Western Maryland Ry. Co. v. Harbor Ins. Co., s. 89-7154

• Decision Date: 03 August 1990
• Docket Number: 89-7155,Nos. 89-7154,s. 89-7154
• Citation: 910 F.2d 960
• Parties: , 17 Fed.R.Serv.3d 930 WESTERN MARYLAND RAILWAY COMPANY, et al., Appellants, v. HARBOR INSURANCE COMPANY, et al., Appellees.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 960

910 F.2d 960

285 U.S.App.D.C. 460, 17 Fed.R.Serv.3d 930

WESTERN MARYLAND RAILWAY COMPANY, et al., Appellants, v. HARBOR INSURANCE COMPANY, et al., Appellees.

Nos. 89-7154, 89-7155.

United States Court of Appeals, District of Columbia Circuit.

Argued April 13, 1990.

Decided Aug. 3, 1990.

Appeal from the United States District Court for the District of Columbia (Civil Nos. 85-03163 and 85-03162).

Sherry W. Gilbert, with whom Jerold Oshinsky and Christopher J. Cherry was on the brief, for appellants in Nos. 89-7154 and 89-7155.

James W. Greene, II, for appellees in Nos. 89-7154 and 89-7155. Also on the brief were Dennis M. Flannery, David M. Becker, and Lynn Bregman for Ins. Co. of North America and California Union Ins. Co.; James E. Rocap, III, for Aetna Cas. and Sur. Co. and Federal Ins. Co.; Kevin Faley, for Allianz Underwriters Ins. Co.; James P. Schaller, M. Elizabeth Medaglia, and Antoinette P. LeBol for American Home Assur. Co., et al.; Richard H. Gimer and Stephen L. Humphrey, for Falcon Ins. Co.; William J. Bowman for First State Ins. Co.; Roger E. Warin and Steven Davidson for Highlands Ins. Co. and The Home Ins. Co.; George Marshall Moriarty, Kenneth W. Erickson, and Eric A. Smith for Intern. Surplus Lines Ins. Co. and The North River Ins. Co.; Brian C. Shevlin for Interstate Indem. Co.; David O. Godwin, Jr. for Nationwide Ins. Co.; Lawrence E. Carr, Jr. and Margaret W. Warner for The Travelers Ins. Co.; Robert E. Higgestad for Universal Reinsurance Co. and Southern American Ins. Co.; and John F. Mahoney, Jr. for U.S. Liability Ins. Co. Mark Mathews also entered an appearance for California Union Ins. Co.

Before EDWARDS, SENTELLE, and THOMAS, Circuit Judges.

Opinion for the Court filed by Circuit Judge CLARENCE THOMAS.

CLARENCE THOMAS, Circuit Judge:

When a party to a federal lawsuit moves to join a nonparty resisting joinder, the district court must answer three questions: Should the absentee be joined? ¹ If the absentee should be joined, can the absentee be joined? ² If the absentee cannot be joined, should the lawsuit proceed without her nonetheless? ³ "To use the familiar [if] confusing terminology," Provident Tradesmens Bank & Trust Co. v. Patterson, 390 U.S. 102, 118, 88 S.Ct. 733, 742, 19 L.Ed.2d 936 (1968): Is the absentee's presence necessary? If the absentee's presence is necessary, is her joinder feasible? If the absentee's joinder is not feasible, is she indispensable?

In each of the two cases in this consolidated appeal the district court held that the plaintiffs in the other were necessary for the just adjudication of the action in question, that joining the other plaintiffs was not feasible, and that the missing parties were indispensable. The district court accordingly dismissed both suits. Chesapeake & Ohio Ry. v. Certain Underwriters at Lloyd's, London, 716 F.Supp. 27 (D.D.C.1989); Western Md. Ry. v. Harbor Ins. Co., Civ. No. 85-3163-SSH (D.D.C. May 25, 1989) (incorporating opinion in Chesapeake & Ohio ). We decide here that regardless of whether it was feasible, the absentees' joinder in these cases was unnecessary, and the absentees, therefore, could not have been indispensable. We accordingly reverse and remand.

We first sketch the backdrop of this appeal. Both Chesapeake & Ohio and Western Maryland arose from a spate of asbestosis claims filed by railroad employees under the Federal Employers' Liability Act (FELA), 45 U.S.C. Secs. 51-60, which in turn led the railroads to sue the carriers of the railroads' indemnity and liability insurance. In Chesapeake & Ohio, three railroads sued forty insurers, seeking damages and a declaration of the railroads' rights under about six hundred policies. See 716 F.Supp. at 28 & n. 1. In Western Maryland, filed the same day, one railroad sued nine insurers, seeking similar relief under forty similar policies. See Chesapeake & Ohio, 716 F.Supp. at 29 & n. 2. All of the defendants in Western Maryland were also defendants in Chesapeake & Ohio, and the plaintiff in Western Maryland was a wholly owned subsidiary of one of the plaintiffs in Chesapeake & Ohio. See 716 F.Supp. at 29-30 (detailing railroads' corporate structure). Thirty-six of the insurance policies issued to the plaintiff in Western Maryland were also issued to some of the plaintiffs in Chesapeake & Ohio. See 716 F.Supp. at 31. All of the policies in both cases imposed "occurrence limits" for personal injury and property damage claims and all imposed "aggregate limits" for claims based on "occupational diseases." See id. at 31 & n. 8. Left for decision in each lawsuit was whether occupational disease claims included the employees' FELA claims based on asbestosis.

