United States District Court, D. South Carolina, Charleston Division
PATRICK MICHAEL DUFFY UNITED STATES DISTRICT JUDGE
matter is before the Court on Defendant Arrow Products,
Inc.’s motion for joinder of a party under Federal
Rules of Civil Procedure 17 and 19 (ECF No. 14). Arrow seeks
to join Plaintiffs Bart and Jay D’Elias’ insurer
because it has a subrogation interest in this case. For the
reasons stated herein, the Court grants Arrow’s motion.
product liability case relates to a water expansion tank that
was installed in the D’Elias’ home. The
D’Elias allege that a defect in the tank caused it to
fail and flood their home, resulting in $152, 735.00 in
property damage and related expenses. They contend Arrow is
liable as the distributor of the tank.
North America Insurance Company insured the
D’Elias’ home when the tank failed. The
D’Elias made a claim on the policy, and Universal paid
them $150, 235.00 on that claim. As Universal and the
D’Elias have acknowledged, that payment gives Universal
a subrogation interest in this case. However, Universal has
executed an affidavit stating that it ratifies the
D’Elias’ lawsuit, waives its subrogation rights,
and agrees to be bound by the results of this action.
argues Universal is a real party in interest, see
Fed. R. Civ. P. 17(a)(1), and thus must be joined as a
plaintiff in this case, see id.; Fed.R.Civ.P. 19(a).
The parties, as well as Universal, agree that Universal is a
real party in interest and that Universal’s joinder
would not destroy the Court’s diversity jurisdiction.
See Jacobs Press, Inc. v. Hartford Steam Boiler
Inspection & Ins. Co., 107 F.3d 866, 1997 WL 90665, at
*5 (4th Cir. Mar. 4, 1997) (per curiam) (table) ("To the
extent of its payment, the insurer-subrogee is deemed the
‘real party in interest.’"). The parties
dispute, however, whether Universal must be joined under Rule
contends Universal must be made an involuntary plaintiff
because of its subrogation interest. The Court agrees.
"[A] partial subrogee" whose presence will not
destroy the district court’s jurisdiction "is a
person to be joined if feasible" upon timely motion by a
defendant. Va. Elec. & Power Co. v. Westinghouse
Corp., 485 F.2d 78, 85 (4th Cir. 1973); see also
Travelers Ins. Co. v. Riggs, 671 F.2d 810, 813 (4th Cir.
1982) ("[I]n a partial subrogation situation where the
action is brought in the name of the insured as real party in
interest, the partially subrogated insurer may also, if
feasible, be involuntarily joined as a party plaintiff upon
motion of the defendant."); Jacobs Press, Inc.,
1997 WL 90665, at *5 ("[U]pon timely motion, the party
sued may compel the joinder of the insurer-subrogee . . .
."). Arrow’s motion is timely, and joinder is
feasible because Universal’s presence in the case will
not destroy this Court’s diversity-based jurisdiction.
Thus, under Virginia Electric & Power, Universal
must be joined.
purpose of [Rules 17 and 19] is essentially the same."
Jacobs Press, Inc., 1997 WL 90665, at *5. "It
is to enable a defendant to present defenses he has against
the real party in interest, to protect the defendant against
a subsequent action by the party actually entitled to relief,
and to ensure that the judgment will have proper res judicata
effect." Va. Elec. & Power Co., 485
F.2d at 84. The D’Elias argue Arrow already has these
protections because Universal has sworn in writing that it
will abide by the results of this action and will not bring a
subrogation suit against Arrow. Thus, they contend, joining
Universal will not fulfill any legitimate purpose; rather, it
will only give Arrow the tactical advantage of injecting the
presence of insurance coverage into the trial, which could
infect the jury’s deliberations.
D’Elias are fighting a battle that has already been
lost. Several years after the Fourth Circuit decided
Virginia Electric & Power, District Judge Robert W.
Hemphill faced a joinder request in a case materially
indistinguishable from the one at bar. See Edwards, Inc.
v. Arlen Realty & Dev. Corp., 466 F.Supp. 505 (D.S.C.
1978). A shopping center tenant who suffered losses from
flooding sued several companies associated with the shopping
center. Id. at 506-07. Two insurance companies paid
some, but not all, of the tenant’s losses. Id.
at. 507. Due to their partial subrogation interests, the
insurers were "admittedly real parties in interest,
" and so the defendants moved to join them as
involuntary plaintiffs. Id. The tenant and its
insurers opposed the motion on the same grounds that the
D’Elias raise here. The insurers stated they were
willing to file ratifications of the tenant’s lawsuit
and also agreed to be bound by its outcome. Id. at
513. The tenant argued that its alignment at trial with the
insurers would unfairly influence the jury. Id. at
Hemphill found those points highly persuasive. In his view,
the insurers’ willingness to ratify the case and abide
by its outcome made forced joinder pointless, as it would
have no effect on the case’s substantive issues.
Id. at 513. It only could "possibly result in a
verdict not based on the substantive merits of the claim but
rather on inherent prejudice against insurance
companies." Id. Nonetheless, he recognized,
Virginia Electric & Power had created a "flat
unconditional rule" requiring that "that all
partial subrogees . . . be joined if feasible."
Id. at 513, 512. Thus, while he believed that not
joining the insurers would be logical and would "allow a
just adjudication of the substantive claim on the merits
unfettered by inherent prejudices against insurance
companies, " he acknowledged that this Court is bound by
Virginia Electric & Power and then ordered joinder
of the insurers. Id. at 514.
way to that conclusion, however, Judge Hemphill made his
thoughts on the holding of Virginia Electric & Power
crystal clear. He called it an "unfortunate statement of
law" that went beyond the facts of that case, ignored
Rule 19(a), and was inconsistent with "logical"
decisions from other courts. Id. at 511, 512, 513,
514. He lamented that the Fourth Circuit had, "by its
fiat, " prevented district courts from applying Rules 17
and 19 and effectuating their purpose, and from
"provid[ing] justice between parties." Id.
at 512. He called upon the Fourth Circuit to
"abandon" the rule and "allow flexibility in
the application of the rules so as to enable the courts to
mete out justice between the parties." Id. at
Hemphill’s complaint did not go unnoticed. In
Riggs, the Fourth Circuit flatly rebuffed Judge
Hemphill by citing Edwards, Inc. and then stating
that, despite criticism,
it is nevertheless the rule of this circuit that in a partial
subrogation situation where the action is brought in the name
of the insured as real party in interest, the partially
subrogated insurer may also, if feasible, be involuntarily