Bits & Pieces

Society Insurance v. Friedle

2019 WL 1997284

Court of Appeals of Wisconsin.
Appeal No. 2018AP224
May 7, 2019
Cir. Ct. No. 2016CV219
APPEAL from a judgment of the circuit court for Lincoln County: JAY R. TLUSTY, Judge. Affirmed.
Before Stark, P.J., Hruz and Seidl, JJ.


*1 ¶1 Bessemer Plywood Company and Harleysville Lake States Insurance Company (collectively, “Bessemer”) appeal a grant of summary judgment in favor of Great West Casualty Company (“Great West”). Bessemer contends that the circuit court erred by determining that Great West had no duty to defend or to indemnify Bessemer against claims arising from a slip and fall accident in which Scott Friedle, an employee of Great West’s insured, Maki Trucking & Logging (“Maki”), suffered severe injuries at a Bessemer facility. We conclude that an exclusion in Great West’s policy precludes coverage of Bessemer for Friedle’s injury as a matter of law, and Great West therefore had no duty to defend or to indemnify Bessemer. Accordingly, we affirm.

¶2 In October 2016, Bessemer hired Maki to pick up a load of plywood from Bessemer’s facility in Bessemer, Michigan. To that end, Friedle drove a Maki-owned truck from Tomahawk, Wisconsin, to the Bessemer facility. After the plywood “was loaded” onto the truck’s flatbed trailer,1 Friedle climbed on top of the load so that he could pull a tarp over the plywood. He subsequently suffered severe injuries when he slipped and fell from the trailer.

¶3 At the time of this incident, Maki had a worker’s compensation insurance policy with Society Insurance (“Society”). In addition, Maki had a commercial automobile, general liability, and inland marine insurance policy with Great West. As relevant to this appeal, Maki’s Great West policy contained the following language:
This insurance does not apply to any of the following:
“Bodily injury” to:
a. An “employee” of the “insured” arising out of and in the course of:
(1) Employment by the “insured”; or
(2) Performing the duties related to the conduct of the “insured’s” business[.2]

¶4 Society subsequently brought this suit against Bessemer to recover worker’s compensation payments it made to Friedle. Society’s complaint asserted claims of negligence and negligence per se. It also requested punitive damages. Friedle was named as an involuntary plaintiff in Society’s action, and he subsequently filed his own complaint in the case. The allegations in Friedle’s complaint were substantially similar to those in Society’s complaint, and Friedle also asserted the same claims and requested substantially the same relief as Society.

*2 ¶5 Bessemer tendered its defense of the lawsuit to Great West under the theory that Bessemer was a permissive user of the Maki-owned truck at the time of the accident, and therefore it was an insured under Great West’s policy. As grounds for its claim that it was a permissive user of the truck, Bessemer alleged that its “employees loaded the Maki truck with plywood.”

¶6 Great West denied the tender, and it filed a third-party complaint seeking a judgment declaring that it owed no duty to defend or to indemnify Bessemer. The circuit court granted Great West’s motion to bifurcate “the liability issues in this matter from the coverage issues, and to stay all liability proceedings until all coverage issues are resolved.” Further, based on Bessemer and Great West’s stipulation that the “claim of Bessemer that Great West has a duty to defend it in this action … may be appropriately decided on Cross-Motions for Summary Judgment,” the court entered a briefing schedule “[i]n order to bring the duty to defend issue to disposition.”

¶7 After briefing, the circuit court granted Great West summary judgment, declaring, “Great West does not have a duty to defend or indemnify Bessemer.” The court reasoned that Great West’s policy did not provide an initial grant of coverage to Bessemer because “Bessemer was not actively engaged in the use of the Maki vehicle at the time of Friedle’s fall, so as to render Bessemer a permissive user of the Maki vehicle.” Further, the court concluded that, even assuming there was an initial grant of coverage, the employment exclusion would apply to preclude coverage. Bessemer now appeals.3

¶8 On appeal, Bessemer contends that the circuit court erred in granting summary judgment to Great West because the court improperly determined Great West had no duty to defend Bessemer.4 We review a circuit court’s decision to grant summary judgment independently, using the same standard applied by the circuit court. Water Well Sols. Serv. Grp., Inc. v. Consolidated Ins. Co., 2016 WI 54, ¶11, 369 Wis. 2d 607, 881 N.W.2d 285. Summary judgment is appropriate where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. WIS. STAT. § 802.08(2) (2017-18).5

*3 ¶9 This case involves interpretation of an insurance policy to determine the scope of an insurer’s duty to defend its insured, which presents a question of law that we review de novo. See Water Well Sols., 369 Wis. 2d 607, ¶12. We construe policy language from the perspective of a reasonable insured, giving the words used in the policy their common and ordinary meanings. Id., ¶14. If policy language is unambiguous, we apply it as written. Marnholtz v. Church Mut. Ins. Co., 2012 WI App 53, ¶10, 341 Wis. 2d 478, 815 N.W.2d 708. However, if policy language is ambiguous—that is, susceptible to more than one reasonable interpretation—we resolve the ambiguity in the insured’s favor. Id.

