American Safety Casualty Insurance v. Condor Associates, Ltd. , 129 F. App'x 540 ( 2005 )

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FILED
FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
APRIL 21, 2005
No. 04-16378 THOMAS K. KAHN
Non-Argument Calendar CLERK
________________________
D. C. Docket No. 04-02034-CV-MHS-1
AMERICAN SAFETY CASUALTY INSURANCE COMPANY,
Plaintiff-Appellant,
versus
CONDOR ASSOCIATES, LTD.,
Defendant-Appellee.
_______________________
Appeal from the United States District Court
for the Northern District of Georgia
_________________________
(April 21, 2005)
Before BLACK, CARNES and PRYOR, Circuit Judges.
PER CURIAM:
American Safety Casualty Insurance Company (ASCIC) appeals from the
district court’s dismissal of its declaratory judgment action against Condor
Associates because of its failure to join an indispensable party pursuant to Fed. R.
Civ. P. 19(b). ASCIC contends that the district court abused its discretion in
concluding that Joseph and Maria Volpe were indispensable parties without whom
the declaratory judgment action could not proceed.
ASCIC instituted this action after Condor, which was insured under a policy
issued by ASCIC, was sued by the Volpes for injuries Joseph Volpe received while
working for a sub-subcontractor of Condor. In its suit, ASCIC sought a
determination that it had no duty under the policy to defend or indemnify Condor
for the damages alleged in the Volpes’ complaint. It did not name the Volpes as a
party to the action.
The district court, however, concluded that the Volpes were an indispensable
party as defined by Rule 19(b) and dismissed ASCIC’s suit.
ASCIC argues that the district court’s application of the Rule 19(b) factors
(and, as a result, its conclusion that the Volpes were indispensable) was erroneous
for two reasons. First, it argues that the district court failed to recognize that
Condor would adequately protect the Volpes’ interest in the declaratory judgment
action because they both desire the same thing—namely, a judgment that the
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insurance policy issued by ASCIC provides coverage for the damages alleged by
the Volpes. Second, ASCIC contends that, even if Condor could or would not
adequately protect the Volpes’ interest, the district court nevertheless erred by
dismissing the action because, according to ASCIC, it ignored the possibility that
the Volpes could intervene in the suit pursuant to Fed. R. Civ. P. 24(a). ASCIC
contends that the possibility of intervention under Rule 24(a) alleviates the
potential for prejudice to the Volpes’ interests.
“We review dismissal for failure to join an indispensable party for abuse of
discretion.” Laker Airways, Inc. v. British Airways, 182 F.3d 843, 847 (11th Cir.
1999) (citing Mann v. City of Albany, 883 F.2d 999, 1003 (11th Cir. 1989)). “This
scope of review will lead to reversal only if the district court applies an incorrect
legal standard, or applies improper procedures, or relies on clearly erroneous
factfinding, or if it reaches a conclusion that is clearly unreasonable or incorrect.
Short of that, an abuse of discretion standard recognizes there is a range of choice
within which we will not reverse the district court even if we might have reached a
different decision.” Schiavo ex rel. Schindler v. Schiavo ex rel. Schiavo, __ F.3d
__, No. 05-11556, 2005 WL 648897, at *2 (11th Cir. Mar. 25, 2005) (internal
citations omitted).
First, ASCIC cites Evangelical Lutheran Church v. Atlantic Mutual
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Insurance Co., 173 F.R.D. 507 (N.D. Ill. 1997), for the proposition that the Volpes
were not indispensable because they shared an “identity of interest” with Condor.
The district court did not abuse its discretion by declining to follow Evangelical
Lutheran. That decision from the Northern District of Illinois is not the law of this
circuit. At most, Evangelical Lutheran is persuasive authority, and the district
court found the reasoning of Evangelical Lutheran “unpersuasive.” We cannot say
that the district court abused its discretion by failing to follow that out-of-circuit
case, particularly where ASCIC has cited no cases from our circuit even hinting
that the type of identity of interest it alleges between Condor and the Volpes would
prevent a finding of indispensability.
