Arcon Corp. v. Liberty Mut. Ins. Co.

• Decision Date: 15 December 1983
• Docket Number: Civ. A. No. 3:83-0003.
• Parties: ARCON CORPORATION, etc., Plaintiff, v. LIBERTY MUTUAL INSURANCE COMPANY, et al., Defendants.
• Court: U.S. District Court — Middle District of Tennessee

591 F. Supp. 15

ARCON CORPORATION, etc., Plaintiff, v. LIBERTY MUTUAL INSURANCE COMPANY, et al., Defendants.

Civ. A. No. 3:83-0003.

United States District Court, M.D. Tennessee, Nashville Division.

March 10, 1983.

On Motion for Summary Judgment May 12, 1983.

On the Merits December 15, 1983.

I.C. Waddey, Jr., Nashville, Tenn., for plaintiff.

C.J. Gideon, Jr., Byron R. Trauger, Doramus, Gideon & Trauger, Nashville, Tenn., for defendants.

NEESE, District Judge, Sitting by Designation.

This is an action predicated on diverse citizenship and the matter in controversy, 28 U.S.C. § 1332(a)(1), (c), in which the plaintiff seeks to recover from the defendants under several theories of recovery: including negligence, breach of contract, misrepresentation and fraud, estoppel, and breach of a policy of insurance. The defendants moved the Court "* * * to dismiss this action for failure of the plaintiff to join indispensable parties." Rule 12(b)(7), F.R.Civ.P. Such motion lacks merit.

The defendants argue that certain other entities should be party-defendants herein because it was the negligence of those non-parties that caused the loss for which the plaintiff seeks recovery. The plaintiff elected not to pursue whatever claims it might have against such alleged wrongdoers, having chosen instead to go against its insurers.

It is elementary that, where one or more persons may be liable to the plaintiff (whether jointly, severally or alternatively), the plaintiff may sue one or more of them without joining the others. Lawlor v. National Screen Serv. Corp., 349 U.S. 322, 330, 75 S.Ct. 865, 869 10, 99 L.Ed. 1122 (1955); Lumbermen's Mut. Cas. Co. v. Elbert, 348 U.S. 48, 52, 75 S.Ct. 151, 154 6, 7, 99 L.Ed. 59 (1954); McPherson v. Hoffman, 275 F.2d 466, 470 3 (6th Cir.1960); Stiles v. Porter Paint Co., 75 F.R.D. 617, 618 4 (D.C.Tenn.1976). The plaintiff had a right to determine for itself whom it would sue herein; after it chose, neither the Court nor the defendants can add another party defendant for it. McPherson v. Hoffman, supra.

The defendants appear to confuse Rule 19, F.R.Civ.P. with Rule 14(a), F.R. Civ.P. See 3 Moore's Federal Practice (2d ed.) 14-29, ¶ 14.04 (Rule 19, allowing defendant to demand joinder of additional necessary or indispensible parties should be distinguished from the theory and procedure under Rule 14(a)). Assertion of a third-party claim under Rule 14(a) is the proper procedure "* * * if there is a dispute over which of several parties caused damage, and multiple litigation may arise with inconsistent results on the issue of causation. * * *" Federal Procedure, L.Ed. 118, § 59:135; see Rogers v. Aetna Cas. and Sur. Co., 601 F.2d 840 (5th Cir. 1979). Such procedure is also the proper method of asserting a claim for subrogation. Ib., at 169, § 59:213.

Obviously, the plaintiff's dispute herein is with its insurers, not with other parties against whom the defendants might have a right of subrogation. The Court sees no reason why this action cannot proceed in the absence of the non-joined entities.

If the defendants are concerned genuinely about not having these additional parties before the Court, they have at their disposal the impleader procedures of Rule 14(a),¹ supra. See Brown v. Chaffee, 612 F.2d 497, 503 (10th Cir.1979) and Willis v. Semmes, Bowen & Semmes, 441 F.Supp. 1235, 1246 (E.D.Va.1977). The motion hereby is

DENIED.²

ON MOTION FOR SUMMARY JUDGMENT

This is a civil action in which the plaintiff seeks to recover from its insurers for property damage sustained as a result of flooding. 28 U.S.C. § 1332(a)(1),(c). The plaintiff asserts claims under a policy of insurance issued by the defendants¹ as well as on the ground that the defendants failed to issue a policy providing coverage for the type of loss the plaintiff incurred.² The insurance companies, in turn, impleaded third parties, Rule 14(a), F.R.Civ.P., claiming those parties were responsible for the flooding and resulting damage to the plaintiff's property.

I

The defendants moved for a summary judgment, Rule 56(b), F.R.Civ.P., "* * * as to all claims asserted by the plaintiff under the insurance contract in controversy * *," on the ground that the plaintiff did not commence this action within the time prescribed in the policy for so doing. The policy provided in clear, unambiguous language that

no suit shall be brought on the policy unless the insured * * * has commenced the suit within one year after the loss occurs.