¶10 In determining whether an insurance policy obliges an insurer to defend a party against a claim, we compare the four corners of the underlying complaints in a case to the terms of the entire insurance policy. Water Well Sols., 369 Wis. 2d 607, ¶15. In doing so, we employ a three-step process to determine if an insurer has a duty to defend. Id., ¶16. First, we examine the facts of the claim as alleged in the underlying complaints to determine whether the policy’s insuring agreement makes an initial grant of coverage. Id. If so, we next consider whether any of the policy’s exclusions preclude coverage. Id. Then, if a particular exclusion applies, we determine whether any exception to that exclusion reinstates coverage. Id. If coverage is not restored by an exception to an exclusion, then the insurer has no duty to defend a party against a claim. Id.

¶11 Here, we begin by acknowledging that the parties dispute whether there is an initial grant of coverage to Bessemer under Great West’s policy.6 This dispute centers on whether Bessemer could be considered a permissive user of the Maki-owned truck at the time of Friedle’s accident.7 We need not resolve this dispute, however, because “[i]f any exclusion clearly bars coverage, we need not examine [the] potentially more difficult question of whether the policy [initially] grants coverage.” State v. GE-Milwaukee, LLC, 2012 WI App 5, ¶7, 338 Wis. 2d 349, 808 N.W.2d 734 (2011). Therefore, we assume, without deciding, that the Great West policy afforded an initial grant of coverage to Bessemer under the theory that Bessemer was a permissive user of the Maki-owned truck, and we proceed to the second step of our duty to defend analysis—that is, whether any of Great West’s policy exclusions preclude coverage. See Water Well Sols., 369 Wis. 2d 607, ¶16.

¶12 We conclude that is plainly the case here. As noted, the employment exclusion in Great West’s policy precludes coverage for “bodily injury to … [a]n employee of the insured arising out of and in the course of … [e]mployment by the insured[.]” (Internal punctuation omitted.) When determining whether an exclusion bars coverage, we have explained that “the phrase ‘arising out of’ in an insurance policy is very broad, general, and comprehensive and is ordinarily understood to mean originating from, growing out of, or flowing from.” Great Lakes Beverages, LLC v. Wochinski, 2017 WI App 13, ¶21, 373 Wis. 2d 649, 892 N.W.2d 333 (citation omitted). Applying this broad and comprehensive interpretation of the phrase “arising out of” to the case at hand, the undisputed facts establish that Friedle’s injuries arose out of the course of his employment and, therefore, the circuit court did not err in granting summary judgment.

*4 ¶13 Our conclusion is based on the following facts alleged in the Society and Friedle complaints, none of which are disputed. Maki dispatched Friedle to the Bessemer facility with directions to pick up and transport a load of plywood. To that end, Maki supplied Friedle with a hard hat, steel-toed shoes, and a harness. Further, both complaints state that “Bessemer’s facility stands in contrast to facilities operated by Bessemer’s competitors, all of whom provide harness lines and other means by which truck drivers can protect themselves from falls when they are standing on the loads they are preparing to transport.” (Emphasis added.)

¶14 The only reasonable inference from these allegations is that when Friedle fell from the truck, he was performing a task “originating from, growing out of, or flowing from” his employment. To explain, the allegation that Maki supplied Friedle with a safety harness shows that Maki anticipated Friedle performing, and intended for him to perform, the very task he was injured while performing—i.e., standing on the load of plywood when preparing it for transport.

¶15 This conclusion is further supported by the fact that the Society complaint states on its face that Friedle “was working within the scope of his employment” when Maki sent him to Bessemer. Further, both the Society and Friedle complaints state that Friedle made a claim for benefits with Society, Maki’s worker’s compensation insurer, which is an allegation that Friedle was acting within the scope of his employment for Maki at the time of the injury.

