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Rediger, v. Country Mutual Insurance Co.

United States District Court, D. Oregon, Eugene Division

April 11, 2017



          Ann Aiken United States District Judge

         This dispute concerns defendant County Mutual Insurance Company's ("defendant") alleged failure to issue a policy on terms agreed to between plaintiffs Jared and Myranda Rediger ("plaintiffs") and insurance agent Bob Bronson ("agent"). Defendant moves to dismiss under Fed.R.Civ.P. 12(b)(7) for failure to join a party under Fed.R.Civ.P. 19. For the reasons below, defendant's motion is denied.


         Agent was a licensed insurance agent in Oregon and an authorized agent of defendant. Pis.' Compl. ¶ 5 (doc. 1). In June 2014, agent viewed and inspected plaintiffs' household and business operations in Harrisburg, Oregon. Id., at ¶¶ 6, 9, 10. Also in June 2014, plaintiffs allegedly purchased insurance coverage from agent on their business operations and home, including coverage for liability, property, and business interruption from perils, including fire. Id. at ¶ 14. Plaintiffs allege that agent agreed to fully insure plaintiffs for replacement of real or personal property, and for agricultural products recovery from business income interruption, in the event of "total loss from perils such as fire." Id. at ¶ 15. In June 2014, plaintiffs paid enough to cover the first six months of their insurance policy. Id. at ¶ 16. For nearly six months, plaintiffs waited for a written policy to issue from defendant, while agent assured them that they were insured. Id. at ¶¶ 17, 18.

         In December 2014, a fire caused damage to plaintiffs' property and their business operations. Id. at ¶ 19. Plaintiffs notified agent and defendant immediately. Id. at ¶ 21. Defendant accepted the claim. Id. at ¶ 22. Defendant also, at that point, issued the written policy. Id. at ¶ 23. Plaintiffs hired a public adjusting company, which concluded that plaintiffs suffered approximately $2.5 million in property damage, and up to $900, 000 in lost business. Id. at ¶¶ 24, 25, Defendant paid plaintiffs $1, 573, 420.03 to compensate for their property losses. Defendant issued no payment for the income plaintiffs lost due to the interruption of their business operations. Id. at ¶26.

         Plaintiffs filed suit. They claim that defendant failed to issue a written policy in conformance with the agreement reached between agent and plaintiffs, and that defendant failed to pay for damages and losses covered under the agreement. Id. at ¶ 27. Plaintiffs claim that j defendant's failure to pay for these damages and losses was a breach of their insurance contract negotiated on defendant's behalf by agent. Id. Plaintiffs claim that as a result of this breach, they have been damaged in the amount of $ 937, 973 in property damage, and up to $900, 000 in J business interruption losses. Id. at ¶ 29. Defendant has not challenged plaintiffs' allegation that agent was the authorized agent of defendant at the time plaintiffs negotiated their insurance policy with agent and defendant.


         Defendant moves to dismiss under Rule 12(b)(7) for failure to join agent, claiming that agent is a necessary and indispensable party under Rule 19, and that because joining agent would destroy diversity, this case must be dismissed. I will first determine whether agent is a necessary party under Rule 19(a), and then address whether agent is an indispensable party under Rule 19(b).

         I. Is Agent Necessary Under Rule 19(a)?

         The Ninth Circuit's analysis of what makes an absent person a necessary party under I i Rule 19(a)(1) consists of two broad inquiries. Ward v. Apple Inc., 791 F.3d 1041, 1048 (9th Cir. 2015). First, under Rule 19(a)(1)(A), can complete relief be provided to existing parties without I the absent person? Id. Second, in the alternative, under Rule 19(a)(1)(B), does the absent person claim an interest that relates to the subject of the action? Id. The moving party has the burden of persuasion in arguing for dismissal. Makah Indian Tribe v. Verity, 910 F.2d 555, 558 (9th Cir. 1990). I start with whether complete relief can be accorded in agent's absence; then, in the alternative, I turn to whether agent claims an interest relating to the subject of the action.

         Rule 19 is "designed to protect the interests of absent parties, as well as those ordered before the court, from multiple litigation, inconsistent judicial determinations or the impairment of interests or rights." CP Nat'l Corp. v. Bonneville Power Admin., 928 F.2d 905, 911 (9th Cir. 1991). Accordingly, Rule 19 issues may be raised sua sponte by reviewing courts. Id. Thus, while defendant does not argue that complete relief cannot be accorded without agent, I will I walk through a complete analysis of Rule 19 as it applies to the present case.

         A. Complete Relief to Existing Parties

         There is no precise precedent in the Ninth Circuit on whether complete relief can be accorded existing parties to an insurance dispute in the absence of the agent who represented the insurance company in negotiating the contract at issue. However, other recent district court decisions provide helpful guidance. These courts have held that when there is a dispute between an insured plaintiff and an insurance-company defendant over the coverage provided by the insurance company, courts can accord complete relief without the insurance agent as a party. See Auto-Owners Ins. Co. v. Morris, 191 F.Supp.3d 1302, 1305 (N.D. Ala. 2016) (insurance agent's conduct was "certainly relevant to the coverage issue, " but "the court can accord complete relief on that coverage issue without the [agent] being joined as a party"); Republic- Franklin Ins. Co. v. Pasour, 2011 WL 5169958, at *4-5 (W.D. N.C. July 29, 2011) (when an action involves a contractual dispute over the extent of insurance coverage, the court can provide complete relief without joining an agent who is neither named in the lawsuit nor a party to the contract); Nationwide Mut. Ins. Co. v. Ruff, 2011 WL 2491345, at *2 (D.S.C. June 22, 2011) (concluding that when there is a contractual dispute about insurance coverage, the court can grant complete relief among existing parties when the existing parties are the "only two parties to the contract"). In the present case, it is undisputed that agent was defendant's agent in negotiating the contract and agent was not a party to the contract, so 1 can accord complete relief to the plaintiffs and defendant without agent as a party.

         The Ninth Circuit's Rule 19 jurisprudence also supports this conclusion. Complete relief can be accorded when a court is able to fashion "meaningful relief between the existing parties. Disabled Rights Action Comm. v. Las Vegas Events, Inc.,375 F.3d 861, 879 (9th Cir. 2004). Relief is "meaningful" when it is not "partial or hollow, " and when it precludes "multiple lawsuits on the same cause of action." Id. (quoting Northrup Corp. v. McDonnell DouglasCorp.,705 F.2d 1030, 1043 (9th Cir. 1983)). I begin with whether this Court can provide relief that is not partial or ...

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