Applied Underwriters v. A & I Steel Fabricators, Inc. et al

Filing 31

MEMORANDUM AND ORDER - On or before May 14, 2013, plaintiff shall file a brief addressing whether California Insurance Company is a required party under the criteria of FRCP 19 and, if it is such a party, whether California Insurance Company's citizenship affects the Court's subject matter jurisdiction. On or before May 28, 2013, defendants shall file a responsive brief. Ordered by Senior Judge Lyle E. Strom. (MKR)

IN THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF NEBRASKA
APPLIED UNDERWRITERS, INC., a )
Nebraska corporation,
)
)
Plaintiff,
)
)
v.
)
)
A&I STEEL FABRICATORS, INC., )
a California corporation, and )
ABLE IRON WORKS, INC.,
)
)
Defendants.
)
______________________________)

8:13CV25

MEMORANDUM AND ORDER

This matter is before the Court on defendants’ motion
to dismiss or in the alternative for a change of venue (Filing
No. 15).

The Court finds that the materials filed to this point

raise a question regarding the Court’s subject matter
jurisdiction that the parties have not yet addressed.
Rule 17(a) of the Federal Rules of Civil Procedure
requires that an action “be prosecuted in the name of the real
party in interest.”

Plaintiff’s brief explains that California

Insurance Company (“CIC”) issued the worker’s compensation
policies for which plaintiff now seeks unpaid premiums and that
CIC is an “indirect subsidiary” of Applied Underwriters, the sole
named plaintiff.

This implies that, although Applied may be

interested in the outcome of the litigation, the parties to the
contracts at issue might actually be the defendants and CIC.
Aside from a single line in the defendants’ reply brief, neither
party has addressed whether CIC is the real party in interest

and, therefore, a necessary party to the litigation under Federal
Rule of Civil Procedure 19(a).1
CIC’s status is particularly important because it also
appears that CIC might be a citizen of California.2

If this is

the case, this Court’s subject matter jurisdiction, premised as
it is on diversity of the parties, may well be lacking.

The

precise identity of the parties to the contracts and the
relationship between the parties has not been made sufficiently
clear for the Court to determine whether Applied is a real party
in interest or whether California Insurance Company is the real
party in interest.

Nor have the parties addressed the factors of

Rule 19(a) that could affect a ruling on compulsory joinder.
Finally, the parties have not clarified whether California
Insurance Company is a citizen of California for the purposes of
28 U.S.C. § 1332.
The Court finds additional briefing is necessary.

The

Court is also cognizant of the potential implications of the
Eighth Circuit’s holding that where a diverse corporation acts as
collections agent for non-diverse corporations, the non-diverse

1

Federal Rule of Civil Procedure 17(a)(3) requires that,
rather than dismissing “an action for failure to prosecute in the
name of the real party in interest,” the Court must give “a
reasonable time . . . for the real party in interest to ratify,
join, or be substituted into the action.”
2

Plaintiff has indicated that California Insurance Company
is “a California property and casualty insurance company” that is
“domiciled” in California.
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corporations are the real parties in interest.

Associated Ins.

Mgmt. Corp. v. Arkansas Gen. Agency, Inc., 149 F.3d 794, 797 (8th
Cir. 1998); see also Nike, Inc. v. Comercial Iberica de
Exclusivas Deportivas, S.A., 20 F.3d 987, 991-92 (9th Cir. 1994)
(affording close scrutiny to “diversity-creating assignments”).
Accordingly,
IT IS ORDERED:
1) On or before May 14, 2013, plaintiff shall file a
brief addressing whether California Insurance Company is a
required party under the criteria of FRCP 19 and, if it is such a
party, whether California Insurance Company’s citizenship affects
the Court’s subject matter jurisdiction.
2) On or before May 28, 2013, defendants shall file a
responsive brief.
DATED this 23rd day of April, 2013.
BY THE COURT:
/s/ Lyle E. Strom
____________________________
LYLE E. STROM, Senior Judge
United States District Court

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