¶16 Bessemer raises two arguments as to why the circuit court erred by concluding that the employment exclusion precluded coverage for Bessemer under the Great West policy. First, Bessemer contends Great West did not “argue for the application of the [exclusion] as part of its summary judgment motion” and therefore “waived its argument.” This argument fails because it “is well recognized that courts may sua sponte consider legal issues not raised by the parties.”8 Leonard v. State, 2015 WI App 57, ¶13, 364 Wis. 2d 491, 868 N.W.2d 186. This authority is a reflection of the court’s function to do justice between the parties. Id. Further, any objection on grounds of theoretical unfairness to the litigants is diminished when the litigants have notice of the consideration of an issue. Id.

¶17 Here, Bessemer was clearly on notice that the employment exclusion could provide a basis for the circuit court to conclude that Great West did not have a duty to defend or to indemnify Bessemer. This notice was provided by a correspondence from Society’s counsel to the court, sent three months prior to the court’s grant of summary judgment, wherein counsel stated:
As the attorney for the plaintiff, I am all for more insurance. Nonetheless, pursuant to SCR 20:3.3, I am compelled to state the following.
Given the language of the [employment] exclusion and the facts of this case, there is no coverage. It does not matter whether or not the vehicle was being “used” at the time of the accident. Even if we assume it was being used, and therefore an initial grant of coverage is triggered, [the employment exclusion] takes it away. Regrettably, Society’s position is that Great West does not have a duty to defend or indemnify Bessemer Plywood or anyone else.
*5 We therefore conclude the circuit court did not err by relying on the employment exclusion as an alternative basis for granting Great West summary judgment.

¶18 Second, Bessemer argues that the fact that Friedle was not wearing his safety harness when he was injured “give[s] rise to a reasonable inference that Friedle fell while performing a task outside his employment.” In support, it points to a case from Georgia, Hoover v. Maxum Indemnity Co., 730 S.E.2d 413 (Ga. 2012).

¶19 In Hoover, a “water extraction technician” was dispatched by his employer to “deliver a ladder to a job site.” Id. at 415. Instead of simply delivering the ladder, however, the water extraction technician climbed onto the roof and assisted an independent roofing contractor with repairs, even though the employee’s “duties as a water extraction technician … did not include climbing on ladders or making roof repairs.” Id. The employee subsequently fell from the roof and suffered a severe head injury. Id. The Georgia Supreme Court ultimately held that an insurance policy’s employment exclusion did not act to bar coverage because the employee “was not performing duties related to the conduct of the insured’s business at the time of the accident.” Id. at 418.

¶20 We are unpersuaded that Hoover provides any support for Bessemer’s position, because it is wholly distinguishable from the facts of this case. The employee in Hoover was undisputedly engaged in a task that was unrelated to the duties of his employment. Conversely, as explained above, the fact that Maki provided Friedle with safety equipment to enable him to perform the very task he was injured while performing permits only one reasonable inference: that Friedle was engaged in a task related to his employment when he sustained his injuries.9

¶21 In sum, we conclude the circuit court did not err in finding that the employment exclusion in Great West’s policy precluded any insurance coverage to Bessemer and, therefore, it had no duty to defend or indemnify Bessemer.10 Consequently, as Bessemer does not argue that any exception to the employment exclusion acts to restore coverage, we conclude that the court properly granted summary judgment in favor of Great West.

*6 By the Court.—Judgment affirmed.

This opinion will not be published. See WIS. STAT. RULE 809.23(1)(b)5.

All Citations
Slip Copy, 2019 WL 1997284


The parties ascribe much significance to the fact that the complaints at issue in this case state only that the plywood “was loaded” onto the truck, without specifying who actually loaded the plywood. In particular, the complaints do not allege that Bessemer employees were involved in loading the plywood, such that Bessemer could be considered a permissive user of the truck. For reasons set forth below, the complaints’ failures to allege who loaded the plywood is not relevant to our analysis.

We refer to this quoted language from the insurance policy as “the employment exclusion” for the remainder of this opinion.

Bessemer requests that we stay this appeal and remand this case to the circuit court for it to decide Friedle’s pending motion to amend his complaint. We previously denied this request in a June 4, 2018 order, and we need not address the issue further. However, we note that Bessemer asserts that we should grant the stay because that complaint, as amended, would establish it was a permissive user of the Maki-owned truck. For reasons set forth below, that issue is immaterial to our disposition of this case.

