Grogan v. Babson Brothers Co., 101 FRD 697 (NDNY 1984) p319.
Case began in state court. Defendant removed to the federal court. Plaintiff then sought to add two new non diverse defendants (pursuant to rule 15 and 20). Diversity was then destroyed. ISSUE: whether P should be allowed to amend complaint when it will destroy diversity and act to remand the case to state court. HOLD: the motion to amend is granted because it was made in good faith, and because diversity jurisdiction no longer exists the case must be remanded to state court. RATIONALE: the court may exercise sound discretion to allow a new party to be added even though diversity will be destroyed. No evidence that the P sought to join additional parties solely to effectuate a remand to state court. To deny this motion would necessitate parallel cases, resulting in a great waste of judicial resources.
Henz v. Superior Trucking Co., 96 FRD 219 (MD Pa. 1982) p321.
Husband and wife sued D. D wished to assert a claim for contribution against husband for any damages it might be forced to pay the wife. Technical aspects of rule 13 and 14 prevented this claim. ONE: could not be asserted as a counterclaim because 13 requires counterclaims to be matured and in existence at the time of pleading (D had not yet been held liable to wife so claim did not exist). TWO: contribution claim could not be a third party claim. 14 does not permit a third party claim to be asserted against a person who is already a party to the suit. SOLUTION: court granted a severance thus making two separate suits. In the wife’s suit the D could seek contribution from him as a third party.
Provident Tradesmens Bank and Trust Co. v. Patterson, 390 U.S. 102 (1968) p323.
Two people in a car were killed and one injured as a result of an accident with a truck. The driver of the truck was also killed. There were many lawsuits, none of which worked out very well. Finally an action was brought against the insurance company of the owner of the car. In order for the insurance to cover liability the driver had to have had permission to be driving the car at the time of the accident. ISSUE: did the driver have permission? The owner was not joined as a plaintiff or defendant. Rule 19a says that owner falls within the category of those who should be joined if feasible. Here, it is too late to join owner, so not feasible. Next issue is 19b: if the judgment should be allowed to stand. HOLD: Using the four factors in 19b, the Court decided that the Court of Appeals erred in not allowing the judgment to stand.
FROM FINDLAW.COM:
An automobile owned by Dutcher, driven by Cionci, to whom Dutcher had given the keys, in which Lynch and Harris were
passengers, collided with a truck driven by Smith. Cionci, Lynch and Smith were killed and Harris was injured. The
administrator of Lynch's estate, the petitioner here, sued Cionci's estate in a diversity action which was settled for $50,000,
which was not paid as Cionci's estate was penniless. Smith's administratrix and Harris each brought a state-court action against
Cionci's estate, Dutcher, and Lynch's estate, but these suits have never gone to trial. Dutcher had an automobile policy with
Lumbermens Mutual Casualty Co., a respondent here, which had a limit of $100,000 for an accident. The policy covered
Dutcher's potential liability as Cionci's "principal" and the direct liability of anyone driving the car with Dutcher's permission.
Lumbermens had declined to defend in petitioner's action against Cionci's estate, believing that Cionci lacked permission and
thus was not covered by the policy. Petitioner then brought this diversity action for a declaration that Cionci's use of the car had
been "with permission" of Dutcher, naming as defendants Lumbermens and Cionci's estate. The state-court tort plaintiffs were
joined as plaintiffs, but Dutcher, a Pennsylvania resident, as were all the plaintiffs, was not joined either as plaintiff or defendant,
a fact not adverted to at trial. The District Court ruled that under Pennsylvania law the driver is presumed to have the owner's
permission, and the State's "Dead Man Rule" did not permit Dutcher to testify in the two estate claims as his interest was
adverse. The court directed verdicts in favor of the two estates. Dutcher was allowed to testify as against Harris, but the jury
found that Cionci had had permission and awarded a verdict to Harris. Lumbermens appealed on state-law grounds, which the
Court of Appeals did not reach. That court reversed on the grounds that Dutcher was an indispensable party, that the right of
any person who "may be [390 U.S. 102, 103] affected" by the judgment to be joined is a "substantive" right, unaffected by Rule 19
of the Fed. Rules of Civ. Proc., and that since Dutcher could not be joined without destroying diversity jurisdiction, the action
had to be dismissed. The court also concluded that since the state-court actions "presented the mooted question as to the
coverage of the policy," the issue here, the District Court should have declined jurisdiction to allow the state courts to settle this
question of state law. Held:
1. On the basis of the record and applying the "equity and good conscience" test of Rule 19 (b), the Court of Appeals
erred in not allowing the judgment to stand. Pp. 107-116.
(a) Here, where Dutcher was assumedly a party who should, under Rule 19 (a), be "joined if feasible," but where his
joinder as a defendant would destroy diversity, is a problem within the scope of Rule 19 (b). Pp. 108-109.
(b) Rule 19 (b) has four "interests" to be examined, in this case from an appellate perspective: plaintiff's interest in having
a forum, defendant's interest in avoiding multiple litigation, interest of the outsider whom it would have been desirable to
join, and interests of courts and the public in complete, consistent, and efficient settlement of controversies. Pp.
109-111.
(c) Application of Rule 19's criteria by the Court of Appeals would have resulted in a different conclusion. Pp. 112-116.
2. The Court of Appeals' dismissal of Rule 19 (b) as an ineffective attempt to change the "substantive rights" stated in
Shields v. Barrow, 17 How. 130, was erroneous, as the Rule is a valid statement of the criteria for determining whether
to proceed or dismiss in the forced absence of an interested person. Pp. 116-125.
3. The Court of Appeals decided the procedural question incorrectly. Pp. 125-128.
(a) In deciding this discretionary matter the court should have considered the existence of a verdict reached after a
prolonged trial in which the defendants did not invoke the pending state actions. Pp. 125-126.
(b) The issue in the state-court actions, whether Cionci was acting as Dutcher's agent, differs from the question in this
case of whether Cionci had "permission" within the scope of the insurance policy. P. 127.