Western Maryland and Chesapeake & Ohio eventually came before the same district judge, and about seven months after the filing of the complaints, all of the defendants in both actions moved concurrently to dismiss. The defendants in Chesapeake & Ohio maintained that that action could not justly be adjudicated without the plaintiff in Western Maryland, and that because the Western Maryland plaintiff could not be joined in Chesapeake & Ohio without destroying diversity, the court should dismiss the latter case under Fed.R.Civ.P. 19. See Defendant's Motion to Dismiss at 1-2, Chesapeake & Ohio, Civ. No. 85-3162-SSH (D.D.C. Apr. 16, 1986). The defendants in Western Maryland repeated the arguments that they made in Chesapeake & Ohio, averred that the Western Maryland action was "duplicative, and merely a device to create diversity of citizenship," and asked the court to dismiss Western Maryland. Defendant's Motion to Dismiss at 2, Western Maryland, Civ. No. 85-3163-SSH (D.D.C. Apr. 16, 1986).

The district court granted both motions and dismissed both suits. It held that the railroads were not necessary parties within the meaning of rules 19(a)(1) or 19(a)(2)(i), but that the railroads were necessary parties under 19(a)(2)(ii). In its 19(a)(2)(ii) analysis, the court first contrasted the parties' respective positions on how to characterize the FELA claims for asbestosis: as occupational disease claims, subject to the policies' aggregate limits, or as claims for bodily injury, covered only by the limits per occurrence. The "better reading of the policies," in the district court's view, was the former one, 716 F.Supp. at 32, and that reading meant that "the four plaintiffs are claimants to a common, limited fund," id.

With the railroads' recovery for their employees' FELA claims against them capped by the aggregate limits, the plaintiff in Western Maryland had "an interest relating to the subject of" Chesapeake & Ohio. Fed.R.Civ.P. 19(a)(2). According to the district court, moreover, the failure to join all of the railroads would leave all of the insurers "subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations." Fed.R.Civ.P. 19(a)(2)(ii); see 716 F.Supp. at 32. ⁴ The district court held that joinder was not feasible because joining the railroads in the two suits would undo diversity of citizenship in both and thus deprive the court of jurisdiction. The court then decided "in equity and good conscience" that neither action should proceed without the absent parties. Fed.R.Civ.P. 19(b). It therefore dismissed both cases. See id.

As we have explained above, a district court deciding a motion under rule 19 should answer three questions in sequence. ⁵ The court need only decide whether an absent party is indispensable if it determines that the party's joinder is infeasible, and it need only decide whether joinder is feasible if it decides that an absentee's presence is necessary. We hold here that regardless of whether the plaintiffs absent from each of these actions could have been joined in the other, their presence was not necessary. It follows, then, that dismissal was unwarranted.

We agree with the district court's conclusion that with respect to rules 19(a)(1) and (a)(2)(i), the absent railroads were not necessary for just adjudication. Even in the absence of some of the railroads, the court could accord complete relief in each case to those already parties. Fed.R.Civ.P. 19(a)(1); see 716 F.Supp. at 31. Because Western Maryland and its corporate kin have chosen to litigate separately, moreover, the district court had reason to conclude that disposition of one suit in the absence of the railroads in the other would not "as a practical matter impair or impede [the railroads'] ability to protect that interest." Fed.R.Civ.P. 19(a)(2)(i); see 716 F.Supp. at 32.

We depart from the district court, however, in our analysis under rule 19(a)(2)(ii). ⁶ Rule 19(a)(2)(ii) directs that an absentee be joined if disposition of the action without her might leave those present "subject to a substantial risk of incurring ... inconsistent obligations." Fed.R.Civ.P. 19(a)(2)(ii) (emphasis added). A recent decision ordering the joinder of an absent insured illustrates why here, in contrast, the railroads' decision not to join one another subjected the insurers to little or no risk of the kind that rule 19 is designed to avert.

In In re Forty-Eight Insulations, Inc., 109 B.R. 315 (N.D.Ill.1989), Forty-Eight Insulations, a manufacturer of products containing asbestos, sued twenty-two insurers for a declaration of the insurers' obligations to Forty-Eight under policies issued to Forty-Eight's corporate parent, Foster Wheeler Corp. The insurers argued that Foster Wheeler was a necessary party to the suit, and they moved for an order joining Foster Wheeler under rule 19. Appraising everyone's positions, the court found that Forty-Eight and Foster Wheeler were common claimants to the defendants' limited insurance fund. Foster Wheeler, however, refused to concede that payments made to Forty-Eight would reduce the amount that it, Foster Wheeler, could recover. According to the court, Foster Wheeler's position made rule 19(a)(2)(ii) joinder appropriate:

In this action Forty-Eight seeks a...