State Auto Insurance Company of Wisconsin et al v. Whirlpool Corporation et al

Filing 15

ORDER granting 8 Motion to Dismiss with respect to the named plaintiffs. State Auto Insurance may file an amended complaint by 12/26/13 or the case will be dismissed. Signed by District Judge William M. Conley on 12/17/13. (rep)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN

STATE AUTO INSURANCE COMPANY
OF WISCONSIN, STATE AUTO PROPERTY
AND CASUALTY INSURANCE COMPANY,
And STATE AUTO INSURANCE COMPANY,
Plaintiffs,
KEVIN SCHULFER, EARL BAINES, PETER
KOWALSKI, MIRIAM SMITH, and DAVE
BROWN,

OPINION AND ORDER
No. 13-cv-602-wmc

Involuntary Plaintiffs,
v.
WHIRLPOOL CORPORATION and ELBI
OF AMERICA, INC.,
Defendants.

In this subrogation action, plaintiffs State Auto Insurance Company of Wisconsin,
State Auto Property and Casualty Insurance Company, and State Auto Insurance
Company seek to recover payments previously made to their insureds, the involuntary
plaintiffs, as a result of an alleged defect in a valve manufactured by defendant Elbi of
America, Inc., which is used in dishwashers and washing machines manufactured and
sold by defendant Whirlpool Corporation. (Compl. (dkt. #1).) The three plaintiffs are
all members of a holding company, State Auto Mutual Insurance Company. As detailed
in Exhibit A attached to the complaint, none of the three plaintiffs has a claim that
exceeds $75,000 as required under 28 U.S.C. § 1332(a). (Compl., Ex. A (dkt. #1-3).)
On this basis, defendant Whirlpool Corporation moves to dismiss for lack of subject

matter jurisdiction under 12(b)(1).

(Dkt. #8.)

Because none of the plaintiffs

individually satisfy the amount in controversy requirement and the claims cannot be
aggregated, the court agrees and will grant defendant‟s motion to dismiss the named
plaintiffs, but will also grant them leave to amend the complaint to substitute the holding
company, State Auto Mutual Insurance Company, as the sole plaintiff.

ALLEGATIONS OF FACT
Plaintiffs assert state law claims for negligence and strict liability, relying on this
court‟s diversity jurisdiction pursuant to 28 U.S.C. § 1332(a).

Plaintiff State Auto

Insurance Company of Wisconsin is citizen of Wisconsin and Ohio; plaintiff State Auto
Property and Casualty Company is a citizen of Iowa and Ohio; and plaintiff State Auto
Insurance Company is a citizen of Ohio.

(Compl. (dkt. #1) ¶¶ 3-5.)

Defendant

Whirlpool Corporation is a citizen of Delaware and Michigan, and defendant Elbi of
America, Inc. is a citizen of Texas.

(Id. at ¶¶ 11, 13.)

As such, complete diversity

between the parties exists.1 As described above, none of the plaintiffs assert a claim that
exceeds $75,000: (1) State Auto Wisconsin asserts a claim of $66,859.75; (2) State
Auto Property asserts a claim of $8,339.49; (3) State Auto Insurance asserts a claim of
$40,000. (Compl., Ex. A (dkt. #1-3).)

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The court has not recounted the citizenship of the individual involuntary plaintiffs
since they appear to be nominal parties. See Navarro Sav. Ass’n v. Lee, 446 U.S. 458, 461
(1980) (“[A] federal court must disregard nominal or formal parties and rest jurisdiction
only upon the citizenship of real parties to the controversy.”). Even if the court were to
consider them, none are citizens of Delaware, Michigan or Texas -- the states of which
defendants are citizens. (See Compl. (dkt. #1) ¶¶ 6-10.)
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OPINION
While one party may aggregate its own claims, the general rule is that multiple
plaintiffs cannot aggregate their claims to meet the amount in controversy requirement.
See McMillian v. Sheraton Chi. Hotels & Towers, 567 F.3d 839, 844 (7th Cir. 2009) (“To
meet the amount-in-controversy requirement, „the separate claims of multiple plaintiffs
against a single defendant cannot be aggregated.‟”) (quoting Clark v. State Farm Mut.
Auto. Ins. Co., 473 F.3d 708, 711 (7th Cir. 2007)). In response, plaintiffs contend that
defendant‟s motion “exalts form over function by separating three plaintiffs that are, for
all intents and purposes, the same entity.”

(Pls.‟ Opp‟n (dkt. #12) 1.)

In support,

plaintiffs cite to Allstate Ins. Co. v. Hechinger Co., 982 F. Supp. 1169, 1172 (E.D. Va.
1997), in which the district court allowed a single insurance company plaintiff to
aggregate its claims concerning multiple insureds to satisfy the amount in controversy
requirement.
Here, however, there are three plaintiffs at stake, and the court would have to
aggregate plaintiffs‟ separate claims -- rather than just the claims of insureds -- in order
for the amount in controversy requirement to be met. While the court accepts plaintiffs‟
representation that all are members of a “holding company system under the control of
State Auto Mutual Insurance Company,” (Pl.‟s Opp‟n (dkt. #12) 2), the court cannot
disregard that the three plaintiffs are separate, legal entities.

To do so -- as defendant

points out in its reply -- would be contrary to cases dismissing affiliated insurance
companies (i.e., parent companies) from actions because the affiliated insurance company
did not issue the policy at stake in the lawsuits. (Def.‟s Reply (dkt. #14) 3-4.)
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In their opposition, plaintiffs also point out that “the payments on which the
Plaintiffs seek to recover were paid from a single bank account held by State Auto
Insurance Companies,” the holding company. (Pl.‟s Opp‟n (dkt. #12) 2 (citing Affidavit
of Teirney S. Christenson (dkt. #13) ¶ 6; id., Ex. E (dkt. #13-5).)

In a footnote,

plaintiffs request that the court permit plaintiffs to amend the complaint to name State
Auto Insurance Companies as the single named plaintiff. (Pls.‟ Opp‟n (dkt. #12) 1 n.1.)
Because the holding company appears to have actually paid the claims at issue -- and not
simply because of its position as a holding company -- it appears that State Auto
Insurance Companies may well have standing to pursue the subrogated claims. See Estate
of Kriefall v. Sizzler USA Franchise, Inc., 2012 WI 70, ¶ 37, 342 Wis. 2d 29, 816 N.W.2d
853 (“Subrogation is akin to indemnification in that it seeks to recoup the total payment
that the party seeking subrogation has made.”). Accordingly, while the court will grant
defendant‟s motion, the court finds plaintiffs‟ request to amend reasonable and will grant
that request as well. See 28 U.S.C. § 1653 (“Defective allegations of jurisdiction may be
amended, upon terms, in the trial or appellate courts.”); Fed. R. Civ. P. 21 (“Misjoinder
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.”).

ORDER
IT IS ORDERED that:
1) Defendant Whirlpool Corporation‟s motion to dismiss (dkt. #8) is GRANTED
with respect to the named plaintiffs;

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2) State Auto Insurance Company is granted leave to amend the complaint
naming itself as the sole plaintiff, provided the amended complaint is filed and
served on or before December 26, 2013; and
3) Failure to comply with this order shall result in dismissal of this case without
prejudice.
Entered this 17th day of December, 2013.
BY THE COURT:
/s/
________________________________________
WILLIAM M. CONLEY
District Judge

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