United of Omaha v. Hieber

• Decision Date: 19 June 1995
• Docket Number: No. 02A03-9409-CV-337,02A03-9409-CV-337
• Parties: UNITED OF OMAHA, Appellant-Third Party Defendant, v. William HIEBER, Dennis Hieber, Donald Hieber, Individually and as a farm partnership, and Kevin Hieber, Appellees-Defendants and Third Party Plaintiffs, and Nathan Hammond, by his parent and next friend, Marjorie Hammond, Kasey Hammond, by her parent and next friend, Marjorie Hammond, and Marjorie Hammond, Appellees-Plaintiffs, and United Farm Bureau Mutual Insurance Company, Appellee-Intervenor and Third Party Plaintiff.
• Court: Indiana Appellate Court

Page 83

653 N.E.2d 83

UNITED OF OMAHA, Appellant-Third Party Defendant, v. William HIEBER, Dennis Hieber, Donald Hieber, Individually and as a farm partnership, and Kevin Hieber,

Appellees-Defendants and Third Party Plaintiffs,

and

Nathan Hammond, by his parent and next friend, Marjorie

Hammond, Kasey Hammond, by her parent and next

friend, Marjorie Hammond, and Marjorie

Hammond, Appellees-Plaintiffs,

and

United Farm Bureau Mutual Insurance Company,

Appellee-Intervenor and Third Party Plaintiff.

No. 02A03-9409-CV-337.

Court of Appeals of Indiana.

June 19, 1995.

Rehearing Denied Dec. 12, 1995 and Dec. 15, 1995.

Thomas W. Yoder, Fort Wayne, for appellant.

Leonard E. Eilbacher, Brian L. England, Fort Wayne, for appellees.

OPINION

GARRARD, Judge.

United of Omaha (Omaha) appeals certain pretrial orders and the summary judgment entered against it in a declaratory judgment action to determine the enforceability of Omaha's subrogation clause in a group health insurance policy.

FACTS AND PROCEDURAL HISTORY

On May 24, 1990, Marjorie Hammond was operating a motor vehicle in which her children, Nathan and Kasey, were passengers. She swerved in order to avoid a farm vehicle driven by Kevin Hieber and lost control of her vehicle. Nathan sustained serious injuries as a result of the accident.

Steven Hammond, Nathan's father, had a group health insurance policy issued by Omaha through Local # 414 Teamsters Health and Welfare Fund and Food Marketing Corporation. Under the policy, Omaha paid approximately $328,924.46 for medical and hospital expenses related to Nathan's injuries. Pursuant to the requirements of the Employee Retirement Income Security Act (ERISA), ¹ Omaha issued a summary plan description (summary) to all participants. The summary contained the following provision:

SUBROGATION

In the event that payment is made by the Plan for services or charges which are eligible for payment by another source, the Plan shall have the right to recover any payments which were or became duplicate payments.

(R. 344). The actual policy issued by Omaha included a more extensive subrogation clause specifically referring to its right to recover policy payments from the proceeds of any settlement or judgment obtained against a negligent third party; however, the policy was not distributed to plan members.

Marjorie Hammond, on behalf of herself and her children, filed a lawsuit against Hieber ² on May 21, 1992. Omaha notified Hieber and his liability insurer, United Farm Bureau Mutual Insurance Company (Farm Bureau), of its subrogation claim. The Hammonds' attorney was initially hired by Omaha to pursue its subrogation claim in connection with his representation of the Hammonds, but his employment for Omaha was terminated in June of 1993.

In response to Hieber's nonparty request for production of documents, Omaha provided the summary of its group policy. Based upon Hieber and Farm Bureau's opinion that the summary did not provide Omaha with a right of subrogation in any third-party tort recovery by Nathan, Hieber filed a third-party complaint for declaratory judgment against Omaha on May 19, 1993, seeking a judgment that Omaha had no subrogation interest in any sums recovered by Nathan in this action. In its answer, Omaha pled the affirmative defenses of lack of subject matter jurisdiction, failure to state a claim upon which relief could be granted, and lack of standing on the part of Hieber. Omaha then filed a motion to dismiss based upon these same contentions, which was overruled by the trial court.

Within two months after the filing of the declaratory judgment action, the trial court sua sponte ordered Hieber to replead paragraphs four and five of his complaint. Paragraph four of Hieber's complaint stated:

Third-party plaintiffs claim that these defendants [Omaha] are within the aforesaid contractual provision, as "another source," from which said medical and hospital expenses are "eligible for payment."

(R. 84). The trial court concluded that, since this paragraph could have the effect of stipulating Hieber's case away, it must have been the result of an inadvertent error in pleading.

The Hammonds and Hieber reached a settlement on November 5, 1993. As a part of the settlement, the Hammonds assigned to Hieber and Farm Bureau all rights to contest and litigate Omaha's subrogation claim, and Hieber and Farm Bureau agreed to indemnify the Hammonds against any potential liability resulting from the subrogation claim. On November 10, 1993, the court granted Farm Bureau's motion to intervene in the declaratory judgment action, again over Omaha's objection.