As indicated, Bessemer focuses its argument on Great West’s duty to defend. Our supreme court has recognized that although Wisconsin law “supports the well-established principle that an insurer’s duty to defend its insured is broader than its duty to indemnify … there may be isolated instances in which an insurer has no duty to defend … but nevertheless owes a duty to indemnify ….” Water Well Sols. Serv. Grp., Inc. v. Consolidated Ins. Co., 2016 WI 54, ¶30 n.17, 369 Wis. 2d 607, 881 N.W.2d 285. Given that Bessemer does not argue that this case presents one of those “isolated instances” where an insurer has no duty to defend but nevertheless has a duty to indemnify, we confine our analysis to Great West’s duty to defend.

All references to the Wisconsin Statutes are to the 2017-18 version unless otherwise noted.

We also note that Bessemer has not—either in the circuit court or on appeal—raised an argument that, assuming Great West does have a duty to defend Bessemer, Great West has breached that duty.

The parties agree that if Bessemer were considered a permissive user of the truck, there would be an initial grant of coverage under the Great West policy.

We observe that Great West disputes whether it “waived” any argument regarding the employment exclusion. We need not address any waiver argument, however, given our conclusion that the circuit court could properly raise the issue sua sponte, even assuming Great West had failed to do so. See Turner v. Taylor, 2003 WI App 256, ¶1 n.1, 268 Wis. 2d 628, 673 N.W.2d 716 (when one issue is dispositive, we need not reach the other issues raised).

To the extent that Bessemer intends to argue that an employee’s failure to utilize employer-provided safety equipment may transform an employment-related task to one outside the course of his or her employment, it provides no citation to any legal authority in support of such a position. We will not further consider this undeveloped argument. See State v. Pettit, 171 Wis. 2d 627, 646, 492 N.W.2d 633 (Ct. App. 1992).

Bessemer also raises a cursory argument in which it points to the fact that Bessemer required Friedle to tarp the load, appearing to argue that this fact shows Friedle was doing work on behalf of Bessemer, not Maki. However, even if we accepted that Friedle tarped the load as a loaned employee of Bessemer—and that there was an initial grant of coverage to Bessemer—the exclusion would still apply. In that case, the employee (Friedle) would still be performing the work of the purported insured (Bessemer) by performing a duty related to the course of Bessemer’s business—i.e., tarping the load. Thus, in either case the employment exclusion applies to bar coverage. Moreover, Bessemer provides no citation to any legal authority in support of its position and, again, we need not consider undeveloped arguments. See id.

Gonzalez v. JAG Trucking

2019 WL 1994464

United States District Court, E.D. California.
Leonel GONZALEZ, et al., Plaintiffs,
JAG TRUCKING, INC. et al, Defendants.
Signed 05/03/2019
Filed 05/06/2019
Attorneys and Law Firms
Matthew C. Clark, Bakersfield, CA, for Plaintiffs.
Yasmine Hussein, John B. Larson, Larson & Gaston, LLP, Pasadena, CA, for Defendants.


(ECF No. 73, 82)

*1 This action stems from a motor vehicle accident that occurred on May 8, 2018, involving multiple vehicles on northbound Interstate Highway 5 (“I-5”), one mile south of Grapevine Road in Kern County, California. On June 14, 2018, Plaintiffs Leonel Gonzalez and Jonathan Basulto (collectively “Plaintiffs”) sued Defendants JAG Trucking, Inc. (“JAG”) and Joshua Nicholson (collectively “Defendants”) in Superior Court of the State of California, County of Kern. ECF No. 1, Ex. A. The complaint generally alleges that Defendants negligently owned or operated a tractor trailer which caused Plaintiffs’ personal and property damages, in connection with the accident. Id. On August 9, 2018, Defendants removed the action to this Court on the basis of diversity jurisdiction pursuant to 28 U.S.C. § 1332, submitting that both Plaintiffs are citizens of California and both Defendants are citizens of Oregon. Id. at 2. Defendants answered the complaint on August 16, 2018, ECF No. 4, and filed a “Cross-Claim” impleading Juan Carlos Hernandez & Francisco Javier Jimenez Tapia d/b/a Pitufos Transport (“Pitufos”), alleging that Pitufos was the proximate cause of any alleged injuries to Plaintiffs and stating five causes of action, including equitable and implied indemnity, apportionment of fault, contribution, and declaratory relief. ECF No. 5.

