Home Insurance as a third-party plaintiff also cannot sue the City. The City contends that for the purpose of the third-party claim in which defendant and third-party plaintiff Home Insurance is suing in the capacity of a subrogee, defendant's citizenship is irrelevant and the court must look to the citizenship of plaintiff, the subrogor, in assessing diversity as between defendant and the City.
In making this argument the City ignores the well known jurisdictional rule that diversity of citizenship is not required between a third-party plaintiff and a third-party defendant even though the jurisdiction of the main claim is based on diversity. Owen Equipment & Erection Co. v. Kroger, 437 U.S. 365, 376, 57 L. Ed. 2d 274, 98 S. Ct. 2396 (1978). That the third-party plaintiff is suing as a subrogee is immaterial. The City's motion to dismiss for lack of jurisdiction must be denied.
Availability of Legal Relief
In the words of the third-party complaint, Home Insurance is seeking "indemnity or contribution" from the City in the event that Home Insurance is found liable on the claim of the plaintiff. Moving to dismiss, the City argues that under Pennsylvania law neither indemnity nor contribution are available to Home Insurance. Citing Globe Indemnity Company v. Agway, 456 F.2d 472 (3d Cir. 1972), the City correctly points out that in Pennsylvania, contribution is authorized only among joint tortfeasors, while indemnity is recognized only between parties who are either primarily and secondarily liable to each other, or who have an express contract which provides for it. The City reasons that since it is not a joint tortfeasor or a potential joint tortfeasor with Home Insurance, Home Insurance cannot make out a claim for contribution. Similarly, since there is no contract of indemnity between the City and Home Insurance, and since primary and secondary liability principles do not apply between an insurer and an unrelated third-party tortfeasor, Home Insurance cannot make out a claim for indemnity. While this may be so, it is clear to the court that Home Insurance's intended theory of recovery on the third-party complaint is subrogation, not indemnity or contribution. As Home Insurance explains in its memorandum in opposition to the City's motion, it "has joined the defendant City . . . on the grounds if it is liable that it is subrogated to any rights which the plaintiff may have against the third-party defendant [City] and . . . the City is bound to indemnify or contribute to any loss suffered by it . . . [Home Insurance] in the initial action." (emphasis added).
It is well established that subrogation is different from either indemnity or contribution. Under the doctrine of subrogation an insurer which pays on a claim of its insured assumes any rights which the insured would have against any other person responsible for the loss. The insurer's right to subrogation is exclusively derivative -- it depends on the claim of the insured and is subject to whatever defenses the tortfeasor has against the insured. Great American Insurance Co. v. United States, 575 F.2d 1031, 1034 (2nd Cir. 1978). While the principle of indemnity underlies subrogation, actions based on subrogation are separate and independent from those based on indemnity. See Great American Insurance Co., 575 F.2d at 1034 (discussing differences between indemnity and subrogation). Thus, whether a party can make out a claim for indemnity is irrelevant in determining whether that party has a right to subrogation.
Actions based on contribution are also separate and independent from those based on indemnity. Contribution is the right enjoyed by a joint tortfeasor, who has paid more than his proper share of the joint liability, to force the others to reimburse him to the extent of their liability. This is entirely different from subrogation which puts a party in a position to exercise the rights and remedies formerly enjoyed by another who no longer has any use for them due to the actions of the party seeking subrogation. 35 P.L.E. 245 (1961). Again, whether a party can make out a claim for contribution is irrelevant in determining whether that party has a right to subrogation.
Despite the differences among indemnity, contribution, and subrogation, the court cannot accept the City's claim that Home Insurance's third-party complaint must be dismissed because it does not expressly use the term "subrogation." As the Second Circuit in Great American pointed out:
By the subrogation of the insurer is meant the substitution of the insurer in place of the insured for the purpose of claiming indemnity from a third person for the loss covered by insurance.
Great American Insurance Co., 575 F.2d at 1034 (emphasis added). Given the liberal standard of pleadings in federal practice, and considering that it is now clear that Home Insurance's third-party claim is based on a theory of subrogation despite the complaint's use of the term "indemnity," it would be a useless formality to require Home Insurance to file an amended complaint. The City's motion for summary judgment on this ground will therefore be denied.
The City makes an alternative argument, however, which requires additional discussion. This argument focuses on a release provision included in a lease between plaintiff and the City for a small plot of ground located inside and completely surrounded by the City's property. Plaintiff uses this plot as a base to anchor the guy cables supporting its tower. Included in the lease for the plot is an aerial "easement" for the cables as they extend from the leased plot, over the City's property, to plaintiff's property line. The release provision of this lease states that:
Lessee [plaintiff] agrees to be responsible for and to relieve and hereby relieves the Lessor [City] from all liability by reason of any injury or damage to any person or property in the demised premises, or arising from the use of the demised premises, whether belonging to the Lessee [plaintiff] or any other person, caused by fire, breakage, destruction, leakage or any other casualty in any part or portion of the demised premises, or any part or portion of the improvements in the demised premises, or from water, rain or snow that may leak into, issue or flow from any part of the said premises whether such fire, breakage, destruction, leakage or other casualty, injury or damage be caused by or result from the negligence of Lessor [City] or his servants or agents or any person or persons whatsoever.