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Icon Group Inc. v. Mahogany Run Development Corp.

argued: April 28, 1987.

ICON GROUP, INC., APPELLANT,
v.
MAHOGANY RUN DEVELOPMENT CORP., ARMOUR JOINT VENTURE, CRISWELL DEVELOPMENT COMPANY, MERRILL LYNCH PRIVATE CAPITAL CORP., FREYER CORPORATION, LOVENLUND RESORTS ASSOCIATES, JAMES ARMOUR, CARL FREYER, WILLIAM CRISWELL, AND SHARON CRISWELL



On Appeal from the United States District Court for the District of the Virgin Islands (St. Thomas), D.C. Civil Action No. 85-427.

Seitz, Higginbotham and Rosenn, Circuit Judges.

Author: Higginbotham

Opinion OF THE COURT

A. LEON HIGGINBOTHAM, JR., Circuit Judge.

This is an appeal from the district court's dismissal of the complaint of plaintiff-appellant ICON Group, Inc. ("ICON"). Finding that joinder of certain interested non-parties was required under Federal Rules 17 and 19, the district court, on two occasions, ordered ICON to join those non-parties. After concluding that ICON had not complied with either of its directives, the district court dismissed ICON's complaint without prejudice. Because we find that ICON complied, substantially if not fully, with the district court's order, we will vacate the judgment of the district court and remand this action to that court.*fn1

I.

Appellee Mahogany Run Development Corporation ("Mahogany Run") owned sixteen condominium units in Mahogany Run, St. Thomas, United States Virgin Islands. On October 6, 1983, Mahogany Run conveyed the units in fee simple to ICG Realty Management Corporation ("ICG"). ICG simultaneously leased the condominium units back to Mahogany Run pursuant to a lease-back agreement (the "Master Lease").*fn2 Appellee James Armour allegedly guaranteed payment of all sums to be paid under the lease by Mahogany Run. On or about December 31, 1983, ICG conveyed the units by warranty deed to seventeen investors ("Investors") as tenants-in-common and also assigned its interest in the Master Lease to the Investors as tenants-in-common. ICON, as one of the Investors, obtained a forty percent interest in the units.

On or about February 1, 1984, Mahogany Run allegedly defaulted on payment of rent under the Master Lease. Despite demands for payment by ICON, Mahogany Run allegedly remains in default at the time of this appeal. Since Mahogany Run's alleged default, ICON has been forced to pay real estate taxes in the amount of $44,026.71 that Mahogany Run would allegedly be required to pay under the Master Lease.

ICON also alleged that on or about December 29, 1984, Mahogany Run and appellees Armour Joint Venture ("Armour") and Criswell Development Corporation ("Criswell Development") organized appellee Lovenlund Resort Associates ("Lovenlund") and transferred Mahogany Run's assets to Lovenlund with the intention and purpose to hinder, delay and defraud Mahogany Run's creditors. ICON alleged further that, in order to commit and then to conceal the above fraudulent conveyance, Mahogany Run, Armour, Criswell Development, appellees William Criswell, Sharon Criswell, Merrill Lynch Private Capital Corp. ("Merrill"), Carl Freyer, and the Freyer Corporation ("Freyer Corp.") used the United States mail and interstate phone lines in violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq. (1982). Additionally, ICON asserted that Merrill induced Mahogany Run and Armour to breach their contractual obligations under the Master Lease and guarantee. Further, ICON asserted that Mahogany Run, Armour and Criswell Development breached their fiduciary duty to the Investors pursuant to the Master Lease.

ICON prayed for compensatory damages in the amount of $5,000,000.00, treble compensatory damages pursuant to 18 U.S.C. § 1964(c) (1982), punitive damages in the amount of $10,000,000.00, an order setting aside and declaring null and void the allegedly fraudulent conveyance of real estate, an order appointing a receiver to take charge of the assets of Mahogany Run, Armour, and Criswell Development, equitable relief, and reasonable costs and attorney's fees.

Several defendants asserted as an affirmative defense that ICON was not the real party in interest under Fed. R. Civ. P. 17 and that the other Investors must be joined under Fed. R. Civ. P. 19. By order dated August 4, 1986, the district court required ICON within 15 days to demonstrate that it was the real party in interest or to join the other Investors in the action; the order further specified that if ICON failed to comply, it would face dismissal of the suit.

In response to the August 4th order, ICON submitted "acknowledgments" from certain of the other Investors that provided:

ACKNOWLEDGMENT

I hereby acknowledge that ICON Group, Inc., as an agent acting on my behalf may commence and conduct any legal action in its own name, with respect to my interests in certain condominium units located at Mahogany Run, St. Thomas, United States Virgin Islands, as more fully ...


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