Siska Revocable Trust v. Milestone Dev't, 715 S.E.2d 21

MIC was formed in 1998 to build and operate a Christiansburg, Virginia hotel; original members included the Trust (Siska), Thomas E. Dowdy, Jason M. Dowdy, and Byron Dowdy, with the Trust holding 49% and others 17% each.
In 2004, an amendment added Jane Dowdy as a 49% member, kept the Trust at 49%, and reduced Thomas Dowdy to 2%, with arbitration to determine ownership effects.
A 2006 arbitration awarded the Trust 43% and Dowdy pair 57%; later that year, the Dowdys transferred MIC assets to Milestone Development, LLC without the Trust’s involvement.
On November 6, 2008, the Trust filed a derivative action under Code § 13.1-1042 on MIC’s behalf against Milestone and the Dowdys, alleging fiduciary breaches and other claims, but MIC was not joined as a party.
The circuit court dismissed on the grounds of lack of standing due to antagonism and failure to fairly represent MIC’s members; circuit court suggested Siska’s motives tainted the action.
The Virginia Supreme Court held that MIC is a necessary party; the appeal is dismissed and the matter remanded for joinder of MIC.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether MIC must be joined as a party in a derivative action.	Siska argues MIC need not be named separately; the Trust is the real plaintiff and represents MIC’s interests.	Milestone contends the LLC is a necessary party that has not been joined, requiring dismissal or remand.	LLC must be joined; necessary party doctrine applies, and absence of MIC prevents proper relief.
Whether nonjoinder of MIC deprived the court of subject matter jurisdiction.	Nonjoinder is not jurisdictional; Rule 3:12 and related authorities allow joinder or dismissal without voiding jurisdiction.	Nonjoinder of MIC would render the action defective and may require dismissal or remand to join indispensable party.	Nonjoinder is not jurisdictional; the court should consider joinder and proceed or remand.

Bonsal v. Camp, 111 Va. 595 (Va. 1911) (necessary party doctrine; court refuses to entertain without indispensable parties)
Sweeney v. Foster, 112 Va. 499 (Va. 1911) (nonjoinder of parties; court refuses to entertain the suit)
The Buchanan Co. v. Smith's Heirs, 115 Va. 704 (Va. 1914) (necessity of joining parties; remedies without prejudice if dismissed)
McDougle v. McDougle, 214 Va. 636 (Va. 1974) (exceptions to joinder; absence not jurisdictional; remand for joinder)
Ross v. Bernhard, 396 U.S. 531 (U.S. Supreme Court, 1970) (corporation as indispensable party in derivative action; relief belongs to entity)
Provident Tradesmens Bank & Trust Co. v. Patterson, 390 U.S. 102 (U.S. Supreme Court, 1968) (procedural framework for indispensability and balancing interests)
Fox v. Deese, 234 Va. 412 (Va. 1987) (nonjoinder analyzed under Code § 8.01-5 and Rule 3:9A)
Mount v. Radford Trust Co., 93 Va. 427 (Va. 1896) (derivative relief belongs to the corporation; necessity of a party)
Simmons v. Miller, 261 Va. 561 (Va. 2001) (derivative action is equitable; relief belongs to the company)
Remora Investments, L.L.C. v. Orr, 277 Va. 316 (Va. 2009) (LLC as separate entity; relief belongs to LLC)
Mission Residential, LLC v. Triple Net Props., LLC, 275 Va. 157 (Va. 2008) (entity separation and derivative actions; ownership and relief)