United States District Court,

S.D. Illinois.

GEORGIA-PACIFIC CORPORATION, a Georgia Corporation, Plaintiff,

v.

SENTRY SELECT INSURANCE COMPANY, Brian Elkins, Svetlana Elkins, and McLeod

Express, L.L.C., Defendants.

No. 05-CV-826-DRH.

 

May 26, 2006.

 

MEMORANDUM & ORDER

 

HERNDON, J.

 

I. INTRODUCTION & BACKGROUND

Presently before the Court is a Motion to Remand, filed by plaintiff Georgia-Pacific Corporation (“Ga-Pac”) (Doc. 10). Ga-Pac is a Georgia corporation with its principal place of business in Georgia. Ga-Pac transacts certain amounts of its business in Illinois (Doc. 2, ¶  1). Defendant Sentry Select Insurance Company (“Sentry”) is a Wisconsin corporation with its principal place of business in Wisconsin and also transacts business in Illinois (Id. at ¶  2; see also Doc. 1, ¶  9). Defendants Brian Elkins and Svetlana Elkins are both citizens of Illinois (Doc. 1, ¶  10). Defendant McLeod Express (“McLeod”) is an Indiana corporation with its principal place of business in Illinois (Id.).

 

McLeod is a trucking company that on or about June 28, 2004, transported and delivered a trailer containing a product shipment obtained at Ga-Pac’s Mt. Olive, Illinois, facility to a Procter & Gamble facility in St. Louis, Missouri. On or about July 1, 2004, Brian Elkins was required by his employer, USF Logistics, to unload the trailer containing the Ga-Pac material/product when it reached the Procter & Gamble facility. While unloading the trailer, Brian Elkins was allegedly injured. Brian Elkins and Svetlana Elkins, his wife, filed suit against both McLeod and Ga-Pac, alleging claims of negligence and requesting damages in an amount in excess of $50,000 (hereinafter, the “Underlying Action”) (see Doc. 2, ¶ ¶  5-8 and Ex. B).

 

McLeod had entered into a Contract Carriage Agreement (the “Agreement”) with Ga-Pac approximately a year prior to Brian Elkins’s alleged accident (Doc. 2, ¶  ¶  9-10 and Ex. C). This Agreement required McLeod to carry certain insurance and to name Ga-Pac as “an additional insured on its Commercial General Liability and Automobile Liability policies” (Doc. 2, p. 4). McLeod obtained this primary coverage insurance from Sentry in the form of a truckers/motor carrier policy of insurance to McLeod (the “Policy”) (Doc. 2, ¶  4). McLeod was the named insured on the Policy.

 

Once Brian and Svetlana Elkins filed the Underlying Action, Ga-Pac tendered its defense to Sentry, stating it was covered as an “additional insured” under the Policy, but Sentry refused this tender of defense and immunity from Ga-Pac (Doc. 2, ¶ ¶  20-21), apparently finding the circumstances and underlying claims excluded Ga-Pac from coverage. Denial of coverage prompted Ga-Pac to file a declaratory judgment action against Defendants in the Circuit Court of Madison County, Illinois, seeking a determination of whether Sentry owes a duty to defend and indemnify Ga-Pac regarding the Underlying Action (see Doc. 2).

 

Sentry removed Ga-Pac’s case to federal court on November 17, 2005, asserting that diversity jurisdiction exists pursuant to 28 U.S.C. §  1332 (Doc. 1). Sentry acknowledges that under 28 U.S.C. §  1441(b), this action, where jurisdiction is based upon diversity, is only removable “if none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.” Thus, because defendants McLeod, [] Brian and Svetlana Elkins are all considered citizens of Illinois–the state in which Ga-Pac originally filed this action–removal would be improper. However, Sentry argues that McLeod, Brian and Svetlana Elkins should not be considered for removal purposes because they are nominal parties to the action (Doc. 1, ¶ ¶  14–16). Additionally, Sentry claims an amount in controversy in excess of $75,000 exists, as the Underlying Action seeks aggregate damages in the excess of $100,000 and the Policy limits also exceed the jurisdictional amount (Id. at ¶  6).

 

Under the federal diversity jurisdiction statute, 28 U.S.C. §  1332(c)(1), a corporation “shall be deemed to be a citizen of any State by which it has been incorporated and of the State where it has its principal place of business….”

 

Noting that nominal parties need not consent or join in the removal, Sentry states that it nevertheless made a request for all Defendants to consent to the removal (Id. at ¶  16). While McLeod has consented  [] (Doc. 4), Sentry explains that Brian and Svetlana Elkins did not give their consent “because they are taking the position that [they] are not necessary parties to this declaratory judgment action” and so their consent is not required  [] (Doc. 1, ¶  16). However, Sentry offers nothing to affirmatively substantiate this assertion.

 

In fact, McLeod has filed a Motion to Dismiss, asserting that it is not a necessary party to this action and that Plaintiff has not stated a claim against McLeod (Docs. 13 & 14).

