizenship of all LLC members)
- Ackerman v. Price Waterhouse, 644 N.E.2d 1009 (under New York law, legal malpractice claims sound in tort)
- Viacom Int’l, Inc. v. Kearney, 212 F.3d 721 (Rule 19 indispensability analysis)
- MasterCard Int’l Inc. v. Visa Int’l Serv. Ass’n, Inc., 471 F.3d 377 (two-prong test for necessary parties)