Hogan et al v. USAA Casualty Insurance Company

Filing 8

ORDER SEVERING PLAINTIFF WITHOUT PREJUDICE -- For the reasons set forth in the ATTACHED WRITTEN MEMORANDUM AND ORDER, all claims by Plaintiff Merel Maynard are severed sua sponte pursuant to Rule 21 of the Federal Rules of Civil Procedure and dismissed without prejudice to commencing a separate action for each insurance policy issued by defendant. SO ORDERED by Judge Dora Lizette Irizarry on 1/10/2014. (Irizarry, Dora)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
------------------------------------------------------------------- x
ALAN and MARYELLEN HOGAN, MEREL
:
MAYNARD,
:
:
Plaintiffs,
:
:
-against:
:
USAA CASUALTY INSURANCE COMPANY,
:
:
Defendant.
:
------------------------------------------------------------------- x
DORA L. IRIZARRY, United States District Judge:

MEMORANDUM AND ORDER
13-CV-5914 (DLI)(MDG)

On October 27, 2013, three (3) plaintiffs commenced this diversity action against
defendant USAA Casualty Insurance Company, each seeking to recover his or her actual
damages resulting from defendant’s purported breach of contract, i.e., its failure to pay the full
amount of each plaintiff’s respective claims under an insurance policy issued to him or her by
defendant. (See generally Complaint (“Compl.”), Dkt. Entry No. 1.) For the reasons set forth
below, the claims of Plaintiff Merel Maynard are severed sua sponte from this action pursuant to
Rule 21 of the Federal Rules of Civil Procedure and dismissed without prejudice to commencing
a separate action for each insurance policy issued by defendant.
BACKGROUND
The complaint, inter alia, alleges that: (1) defendant is an insurance carrier “organized
and existing under and by virtue of the laws of Texas,” (Compl. ¶ 2); (2) defendant issued an
insurance policy to each plaintiff covering losses to his or her “dwelling and personal property”
(Compl., ¶ 6); (3) each plaintiff paid all of the premiums on his or her policy (id.); (4) as a result
of “Superstorm Sandy” (“the Storm”), each plaintiff’s insured property and contents suffered
“wind damage” in excess of $75,000 (Compl. ¶¶ 3, 7-8); (5) each plaintiff reported and properly

submitted a claim under his or her policy to defendant (Compl. ¶ 9); (6) defendant “wrongfully
denied payment in the full amount of each [p]laintiff’s claims” (Compl. ¶ 11); (7) each plaintiff
retained an independent expert to evaluate the damages to his or her property and contents
(Compl. ¶ 12); and (8) plaintiffs’ “respective losses were thoroughly documented” (id.).
On October 27, 2013, three (3) plaintiffs commenced this action against defendant
alleging claims of breach of contract, breach of good faith and fair dealing, and various
violations of New York General Business Law §§ 349 & 350. Notably, the complaint asserts
one (1) claim for relief for breach of contract, with each plaintiff seeking to recover the actual
damages he or she sustained as a result of defendant’s denial and/or limitation of his or her
claims under his or her respective insurance policy. (Compl. ¶¶ 14-18.)
DISCUSSION
I.

Permissive Joinder of Plaintiffs
Rule 20(a)(1) of the Federal Rules of Civil Procedure permits the joinder of multiple

plaintiffs in an action if:
“(A) they assert any right to relief jointly, severally, or in the
alternative with respect to or arising out of the same transaction,
occurrence, or series of transactions or occurrences; and (B) any
question of law or fact common to all plaintiffs will arise in the
action.”
In determining whether claims relate to, or arise out of, the same “transaction” or
“occurrence” under Rule 20(a), “courts are to look to the logical relationship between the claims
and determine ‘whether the essential facts of the various claims are so logically connected that
considerations of judicial economy and fairness dictate that all the issues be resolved in one
lawsuit.’” Kalie v. Bank of America Corp., ___ F.R.D. ___, 2013 WL 4044951, at *3 (S.D.N.Y.
Aug. 9, 2013) (quoting United States v. Aquavella, 615 F. 2d 12, 22 (2d Cir. 1979)); see also