 

The Court notes that there is no attorney of record listed for Brian and Svetlana Elkins on the case docket, nor have they filed any responsive pleadings to either the Notice of Removal or Ga-Pac’s Complaint.

 

Ga-Pac challenges the removal, instead filing its Motion to Remand on December 13, 2005 (Doc. 10). Contrary to Sentry’s belief, Ga-Pac argues that McLeod, Brian and Svetlana Elkins are necessary parties of interest, thereby making this case not removable under 28 U.S.C. §  1441(b) (Docs. 10 & 11). Ga-Pac further argues that the removal is defective because consent of all defendants (namely, Brian and Svetlana Elkins) was not obtained pursuant to 28 U.S.C. §  1446(b). Sentry has filed a Response in opposition to Ga-Pac’s Motion to Remand (Doc. 25).

 

Examining the relevant pleadings, it is obvious that the central issue determining whether removal was proper is whether McLeod, Brian and Svetlana Elkins can be considered necessary parties of interest to Ga-Pac’s suit. For the following reasons, Ga-Pac’s Motion to Remand is granted (Doc. 10).

 

II. ANALYSIS

A. REMOVAL

 

The removal statute, 28 U.S.C. §  1441, is construed narrowly, and doubts concerning removal are resolved in favor of remand. Doe v. Allied-Signal, Inc., 985 F.2d 908, 911 (7th Cir.1993). Defendants bear the burden to present evidence of federal jurisdiction once the existence of that jurisdiction is fairly cast into doubt. See In re Brand Name Prescription Drugs Antitrust Litig., 123 F.3d 599, 607 (7th Cir.1997). “A defendant meets this burden by supporting [its] allegations of jurisdiction with ‘competent proof,’ which [the Seventh Circuit] requires the defendant to offer evidence which proves ‘to a reasonable probability that jurisdiction exists.” ‘ Chase v. Shop ‘N Save Warehouse Foods, Inc., 110 F.3d 424, 427 (7th Cir.1997) (citations omitted). However, if the district court lacks subject matter jurisdiction, the action must be remanded to state court pursuant to 28 U.S.C. §  1447(c).

 

Whether removal in this case was proper hinges on two aspects. First, as previously explained, under the removal statute, a case cannot be removed to federal district court based upon diversity jurisdiction if any of the necessary party defendants are citizens of the state in which the action was brought. 28 U.S.C. §  1441(b). Therefore, because defendants McLeod, Brian and Svetlana Elkins are all Illinois citizens, removal would not be proper if they are deemed necessary parties to this action. Second, under 28 U.S.C. §  1446(b), each defendant must consent to removal affirmatively and officially communicate this to the Court. See, e.g., Northern Ill. Gas Co. v. Airco Industrial Gases, Div. of Airco, Inc., 676 F.2d 270, 272 (7th Cir.1982). One exception to consent is when the party defendant is considered unnecessary or nominal to the suit. See Ryan v. State Bd. of Elections of State of Ill., 661 F.2d 1130, 1134 (7th Cir.1981). Because it believes Brian and Svetlana Elkins are not necessary parties to this declaratory judgment action, Sentry argues it did not need to obtain their consent for removal.

 

B. NECESSARY PARTIES

 

No Seventh Circuit or Supreme Court case law appears to be on point with the central issue in this matter of whether McLeod, Brian and Svetlana Elkins are necessary parties to Ga-Pac’s declaratory judgment suit against Sentry. The parties cite to several germane Illinois state appellate opinions and opinions from the United States District Court for the Northern District of Illinois, which the Court will use as interpretative guidance for its analysis.

 

In removing this case, Sentry relies on the holdings in both Winklevoss Consultants, Inc. v. Federal Insurance Co., 174 F.R.D. 416 (N.D.Ill.1997) and Fathers of the Order of Mount Carmel, Inc. v. National Ben Franklin Insurance Co. of Illinois, 697 F.Supp. 971 (N.D.Ill.1988) (Doc. 1, ¶  12). Sentry asserts that the above cases support the theory that in a duty to defend declaratory judgment action brought by an insured party against the insurer, McLeod, Brian and Svetlana Elkins should be considered nominal parties, not considered for removal purposes. Opposing the removal, Ga-Pac cites to Flashner Medical Partnership v. Marketing Management, Inc., 189 Ill.App.3d 45, 54, 545 N.E.2d 177, 183, 136 Ill.Dec. 653 (1st Dist.1989), supporting its remand argument that McLeod, Brian and Svetlana Elkins are instead necessary parties to this declaratory judgment action and, as such, removal was improper because 28 U.S.C. §  1441(b) does not allow a party to remove a case where a defendant is also a citizen of the same state in which the complaint was originally filed (Doc. 10, p. 4) and also because Brian and Svetlana Elkins did not consent to the removal (Id. at 3-5, 136 Ill.Dec. 653, 545 N.E.2d 177).

