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Chong Chen v. Shan Qiao Zhang

February 10, 2010

CHONG CHEN, PLAINTIFF,
v.
SHAN QIAO ZHANG, ET AL.,
DEFENDANTS.



The opinion of the court was delivered by: Schiller, J.

MEMORANDUM

Plaintiff Chong Chen has filed a lawsuit against his neighbor, Defendant Shan Zhang, and Zhang's insurance company in connection with property damage he incurred as a result of a fire at Zhang's property. Zhang's insurer, Erie Insurance Company ("Erie"), has moved to dismiss Chen's breach of contract claim against it. For the reasons stated below, the Court grants the motion.

Chen has also sued his own home insurer, Allstate Insurance Company ("Allstate"), alleging that Allstate breached Chen's insurance contract by failing to provide reimbursement for the damages to his property. However, because Chen's joinder of Allstate does not satisfy the requirements of Federal Rule of Civil Procedure 20(a)(2), the Court will also dismiss Allstate.

I. BACKGROUND

On February 19, 2010, Zhang's home at 753 Jericho Road in Philadelphia caught fire, damaging Chen's adjacent property located at 751 Jericho Road. (Compl. ¶ 7.) According to Chen, Zhang's negligence caused the fire. (Id. ¶ 8.) At the time of the fire, Chen had a home insurance policy with Allstate and Zhang had one with Erie. (Id. ¶¶ 20, 27.) Chen has filed a breach of contract claim against Erie claiming that he is a third-party beneficiary of the insurance agreement between Erie and Zhang. He also sued Zhang for negligence and Allstate for breach of contract.

II. STANDARD OF REVIEW

A. Motion to Dismiss

The Federal Rules of Civil Procedure mandate dismissal of complaints which fail to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). Courts look to the complaint and attached exhibits in ruling on a motion to dismiss. Sands v. McCormick, 502 F.3d 263, 268 (3d Cir. 2008); Jordan v. Fox, Rothschild, O'Brien & Frankel, 20 F.3d 1250, 1261 (3d Cir. 1994). The Court accepts "as true all of the allegations in the complaint and all reasonable inferences that can be drawn therefrom," viewing them in the light most favorable to the non-moving party. Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008); Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997). The defendant bears the burden of establishing that the complaint fails to state a claim upon which relief can be granted. See Gould Elecs., Inc. v. United States, 220 F.3d 169, 178 (3d Cir. 2000).

The Third Circuit applies a two-part analysis to determine whether claims survive a Rule 12(b)(6) motion to dismiss. Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009). First, the Court must separate the factual and legal elements of the claim, accepting well-pleaded facts as true, but disregarding legal conclusions. Id. Second, the Court must determine whether the facts alleged in the complaint are sufficient to show a plausible claim for relief. Id. at 211 (citing Phillips, 515 F.3d at 234-35). If the well-pleaded facts "do not permit the court to infer more than the mere possibility of misconduct," the complaint should be dismissed for failure to state a claim. Jones v. ABN Amro Mortg. Grp., 606 F.3d 119, 123 (3d Cir. 2010).

B. Misjoinder of Defendants

District courts may raise the issue of improper joinder under the Federal Rules sua sponte. See Fed. R. Civ. P. 21; Schulman v. J.P. Morgan Inv. Mgmt., Inc., 35 F.3d 799, 804 (3d Cir. 1994); Braverman Kaskey, P.C. v. Toidze, Civ. A. No. 09-3470, 2010 WL 4452390, at * 2 (E.D. Pa. Nov. 4, 2010). The Court has broad discretion to deny joinder if it determines that the addition of the party under Rule 20 will not foster the objectives of the rule. Blood v. Fed. Bureau of Prisons, Civ.A. No. 09-229, 2009 WL 1118471, at * 3 (M.D. Pa. Apr. 24, 2009) (citing 7 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1652 (3d ed. 2009)). A court may dismiss a misjoined party at any stage of the action. Fed. R. Civ. P. 21. "When a court 'drops' a defendant under Rule 21, that defendant is dismissed from the case without prejudice." DirecTV, Inc. v. Leto, 467 F.3d 842, 845 (3d Cir. 2006).

III. DISCUSSION

A. Chen is not a Third-Party Beneficiary to the Erie Insurance Contract

Chen seeks to enforce an insurance contract between Zhang and Erie as a third-party beneficiary. He alleges that he was part of a "class of persons who were intended as beneficiaries" of the contract between Zhang and Erie. (Compl. ¶ 30.) Thus, Erie must pay Chen for property damage caused by Zhang. (Id. ¶ 31.) Despite ...


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