Atlantic Casualty Insurance Company v. Dover Roofing & General Remodeling Exteriors Unlimited Inc.
MEMORANDUM (Order to follow as separate docket entry) re: 8 MOTION to Dismiss Complaint in Declaratory Judgment for Failure to Join Indispensable Parties filed by Dover Roofing & General Remodeling Exteriors Unlimited Inc. (See memo for complete details.) Signed by Chief Judge Christopher C. Conner on 1/11/18. (ki)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
DOVER ROOFING & GENERAL
CIVIL ACTION NO. 1:17-CV-228
(Chief Judge Conner)
Plaintiff Atlantic Casualty Insurance Company (“Atlantic”) filed the abovecaptioned action seeking declaratory judgment against Defendant Dover Roofing
& General Remodeling Exteriors Unlimited Inc. (“Dover”). Atlantic asserts that
it has no duty to defend or indemnify Dover in an underlying state action. (Doc. 1
¶ 12). Dover moves to dismiss Atlantic’s complaint for failure to join indispensable
parties. (Doc. 8). The court will deny Dover’s motion.
Factual Background & Procedural History
Atlantic is an insurance company based in Goldsboro, North Carolina. (See
Doc. 1 ¶ 3). Dover is a business entity based in Dover, Pennsylvania. (Id. ¶ 4). From
June 2, 2009 to June 2, 2012, Atlantic insured Dover under a commercial general
liability policy.1 (Id. ¶¶ 6-8).
The initial policy period spanned from June 2, 2009 to June 2, 2010. (Doc. 1
¶ 6). Atlantic and Dover subsequently renewed the policy for two additional periods
of one year each. (Id. ¶ 8).
In March of 2010, Sandra and Gene Danner (the “Danners”) allegedly
entered into a contract with Dover. (Id. ¶ 30). Pursuant to the contract, Dover was
to install new siding and gutters on a residential property owned by the Danners.
(Id. ¶¶ 26, 30). David R. Miller, doing business as Miller Contracting (“Miller”),
purportedly performed the work on behalf of Dover. (See id. ¶¶ 35-36; see also id.
¶ 9). On September 8, 2014, the Danners filed a complaint in Pennsylvania state
court alleging breach of contract against Dover and Miller. (Id. ¶ 10). The Danners
predicated their claims on faulty workmanship. (Id. ¶ 25).
On February 6, 2017, Atlantic filed the instant declaratory judgment action.
(Doc. 1). Atlantic asserts that it has no obligation to defend or indemnify Dover in
the state court action based on the allegations in the underlying complaint and the
plain language of the insurance policy. (Id. ¶ 12). On April 7, 2017, Dover filed the
pending motion to dismiss for failure to join indispensable parties. (Doc. 8). The
motion is fully briefed and ripe for disposition.
Federal Rule of Civil Procedure 12(b)(7) provides for dismissal of a complaint
for failure to join a party under Rule 19. FED. R. CIV. P. 12(b)(7). Rule 19 specifies
the circumstances in which the joinder of an absent party is required. See FED. R.
CIV. P. 19; see also Gen. Refractories Co. v. First State Ins. Co., 500 F.3d 306, 312 (3d
Cir. 2007). The moving party bears the burden of showing that the absent party is a
required party and that dismissal is proper under Rule 12(b)(7). Disabled in Action
v. SEPTA, 635 F.3d 87, 97 (3d Cir. 2011). Similar to other bases for dismissal, the
court accepts the truth of the allegations in the complaint and views them in the
light most favorable to the non-moving party. Polygon U.S. Corp. v. Diversified
Info. Techs., 12-CV-0923, 2012 WL 5379168, at *4 (M.D. Pa. Oct. 31, 2012) (citing
Cummings v. Allstate Ins. Co., No. 11-02691, 2011 WL 6779321, at *3 (E.D. Pa. Dec.
27, 2011)). Under Rule 12(b)(7), however, the court may also consider relevant
evidence outside the pleadings. Id.
Dover asserts that Atlantic failed to join indispensable parties to this
declaratory judgment action. In deciding a Rule 12(b)(7) motion, the court must
determine: (1) whether the absent party is a required party; (2) if so, whether it is
feasible to join the absent party to the action; and (3) if the absent party cannot be
joined, whether the absent party is indispensable. Gen. Refractories Co., 500 F.3d
at 312. If the absent party is indispensable, the court must dismiss the action. Id.