 

Essentially, Ga-Pac asserts that according to Flashner, tort claimants in an underlying action have interests in the outcome of a declaratory judgment action regarding insurance coverage, as “a declaration of non coverage would eliminate a source of funds” (Id.). Therefore, Ga-Pac argues McLeod, Brian and Svetlana Elkins meet the joinder requirements under Federal Rule of Civil Procedure 19 to show they are necessary parties to the instant action, explaining that if they were absent from the suit, their interests would not be adequately protected by either Ga-Pac or Sentry (Id.).

 

1. Case Law

 

a. Fathers of the Order of Mount Carmel, Inc. v. National Ben Franklin Insurance Co. of Illinois

 

In Fathers, the district court noted that “[a]n injured party is a necessary party in a declaratory judgment action brought by an insurer against the insured regarding the insurer’s obligation to provide coverage.” Fathers, 697 F.Supp. at 973 (citing M.F.A. Mut. Ins. Co. v. Cheek, 66 Ill.2d 492, 363 N.E.2d 809, 811, 6 Ill.Dec. 862, 864 (1977)). Explaining the Illinois Supreme Court’s reasoning, the Fathers court stated that the injured party was necessary because there was a distinct likelihood that the insured party would fail to appear in the case filed by the insurer, thereby eliminating the injured party’s chances of proving the “viability of the [insurance] policy.” Id. However, the Fathers court reasoned that if the declaratory judgment action had instead been filed by the insured against the insurer, this would adequately serve to protect the injured parties’ interests because it would clearly indicate the insured party wished to properly obtain coverage. Id.

 

b. Flashner Medical Partnership v. Marketing Management, Inc.

 

One year later, the Illinois Appellate Court decided Flashner. The plaintiff insureds, Flashner Medical Partnership (the individual partners and the corporation itself), filed a suit seeking a declaratory judgment that defendant insurer, Chicago Insurance Company (“CIC”), [] had a duty to defend and indemnify the plaintiff insureds in an underlying medical malpractice action. Flashner, 189 Ill.App.3d at 47, 545 N.E.2d at 179, 136 Ill.Dec. at 655. Also at issue was whether the plaintiff insureds were covered under the CIC policy for certain underlying claims due to various wavier and estoppel issues. Id. at 49-50, 545 N.E.2d at 180-81, 136 Ill.Dec. at 656-57.

 

CIC was actually a reinsurer, as the plaintiff insured’s medical malpractice insurer had been declared insolvent.

 

One of the issues examined on appeal was whether the underlying tort claimants should be considered necessary parties to the declaratory judgment action. Id. As coverage was an issue at controversy in the plaintiff insureds’ declaratory judgment action, the state appellate court found the underlying tort claimants were necessary parties because they had a present substantial interest in the outcome of the litigation, as “a declaration of non-coverage would eliminate a source of funds.” Id. at 54, 545 N.E.2d at 183, 136 Ill.Dec. at 659. Simply stated, the court noted that “[w]here questions of liability insurance coverage are litigated, claimants against the insured are ordinarily necessary parties to the action.” Id. (internal citations omitted). Recognizing that even though the underlying tort claimants’ interests were likely aligned with the plaintiff insureds’ interests in the determination of coverage under the CIC policy, because the plaintiff insureds had sued several other parties for contractual and fraud issues, the court opined, “the success of plaintiff [insureds]’ claims against the other defendants might depend upon a determination of non-coverage. Plaintiff [insureds], therefore, might choose to pursue a litigation strategy that could adversely affect the absent tort claimants.” Id.

 

c. Winklevoss Consultants, Inc. v. Federal Insurance Co.

 

Nearly a decade later, the United States District Court for the Northern District of Illinois examined the issue of whether underlying tort claimants were considered necessary parties in a declaratory judgment action regarding an insurer’s duty to defend and indemnify. See Winklevoss Consultants, Inc. v. Fed. Ins. Co., 174 F.R.D. 416 (1997). In Winklevoss, the plaintiff insureds sought a declaratory judgment that an insurance policy issued by the defendant insurer required the defendant to defend and indemnify them in a separate underlying action brought against the plaintiffs for misappropriation of trade secrets. Id. at 416-17. The defendant insurer filed a motion to dismiss the plaintiffs’ declaratory judgment action for failure to join an underlying tort claimant as a necessary party in accordance with Federal Rule of Civil Procedure 19.

 

The district court first clarified that under Seventh Circuit precedent, “the issue of whether an insurer must indemnify its insured is not ripe until the underlying litigation ends.” Id. at 417 (citing Travelers Ins. Co. v. Penda Corp., 974 F.2d 823, 833 (7th Cir.1992); United Nat’l Ins. Co. v. Dunbar & Sullivan Dredging Co., 953 F.2d 334, 338 (7th Cir.1992)). This is because the duty to indemnify “turns upon the facts of the underlying suit” and therefore “is triggered, only after the insured becomes legally obligated to pay damages in the underlying action.” Id. (citations and internal quotations omitted). In contrast, the duty to defend “hinges on a liberal reading of the underlying complaint and thus can be determined on the pleadings.” Id. (citations and internal quotations omitted). Therefore, the Winklevoss court promptly ordered that the portion of the declaratory judgment action regarding the duty to indemnify be stayed until the underlying tort action was decided, and thereafter considered the defendants’ motion to dismiss “only with respect to the duty to defend portion of the litigation.” Id.