The Defendants then filed a first amended “Cross-Claim,” naming, in addition to Pitufos, seventeen additional “cross-defendants” by way of a sixth cause of action for declaratory relief. ECF No. 8.1 The additional Third-Party Defendants include: (1) Jose Alvarado, (2) Juana Leuvano, (3) Leah Alvardo, (4) Andrew Lerma, (5) Frank Lopez, (6) Isiah Gonzalez, (7) Stephanie Rutherford, (8) Noelle Krawiec, (9) Andres Krawiec, (10) Rafael Martinez, (11) Eduardo Guardia, (12) Stephen Fisher, (13) Todd Kittinger,2 (14) Martin Gomez, (15) Mark Blanchard, (16) Ana Rodriguez, and (17) Gilberto Rodriguez. Id. at 10. These individuals were allegedly either drivers or passengers of other vehicles involved in the May 8, 2018 collision; Defendants claim that these seventeen Third-Party Defendants “are potential claimants in the underlying lawsuit filed by Plaintiffs herein.” Id. at ¶ 74 (emphasis added). The Third-Party Complaint further contends that Defendants JAG and Nicholson “desire a judicial determination of the percentage or ratio of contributing fault as between all parties so that the actual contributing fault of each party can be determined” and that “[d]eclaratory relief is necessary and appropriate at this time in order to avoid multiplicity of suits and circuit [sic] of actions and in order that all parties may ascertain their rights and duties.” Id. at ¶¶ 76-77. As the basis for jurisdiction in its TPC against these eighteen Third-Party Defendants, Defendants submit that there is original jurisdiction under 28 U.S.C. § 1332 and additionally submit that “[a] defendant may implead a Third-Party Defendant who is of the same citizenship as the plaintiff without destroying diversity if ancillary jurisdiction over the third-party claim is present. (F.R.C.P. 14).” Id. at ¶¶ 11, 13.

*2 Of the eighteen Third-Party Defendants named in the TPC, Todd Kittinger made a motion pursuant to Federal Rule of Civil Procedure (“Rule”) 12(b)(6) to dismiss the sixth cause of action against seventeen Third-Party Defendants, which this Court denied. ECF No. 69.3

On March 12, 2019, Defendants JAG and Nicholson moved to amend the TPC requesting to join four additional parties. ECF No. 73. In their original motion, Defendants cursorily cited to Rules 19(a) and 20 without explanation of how either of these rules support their motion to amend. Id. The Court, after preliminarily reviewing the motion, ordered Defendants to file a proposed second amended TPC and a supplemental brief clarifying the basis for the motion to amend, including an explanation of whether leave to amend is appropriate under Rule 15 and whether joinder of these additional parties is appropriate under the Rules cited in their motion. ECF No. 79. The Defendants filed a supplemental brief on March 26, 2019 along with a proposed second amended “Cross-Claim,” referred to herein as the second amended TPC or proposed TPC. ECF No. 82. No oppositions have been filed to the motion to amend and the matter was taken under submission on the papers pursuant to Local Rule 230(g).

Rule 15(a)(2) provides that “a party may amend its pleading only with the opposing party’s written consent or the court’s leave” and that “[t]he court should freely give leave when justice so requires.” Fed. R. Civ. P. 15(a)(2). Courts consider certain factors when assessing the propriety of a granting a party leave to amend: bad faith, undue delay, prejudice to the opposing party, futility of amendment, and whether the party has previously amended the pleading. Desertrain v. City of Los Angeles, 754 F.3d 1147, 1154 (9th Cir. 2014); see also DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 186 (9th Cir. 1987). The factors do not carry equal weight; prejudice to the opposing party is the most important, Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003), and “delay, by itself, is insufficient to justify denial of leave to amend.” DCD Programs, Ltd., 833 F.2d at 186. “In the absence of any apparent or declared reason—such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc.—the leave sought should, as the rules require, be ‘freely given.’ ” Foman v. Davis, 371 U.S. 178, 182, 83 S. Ct. 227, 230, 9 L.Ed. 2d 222 (1962). District courts may not “outright refus[e] to grant the leave without any justifying reason appearing for the denial.” Id.

