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Scottsdale Insurance Co. v. RSE Inc.

United States District Court, E.D. Pennsylvania

October 14, 2014



STEWART DALZELL, District Judge.

I. Introduction

We consider here defendant RSE Inc.'s ("RSE") motion to dismiss plaintiff Scottsdale Insurance Company's ("Scottsdale") Complaint which seeks a declaratory judgment that it does not have a duty to defend or indemnify RSE in an underlying action in Pennsylvania state court. RSE argues that Scottsdale has failed to join necessary parties under Fed.R.Civ.P. 19, or, in the alternative, that we should decline to exercise jurisdiction because of the pending action in state court. We will consider RSE's arguments in turn.

II. Standard of Review

To prevail on a motion to dismiss under Fed.R.Civ.P. 12(b)(7), the moving party must show a plaintiff has failed to join a party under Fed.R.Civ.P. 19. Cummings v. Allstate Ins. Co. , 2011 WL 6779321, *2 (E.D. Pa. Dec. 27, 2011) (Kelly, J.). Rule 19(a)(1)(B)(i) provides that

A person who is subject to service of process and whose joinder will not deprive the court of subject-matter jurisdiction must be joined as a party if...
(B) that person claims an interest relating to the subject of the action and is so situated that disposing of the action in the person's absence may:
(i) as a practical matter impair or impede the person's ability to protect the interest...

Such persons are required to be joined if "feasible". Fed.R.Civ.P. 19(a). We first determine whether such parties are "necessary" under Rule 19(a), and, if they are, but joinder is not "feasible" because joining them would defeat diversity, we next ask if the parties are "indispensable" under Rule 19(b). Gen. Refractories Co. v. First State Ins. Co. , 500 F.3d 306, 312 (3d Cir. 2007). We only proceed to a Rule 19(b) analysis if we determine that joinder is compulsory under Rule 19(a). See id. at 313 (explaining that, prior to a discretionary determination under Rule 19(b) that joinder of an indispensable party is "not feasible", the court must hold that joinder is compulsory under Rule 19(a)). Under Rule 19(a)(1), the inquiry is whether complete relief may be accorded to parties named in the action in the absence of parties not named - that is, the inquiry is limited to the effect on present parties and "what effect a decision may have on absent parties is immaterial." Id . (citing Angst v. Royal Maccabees Life Ins. Co. , 77 F.3d 701, 705 (3d Cir. 1996)); see also Janney Montgomery Scott, Inc. v. Shepard Niles, Inc. , 11 F.3d 399, 405 (3d Cir. 1993) (the effect a Rule 19(a)(1) decision may have on the absent party is not material).

In reviewing a motion under Rule 12(b)(7), we must accept as true the allegations in the complaint and draw all reasonable inferences in the non-moving party's favor. Cummings v. Allstate Ins. Co., 2012 WL 2327855, *3 (E.D. Pa. June 19, 2012) (Kelly, J.) (citing Pittsburgh Logistics Sys., Inc. v. C.R. England, Inc. , 669 F.Supp.2d 613, 618 (W.D. Pa. 2009), and Jurimex Kommerz Transit G.M.B.H. v. Case Corp. , 65 F.Appx. 803, 805 (3d Cir. 2003)). When making a Rule 19 determination, we may also consider evidence outside the pleadings. See Jurimex Kommerz Transit G.m.b.H. v. Case Corp. , 201 F.R.D. 337, 339 (D. Del. 2001); see also A. & M. Gregos, Inc. v. Robertory , 384 F.Supp. 187, 193 n. 16 (E.D. Pa. 1974) (citing Land v. Dollar , 330 U.S. 731, 735 n.4 (1947) for the proposition that a court may rely on affidavits and material outside the pleadings when considering a motion to dismiss on grounds relating to the court's jurisdiction, as opposed to failure to state a claim).

Our Court of Appeals reviews a district court's decision to grant or withhold declaratory judgment for abuse of discretion and, as discussed below, recently provided an eight-factor test to guide our discretion in insurance cases between an insurer and an insured. Reifer v. Westport Ins. Corp. , 751 F.3d 129, 138, 146 (3d Cir. 2013).

III. Factual Background

Plaintiff Scottsdale is an Arizona insurance company with its principal place of business in Columbus, Ohio. Complaint at ¶ 4. Scottsdale issues insurance policies in the Commonwealth of Pennsylvania. Id . Scottsdale issued defendant RSE such a policy for the period from October 1, 2013 through October 1, 2014. Id . ¶ 10-11. RSE is a Pennsylvania corporation with its principal place of business in Pottstown, Pennsylvania. Id. at ¶ 6. Scottsdale seeks a declaratory judgment pursuant to Fed.R.Civ.P. 57 and 28 U.S.C. § 2201 to determine its rights and obligations under policy number BCS0030904 with respect to an underlying suit in the Commonwealth of Pennsylvania. Id. at ¶ 10-11.

RSE is a defendant in the case captioned FEI Co. v. Refrigeration Service and Engineering, Inc., a/k/a Industrial RSE, filed December 16, 2013, in the Pennsylvania Court of Common Pleas for Dauphin County.[1] Id. at ¶ 13. RSE sought defense and indemnity from Scottsdale in that underlying action, and Scottsdale has been providing a defense since November 16, 2013, subject to a reservation of rights dated April 17, 2014. Id. at ¶ 14-16. Scottsdale seeks a determination that it does not have an obligation to defend or indemnify RSE in the underlying action, or in additional claims ...

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