 

Commencing its analysis, the district court examined the requirements of Rule 19 joinder. Id. Under these Rule 19(a) requirements, the Winklevoss court found that the underlying tort claimant was not a necessary party to the plaintiff insureds’ declaratory judgment action against the defendant insurer, “much less indispensable under Rule 19(b)….” Id. Noting that although the Seventh Circuit had not yet addressed the issue, the district court cited to a number of other cases which hold that a plaintiff suing the insured (the “injured party”) is not a necessary party to a declaratory judgment action that the insured brings to determine the insurer’s duty to defend. Id. at 418. []

 

Winklevoss, citing in support, Fathers of the Order of Mount Carmel, Inc. v. National Ben Franklin Ins. Co., 697 F.Supp. 971, 973 (N.D.Ill.1988); Evangelical Lutheran Church v. Atlantic Mutual Ins. Co., 173 F.R.D. 507, 508-09 (N.D.Ill.1997); Americas Ins. Co. v. City of Chicago, 1997 WL 51436, at *1-2 (N.D.Ill. Feb.3, 1997); Providence Hosp. v. Rollins Burdick Hunter of Ill., Inc., 1993 WL 278552 (N.D.Ill. July 20, 1993); Sliwa v. Hunt, 1992 WL 346425, at(N.D.Ill. Nov.18, 1992).

 

The district court then discussed Fathers and its rationale behind distinguishing itself from the earlier Illinois Supreme Court holding in M.F.A. Mutual Ins. Co. v. Cheek, in which the insurer had sued the insured to determine its coverage obligations. Id. (emphasis in original). The Illinois Supreme Court, in M.F.A., had determined that the underlying tort claimant was a necessary party to the declaratory judgment action because its interests in the viability of the insurance policy should not be defeated if the defendant insured chose not to appear, resulting in a default judgment. Id. (citing M.F.A. Mutual Ins. Co., 66 Ill.2d at 494, 363 N.E.2d at 811, 6 Ill.Dec. at 864). Yet the Winklevoss court noted the distinguishing fact between Fathers and M.F.A. was that in Fathers, it was the insured party who filed suit against the insurer. Id. Therefore, the district court believed that “the [plaintiff] insureds’ act of bringing the action in favor of a duty to defend belied any risk that they would prejudice the injured parties by failing to appear, and, as such, adequately protected the injured parties’ position.” Id.

 

Observing the finding in Fathers, the Winklevoss court reached the same conclusion though its Rule 19(a) analysis of the facts of the declaratory judgment action. The district court determined that complete relief could be accorded without the underlying tort claimant as a party to the suit because all the plaintiff insureds sought was a declaration that the defendant insurer must defend them in the underlying action–as a purely legal analysis involving the language of the insurance policy and applicable law, the underlying tort claimant’s absence would not hinder that type of analysis. Id. Secondly, the district court found that the underlying tort claimant had no “stake” in whether the plaintiff insureds were defended by lawyers supplied by the defendant insurer or its own retained attorneys. Id. at 418-19 (citing Flashner, 189 Ill.App.3d at 54, 545 N.E.2d at 183, 136 Ill.Dec. at 659).

 

Therefore, Winklevoss made it clear that it found the underlying tort claimant was not a necessary or indispensable party under the joinder requirements of Rule 19, however, only with regard to the duty to defend portion of the plaintiff insureds’ declaratory judgment action. Id. at 419. To the contrary, if the actions deal with more than just the duty to defend– coverage, for instance–Winklevoss indicates that the underlying tort claimant would be a necessary party as such actions “ha[ve] the potential to eliminate a source of funds for the injured claimant.” Id. (“[B]ecause all these actions  [] dealt with coverage (not just the duty to defend), they had the potential to eliminate a source of funds for the injured [underlying] claimant.”).

 

Winklevoss citing the following cases: See M.F.A. Mutual Ins. Co. v. Cheek, 66 Ill.2d 492, 494-95, 6 Ill.Dec. 862, 863-64, 363 N.E.2d 809, 810-11; Williams v. Madison County Mutual Auto. Ins. Co., 40 Ill.2d 404, 405-08, 240 N.E.2d 602, 603-04 (1968); Allied American Ins. Co. v. Ayala, 247 Ill.App.3d 538, 540, 543, 186 Ill.Dec. 717, 721, 723, 616 N.E.2d 1349, 1353, 1355 (2d Dist.1993); American Home Assurance Co. v. Northwest Indus., Inc., 50 Ill.App.3d 807, 808, 812, 8 Ill.Dec. 570, 572, 574-75, 365 N.E.2d 956, 958, 960-61 (1st Dist.1977).

