Schwartz et al v. The Standard Fire Insurance Company

Filing 5

MEMORANDUM AND OPINION: For the reasons stated herein, all claims by plaintiffs other than Schwartz are sua sponte severed pursuant to Ru1e 21 of the Federal Ru1es of Civil Procedure and dismissed without prejudice to commencing separate actions fo r each insurance policy issued by defendant. Paul Fisher, Frank Florio, Nancy Florio, Edda Hampton, James Hampton, Walsh King, Matthew LaSorsa, Kerry Maguire, Gregory Maiorana, Patricia McDonnell, Joanne Middleton, Mary Mooney, Patrick Obrien, Jomar ie Rissmeyer, Robert Rissmeyer, Judith Thomson, Peter Thomson, Arthur Van Zanten, Elizabeth Van Zanten, Lisa Volpe, Jane Walsh, Jean Walsh, Valerie Buscemi and Jennifer Feerick terminated.. Ordered by Judge Sandra J. Feuerstein on 11/22/2013. (Bollbach, Jean)

1Nle1~E f)

U.S.

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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK

DIST~IC~I<c~W/,!~7o.N.Y.

HOY 212013

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LONG ISLAND OFFICE

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ALLEN SCHWARTZ and
LISA SCHWARTZ, et al.,

OPINION AND ORDER
13 CV 5908 (SJF)(AKT)

Plaintiffs,
-againstTHE STANDARD FIRE INSURANCE
COMPANY,
Defendant.

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FEUERSTEIN, J.
On October 25, 2013, twenty-six (26) plaintiffs commenced this action against defendant
The Standard Fire Insurance Company ("defendant") pursuant to, inter alia, the National Flood
Insurance Act ("NFIA"), 42 U.S.C. §§ 4001, et seq., 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. For the reasons set forth below, the claims of all plaintiffs except the first-named
plaintiff(s), Allen Schwartz and Lisa Schwartz (collectively, "Schwartz"), are sua sponte severed
from this action pursuant to Rule 21 of the Federal Ruies of Civil Procedure and dismissed
without prejudice to commencing separate actions for each insurance policy issued by defendant.

I.

Background

A.

Factual Background

The complaint alleges, inter alia: (1) that defendant is a "Write your Own" insurance
carrier participating in the National Flood Insurance Program pursuant to the NFIA, (Complaint
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["Compl."], ~ 3); (2) that defendant issued an insurance policy to each plaintiff covering losses to
his or her property and contents "against physical damage by or from flood," (Compl., ~~ 4, 9);
(3) that each plaintiff paid all of the premiums on his or her policy, (Compl., ~ 10); (4) that as a
result of"Superstorm Sandy" ("the Storm"), each plaintiff's property and contents were damaged
"by and from flood," (Compl., ft 11, 12); (5) that each plaintiff reported and properly submitted
a claim under his or her policy to defendant, (Compl., ~ 13); (6) that defendant "wrongfully
denied or unfairly limited payment on the claims of each Plaintiff," (Compl., ~ 14); (7) that each
plaintiff retained an independent expert to evaluate the damages to his or her property and
contents, (Compl., ~ 15); and (8) that the independent expert of each plaintiff determined that
"the flood event critically damaged [that plaintiff's] covered propert[y]," id.

B.

Procedural History

On October 25, 2013, twenty-six (26) plaintiffs commenced this action against defendant
pursuant to, inter alia, the NFIA. The complaint asserts one (I) claim 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., ~~ 16-20 and "Wherefore" clause).

II.

Discussion
A.

Permissive Joinder of Plaintiffs

Rule 20(a)(l) of the Federal Rules of Civil Procedure permits the joinder of multiple
plaintiffs in an action if:

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"(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 Corn.,- F.R.D.-, 2013 WL 4044951, at* 3 (S.D.N.Y.
Aug. 9, 2013) (quoting United States v. Aquavell!!, 615 F.2d 12,22 (2d Cir. 1979)); see also
Abraham v. American Home Mortgage Servicing. Inc.,- F. Supp. 2d - , 2013 WL 2285205, at
* 3 (E.D.N.Y. May 23, 2013) (Rule (20)(a)(l)); Peterson v. Regin!!, 935 F. Supp. 2d 628,638
(S.D.N.Y. 2013) (Rule 20(a)(2)); Deskovic v. City of Peekskill, 673 F. Supp. 2d 154, 166
(S.D.N.Y. 2009) (Rule 20(a)(2)); Barnhart v. Town ofParm!!, 252 F.R.D. 156, 160 (W.D.N.Y.
2008) (Rule 20(a)( I)). Plaintiffs bear the burden of demonstrating that joinder is proper under
Rule 20(a). Kalie, -F.R.D.-, 2013 WL 4044951, at *5; Deskovic, 673 F. Supp. 2d at 159.
Plaintiffs' claims in this case are not properly joined pursuant to Rule 20(a)(l) 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
plaintiffs 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 twenty-six (26) plaintiffs herein separately purchased,
and were issued, sixteen (16) distinct insurance policies from defendant at different times; each
of those sixteen ( 16) insurance policies relates to a separate and distinct property; each plaintiff
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separately performed his or her own obligations under his or her respective insurance policy, e.g.,
paid the premiums and submitted claims thereunder; and 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 flood which allegedly damaged his
or her property may have been occasioned by the Storm. Moreover, defendant will likely have
different justifications for denying and/or limiting each plaintiff's claims. Since the sixteen (16)
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.

B.

Misjoinder

Rule 21 of the Federal Rules of Civil Procedure provides, in relevant part, that
"[!ll]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]fa 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, No. 12 CV

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4640,2013 WL 5437060, at* 4 (E.D.N.Y. Sept. 27, 2013).
In determining 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 Com., 288 F.R.D. 331, 333 (S.D.N.Y. 2013) (quoting Erausquin v. Notz. Stucki
Mgmt. CBermuda) 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
oflitigation. "'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).
Joinder of the claims of twenty-six (26) plaintiffs involving sixteen (16) 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. Furthermore, settlement of the claims
is likely to be facilitated if the claims relating to sixteen (16) separate insurance policies are
litigated separately. See Adams, 2013 WL 5437060, at* 4. In addition, "[a] joint trial could
lead to confusion of the jury and thereby prejudice [the] defendant[]." Kalie,- F.R.D.-, 2013
WL 4044951, at * 6 (quotations and citation omitted). Accordingly, all claims by plaintiffs other

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than Schwartz are sua sponte severed 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.

III.

Conclusion
For the reasons stated herein, all claims by plaintiffs other than Schwartz are sua sponte

severed pursuant to Ru1e 21 of the Federal Ru1es of Civil Procedure and dismissed without
prejudice to commencing separate actions for each insurance policy issued by defendant.

SO ORDERED.

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SANDRA J. FEUERSTEIN
United States District Judge

Dated: November 21,2013
Central Islip, N.Y.

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