The Burlington Insurance Company v. Columbia Mutual Insurance Company

Filing 21

MEMORANDUM AND ORDER re: 10 MOTION to Dismiss Case filed by Defendant Columbia Mutual Insurance Company. IT IS HEREBY ORDERED that defendant's motion to dismiss is GRANTED, without prejudice to plaintiff's ratification, joinder, or s ubstitution of the real party in interest as plaintiff. IT IS FURTHER ORDERED that plaintiff shall have 14 days in which to ratify, join, orsubstitute its insured as the real party at interest in this matter. IT IS FINALLY ORDERED that if plaintiff d oes not ratify, join, or substitute itsinsured as the real party at interest in this matter with 14 days, the Court will dismiss plaintiff's complaint with prejudice. (Response to Court due by 9/21/2012.) Signed by District Judge Stephen N. Limbaugh, Jr on 9/7/12. (CSG)

EASTERN DISTRICT OF MISSOURI
SOUTHEASTERN DIVISION

THE BURLINGTON INSURANCE CO.,

)
)
Plaintiff,
)
)
vs.
)
)
COLUMBIA MUTUAL INSURANCE CO., )
)
Defendant.
)

Case No. 1:11-CV-214 SNLJ

MEMORANDUM AND ORDER
Plaintiff Burlington Insurance Company seeks indemnification from defendant Columbia
Mutual Insurance Company for settlement funds paid by Burlington to a third party. Defendant
moved to dismiss (#10). This matter has been fully briefed and is now ripe for adjudication.
I.

Background
According to the complaint, on January 2, 2010, Richard Bailey was injured while on

property leased by Goldstar Enterprises, Inc. in Sikeston, Missouri. Mr. Bailey had been
repairing a defect in a tank that was permanently mounted onto a trailer. Mr. Bailey climbed on
top of the tank to hand a mig welder to an employee of Goldstar Enterprises, and the employee lit
the mig welder, which caused an explosion that severely injured Mr. Bailey. The mig welder was
owned by Goldstar Enterprises. Both the tank and trailer were used by Goldstar Recylcers, Inc.,
in the operation of its restaurant grease recycling business. However, the trailer was owned by
Goldstar Enterprises, and the tank itself was owned either by Goldstar Enterprises or Ed Jolley,
the owner of both Goldstar Enterprises and Goldstar Recyclers.

On the date of the accident, Goldstar Recyclers was insured by plaintiff, and Goldstar
Enterprises was insured by defendant. Mr. Bailey presented a claim for personal injury arising
out of the accident to Goldstar Recyclers, and, upon investigation, plaintiff Burlington paid
$900,000 in settlement to Mr. Bailey. Plaintiff also obtained a release from Mr. Bailey that
released defendant Columbia from all claims and actions by Mr. Bailey arising out of the January
2, 2010 incident.
Before reaching that settlement, plaintiff notified defendant Goldstar Enterprises and
demanded that defendant pay for or contribute to the settlement. Defendant refused. As a result,
plaintiff filed this four-count lawsuit against defendant: indemnification (Count I), equitable
contribution (Count II), unjust enrichment (Count III), and declaratory judgment (Count IV).
Defendant has moved to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6).
II.

Legal Standard
The purpose of a Rule 12(b)(6) motion to dismiss for failure to state a claim is to test the

legal sufficiency of a complaint so as to eliminate those actions which are fatally flawed in their
legal premises and designed to fail, thereby sparing litigants the burden of unnecessary pretrial
and trial activity. Young v. City of St. Charles, 244 F.3d 623, 627 (8th Cir. 2001) (quoting
Neitzke v. Williams, 490 U.S. 319, 326-27 (1989)). A complaint must be dismissed for failure to
state a claim if it does not plead enough facts to state a claim to relief that is plausible on its face.
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 560 (2007) (abrogating the traditional “no set of
facts” standard set forth in Conley v. Gibson, 355 U.S. 41, 45-46 (1957)). A petitioner need not
provide specific facts to support his allegations, Erickson v. Pardus, 551 U.S. 89, 93 (2007) (per
curiam), but “must include sufficient factual information to provide the grounds on which the
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claim rests, and to raise a right to relief above a speculative level.” Schaaf v. Residential
Funding Corp., 517 F.3d 544, 549 (8th Cir. 2008), cert. denied, 129 S.Ct. 222 (2008) (quoting
Twombly, 550 U.S. at 555-56 & n.3).
In ruling on a motion to dismiss, a court must view the allegations of the complaint in the
light most favorable to the petitioner. Scheuer v. Rhodes, 416 U.S. 232 (1974); Kottschade v.
City of Rochester, 319 F.3d 1038, 1040 (8th Cir. 2003). Although a complaint challenged by a
Rule 12(b)(6) motion does not need detailed factual allegations, a petitioner must still provide the
grounds for relief, and neither “labels and conclusions” nor “a formulaic recitation of the
elements of a cause of action” will suffice. Twombly, 550 U.S. at 555 (internal citations
omitted). “To survive a motion to dismiss, a claim must be facially plausible, meaning that the
factual content . . . allows the court to draw the reasonable inference that the respondent is liable
for the misconduct alleged.” Cole v. Homier Dist. Co., Inc., 599 F.3d 856, 861 (8th Cir. 2010)
(quoting Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009)). When determining the facial
plausibility of a claim, the Court must “accept the allegations contained in the complaint as true
and draw all reasonable inferences in favor of the nonmoving party.” Id. (quoting Coons v.
Mineta, 410 F.3d 1036, 1039 (8th Cir. 2005)).
III.

