National Un. Fire Ins. v. Mason, Perrin & Kanovsky
Decision Date | 17 March 1989 |
Docket Number | No. 87 Civ. 9269 (RWS).,87 Civ. 9269 (RWS). |
Citation | 709 F. Supp. 411 |
Parties | NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA., Plaintiff, v. MASON, PERRIN & KANOVSKY, Arthur D. Mason, Richard P. Perrin, Helen R. Kanovsky, James F. McConnell and Mary V. Harcar, Defendants. |
Court | U.S. District Court — Southern District of New York |
Arnoff & Siskind, P.C., New York City, for plaintiff; Norman B. Arnoff, Linda K. Brockett, Gordon P.R. Posner, of counsel.
O'Dea & Mason, Washington, D.C., for defendant Arthur D. Mason; James L. O'Dea, of counsel.
Mark Grossman, New York City, for defendant Richard P. Perrin.
Helen R. Kanovsky, Bethesda, Md., pro se.
Defendant Helen R. Kanovsky ("Kanovsky") has moved pursuant to Rule 12(b)(7), Fed.R.Civ.P., to dismiss the complaint of Plaintiff National Union Fire Insurance Company of Pittsburgh ("National Union") on the grounds that National Union failed to join indispensable parties under Rule 19, Fed.R.Civ.P., and for attorney's fees incurred in defending against the complaint. In the alternative, Kanovsky has moved under 28 U.S.C. § 1404(a) to transfer this matter to the United States District Court for the District of Columbia. Kanovsky is joined in this motion by defendants Richard P. Perrin ("Perrin") and Arthur D. Mason ("Mason"). National Union has cross-moved under Rules 12(c) and 12(h)(2) Fed. R.Civ.P. to dismiss the counterclaims for failure to state a claim upon which relief can be granted. For the reasons set forth below, Kanovsky's motion to dismiss the complaint is denied, as is National Union's motion to dismiss the counterclaims. Kanovsky's motion to transfer venue is granted.
National Union has brought this action seeking to rescind a policy of lawyer's professional liability insurance and for damages. Kanovsky has counterclaimed, charging National Union with bad faith. She has also filed a Third-Party Complaint against First State Insurance company ("First State"), as the primary carrier for defendants with respect to the In re Boardwalk Marketplace class action litigation (the "Boardwalk litigation"), according to National Union. The Boardwalk litigation involves a series of lawsuits by investors in limited partnerships alleging violations of federal securities laws. Mason, Perrin and Kanovsky have been among those named as defendants in many of the suits.
The facts in this case are set forth in this court's opinion dated June 29, 1988 (the "June opinion"), National Union Fire Insurance Co. v. Mason, Perrin & Kanovsky, 689 F.Supp. 303 (S.D.N.Y.1988), familiarity with which is assumed, in which motions to dismiss for lack of personal jurisdiction by defendants Mary V. Harcar ("Harcar") and James F. McConnell ("McConnell") were granted. By opinion dated July 29, 1988, the June opinion was modified to the extent that the motion to dismiss the complaint as against McConnell was denied.
Since the June opinion, defendant Arthur D. Mason ("Mason") has been acquitted of all charges against him in the federal criminal action. In addition, on November 1, 1988, First State and National Union entered into a Sharing Agreement by which First State will reimburse National Union five-twelfths of the attorneys' fees and costs to defend the insureds. National Union has agreed to abandon all claims against the insureds for monetary damages.
Rule 19, Fed.R.Civ.P. sets forth the standards for "Joinder of Persons Needed for Just Adjudication." Pursuant to Rule 19(a), a person should be joined if:
The application for the Insurance policy at issue in this case names seven individuals, who became "Persons Insured under the Insurance Policy" from its date of inception: Mason, Perrin, Kanovsky, Harcar, McConnell, Linda L. Lord ("Lord") and Kevin L. Petrasic ("Petrasic"). It also names the law firm of Mason Perrin & Kanovsky ("MP & K"). Harcar, Lord and Petrasic have not, to date, been named as defendants in the Boardwalk litigation. However, Harcar was a general partner of MP & K, a named defendant in Boardwalk. On November 15, 1986, on the election of MP & K, the policy was cancelled. Thereafter, Mason, Perrin and Kanovsky, but not Harcar, Lord or Petrasic, exercised their right under the terms of the policy to purchase an extended reporting period to cover claims made after such date.
Kanovsky contends that Harcar, Lord and Petrasic are necessary parties to this action, and that, because they cannot be joined as parties on grounds of lack of personal jurisdiction, dismissal is required under Rule 19. In addition, Kanovsky contends that First State is an indispensable party to this lawsuit. However, these parties do not need to be joined under 19(a).
First, in considering whether these parties are necessary under Rule 19(a)(1), which provides that in the absence of a necessary party, complete relief cannot be accorded, it is important to note that defendants, and not plaintiff National Union, have brought this motion. If National Union, loses this suit and is thus bound to fulfill its obligations under the Insurance Policy, the absence of the parties will not affect the ability of defendants to be accorded complete relief. If National Union is successful, it will be relieved of having to defend the named defendants.
As for whether the missing parties have an interest in the action, it is at least arguable that Harcar does, even though she has been dismissed from this action. As a general partner of MP & K, she may have an interest in the underlying litigation even if not named as a defendant. However, if the insurance policy is found to be valid, National Union may owe a duty under the policy to MP & K, and its obligations would continue until the Boardwalk litigation is completed. As for Lord and Petrasic, they have no claim under the insurance, which was a "claims made" policy, and they did not make claims before the cancellation of their insurance on November 15, 1986.1 Furthermore, like Harcar, neither Lord nor Petrasic has been named in any litigation covered by the subject policies. Therefore, they have no interest in this action.2
3A Moore's, ¶ 19.07 2.-1, at 19-106 to 19-108.
Several courts have held that where defendants have raised arguments which the missing party would raise, the missing party's interests have been adequately represented. See, e.g., United Transportation Union v. Long Island Railroad Co., 634 F.2d 19, 22 (2d Cir.1980), rev'd on other grounds, 455 U.S. 678, 102 S.Ct. 1349, 71 L.Ed.2d 547 (1982) ( ); Jeffries v. Georgia Residential Finance Authority, 678 F.2d 919, 928 (11th Cir.), cert. denied, 459 U.S. 971, 103 S.Ct. 302, 74 L.Ed.2d 283 (1982) ( ). Here, the absent partners would appear to have no interest or argument different from the present defendants with respect to the coverage of the policies. Thus, any interests which the absent individuals have are adequately represented and protected by the defendants in this action who have "as a practical matter" protected the indirect interest of the others.
In addition, the absence of Lord, Petrasic and Harcar is not cause to fear "double, multiple or otherwise inconsistent obligations." Rule 19(a)(2)(ii). Again, it is important to keep in mind that this motion is brought by defendants, and not by plaintiffs. If National Union succeeds in this suit for rescission, it will tender back the premium to the firm. If National Union is not successful, it will pay for defendants' defense in the Boardwalk litigation. Furthermore, a decision that National Union is not obliged to defend the present defendants is not necessarily incompatible with a decision that it must defend Lord, Petrasic or Harcar.
Therefore, the missing parties do not have to be joined under 19(a) Fed.R.Civ. P. However, even if these parties should be joined under 19(a), they are not indispensable under 19(b), and therefore there is no need to dismiss this action.
Pursuant to Rule 19(b), Fed.R.Civ.P., when joinder of the person described under 19(a) is not feasible:
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