That the district court did not err by failing to follow Evangelical Lutheran is
especially evident in light of Ranger Insurance Co. v. United Housing of New
Mexico, 488 F.2d 682 (5th Cir. 1974), a case that is binding and one on which the
district court relied.1 In Ranger, we affirmed the district court’s conclusion that the
absent tort claimants were indispensable parties to the insurer’s declaratory
judgment action against the insured because, were the case allowed to proceed
without them, “the claimants’ interests would be prejudiced.” Id. at 683. In so
1
In Bonner v. Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), we adopted as
binding precedent the decisions of the former Fifth Circuit handed down prior to October 1,
1981.
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ruling, we said nothing about the identity of interests between the claimants and the
insured, even though, like here, both the insured and the claimants presumably
wanted a judgment that the insurance policy afforded coverage of their claims. Id.The district court in this case acted well within its discretion in applying the
reasoning and analysis from Ranger to reach the conclusion that the Volpes would
be prejudiced if ASCIC’s suit were to proceed without them. Indeed, it probably
would have been error not to follow Ranger.
Second, the district court did not abuse its discretion by failing to consider
the possibility that the Volpes might be able to intervene in this action when
weighing the potential prejudice against them. It is true that the Federal Rules of
Civil Procedure advisory committee noted that the possibility of intervention may
be a relevant factor in considering if a party is indispensable under Rule 19(b). See
Fed. R. Civ. P. 19 advisory committee’s note (“[T]he absentee may sometimes be
able to avert prejudice to himself by voluntarily appearing in the action or
intervening on an ancillary basis.”).
Importantly, however, consideration of the possibility of intervention is not a
hard and fast requirement. Several other circuits considering the interplay between
the possibility of intervention under Rule 24(a) and the prejudice determination
under Rule 19(b) treat the possibility of intervention as a permissive, rather than
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mandatory, consideration. See Dainippon Screen Mfg. Co. v. CFMT, Inc., 142
F.3d 1266, 1272 (Fed. Cir. 1998) (“Moreover, to the extent it would be prejudiced
if the suit were to proceed in its absence, CFMT may intervene in the suit, and this
opportunity to intervene may be considered in calculating [any] prejudicial effect.”
(internal quote and citation omitted) (emphasis added)); Travelers Indem. Co. v.
Dingwell, 884 F.2d 629, 636 (1st Cir. 1989) (“A court can properly consider ability
to intervene when assessing the interest of an absent party for purposes of the
indispensability determination under Rule 19(b). But ability to intervene cannot
control the indispensability determination, which examines whether a party is an
essential part of the controversy before the court.” (emphasis added)); In re
Allustiarte, 786 F.2d 910, 919 n.2 (9th Cir. 1986) (“[T]he absent parties’ failure to
intervene when they were not joined, may be considered in determining whether
those parties have been prejudiced by non-joinder.” (emphasis added)).
We are not persuaded by the Second Circuit cases that are cited by ASCIC.
First, we do not read those cases as imposing a rule that a district court must
always consider the ramifications of Rule 24 when making an indispensability
determination under Rule 19(b). It is especially clear in Prescription Plan Service
Corp. v. Franco, 552 F.3d 493 (2d Cir. 1977), that the Second Circuits’ reversal of
the district court was not due to that court’s failure to consider the possibility of
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intervention under Rule 24 but, rather, its “fail[ure] to consider” the criteria
enumerated in Rule 19(b). Id. at 496 (concluding that none of the four Rule 19(b)
factors were met). Second, those Second Circuit decisions would not be binding
here, even if they did create such a requirement. And, given the decisions from
other circuits that we have just cited, we would not be alone in declining to adopt
such a rule.
We conclude, then, that while the district court could have considered the
possibility of intervention, its failure to do so was not an abuse of discretion.2
Therefore, ASCIC has failed to demonstrate that the district court abused its
discretion in finding that the Volpes were not indispensable parties.
AFFIRMED.
2
It is unnecessary for us to decide whether the Volpes actually could have intervened in
this case.
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