Discussion
Defendant contends that plaintiff’s entire complaint should be dismissed because plaintiff

is not the real party in interest. Defendant contends that plaintiff’s suit must be brought in the
name of plaintiff’s insured, Goldstar Recyclers, because plaintiff has not pleaded that Goldstar
Recyclers assigned its right to bring suit to recover the settlement paid on its behalf.

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In support, defendant relies on § 507.010 R.S.Mo. and Missouri Supreme Court Rule
52.01, which requires that every civil action be prosecuted “in the name of the real party in
interest.” The Federal Rules of Civil Procedure also require that every action “be prosecuted in
the name of the real party in interest.” Fed. R. Civ. P. 17(a)(1). Plaintiff Burlington, defendant
argues, is not the “real party in interest” here — rather plaintiff’s insured is the real party at
interest. Indeed, in Missouri, unless the insured has assigned its right of action to its insurer, the
insured holds legal title to any claims it may have against a tortfeasor. Kroeker v. State Farm
Mut. Auto. Ins. Co., 466 S.W.2d 105, 110 (Mo. Ct. App. 1971). Where “the interest of the
insurer is derived by subrogation, the action must be brought by, or at least in name of, the
insured.” American Guarantee & Liability Ins. Co. v. U.S. Fidelity & Guar. Co., 693 F. Supp. 2d
1038, 1049 (E.D. Mo. 2010) (quoting Warren v. Kirwan, 598 S.W.2d 598, 599 (Mo. Ct. App.
1980)). Only where the insured has assigned the “entire cause of action” to the insurer may the
action be brought by the insurer. Warren, 598 S.W.2d at 599.
Here, plaintiff has not alleged that Goldstar Recyclers assigned its right of action to its
insurer. Plaintiff contends instead that defendant’s argument is inapposite because his supporting
case law does not involve claims of equitable contribution nor claims between insurers of two
joint tortfeasors. Plaintiff relies on State ex rel. McCubbin v. McMillian, 349 S.W.3d 453, 461
(Mo. Ct. App. 1961), in which the court held that one motorist’s insurance company could
enforce its insured’s right of contribution against another joint-tortfeasor motorist’s insurance
company. However, that practice — which is reflected in a case that is now more than 50 years
old — appears to have been disallowed by subsequent case law. E.g., Kroeker, 466 S.W.2d at
110. Moreover, the claim for contribution between insurance carriers in McCubbin was a cross4

claim within a complex action involving the insured tortfeasors, the injured party, and insurance
companies.
Plaintiff is correct that the defendant’s supporting cases do not involve claims for
equitable contribution between two joint tortfeasors. But the Missouri Supreme Court has been
clear regarding contribution claims, as well: “To maintain an action for contribution, both the
party seeking contribution and the ‘defendant against whom contribution is sought must be ...
tortfeasor[s], originally liable to the plaintiff-injured party.’” Union Elec. Co. v. Metropolitan St.
Louis Sewer Dist., 258 S.W.3d 48, 55 (Mo. 2008) (quoting Gramex Corp. v. Green Supply, Inc.,
89 S.W.3d 432, 442 (Mo. banc 2002) and Safeway Stores, Inc. v. Raytown, 633 S.W.2d 727, 730
(Mo. banc 1982))). Here, neither the plaintiff nor the defendant are alleged to be joint
tortfeasors. The only exception to that rule requiring tortfeasors as parties is in a concurrent
insurance situation: “Where multiple insurance carriers insure the same insured and cover the
same risk, each insurer has independent standing to assert a cause of action against its coinsurers
for equitable contribution when it has undertaken the indemnification of the common insured.”
Heartland Payment Systems, L.L.C. v. Utica Mut. Ins. Co., 185 S.W.3d 225, 232 (Mo. Ct. App.
2006). Here, the plaintiff and defendant had different insureds, so that exception for “concurrent
insurance” is not applicable.
In sum, plaintiff is not the real party in interest according to Missouri law, and, moreover,
it appears that contribution is not available as alleged because contribution has not been sought
from the “tortfeasor...originally liable to the...injured party” as required by Gramex, 89 S.W.3d at
442.

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IV.

Conclusion
The Court will grant defendant’s motion to dismiss. However, the Court “may not

dismiss an action for failure to prosecute in the name of the real party in interest until, after an
objection, a reasonable time has been allowed for the real party in interest to ratify, join, or be
substituted into the action. After ratification, joinder, or substitution, the action proceeds as if it
had been originally commenced by the real party in interest.” Fed. R. Civ. P. 17(a)(3). Because
the Court would dismiss plaintiff’s complaint for failure to prosecute in the name of the real
party in interest, the plaintiff shall have 14 days in which to “ratify, join, or ... substitute” its
insured as plaintiff.
Accordingly,
IT IS HEREBY ORDERED that defendant’s motion to dismiss is GRANTED, without
prejudice to plaintiff’s ratification, joinder, or substitution of the real party in interest as plaintiff.
IT IS FURTHER ORDERED that plaintiff shall have 14 days in which to ratify, join, or
substitute its insured as the real party at interest in this matter.
IT IS FINALLY ORDERED that if plaintiff does not ratify, join, or substitute its
insured as the real party at interest in this matter with 14 days, the Court will dismiss plaintiff’s
complaint with prejudice.
Dated this 7th day of September, 2012.
_________________________________
STEPHEN N. LIMBAUGH, Jr.
UNITED STATES DISTRICT JUDGE

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