In CCP Golden/7470 LLC v. Breslin, No. 24-2731 (7th Cir. Dec. 3, 2025), the Seventh Circuit rejects an effort to defeat diversity jurisdiction, holding (contrary to prior dicta on the subject) that co-parties to a contract who are jointly and severally liable need not always be deemed indispensable parties for purposes of Fed. R. Civ. P. 19(b).
In a breach-of-lease dispute, plaintiff property owners sued Breslin and his co-guarantors under the court’s diversity jurisdiction to enforce guaranties for the tenants. Plaintiffs discovered that the presence of one defendant in the suit, Burris III, destroyed complete diversity. “They moved to dismiss him [under Fed. R. Civ. P. 21] to keep the case in federal court. The district court granted the motion, which Breslin never contested. The parties then proceeded to summary judgment, where Breslin presented no evidence. Plaintiffs prevailed, and the district court awarded them nearly $22 million in damages.”
On appeal, defendants argues that the one, non-diverse guarantor was a necessary and indispensable party and should not have been dismissed, yet the Seventh Circuit upholds subject-matter jurisdiction and substantially affirms the judgment.
“There is no dispute that California citizen Burris III’s presence in the suit destroyed complete diversity. Whether the district court rightly dismissed him under Rule 21 to preserve subject matter jurisdiction turns on whether—as Breslin contends—Burris III was indispensable under Rule 19 . . . . If Burris III [were] indispensable, the parties may not litigate this controversy in his absence, and we must dismiss for lack of subject matter jurisdiction.”
The panel expresses doubt that the defendant is a necessary party under Rule 19(a). “Since Burris III was jointly and severally liable with his co-obligors, complete relief could be granted to Plaintiffs in his absence . . . . And disposing of the action in Plaintiffs’ favor would not necessarily impair or impede Burris III’s ability to protect his interest.”
Yet even if Burris III were necessary under Rule 19(a), the panel concludes that he is not indispensable under Rule 19(b). The panel notes that other circuits have held that co-obligors under a contract “are not indispensable parties in contract disputes that do not … challenge the validity of the contract” as a whole. “A contrary rule would render contractual joint and several liability largely irrelevant.”
Defendant “Breslin advocates for a bright-line rule that parties to a contract are indispensable to suits on the contract. True, we observed in Davis Companies [ v. Emerald Casino, Inc., 268 F.3d 477, 481 (7th Cir. 2001)] that ‘a contracting party is the paradigm of an indispensable party’ . . . . Breslin’s maximalist reading of one line from Davis Companies—which he reads to imply that all contracting parties are by definition necessary and indispensable—is unfounded in our precedent, which calls for a case-specific inquiry . . . . Moreover, that sweeping statement from Davis Companies was dicta since the party at issue in that case was not a contracting party.”
“Because Burris III was not indispensable to the litigation, the district court did not err in dismissing him to maintain diversity jurisdiction over the suit.”
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