In the absence of a statutory provision to the contrary, the validity of a provision in a policy of insurance requiring suit under the policy to be brought within a prescribed period of time "* * * cannot be disputed. * * *" Thompson v. Phenix Ins. Co., 136 U.S. 287, 298, 10 S.Ct. 1019, 1023, 34 L.Ed. 408, 413 (1890); accord Riddlesbarger v. Hartford Ins. Co., 74 U.S. (7 Wall.) 386, 392, 19 L.Ed. 257, 260 (1869) ("We have no doubt of its validity.") In Tennessee, such contractual periods of limitation have consistently been upheld and enforced. Interstate Life & Accident Co. v. Hunt, 171 Tenn. 119, 100 S.W.2d 987, 9893 (1937); Johnson v. Life & Casualty Ins. Co., 168 Tenn. 358, 79 S.W.2d 39, 40 (1935); Guthrie v. Connecticut Indemnity Ass'n., 101 Tenn. 643, 49 S.W. 829, 830 (1898); Holland v. Fuller, 14 F.Supp. 688, 6924 (E.D.Tenn.1936).

In such situations, Tennessee's so-called savings' statute, T.C.A. § 28-1-105, "* * * is wholly inapplicable * * *." Guthrie v. Connecticut Indemnity Ass'n., supra, 49 S.W. at 830. "* * * This must be true, for, if the contractual-limitation is valid, the parties are not bound by the general limitation of the statute; and for a reason they are not bound by the savings of the statute. This question is purely one of contract, and is not regulated by the terms of the statute. * * *" Id.

The complaint alleges that the loss sustained by the plaintiff occurred "on or about May 4, 1979." The plaintiff did not, however, commence this action until January 3, 1983, well outside the one-year period prescribed by the policy. The plaintiff's action "on the policy" is thus time-barred.

The motion of the defendants for a summary judgment, as to all claims asserted by the plaintiff on the insurance policy itself, hereby is GRANTED, Rule 56(c), F.R. Civ.P., and the plaintiff hereby is

DENIED all relief on the claims set forth in counts VI and VII of its complaint.

II

The third-party claims asserted by the insurance companies are premised upon a finding in favor of the plaintiff, and against the former, "* * * under the insurance contract * * *." In such event, the third-party plaintiffs aver they would be "* * * subrogated to the rights of the plaintiff and entitled to be indemnified by the third-party defendants for all amounts paid for the May 4, 1979 flood loss under the insurance contract to the plaintiff."³

The Court ruled, supra, that the claims of the plaintiff on the policy of insurance are barred by the one-year contractual period of limitations, and the plaintiff has been denied all relief on such claims. Obviously then, the insurance companies could not be found liable to the plaintiff "* * * under the insurance contract * *." Accordingly, the third-party claims — which are based on a recovery by the plaintiff against the insurance companies under the policy — have become moot and are without the jurisdiction of the Court. Faser v. Sears, Roebuck & Co., 674 F.2d 856, 8606 (11th Cir.1982).

It results, that the third-party claims herein hereby are

DISMISSED sua sponte for lack of the Court's jurisdiction of the subject matter.⁴ Rule 12(h)(3), F.R.Civ.P.

The clerk will assign this action for a pre-trial conference on the remaining (separate) issues, supra, at a convenient time.

MEMORANDUM OPINION, FINDINGS, CONCLUSIONS AND DECISION

ON THE MERITS

This action by the plaintiff Arcon Corporation, inter alia, is to recover of the defendants Liberty Mutual Insurance Company and Liberty Mutual Fire Insurance Company damages allegedly due it by reason of such insurers' having failed to comply with their contract with the plaintiff to shift its loss from flooding of the contents in its business-house from the plaintiff to the defendants. Trial to the Court was on October 17-18, 1983.

Upon the stipulated and other evidentiary facts and reasonable inferences flowing therefrom, the Court makes the following

Findings-of-Fact

(indicated by arabic-numerals)

and arrives at the following

Conclusions-of-Law

(indicated by capitalized-letters).

I Jurisdiction

1. The plaintiff is a Tennessee corporation, not incorporated by Massachusetts, with its principal place of business within Tennessee, and the defendants are Massachusetts corporations, not incorporated by Tennessee, with their respective principal places of business within Massachusetts. The sum or value of the matter presently in controversy, exclusive of interest and costs, exceeds the sum of $10,000, and the defendants are before the Court by due process of law.

A. This Court has jurisdiction of the subject-matter hereof, 28 U.S.C. §§ 1332(a)(1), (c), and of all the parties.

B. The law of Tennessee, as applicable herein, is regarded as the rules of decision in this civil action. 28 U.S.C. § 1652; Erie Railroad Company v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed.2d 1188 (1938).

II Liability

2. In all transactions between the parties herein: the plaintiff acted by and through Mr. Charles Swift; the defendants acted by and through Messrs. Matthew Ashwood and William Eugene Webb, Jr.; and each of such respective agents acted respectively within the apparent scope of the authority which had been granted him by the respective principals.

C. Where employees of corporations act thus within the apparent scope of their authority to act for such corporations, then their actions are those of, and bind, such corporations. Whitehaven Utility District of Shelby County v. Ramsey, 215 Tenn. 435, 387 S.W.2d 351, 3544 (1964).

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