H5 Capital-Seattle Real Estate LLC v. Onni Capital LLC, 2:20-cv-00801

H5 Capital (plaintiff) owns property at 121 Boren Ave N and entered an option agreement with Onni Capital (defendant) granting Onni the exclusive right to buy the property.
Onni paid $1,000,000 to escrow (two $500,000 payments under the option/purchase agreements) and later paid $1,500,000 earnest money, leaving $2,500,000 in escrow with First American Title (the Disputed Funds).
Onni exercised the option, then later terminated the purchase agreement before closing, citing COVID-19 impracticability, and instructed First American to return the Disputed Funds.
H5 sued Onni for breach and sought a declaration awarding the Disputed Funds to H5; First American still holds the funds in escrow and filed a declaration that it has no pecuniary interest and will disburse only on mutual written instructions.
Onni moved to dismiss under Fed. R. Civ. P. 12(b)(7)/Rule 19, arguing First American is a necessary and indispensable party whose joinder would destroy diversity jurisdiction.
The court denied the motion, finding First American is not a required party and that the court can afford complete, meaningful relief without joining it.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the escrow holder (First American) is a "necessary" party under Rule 19(a)	First American claims no interest in the funds and will disburse only on mutual written instructions; not necessary	First American's possession of funds gives it an interest; without joinder court cannot bind it	First American is not a necessary party; it has no claimed pecuniary interest
Whether a court can accord "complete relief" without joining First American	A declaratory judgment awarding the funds is meaningful relief between the parties; court may assume escrow compliance	Only an order directing First American to release funds is truly complete; mutual instructions may never occur	Declaratory relief is meaningful and complete; court may assume First American will honor agreements
Whether dismissal is required because the absent party is indispensable and joinder would destroy diversity	No dismissal needed because First American is not required; court can proceed	If First American is required and cannot be joined, dismissal is necessary because joinder would destroy diversity	Court did not find First American required, so it denied dismissal and did not reach indispensability analysis

Confederated Tribes of Chehalis Indian Reservation v. Lujan, 928 F.2d 1496 (9th Cir. 1991) (articulates Rule 19 two-step necessary/indispensable framework)
Dawavendewa v. Salt River Project Agr. Imp. & Power Dist., 276 F.3d 1150 (9th Cir. 2002) (describes practical, fact-specific Rule 19 inquiry and impairment test)
Alto v. Black, 738 F.3d 1111 (9th Cir. 2013) (explains that courts may award meaningful relief without an absent party and may assume compliance by nonparties in some circumstances)
Disabled Rights Action Comm. v. Las Vegas Events, Inc., 375 F.3d 861 (9th Cir. 2004) (defines complete relief as preventing multiple lawsuits and providing meaningful relief among parties)