Hieber and Farm Bureau filed a motion for summary judgment, which the trial court granted on May 18, 1994. The court concluded that under its insurance summary Omaha had failed to preserve a right of subrogation against a recovery from a third-party tortfeasor.

ISSUES AND DISCUSSION

Omaha raises several issues for our review:

I. Whether the court erred in denying Omaha's motion to dismiss the declaratory judgment action.

II. Whether the court erred in ordering that paragraphs four and five of the complaint for declaratory judgment be repled.

III. Whether the court erred in permitting Farm Bureau to intervene in the declaratory judgment action.

IV. Whether the court erred in granting Hieber and Farm Bureau's motion for summary judgment.

ISSUE I

Omaha first contends that it was improperly made a party to this case. ³ We disagree.

Ind.Trial Rule 20 governs the permissive joinder of parties:

(A) Permissive Joinder

(1) All persons may join in one action as plaintiffs if they assert any right to relief jointly, severally, or in the alternative in respect of or arising out of the same transaction, occurrence, or series of transactions or occurrences and if any question of law or fact common to all these persons will arise in the action.

(2) All persons may be joined in one action as defendants if there is asserted against them jointly, severally, or in the alternative, any right to relief in respect of, or arising out of, the same transaction, occurrence, or series of transactions or occurrences and if any question of law or fact common to all defendants will arise in the action.

A plaintiff or defendant need not be interested in obtaining or defending against all the relief demanded. Judgment may be given for one or more of the plaintiffs according to their respective rights to relief, and against one or more defendants according to their respective liabilities. Unwilling plaintiffs who could join under this rule may be joined by a plaintiff as defendants, and the defendant may make any persons who could be joined under this rule parties by alleging their interest therein with a prayer that their rights in the controversy be determined, along with any counterclaim or cross-claim against them, if any, as if they had been originally joined as parties.

T.R. 20(A) (emphasis added).

The purpose of T.R. 20(A) is to promote trial convenience, expedite claims, and avoid multiple lawsuits. McCoy v. Like (1987), Ind.App., 511 N.E.2d 501, 503, reh'g denied, trans. denied. To accomplish these ends, Indiana courts give T.R. 20(A) the broadest possible reading, especially in light of T.R. 20(B) and T.R. 42(B), which allow for separate trials after all parties have been joined. Id. at 504. The determination of whether joinder should be granted rests within the trial court's discretion. We will reverse only for an abuse of that discretion. Id.

We find Pivarnik v. Northern Indiana Public Service Co. (1994), Ind., 636 N.E.2d 131 to be instructive in our resolution of this issue. In that case, a bulldozer owned by GVK Corporation and operated by Robert Cauffman hit a NIPSCO pipeline. GVK had been hired by the owners of the property, Daniel and Edward Pivarnik, to dig a pond. GVK initially brought suit against NIPSCO, and NIPSCO filed a third-party complaint against Cauffman and the Pivarniks. The court concluded that Cauffman and the Pivarniks were proper parties under Trial Rule 20. Cauffman and the Pivarniks had both brought separate actions against NIPSCO, and the supreme court concluded that they clearly could have joined with GVK as plaintiffs in the original lawsuit against NIPSCO, as their claims against NIPSCO arose out of the same occurrence and common questions of both fact and law existed. Thus, because the Pivarniks and Cauffman could have joined as plaintiffs with GVK under T.R. 20(A)(1), GVK could have itself joined the Pivarniks and Cauffman as unwilling plaintiffs. T.R. 20(A)(2); Id. at 139. Therefore, as the Pivarniks and Cauffman could have been joined under Trial Rule 20, defendant NIPSCO had the right under the rule to seek joinder of these parties by alleging their interest in the lawsuit and by asking that the court determine that interest. Id.

In the case before us, Omaha could have joined the lawsuit as a plaintiff with the Hammonds, because its alleged subrogation claim arose from the accident and there existed common questions of fact and law, as both Nathan and Omaha's right to recovery depended on the determination of Hieber's fault. Thus, as in Pivarnik, the Hammonds could have joined Omaha as an unwilling plaintiff. Consequently, Hieber had the right to seek joinder of Omaha by alleging Omaha's interest in the lawsuit and asking that the court determine that issue. While Hieber characterized this request as a third-party complaint for declaratory judgment, this was, in substance, a request for the court to determine Omaha's interest in the lawsuit.

In any event, even if joinder were not proper under T.R. 20(A), a motion to dismiss is not the proper remedy. T.R. 21(A); McCoy, 511 N.E.2d at 506. A motion to sever the declaratory judgment action would have been appropriate, and, in fact, Hieber filed a motion for a separate trial. Id. The trial court did not abuse its discretion in permitting the declaratory judgment action against Omaha.

ISSUE II...