 

2. Whether Underlying Claimants Are Necessary Parties to a Declaratory Judgment Action Brought by an Additional Insured Against an Insurer

 

To summarize, the case law discussed within this opinion generally holds that underlying tort claimants are not necessary parties to a declaratory judgment action regarding an insurer’s duty to defend when the action is filed by the insured. However, if the declaratory judgment action is filed instead by the insurer or involves a determination of insurance coverage or both, then the underlying claimant is considered a necessary party. Moreover, a claim regarding a duty to indemnify is generally not ripe until the underlying litigation is complete, so until that occurs, the indemnity portion of a declaratory judgment lawsuit is typically stayed or dismissed with leave to re-file. Lastly, determination of whether a party is necessary or indispensable to a suit removed to federal court follows federal law, even in a diversity case. See Winklevoss, 174 F.R.D. at 419 (citing Krueger v. Cartwright, 996 F.2d 928, 931 (7th Cir.1993); Sliwa v. Hunt, 1992 WL 3469425 at(N.D.Ill.1992)).

 

The Court’s analysis of whether McLeod, Brian and Svetlana Elkins are necessary parties must be determined pursuant to Rule 19(a).

 

Rule 19(a) states that a party is necessary to a suit if:

(1) in the person’s absence complete relief cannot be accorded among those already parties, or

(2) the person claims an interest relating to the subject of the action and is so situated that the disposition of the action in the person’s absence may

(i) as a practical matter impair or impede the person’s ability to protect that interest or

(ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of the claimed interest.

 

a. Duty to Defend

 

Determining the duty to defend “is a question resolved by comparing the allegations of the underlying complaint to the insurance policy.” Connecticut Indem. Co. v. DER Travel Service, Inc., 328 F.3d 347, 349 (7th Cir.2003)(citing Lapham-Hickey Steel Corp. v. Protection Mut. Ins. Co., 166 Ill.2d 520, 531 655 N.E.2d 842, 847, 211 Ill.Dec. 459, 464 (1995)). If the underlying complaint alleges facts within or potentially within policy coverage, the insurer is obligated to defend its insured, even if the allegations are groundless, false, or fraudulent. United States Fidelity & Guaranty Co. v. Wilkin Insulation Co., 144 Ill.2d 64, 161 Ill.Dec. 280, 578 N.E.2d 926, 930 (Ill.1991). Furthermore, if the insurer relies on an exclusionary provision, it must be “clear and free from doubt” that the policy’s exclusion prevents coverage. See Bituminous Cas. Corp. v. Fulkerson, 212 Ill.App.3d 556, 156 Ill.Dec. 669, 571 N.E.2d 256, 262 (Ill.App.Ct.1991). The Court must liberally construe the underlying complaint and the insurance policy in favor of the insured. See United States Fidelity & Guaranty Co., 161 Ill.Dec. 280, 578 N.E.2d at 930.

 

i. Brian and Svetlana Elkins

 

It is clear from the Policy issued by Sentry to McLeod that Ga-Pac is specifically listed as an additional insured under an endorsement to the Policy (see Doc. 2-3, p. 8). Resolving Ga-Pac’s duty to defend claim will only determine who is in charge of Ga-Pac’s legal representation–this will not impede or impair the interests of Brian and Svetlana Elkins in their underlying suit. Additionally, complete relief regarding the duty to defend can be accorded in their absence.

 

Following the guidance provided by the available body of case law and analyzing the facts in accordance with Rule 19, because this declaratory judgment action was filed by an insured (albeit an “additional” insured), Brian and Svetlana Elkins, as the underlying claimants, are not necessary parties for the duty to defend portion of this litigation as their interests will be adequately protected by Ga-Pac. The duty to defend claim is resolved by merely interpreting the Policy with the Underlying Action. Therefore, Brian and Svetlana Elkins will not detract the Court from reaching a just outcome in their absence–only their filed complaint is required, which is already part of the record in this matter. []

 

Because the Court does not find Brian and Svetlana Elkins to be necessary parties to Ga-Pac’s duty to defend portion of the litigation in this case, it is unnecessary to determine whether they are considered indispensable parties under Rule 19(b) at this point.

 

ii. McLeod

 

Even though an argument could be made that McLeod, as the named insured on the Policy, is not a necessary party to the duty to defend portion of Ga-Pac’s suit, [] the Court believes the more appropriate view to be otherwise in this instance. This is not a subrogation action where the insurer is standing in the shoes of the named insured for purposes of filing suit against potential tortfeasors, thereby, at times, rendering the named insured an unnecessary party. Instead, an additional insured is bringing action against the insurer. Sentry has already agreed to defend McLeod in the Underlying Action but has denied a tender of defense from Ga-Pac.

