CSX Transportation, Inc. v. Luster Express, LLC
Filing
17
MEMORANDUM OPINION AND ORDER Signed by Magistrate Judge H. Brent Brennenstuhl on 8/28/2017 granting 14 Motion to Intervene. cc: Counsel(JBM)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF KENTUCKY
OWENSBORO DIVISION
________________________________________________________________
)
CSX TRANSPORTATION, INC.
)
)
PLAINTIFF
) Civil Action No. 4:16cv-00167-JHM
v.
) CHIEF JUDGE JOSEPH H. MCKINLEY, JR.
)
)
LUSTER EXPRESS, LLC
)
d/b/a Bama Freight, LLC
)
)
DEFENDANT
)
_____________________________________________________________
MEMORANDUM OPINION AND ORDER
Before the Court is the motion of Praetorian Insurance Company (DN 14) to
intervene in this action to assert a property damage subrogation claim against Plaintiff
CSX Transportation, Inc. CSX opposes the motion and has filed a response at DN 15, to
which Praetorian has replied at DN 16.
Nature of the Case
On July 14, 2015, Jason Sullivan, an employee of Defendant Luster Express, LLC,
was driving a tractor unit pulling a flatbed drop deck trailer. When Sullivan attempted to
cross a set of railroad tracks, his trailer became stuck. An oncoming CSX train struck the
trailer, pushing it down the track and destroying a crossing signal and signal house
(DN 1). CSX brings this negligence action against Luster Express for property damage.
Praetorian’s Motion to Intervene
Praetorian provided insurance coverage to Luster for the tractor-trailer involved in
the accident. Praetorian alleges it paid for damage to the truck, trailer and cargo, as well
as towing and storage fees, totaling approximately $119,000.00, and is subrogated to
Luster for recovery of those payments. Praetorian seeks to intervene in this action to
assert a claim against CSX pursuant to Fed. R. Civ. P. 24(a) as a matter of right, as it
contends its claims relate to the property or transaction that is the subject of this action
and is so situated that disposing of the action may impair or impede its ability to protect
its interest. In the alternative, Praetorian asserts that is should be permitted to intervene
under Rule 24(b).
CSX’s Opposition
CSX contends that Fed. R. Civ. P. 13(a) requires that any counterclaim against it
must have been asserted when Luster filed its answer. As Praetorian is a subrogee of
Luster, and therefore stands in the shoes of its insured with regard to the assertion of the
subrogation claim, CSX argues that the subrogation claim must have been asserted as a
counterclaim, and Praetorian is estopped from attempting to assert it now. In support of
its position, CSX cites Avemco Ins. Co. v. Cessna Aircraft Co., 11 F.3d 668 (10th Cir.
1993) and Cincinnati Ins. Co. v. Cost Co., No. 5:10CV7, 2011 U.S. Dist. LEXIS 3155
(N.D. W. Va. Jan. 12, 2011) for the proposition that “pleader” as used in Rule 13(a)
includes any subrogation claim and, as such, a subrogation claim is a mandatory
counterclaim which must be asserted at the outset of the defense.
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Analysis
Fed. R. Civ. P. 13(a) defines a compulsory counterclaim as one which arises out of
the transaction or occurrence that is the subject matter of the opposing party’s claim and
does not require the addition of another party over whom the court cannot acquire
jurisdiction. If both of these factors are satisfied, then the pleader must state any such
claim it holds at the time of service. The reason for the rule has been explained as
follows:
“The requirement that counterclaims arising out of the same transaction or
occurrence as the opposing party’s claim ‘shall’ be stated in the pleadings
was designed to prevent multiplicity of actions and to achieve resolution in
a single lawsuit of all disputes arising out of common matters. The Rule
was particularly directed against one who failed to assert a counterclaim in
one action and then instituted a second action in which that counterclaim
became the basis of the complaint.”
Kirschbaum v. Wells Fargo, N.A., No. 5:16-CV-136-JHM, 2017 U.S. Dist. LEXIS
47308, *18 (W.D. Ky. March 30, 2017) (quoting Southern Const. Co. v. Pickard, 371
U.S. 57, 60 (1962).
Contrary to CSX’s suggestion, Rule 13(a) does not establish a “speak now or
forever hold your peace” doctrine.
“The Court . . . considering the applicability of Rule 15 holds that a
compulsory counterclaim not raised in an answer cannot be raised in
subsequent litigation but may be filed (is not waived) in the instant
litigation with the Court’s permission. Accordingly, [defendant] did not
waive the compulsory counterclaim when it failed to raise it in its answer to
[plaintiff’s] claim. Instead, it was free to ask the Court for leave to amend.”
Dixie Fuel Co., LLC v. Straight Creek, LLC, No. 08-326-GFVT, 2011 U.S. Dist. LEXIS
23321, *8-9 (E.D. Ky. March 8, 2011); see also Vaughn v. Konecranes, Inc., No. 5:143
136-DCR, 2015 U.S. Dist. LEXIS 7467, *4 (E.D. Ky. Jan. 22, 2015) (“This Court has
previously held that a compulsory counterclaim not raised in an answer cannot be raised
in subsequent litigation but may be filed in the instant litigation with the Court’s
permission”).
As Praetorian notes, the cases cited by CSX can be differentiated by the fact that
the parties seeking to assert subrogation claims had the opportunity to make the claims in
prior actions, but failed to do so. Those courts concluded that, in keeping with Rule
13(a)’s objective of preventing piecemeal litigation, the subrogation holders’ missed their
window of opportunity to make the claims.
Conversely, in this case Praetorian’s
assertion of the subrogation claim is entirely consistent with the objective of Rule 13(a)
that all claims arising from a common nexus be resolved in a single action.
IT IS ORDERED the motion of Praetorian Insurance Company to intervene,
DN 14, is GRANTED.
ENTERED this August 28, 2017
Copies to:
Counsel of Record
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