United States District Court, E.D. Kentucky, Southern Division, Pikeville
MEMORANDUM OPINION AND ORDER DENYING PETITION FOR
HORN BOOM UNITED STATES DISTRICT COURT JUDGE.
matter is before the Court on Defendant Johnny Caudill's
Motion to Dismiss, or in the Alternative, Motion to File Late
Answer and Third Party Claims/Counterclaims. [R. 6] On March
19, 2018 Plaintiff Daily Underwriters of America, Inc.
brought this action for declaratory judgment pursuant to 28
U.S.C. § 2201 (“Declaratory Judgment Act”).
[R. 1] In lieu of an answer Defendant Caudill filed the
Motion to Dismiss currently before the Court. [R. 6] On May
9, 2018 the plaintiff filed its motion in response [R. 12]
and on May 17, 2018 defendant filed its reply [R. 13]. For
the reasons stated below, the Court declines to exercise
jurisdiction pursuant to the Declaratory Judgment Act.
about August 22, 2017 Defendant Caudill, an employee of L.M.
Wright Trucking, Inc., was injured when the car he was
driving collided with a vehicle operated by Ethan Adams. [R.
1 at p. 3] At all times relevant to this dispute L.M. Wright
Trucking carried a Commercial Auto Policy of Insurance with
Daily Underwriters covering their commercial vehicles,
including the one driven by Caudill. Id. at 2-3. As
a result of the collision Caudill made a liability claim
against Ethan Adams, who tendered to Caudill the liability
limits of his policy of motor vehicle insurance provided by
Kentucky Farm Bureau. Id. at 4. After asserting this
claim against Adams, Caudill tendered a claim for
underinsured motorist insurance benefits to Daily
Underwriters, contending that he was entitled to
“stack” underinsured motorists coverage for each
of the 13 company vehicles covered by the Policy.
Id. Daily Underwriters denied Caudill's claim
that he is entitled to stack coverage, claiming that he is
limited to recovery of $60, 000 because he is not a named
insured or family member as defined by the policy. [R. 12 at
p. 3] On March 19, 2018 Daily Underwriters brought this
declaratory judgment action seeking a declaration of rights
with regard to whether or not Caudill was entitled to
“stacked” benefits under the Policy. [R. 1] On
April 11, 2018 Defendant Caudill brought suit in Letcher
Circuit Court against the estate of Ethan Adams, Kentucky
Farm Bureau Insurance Company, Daily Underwriters of America,
and Rockhill Insurance Company seeking damages for allegedly
significant personal injuries resulting from the crash. [R.
Subject Matter Jurisdiction
courts are courts of limited jurisdiction and therefore must
have subject matter jurisdiction to hear a case. 28 U.S.C.
§ 1332 provides subject matter jurisdiction if the
parties are from different states and the amount in
controversy exceeds $75, 000. Plaintiff claims that diversity
of citizenship is met as the amount in controversy exceeds
$75, 000 and the parties are completely diverse. [R. 1]
Because the defendant seeks $780, 000 in the state insurance
dispute [R. 1 at p. 4], the Court agrees that the amount in
controversy requirement is satisfied and therefore the only
question at hand is whether or not diversity is improper
given the existence of non-diverse, mandatory parties.
Grange Mut. Cas. Co. v. Safeco Ins. Co. of America,
565 F.Supp.2d 779, 784 (E.D.Ky. 2008) (“when the
applicability of an insurance policy to a particular
occurrence is the question, the amount in controversy is
measured by the value of the underlying claim”).
motion to dismiss the defendant claims that this Court does
not have subject matter jurisdiction to hear the case as
there are indispensable parties that would destroy diversity
but which have not been joined to this suit. [R. 6] The
defendant's motion is short on specifics and simply
states that due to Fed.R.Civ.P. 19 the other parties to the
underlying state court action must be joined “in order
to prevent potentially inconsistent or unfair verdicts and
for judicial economy.” Id. The defendant does
not give any reasons why the declaratory judgment action
would cause potentially inconsistent or unfair verdicts or
reduce judicial economy. Under the Sixth Circuit's
three-part test a party is indispensable under Rule 19 if:
(1) it is necessary, (2) its joinder cannot be effected, and
(3) the court determines that it will dismiss the pending
case rather than proceed in the case without the absentee.