2

Abraham v. Am. Home Mortg. Servicing, Inc., ___ F. Supp. 2d ___, 2013 WL 2285205, at *3
(E.D.N.Y. May 23, 2013) (“The purpose of Rule 20 is to promote trial convenience and to
expedite the final determination of disputes.”) (quoting Vanderzalm v. Sechrist Indus., Inc., 875
F. Supp. 2d 179, 183 (E.D.N.Y. 2012). Plaintiffs bear the burden of demonstrating that joinder is
proper under Rule 20(a). Kalie, ___ F.R.D. ___, 2013 WL 4044951, at *5; see also Deskovic v.
City of Peekskill, 673 F. Supp. 2d 154, 159 (S.D.N.Y. 2009).
Plaintiffs’ claims in this case are not properly joined pursuant to Rule 20(a)(1) of the
Federal Rules of Civil Procedure. Indeed, judicial economy and fairness dictate that plaintiffs’
claims under each distinct insurance policy issued by defendant be tried separately. In order for
a plaintiff’s right to relief to relate to, or arise out of, a transaction or occurrence for purposes of
Rule 20(a), the “transaction” or “occurrence” must relate to the contract purportedly breached by
defendant, i.e., the insurance policy. The three (3) plaintiffs herein separately purchased, and
were issued, two (2) distinct insurance policies from defendant at different times. Each of those
two (2) insurance policies relates to a separate and distinct property. Each plaintiff separately
performed his or her own obligations under his or her respective insurance policy, e.g., paid the
premiums and submitted claims thereunder. Each plaintiff seeks to recover his or her actual
damages as a result of defendant’s purported breach of his or her respective insurance policy,
i.e., either defendant’s outright denial of his or her claims or its failure to pay the entire amounts
claimed by him or her. The fact that plaintiffs’ separate properties, for which they made distinct
claims under the separate insurance policies issued to them by defendant, all sustained damage as
a result of the same storm is immaterial for purposes of Rule 20(a) of the Federal Rules of Civil
Procedure, i.e., each plaintiff’s right to relief under his or her respective insurance policy issued
by defendant is not affected by the fact that the wind that allegedly damaged his or her property

3

may have been occasioned by the Storm. Moreover, defendant may have different justifications
for denying and/or limiting each plaintiff’s claims. Since the two (2) insurance policies upon
which plaintiffs claim a right to relief do not relate to, or arise out of, the “same transaction,
occurrence, or series of transaction or occurrences,” plaintiffs are not properly joined in this
action pursuant to Rule 20(a) of the Federal Rules of Civil Procedure.
II.

Misjoinder
Rule 21 of the Federal Rules of Civil Procedure provides, in relevant part, that

“[m]isjoinder of parties is not a ground for dismissing an action. On motion or on its own, the
court may at any time, on just terms, add or drop a party.” Thus, “[i]f a court concludes that
[parties] have been improperly joined under Rule 20, it has broad discretion under Rule 21 to
sever [those] parties . . . from the action.” Kalie, ___ F.R.D. ___, 2013 WL 4044951, at *3
(quoting Deskovic, 673 F. Supp. 2d at 159-60); see also Adams v. US Bank, NA, 2013 WL
5437060, at *4 (E.D.N.Y. Sept. 27, 2013).
To determine whether to sever parties improperly joined under Rule 20(a), courts
generally consider, in addition to the factors set forth in Rule 20(a), “whether settlement of the
claims or judicial economy would be facilitated; [] whether prejudice would be avoided if
severance were granted; and [] whether different witnesses and documentary proof are required
for the separate claims.” Crown Cork & Seal Co., Inc. Master Retirement Trust v. Credit Suisse
First Boston Corp., 288 F.R.D. 331, 333 (S.D.N.Y. 2013) (quoting Erausquin v. Notz, Stucki
Mgmt. (Bermuda) Ltd., 806 F. Supp. 2d 712, 720 (S.D.N.Y. 2011)). “A court should consider
whether severance will ‘serve the ends of justice and further the prompt and efficient disposition
of litigation.’” Crown Cork, 288 F.R.D. at 332 (quoting T.S.I. 27, Inc. v. Berman Enters., Inc.,
115 F.R.D. 252, 254 (S.D.N.Y. 1987)); see also In re Ski Train Fire in Kaprun, Austria, on
November 11, 2004, 224 F.R.D. 543, 546 (S.D.N.Y. 2004).
4

Joinder of the claims of three (3) plaintiffs involving two (2) separate insurance policies
does not serve the interest of judicial economy.

There will be little, if any, overlapping

discovery and each plaintiff’s breach of contract claim will require distinct witnesses and
documentary proof. “The interest in economy is affirmatively disserved by forcing these many
parties to attend a common trial at which these separate, unrelated claims . . . would be
resolved.” Kalie, ___ F.R.D. ___, 2013 WL 4044951, at *6. In addition, “[a] joint trial could
lead to confusion of the jury and thereby prejudice [the] defendant[].” Id. (quotations and
citation omitted). Furthermore, settlement of the claims is more likely to be facilitated if the
claims relating to two (2) separate insurance policies are litigated separately. See Adams, 2013
WL 5437060, at *4. Accordingly, all claims by Plaintiff Merel Maynard are severed sua sponte
pursuant to Rule 21 of the Federal Rules of Civil Procedure and dismissed without prejudice to
commencing separate actions for each insurance policy issued by defendant.
CONCLUSION
For the reasons set forth above, all claims by Plaintiff Merel Maynard are severed sua
sponte pursuant to Rule 21 of the Federal Rules of Civil Procedure and dismissed without
prejudice to commencing a separate action for each insurance policy issued by defendant.

SO ORDERED.
Dated: Brooklyn, New York
January 10, 2014
/s/
DORA L. IRIZARRY
United States District Judge

5