Kras v. Dick's R U Crazy, Inc. et al

Filing 71

OPINION AND ORDER: DENIES Plaintiff's Motion to Join Additional Parties and for Remand 47 and ORDERS both parties to file briefs, as outlined, on or before 2/16/2018, with responses to be filed on or before 3/2/2018. The Court DENIES Garnish ee-Defendant's Motion for Summary Judgment 55 , Counter Defendant's Motion for Summary Judgment on Conifer Insurance Company's Declaratory Judgment Counter Claim 57 , and Plaintiff's Motion and Memorandum in Support to Strike Affidavit of Detective Sgt. Stephen Guernsey 60 , with leave to refile after the Court has ruled on the question of joinder. Signed by Magistrate Judge John E Martin on 1/29/2018. (lhc)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
HAMMOND DIVISION
NATHAN KRAS,
Plaintiff/Judgment Creditor,

)
)
)
v.
)
)
CONIFER INSURANCE ,
)
Garnishee-Defendant,
)
____________________________________)
)
CONIFER INSURANCE ,
)
Counter-Claim Plaintiff,
)
)
v.
)
)
NATHAN KRAS,
)
Counterclaim Defendant.
)

CAUSE NO.: 2:16-CV-224-JEM

OPINION AND ORDER
This matter is before the Court on Plaintiff’s Motion to Join Additional Parties and for
Remand [DE 47], filed May 3, 2017. Plaintiff seeks to join as defendants in this case the entities who
were defendants/judgment debtors in the underlying state court proceedings, pursuant to Federal
Rule of Civil Procedure 19. On May 17, 2017, Conifer Insurance Company filed its response, and
Kras filed a reply on May 23, 2017.
I. Background
In September 2013, Nathan Kras was shot in the leg and abdomen outside a Hammond,
Indiana nightclub. Two years later, in September 2015, Kras sued the nightclub and its owners in
state court, alleging negligence. The nightclub owners had insurance with Conifer Insurance
Company, but Conifer denied the nightclub defendants’ request for coverage for the attack. In
Conifer’s view, the policy provided coverage for the nightclub property only, not for the adjoining
gravel parking lot where Conifer said the attack occurred. Conifer did not move for a declaratory

judgment in the state court, and the state court litigation between Kras and the nightclub defendants
proceeded without Conifer’s involvement.
In March 2016, Kras served 28 admissions requests on the nightclub defendants regarding
the nature, extent, and amount of Kras’s injuries and damages, the location of the attack, and the
owners’ fault with respect to the attack. In April 2016, Kras and the owners entered into a consent
judgment by which the owners admitted negligence and admitted to all 28 admissions requests, and
the state court entered judgment against them for $2,955,056—the amount of damages identified in
the consent judgment and in the admissions requests. The consent judgment included a clause in
which Kras agreed not to execute against the judgment debtors.
Having received judgment in his favor, in April 2016 Kras filed a motion for a proceeding
supplemental. Kras sought to garnish $2,955,056 from Conifer in satisfaction of the state court
judgment against the judgment debtors. Conifer removed the case to federal court on June 13, 2016,
and thereafter filed a counterclaim for declaratory judgment on the grounds that it did not owe
coverage to the judgment debtors.
Accordingly, the two claims proceeding in this Court are a garnishment proceeding to
determine whether Conifer is in possessions of any assets that should be used for payment of the
state court judgment, and a counterclaim for declaratory judgment that the underlying judgment
debtors are not entitled to coverage from Conifer for the actions giving rise to the state suit.
The parties have filed forms of consent to have this case assigned to a United States
Magistrate Judge to conduct all further proceedings and to order the entry of a final judgment in this
case. Therefore, this Court has jurisdiction to decide this case pursuant to 28 U.S.C. § 636(c).
II. Analysis