 

In fact, the Court notes that McLeod has filed a Motion to Dismiss, its argument being that because it believes it is not a necessary party and because Ga-Pac does not state a claim against it, it should be dismissed from this action. However, the Court cannot technically consider motions filed subsequent to the removal if it is determined that there is no jurisdiction and the case should be remanded.

 

Reviewing the Policy, the Court observes that the endorsement naming Ga-Pac as an additional insured extends its Policy coverage for “Bodily Injury and Property Damage Liability …” (Doc. 2-3, p. 8). As the Underlying Action deals with liability for Brian Elkins’s alleged personal injuries, the applicable coverage at issue is the Bodily Injury section of the Policy. Section II of the Policy is entitled “Liability Coverage” (Doc. 204, p. 11). Part of this section states that Sentry’s “duty to defend or settle ends when the Liability Coverage Limit of Insurance has been exhausted by payment of judgments or settlements” (Id.).

 

The Court feels that under a Rule 19 analysis, McLeod is a necessary party concerning the duty to defend portion of this case. If the Court were to determine a duty to defend Ga-Pac exists under the Policy, it could eventually lead to a further finding of a duty to indemnify, which would have direct bearing on Sentry’s coverage amount for McLeod under the Policy. Therefore, McLeod’s interests would not be adequately represented by either Sentry or Ga-Pac if it were absent from this suit. Moreover, a judgment regarding Ga-Pac’s duty to defend claim will make declaration concerning the scope and interpretation of the Policy–McLeod’s Policy–which directly affects McLeod. As such, the Court believes it to be a necessary party under Rule 19(a).  []

 

Because McLeod was served and does not object to being served and made a party to this suit, an analysis of whether it can be considered an indispensable party under Rule 19(b) is unnecessary.

 

b. Duty to Indemnify

 

The duty to indemnify is another matter entirely. Whether Sentry has a duty to indemnify Ga-Pac as an additional insured under the Policy “is only ripe for consideration if [Ga-Pac] has already incurred liability in the [Underlying Action] against it.” Premcor USA, Inc. v. American Home Assurance Co., 400 F.3d 523, 530 (7th Cir.2005)(citing Outboard Marine Corp. v. Liberty Mut. Ins. Co., 154 Ill.2d 90, 127, 67 N.E.2d 1204, 1221, 180 Ill.Dec. 691, 708 (1992)). A duty to indemnify only arises “if the insured’s activity and the resulting loss or damage actually fall within the [Policy’s] coverage.” Outboard Marine Corp., 154 Ill.2d at 128, 67 N.E.2d at 1221, 180 Ill.Dec. at 708 (emphasis in original) (internal citations omitted). Therefore, the duty to indemnify is narrower in scope than a duty to defend. Id. (internal citations omitted).

 

i. Brian and Svetlana Elkins

 

Applicable case law, as previously illustrated, finds that when dealing with an issue of insurance coverage, the underlying claimants are necessary parties, whether the declaratory judgment action is filed by the insured or insurer. Therefore, when Ga-Pac’s duty to indemnify claim becomes ripe, Brian and Svetlana Elkins as the underlying claimants will be considered necessary parties. [0]

 

0. The Record does not indicate whether Brian and Svetlana Elkins have been served in this action. However, because Ga-Pac’s duty to indemnify claim is not yet ripe, there is no need to currently determine whether Brian and Svetlana Elkins are indispensable parties under Rule 19(b).

 

ii. McLeod

 

Similarly with the named insured under the Policy, when Ga-Pac’s duty to indemnify claim becomes ripe, it will be in McLeod’s best interest to be a present party to the action. It appears that McLeod’s Policy does not allot a separate coverage limitation for additional insureds, such as Ga-Pac. Therefore, any coverage/indemnification funds determined to be owed by Sentry to Ga-Pac will directly affect the amount of coverage/indemnification for McLeod, if it is found partially liable in the Underlying Action. McLeod’s own separate and distinct interest regarding coverage under the Policy renders it a necessary party to the duty to indemnify portion of Ga-Pac’s declaratory judgment action.

 

c. Whether Removal Was Proper

 

Even if the Court were to stay Ga-Pac’s duty to indemnify claim until the Underlying Action is complete, or to dismiss it with leave to later re-file, the fact remains that the Court finds McLeod is a necessary party to the duty to defend portion of this suit. Because McLeod can be considered an Illinois citizen, as its principal place of business is in Illinois, the Court finds this case is not removable under 28 U.S.C. §  1441(b), even though Sentry did properly obtain McLeod’s consent to the removal. See, e.g., Caterpillar, Inc. v. Lewis, 519 U.S. 61, 68, 117 S.Ct. 467, 136 L.Ed.2d 437 (1996). The Court also observes that once Ga-Pac’s duty to indemnify portion of the litigation were ripe for determination, McLeod and Brian and Svetlana Elkins would all be considered necessary parties, which would further support a finding that this case was not removable under 28 U.S.C. §  1441(b). Therefore, the case must be remanded pursuant to 28 U.S.C. §  1447(c).