Laethem Equipment Co. v. Deere & Co., 485
Fed.Appx. 39, 44 (6th Cir. 2012). The initial burden rests
with the moving party to show that the missing party is
indispensable. Boles v. Greeneville Hous. Auth., 468
F.2d 476, 478 (6th Cir. 1972).
Rule 19(a) a party is necessary if “in that
person's absence, the court cannot accord complete relief
among existing parties” or the un-joined party
“claims an interest relating to the subject of the
action and is so situated that disposing of the action in
that person's absence” may impede on their rights
or cause them to incur multiple or inconsistent obligations.
Fed.R.Civ.P. 19(a)(1)(A)-(B). The Sixth Circuit has held that
Rule 19 is “not to be applied in a rigid manner but
should instead be governed by the practicalities of the
individual case.” Smith v. United Bhd. of
Carpenters & Joiners of Am., 685 F.2d 164, 166 (6th
Cir. 1982). Further, “simply because some forms of
relief might not be available due to the absence of certain
parties, the entire suit should not be dismissed if
meaningful relief can still be accorded.” Id.
has failed to show that the absent parties are required under
Rule 19(a)(1)(A) because complete relief is possible between
the present parties. Regarding completeness, the possibility
of future litigation amongst the relevant parties does not
mandate joinder, as Rule 19(a)(1) is concerned only with
those who are already parties. Sch. Dist. of Pontiac v.
Sec'y of the United States Dep't of Educ., 584
F.3d 253, 265 (6th Cir. 2009). The relief being requested - a
determination of the potential total liability between the
defendant insured and the plaintiff insurer - can be
completely decided without input from the other two insurers
in the state action, neither of which is a party to the
disputed insurance contract. Even though there exist other
parties to whom a portion of the fault may be allocated, this
does not mean that complete relief is impossible between the
parties named in the suit. See, e.g. Laethem Equipment
Co., 485 Fed.Appx. at 44. The fact that one of the other
insurers might face some future claim for contribution or
indemnification, as argued by the defendant, does not make
them necessary parties for the purposes of Rule 19 as the
Court can provide complete relief as to the question of
stacking between the insurer and the insured named in this
Court must next determine if the absent parties are necessary
under Rule 19(a)(1)(B), considering if they have an interest
relating to the subject of the action and whether or not
their absence would risk impeding their ability to protect
that interest or create a substantial risk of incurring
multiple or otherwise inconsistent obligations. Fed.R.Civ.P.
19(a)(1)(B). First, it does not appear that the absent
parties even have an interest in the subject of this action.
PrePaid Lab, LLC v. Lab. Corp. of Am. Holdings, No.
5:11-cv-00509, 2011 WL 2532405, *5 (N.D. Ohio June 24, 2011)
(finding that absent party was not a necessary party because,
inter alia, it “is not a signatory to the
parties' contract and has no express legal rights or
duties pursuant to the contract”). As noted by
plaintiff in its response “[n]either Duke nor KFB are
parties to the Policy, have duties or obligations that arise
out of the Policy, or have any direct or indirect interest in
the determination of rights and obligations under the
Policy.” [R. 12 at p. 8] Next, this action would not
subject the absent parties to multiple or inconsistent
obligations as the issue at stake only involves the parties
to this action and any judgment rendered by this court would
be binding in the state court action.
the Court finds that the absent parties are not required
under Rule 19(a), it is not required to analyze joinder under
19(b). Temple v. Synthes Corp., 498 U.S. 5, 8
(1990). Therefore, the Court will not dismiss the suit for
failure to join an indispensable party under Rule 19.
Declaratory Judgment Act, 28 U.S.C. § 2201
the Court has jurisdiction to hear this action, under 28
U.S.C. § 2201 it must still decide whether jurisdiction
is appropriate. The Declaratory Judgment Act provides that
“[i]n a case or actual controversy within its
jurisdiction … any court of the United States, upon
the filing of an appropriate pleading, may declare
the rights and other legal relations of any interested party
seeking such declaration.” 28 U.S.C. § 2201(a)
(emphasis added). The Court is granted wide discretion and is
“under no compulsion to exercise jurisdiction.”
Brillhart v. Excess Ins. Co. of Am., 316 U.S. ...