*3 Unfortunately, despite the requested supplemental briefing, the procedural mechanism Defendants are attempting to utilize to join these four additional parties remains wholly unclear.4 Defendants JAG and Nicholson have made a motion to amend the TPC to join four additional parties to the sixth cause of action for declaratory relief: Enterprise Holdings, Inc. (“EHI”), Avis Budget Group, Inc. (“ABGI”), DPWN Holdings, Inc. (“DPWN”), and Progressive County Mutual Insurance Company (“Progressive”). ECF No. 82 at 2-3.5 Defendants’ supplemental briefing submits that the subject accident was a 12-vehicle collision on northbound I-5, involving a total of 20 drivers and passengers. Id. at 2. The occupants of four of the 12 vehicles declined any personal injury claims or involvement in the litigation “leaving open only their respective property damage claims.” Id. EHI rented out a vehicle to Rafael Martinez. ABGI rented out a vehicle to Eduardo Guardia. DPWN owned a vehicle that was operated by its employee, Martin Gomez, and another employee, Mark Blanchard, was a passenger. Progressive insured a vehicle involved in the subject incident which was operated by Ana Rodriguez with Gilberto Rodriguez as a passenger. These four additional parties – EHI, ABGI, DPWN, and Progressive – seek (thus far outside this forum) to recover repair costs from Defendants for the property damages to their vehicles that were involved in the collision. See Id. at 3-4; see also ECF No. 82-1 at ¶¶ 60, 64, 74, 80. Defendants represent that the drivers and passengers of these vehicles will be dismissed from the action since they have declined any personal injury claims. Id.6 In contrast to the representations in the brief that this additional parties have claims against the Defendants, the proposed second amended TPC cites Rule 14 as the basis for impleading these Defendants. ECF No. 82-1 at ¶ 81. The proposed TPC states that Defendants “desire a judicial determination of the percentage or ratio of contributing fault as between all parties so that the actual contributing fault of each party can be determined.” Id. at ¶ 84. However, the proposed TPC also states that this parties are “potential claimants” and Defendants deny responsibility for any injures to these parties while also indicating that the additional four parties are seeking to recover repair costs to their vehicles. Id. at ¶ 82; see also ¶¶ 60, 64, 74, 80.

Despite citing and briefing Rule 20 in their supplemental brief,7 the proposed TPC only cites to Rule 14 as the basis for joining these four parties. Therefore, the Court considers whether to grant the motion to amend based on the requirements of Rule 14. As this Court previously indicated, to the extent that there is a reference in the TPC to the Third-Party Defendants being “potential claimants,” Rule 14 provides for joining parties who “may be liable to [a defending party] for all or part of the claim against it.” Fed. R. Civ. P. 14; ECF No. 69 at 10, n.6.8 “Thus, a third-party claim may be asserted only when the third party’s liability is in some way dependent on the outcome of the main claim and is secondary or derivative thereto.” Stewart v. Am. Int’l Oil & Gas Co., 845 F.2d 196, 199 (9th Cir. 1988). “The crucial characteristic of a Rule 14 claim is that defendant is attempting to transfer to the third-party defendant the liability asserted against him by the original plaintiff. The mere fact that the alleged third-party claim arises from the same transaction or set of facts as the original claim is not enough.” Id. (quoting 6 Wright & Miller, Fed. Prac. & Proc. § 1446 at 257 (1971 ed.) ). To the extent that the proposed TPC attempts to implead EHI, ABGI, DPWN, and Progressive for liability to Defendants for Plaintiffs’ claims, the Court will allow amendment without reaching the question of sufficiency of the proposed TPC and whether the substantive of law of California permits for such liability. Such questions would be better resolved on a motion to dismiss. See, e.g., SAES Getters S.p.A. v. Aeronex, Inc., 219 F. Supp. 2d 1081, 1086 (S.D. Cal. 2002) (“While courts will determine the legal sufficiency of a proposed amendment using the same standard as applied on a Rule 12(b)(6) motion, … such issues are often more appropriately raised in a motion to dismiss rather than in an opposition to a motion for leave to amend.”).

*4 However, as mentioned, Defendants’ briefing and portions of the proposed second amended TPC suggest that Defendants are seeking to join these parties as potential claimants (i.e., for any claims these parties may have against the Defendants). This is not the appropriate use of Rule 14. Whether EHI, ABGI, DPWN, and/or Progressive have property damages claims against Defendants does not support that these parties may be liable to Defendants for all or part of Plaintiffs’ claims against them. See Fed. R. Civ. P. 14. It remains unclear to the Court what Defendants are attempting to do in adding these parties and whether they are being joined solely as parties who may be liable to Defendants for Plaintiffs’ claims under Rule 14 or whether they are being joined by some other mechanism or for some other purpose. As the proposed second amended TPC does not cite any procedural mechanism by which it can join EHI, ABGI, DPWN, and Progressive as potential claimants, amendment to include such claims is not appropriate because the Court cannot determine at this time whether any such claims would be futile. The supplemental briefing does not provide support for this type of joinder being appropriate under Rule 20.9