 

III. CONCLUSION

For the reasoning as stated within this Order, plaintiff Ga-Pac’s Motion to Remand (Doc. 10) is GRANTED. This case is hereby REMANDED back to the Circuit Court for the Third Judicial Circuit of Madison County, Illinois, with each party is to bear its own costs.

 

IT IS SO ORDERED.

 

Slip Copy, 2006 WL 1525678 (S.D.Ill.)

United States Court of Appeals,

Seventh Circuit.

Christine MAROULES, Plaintiff-Appellant,

v.

JUMBO, INC. and James E. Windsor, Defendants-Appellees.

No. 04-3248.

 

ARGUED Sept. 20, 2005.

DECIDED June 20, 2006.

 

Before CUDAHY, KANNE, and ROVNER, Circuit Judges.

 

ROVNER, Circuit Judge.

 

Ordinarily we count on gravity to keep heavy items in place; and so when flour barrels, armchairs, and truck wheels become airborne we assume first that something has gone wrong. Such events, lawyers say, speak for themselves, or in Latin, “res ipsa loquitur,” and the blame for any resulting injury can be imputed to the person who had control of the item before it became a dangerous projectile. Christine Maroules asks the court to adopt this view to delegate to the owner of Jumbo, Inc. trucking company and Jumbo’s driver, James E. Windsor (together, “Jumbo”), blame for injuries she sustained when a wheel broke free from the truck upon which it was mounted, flew through the air, and crashed through the front passenger side of her car. Because she has failed to demonstrate the elements necessary for res ipsa loquitur to apply, however, we affirm the decision of the district court granting summary judgment to Jumbo.

 

I.

At the time of the accident on January 4, 2000, Windsor was operating the semi-tractor-trailer in question for his employer, Jumbo Inc., driving westbound through Indiana on Interstate Route 80. Windsor did not realize that the two-wheel unit (tandems), consisting of two tires and two rims attached by studs to a wheel assembly, had detached from his truck until he was stopped by an Indiana State Trooper at the border between Illinois and Indiana. At that point he inspected his truck and determined that five or six of the ten studs upon which the wheel unit was mounted were broken and sheared off, although the thread of the portions of the studs that had remained on the trailer did not appear to be worn. The nuts attaching the wheel unit were also missing, and the four or five studs that remained were broken or sheered off. According to Windsor’s affidavit, he had inspected the nuts just a few hours prior to the accident, as part of his routine walk-around inspection which he conducted at the beginning and end of each day and every time he started the vehicle. As part of his inspection he checked the physical condition of the tires, rims, lugs, studs, nuts, and tires’ air pressure. He testified that upon his inspection, the studs and nuts were not loose in any way. Philip Simonsen, the president of Jumbo Inc., testified that the trailer, which he purchased as a used vehicle in 1999, had received a full annual inspection in compliance with U.S. Department of Transportation regulations just five weeks before the accident. Simonsen also testified that Jumbo hires a third-party company to inspect, maintain, and repair its trailers and all of their parts, including the wheel studs, which it had done on numerous occasions prior to the accident. Mr. Windsor testified that the bolts in question can last for several years and “can go until you have a problem,” that is until they turn brown or one breaks off, at which point all studs should be replaced as they tend to reach their breaking points at around the same time. (R. at 40, Ex. 2, p. 78). Maroules contends that ordinary care required the defendants to “take notice of the tendency of parts of machinery to decay from age, or wear out by use, and the law requires them to make reasonable inspection of the various parts of machinery from time to time for the purpose of discovering any defective parts, to the end such parts may be replaced or repaired.” (Maroules brief at 22). In short, Maroules contends that Jumbo should have replaced the wheel studs periodically and prophylactically instead of waiting for them to break or show other indicia of failure.

 

II.