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Kras seeks to join the nightclub defendants, who were also judgment debtors in the
underlying state court suit, as defendants in this case. Conifer argues that the judgment debtors are
not necessary parties to the garnishment proceeding between Kras and Conifer.
Federal Rule of Civil Procedure 19 governs joinder of parties:
(a) Persons Required to Be Joined if Feasible.
(1) Required Party. A person who is subject to service of
process and whose joinder will not deprive the court of
subject-matter jurisdiction must be joined as a party if:
(A) in that person’s absence, the court cannot accord
complete relief among existing parties; or
(B) that person claims an interest relating to the
subject of the action and is so situated that disposing
of the action in the person’s absence may:
(i) as a practical matter impair or impede the
person’s ability to protect the interest; or
(ii) leave an existing party subject to a
substantial risk of incurring double, multiple,
or otherwise inconsistent obligations because
of the interest.
(2) Joinder by Court Order. If a person has not been joined
as required, the court must order that the person be made a
party. A person who refuses to join as a plaintiff may be made
either a defendant or, in a proper case, an involuntary
plaintiff.
Fed. R. Civ. P. 19(a)(1), (2). Paragraph (b) provides:
(b) When Joinder Is Not Feasible. If a person who is required to be
joined if feasible cannot be joined, the court must determine whether,
in equity and good conscience, the action should proceed among the
existing parties or should be dismissed. The factors for the court to
consider include:
(1) the extent to which a judgment rendered in the person’s
absence might prejudice that person or the existing parties;
(2) the extent to which any prejudice could be lessened or
avoided by:
(A) protective provisions in the judgment;
(B) shaping the relief; or
(C) other measures;
(3) whether a judgment rendered in the person’s absence
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would be adequate; and
(4) whether the plaintiff would have an adequate remedy if
the action were dismissed for nonjoinder.
Fed R. Civ. P. 19(b).
Kras argues that the case must be remanded because joining the judgment debtors would
destroy diversity, but that Kras may be prejudiced if the garnishment proceeds without them. The
state court consent judgment contains a clause in which Kras agreed not to execute against the
judgment debtors. Kras argues that there are now questions about the representations some of the
judgment defendants made in their affidavits, and that some of the Rule 19(b) factors support joinder
and remand: in the judgment defendants’ absence Kras will not be able to determine whether to
rescind the consent judgment or its non-execution clause and having to continue the process against
them in state court will add years onto his ability to receive satisfaction of the judgment.
Conifer contends that the judgment debtors are not required defendants. Conifer argues that
since this is a proceeding supplemental against Conifer as a Garnishee-Defendant, it is separate from
the underlying liability case, and that collection against judgment debtors can still happen in the
original state court action if that is appropriate.
The Court must first determine whether the judgment debtors are required parties pursuant
to Rule 19(a) before determining whether or not joinder is feasible. Askew v. Sheriff of Cook Cty.,
Ill., 568 F.3d 632, 635 (7th Cir. 2009) (“Rule 19(a) addresses ‘persons required to be joined if
feasible,’ and Rule 19(b) describes what the court must do if joinder is not feasible. The first step,
however, is to identify which parties (if any) fall within the scope of the rule.”) (quoting Fed. R. Civ.
P. 19(a)). As Conifer argues, complete relief between Kras and Conifer as to whether Conifer has
funds appropriate for garnishment can be determined without the judgment debtors, and the

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judgment debtors’ interest in Kras’s garnishment proceedings against Conifer is not impeded by
their absence. The enforcability of the consent judgment as between Kras and the judgment debtors
is not within the scope of the garnishment proceeding brought by Kras against Conifer. Likewise,
the judgment debtors’ obligation to satisfy any portion of the judgment is not within the scope of
the garnishment proceedings brought by Kras against Conifer.
While the judgment debtors are not necessary defendants to the garnishment claim, the same
is not necessarily true of the declaratory judgment counterclaim. Kras does not address whether the
judgment debtors, as the insureds in the underlying state case, are required parties as to Conifer’s
counterclaim seeking a declaration regarding the scope of coverage of that insurance. Conifer
acknowledges in a footnote that the judgment debtors may be necessary parties for the purposes of
resolving Conifer’s claim for declaratory judgment. However, Conifer does not analyze the Rule
19(a) factors as they relate to the declaratory judgment counterclaim, merely pointing out that the
judgment debtors’ addition as counterclaim defendants would not destroy diversity. The Court is
concerned that the judgment debtors may indeed be necessary parties for determination of
counterclaim for declaratory judgment regarding whether the insurance policy procured by the
judgment debtors as the insureds covers the injury in this case. Accordingly, additional briefing is
required addressing whether the judgment debtors are required parties under Federal Rule of Civil
Procedure 19(a). See Republic of Philippines v. Pimentel, 553 U.S. 851, 861 (2008) (“A court with
proper jurisdiction may also consider sua sponte the absence of a required person . . .”). The Court
notes that diversity between the parties will not be destroyed if the judgment debtors are added as
counterclaim defendants.
Because the legal issues in the motions for summary judgment are overlapping, the Court

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finds that it is not appropriate for it to rule on either pending motion until the issue of joinder is
resolved. The motions for summary judgment on both the garnishment proceeding and the
declaratory judgment may be refiled after the Court has determined that all required parties are in
the case and have had the opportunity to address the legal arguments that may affect their interests.
IV. CONCLUSION
For the foregoing reasons, the Court hereby DENIES Plaintiff’s Motion to Join Additional
Parties and for Remand [DE 47] and ORDERS both parties to file briefs addressing whether the
judgment debtors are required parties to the counterclaim for declaratory judgment on or before
February 16, 2018, with responses to be filed on or before March 2, 2018.
The Court hereby DENIES Garnishee-Defendant’s Motion for Summary Judgment [DE 55],
Counter Defendant’s Motion for Summary Judgment on Conifer Insurance Company’s Declaratory
Judgment Counter Claim [DE 57], and Plaintiff’s Motion and Memorandum in Support to Strike
Affidavit of Detective Sgt. Stephen Guernsey [DE 60], with leave to refile after the Court has ruled
on the question of joinder.
SO ORDERED this 29th day of January, 2018.
s/ John E. Martin
MAGISTRATE JUDGE JOHN E. MARTIN
UNITED STATES DISTRICT COURT
cc:

All counsel of record

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