In sum, because there is a “possible scenario under which the third party defendants may be liable for all or part of the defendants’ liability to the plaintiffs[,]” Banks, 109 F.R.D. at 540, the Defendants are permitted to amend to the extent the TPC implicates Third-Party Defendants liability for Plaintiffs’ claims for personal and property damages against Defendants in relation to the multivehicle accident.10 Amendment in this regard to join additional parties is not obviously futile since it is not clearly subject to dismissal. See SAES Getters S.p.A., 219 F. Supp. 2d at 1086 (“an amendment is ‘futile’ only if it would clearly be subject to dismissal”).

In addressing the remaining factors considered when granting a motion to amend, Defendants submit that the Rule 15 factors of bad faith, undue delay, prejudice to opposing party all weigh in favor of granting leave to amend. ECF No. 82 at 4.11 Defendants further submit that adding these four additional parties does not affect the Court’s jurisdiction and will not prejudice any of the involved parties given the early stage of the proceedings as trial has not yet been scheduled and discovery does not close for months. Id. at 7. Defendants contend that adding these parties will streamline the litigation by ensuring litigations in a single suit rather than necessitating the need for a separate action over the claims. Id. at 5. Additionally, none of the parties have opposed the amendment or given any indication that they will be prejudiced in any way by the joinder of these parties. See, e.g., DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 187 (9th Cir. 1987) (noting that “[t]he party opposing amendment bears the burden of showing prejudice.”). In addition, the Court does not find that Defendants are acting in bad faith or that there was undue delay.

*5 Given the liberal standard in granting a motion to amend and the fact that amendment is not obviously futile (at least with regard to potential claims pursuant to Rule 14), the Court will grant the motion to amend as delineated herein. The Court will not attempt to wade into the details and sufficiency of the claims and will not consider the appropriateness of the contribution claims under California law in the context of this unopposed motion to amend. See, e.g., 6 Wright & Miller, Fed. Prac. & Proc. Civ. § 1448 (3d ed.) (“If the governing substantive law recognizes a right of contribution, impleader under Rule 14 is a proper procedure by which to seek relief from joint tortfeasors. The availability of impleader enables the right of contribution to be litigated concurrently with the main claim.”) (footnotes omitted). Joinder in the context of allowing Defendants to implead third party defendants that may be liable in the multivehicle accident will also generally comport with the purpose of the Rules. See generally United Mine Workers of America v. Gibbs, 383 U.S. 715, 724 (1966) (noting “[u]nder the Rules, the impulse is toward entertaining the broadest possible scope of action consistent with fairness to the parties; joinder of claims, parties and remedies is strongly encouraged.”); Am. Zurich Ins. Co. v. Cooper Tire & Rubber Co., 512 F.3d 800, 805 (6th Cir. 2008) (purpose of Rule 14 is “to permit additional parties whose rights may be affected by the decision in the original action to be joined so as to expedite the final determination of the rights and liabilities of all interested parties in one suit.”)

However, if Defendants intend to extend their claims against the Third-Party Defendants to include liability other than for contribution to the claims brought by Plaintiffs against Defendants, they must clearly delineate a proper basis for the joining of such claims to this lawsuit only as permissible under the Rules.

For the reasons set forth above, Defendants JAG and Nicholson’s motion to amend the TPC, ECF No. 73, is GRANTED to the extent it attempts to implead parties that may be liable under Rule 14. Defendants shall file the amended TPC within fourteen (14) days of the date of this Order. The Defendants should ensure that the filed TPC reflects the proper parties and that the continued reference to potential claimants and claims not brought pursuant to Rule 14 are removed.


All Citations
Slip Copy, 2019 WL 1994464


For the sake of clarity, the Court refers to the “Cross-Claim” as the Third-Party Complaint (“TPC”) as it appears Defendants are utilizing Rule 14 to implead these additional parties. See ECF No. 8 at ¶¶ 13, 73. The impleaded parties will be referred to as the “Third-Party Defendants.”

Mr. Todd Richard Kittinger was erroneously sued as Todd Richard Kittenger (herein “Kittinger”). ECF No. 45-3 at 2.