Under Rule 19(a)(1), the joinder of an absent party is necessary when:
(A) in that person’s absence, the court cannot accord
complete relief among the existing parties; or (B) that
person claims an interest relating to the subject of the
action and is so situated that disposing of the action in the
person’s absence may: (i) as a practical matter impair or
impede the person’s ability to protect the interest; or (ii)
leave an existing party subject to a substantial risk of
incurring double, multiple, or otherwise inconsistent
obligations because of the interest.
FED. R. CIV. P. 19(a). We are to treat clauses (A) and (B) in the disjunctive, requiring
a movant to satisfy only one of the subsections in order to establish an absent party
as necessary. See Koppers Co. v. Aetna Cas. & Sur. Co., 158 F.3d 170, 175 (3d Cir.
1998). Dover grounds its motion in Rule 19(a)(1)(B). (Doc. 8 ¶ 11).
The Third Circuit Court of Appeals has determined that parties fall within
the ambit of Rule 19(a)(1)(B) when they have a “legally protected interest” in
the action. Liberty Mut. Ins. Co. v. Treesdale, Inc., 419 F.3d 216, 230 (3d Cir. 2005).
Parties with “merely a financial interest” in a dispute, per contra, are not necessary
parties as contemplated by Rule 19. Id. The court of appeals in Treesdale, for
example, held that injured third parties do not have a legal interest in declaratory
judgment litigation between their alleged tortfeasor and its insurer. See id. at 21819, 229-30.2
Dover asserts that the Danners have an interest in this declaratory
judgment action cognizable under Rule 19(a)(1)(B). (Doc. 9 at 4). Dover postulates
that, should this action resolve in Atlantic’s favor, the Danners’ ability to recover
damages from Dover may be impaired. (Id.) Dover asserts that Miller is a required
party on a similar basis, viz.: any determination of Dover’s insurance coverage may
affect the damages which Miller, Dover’s codefendant in the underlying action,
We acknowledge some conflicting jurisprudence on this point. In Federal
Kemper Insurance Co. v. Rauscher, 807 F.2d 345 (3d Cir. 1986), the Third Circuit
intimated, in dicta, that injured third parties are indispensable to insurance
coverage declaratory judgment suits. Rauscher, 807 F.2d at 354 n.5. The Rauscher
court offered this observation as an alternative holding at the close of a complex
Article III standing analysis. See id. District courts which have considered this
ostensible conflict have distinguished the standing analysis in Rauscher from the
Rule 19 analysis in Treesdale, emphasizing the fundamental distinctions between
Article III standing and Rule 19 joinder and concluding that Treesdale controls
Rule 19 joinder determinations. See Scottsdale Ins. Co. v. RSE Inc., 303 F.R.D. 234,
237-38 (E.D. Pa. 2014); State Farm Fire & Cas. Co. v. Scalia, No. 14-CV-00049, 2014
WL 6982926, at *3-5 (M.D. Pa. 2014) (Jones, J.); Hartford Cas. Ins. Co. v. Cardenas,
292 F.R.D. 235, 242-46 (E.D. Pa. 2013); Nationwide Mutual Ins. Co. v. Garman, No.
09-CV-1431, 2010 WL 2038575 (M.D. Pa. May 19, 2010) (Rambo, J.). We agree with
and adopt the ratio decidendi of these cases.
might ultimately recover from Dover. (Id.) The interests identified by Dover are
merely—and exclusively—financial in nature.
Applying Treesdale and its progeny to the case sub judice, it is evident
that the Danners and Miller are not indispensable to this litigation. See Treesdale,
419 F.3d at 230. Dover’s own contention that the Danners’ interest is limited to
the amount of damages they could recover in state court suit underscores this
conclusion. (Doc. 9 at 4). Similarly, Dover fails to identify any interest Miller may
have in this case other than the extent of damages recoverable in the underlying
suit. (See id. at 5). Neither party holds a legally protected interest in this action.
See Treesdale, 419 F.3d at 230. Consequently, because the Danners and Miller have
only financial interests in this declaratory judgment action, we may proceed with
the existing parties.
The court will deny Atlantic’s motion (Doc. 8) to dismiss. An appropriate
order shall issue.
/S/ CHRISTOPHER C. CONNER
Christopher C. Conner, Chief Judge
United States District Court
Middle District of Pennsylvania
January 11, 2018
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