Mr. Kittinger argued in his motion to dismiss that the “Sixth Cause of Action would be better stated as an Interpleader cause of action pursuant to [Rule] 22 and not a Declaratory Judgment cause of action pursuant to [Rule] 57” and additionally argued that the Court should exercise its discretion to not entertain the declaratory judgment cause of action. ECF No. 45-3 at 4-6. Due to lack of support for his arguments and lack of analysis of the factors Courts consider in deciding whether to exercise discretion under the Declaratory Judgment Act, the Court Denied the motion to dismiss. See generally ECF No. 69.

Defendants original motion to amend indicated that it was relying on Rule 19 or 20 for joining these additional parties. ECF No. 73 at 2-3. However, while the supplemental brief discusses Rule 15 and Rule 20, the proposed second amended TPC exclusively relies on Rule 14. Accordingly, the Court credits the allegations in the proposed complaint’s reference to Rule 14 as the purported basis for joining these four parties rather than the briefing which curiously does not mention Rule 14.

Defendants indicate that EHI is the parent corporation of National Car Rental and ABGI is the parent corporation for Avis Car Rental. ECF No. 82 at 2.

While Defendants’ supplemental briefing indicates that Rafael Martinez, Eduardo Guardia, Martin Gomez, Mark Blanchard, Ana Rodriguez, and Gilberto Rodriguez will be dismissed from this action, these third-party defendants appear to still be named in the sixth cause of action in the proposed second amended TPC submitted in conjunction with Defendants’ brief. ECF No. 82-1 at 10. If the Defendants intend to dismiss these Third-Party Defendants, the second amended TPC should reflect this upon filing.

The Court prompted the Defendants to file a supplemental brief to clarify the basis of its motion to amend, which initially cited Rule 19(a) as well as Rule 20 without explanation for the rules’ application to the facts of this case. See ECF Nos. 73, 79.

As this Court also previously indicated, “[i]t is well settled that Rule 14 creates no substantive rights to reimbursement, contribution or indemnity, but merely simplifies procedure, where such a right exists, by allowing its determination at the trial of original claim.” Banks v. City of Emeryville, 109 F.R.D. 535, 541 (N.D. Cal. 1985) (internal quotation marks and citation omitted). Substantive rights to contribution or indemnity are determined by state law. Id. The Court does not reach the issue of whether the substantive law of California provides for contributory fault in this context of passengers, car rental companies, or insurers, as the Court presently has no arguments before it in this regard.

The Court is not aware of any authority permitting a Defendant to utilize Rule 20 to join all potential plaintiffs in a case and Defendants have not presented any authority supporting this proposition. Nor does the language of the Rule 20 clearly lend itself to such an interpretation. Compare Rule 20(a)(1) (providing “Persons may join in one action as plaintiffs…”) with Rule 20(a)(2) (Persons… may be joined in one action as defendants…”) (emphasis added).

See, e.g., Doland v. Berrios, No. 1:11-CV-1783, 2012 WL 6137489, at *1 (M.D. Pa. Dec. 11, 2012) (previously finding the requirements of Rule 14(a) were satisfied and allowing filing of third-party complaint joining three third party defendants who were allegedly involved in multi-vehicle accident on a Pennsylvania interstate and finding their joinder would “promote efficiency, avoid circularity, and eliminate the potential for duplicative litigation” and noting “motions for joinder should be freely granted to effectuate the purposes of the impleader rules”) (citation omitted); Pitcavage v. Mastercraft Boat Co., 632 F. Supp. 842, 847-48 (M.D. Pa. 1985) (plaintiffs filed action against boat manufacturer for injuries sustained in boating accident and manufacturer filed a third party complaint against owner and operator of boat and court found that “third-party defendants may be liable to [boat manufacturer] for contribution if it is later determined that the third-party defendants ‘contributed’ to the accident. It is not necessary that the third-party defendants be automatically liable for all or part of plaintiffs’ claim. Impleader is proper if under some construction of facts which might be adduced at trial, recovery by the third-party plaintiff would be possible.”) (emphasis added) (footnote omitted).

Specifically, Defendants state that they only recently became aware that the proposed additional parties sought to assert property damage claims against them and that the occupants of the respective vehicles were not seeking personal injuries. Defendants then sought to meet and confer with those entities prior to filing this motion. ECF No. 82 at 4. As indicated herein, this reason for joining these additional parties is not permitted pursuant to Rule 14 and Defendants do not provide another procedural basis to join them for this purpose. The Court reminds the Defendants that it is their responsibility to clearly indicate what their intent is and diligently research the appropriate procedural mechanism to achieve such intent to join such parties before filing motinos. These claims will be limited to the contribution claims that are properly brought pursuant to Rule 14.

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