In response to Jumbo’s summary judgment claim, Maroules asked the district court to apply the doctrine of res ipsa loquitur. [] Res ipsa loquitur is a shortcut to a negligence claim. Although negligence may not be inferred from the mere fact that an injury occurred, it may be inferred from the circumstances surrounding the injury. K-Mart v. Gipson, 563 N.E.2d 667, 669 (Ind.Ct.App.1990). The doctrine recognizes that in some situations an occurrence is so unusual that, absent a reasonable justification, the person in control of the situation should be held responsible. Cergnul v. Heritage Inn, Inc., 785 N.E.2d 328, 332 (Ind.Ct.App.2003). In other words, as the Latin describes, “the thing speaks for itself.” See Byrne v. Boadle, 2 H & C 722, 159 Eng. Rep. 299 (1863) (the original res ipsa loquitur case involving a flour barrel falling out of a warehouse window). The central question in any res ipsa loquitur case is whether the incident more probably resulted from the defendant’s negligence than from some other cause. Deuitch v. Fleming, 746 N.E.2d 993, 999 (Ind.Ct.App.2001). To establish this inference of negligence, the plaintiff must demonstrate: (1) that the injuring instrumentality was within the exclusive management and control of the defendant, and (2) that the accident is of the type that does not ordinarily happen if those who have the management and control exercise proper care. Balfour v. Kimberly Home Health Care, Inc., 830 N.E.2d 145, 148 (Ind.Ct.App.2005). Under Indiana law, res ipsa loquitur is an evidentiary doctrine that allows an inference of negligence to be drawn under certain factual circumstances. See Gold v. Ishak, 720 N.E.2d 1175, 1180 (Ind.Ct.App.1999). Once the plaintiff has met the burden of demonstrating the control and due care prongs of res ipsa loquitur, the doctrine operates to permit an inference of negligence based upon the circumstantial evidence. Ross v. Olson, 825 N.E.2d 890, 894 (Ind.Ct.App.2005). The inference, however, is just that–a plaintiff does not win her case merely because she has met the res ipsa loquitur requirements. Rector v. Oliver, 809 N.E.2d 887, 891 (Ind.Ct.App.2004), transfer denied, 822 N.E.2d 981 (Ind.2002). A successful res ipsa loquitur showing simply creates an inference which the trier of fact may choose to accept or not. Id.

 

Whether the doctrine of res ipsa loquitur applies in any given negligence case is a mixed question of law and fact. Syfu v. Quinn, 826 N.E.2d 699, 703 (Ind.Ct.App.2005). The question of law is whether the plaintiff’s evidence includes all of the underlying elements of res ipsa loquitur. Id. at 704. The determination for the trier of fact is whether the permissible inference is to be drawn. Shull v. B.F. Goodrich Co., 477 N.E.2d 924, 928 (Ind.Ct.App.1985). A court may enter summary judgment when it is convinced that there are no genuine issues as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). Consequently, faced with the defendant’s summary judgment motion, the district court’s task was to determine whether Maroules had met the underlying requirements of res ipsa loquitur. We review the grant of summary judgment de novo because it presents the purely legal question of whether the underlying elements of res ipsa loquitur exist. See Smith v. Sheahan, 189 F.3d 529, 532 (7th Cir.1999). Jumbo is entitled to a judgment as a matter of law if Maroules cannot make a sufficient showing on an essential element of her case with respect to which she has the burden of proof. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In this case, it is Maroules’ burden to establish that (1) Jumbo had exclusive management and control of the runaway wheel assembly and (2) the accident is of the type that does not ordinarily happen if those who have the management and control exercise proper care. Gipson, 563 N.E.2d at 669.

 

The defendants begin by denying that they had exclusive control. To support this proposition, they contend that they had no role in manufacturing the trailer or its wheel studs; they had no control over the inspection and maintenance of the trailer or its wheel studs prior to the time that Jumbo purchased the trailer in 1999; and that Jumbo does not maintain, service, or repair its trailers and their parts, but instead relinquishes control every time it sends its trailers to an outside third party maintenance company to do this work.

 

[10][11][12] Jumbo’s argument is appealing on the surface when one contemplates any number of alternative theories for the accident: the stud manufacturer could have negligently or knowingly manufactured defective studs, the maintenance business could have used a faulty power tool to tighten the bolts, or a vandal could have sabotaged the truck wheels. Recall, however, that the doctrine of res ipsa loquitur does not hand victory to the plaintiff; it merely creates an inference of negligence that the trier of fact, upon hearing all of the evidence, may or may not choose to accept. See Rector, 809 N.E.2d at 891. Consequently, the concept of control under Indiana’s res ipsa loquitur case law is expansive. Id. at 890. To prove the “exclusive control” requirement of res ipsa loquitur, the plaintiff simply is required to show either that a specific instrument caused the injury and that the defendant had control over that instrument or that any reasonably probable causes for the injury were under the control of the defendant. Slease v. Hughbanks, 684 N.E.2d 496, 499 (Ind.Ct.App.1997). Indiana case law instructs that a defendant need not be in control of the causative instrumentality at the exact moment of injury, provided the defendant was the last person in control. Shull, 477 N.E.2d at 931. Furthermore, the possibility of multiple causes or multiple defendants does not automatically defeat the application of res ipsa loquitur. Rector, 809 N.E.2d at 890. It is not necessary for the plaintiff to exclude every other possibility other than the defendant’s negligence as a cause of the injury. Id. at 891; Gipson, 563 N.E.2d at 671. In other words, the possibility that a third party may have negligently manufactured, installed, or maintained the studs does not preclude a finding that Jumbo had control over the injuring instrumentality. In fact, a plaintiff may point to several alternative causes of injury and allow the jury to determine which, if any, instrumentality caused the injury. Slease, 684 N.E.2d at 499. As the Indiana Appellate court explained, “[a]ll inferences from the evidence, including those arising from the res ipsa doctrine, are to be placed in the scales to be weighed by the trier of fact.” Gipson, 563 N.E.2d at 671. If the plaintiff cannot, however, identify any potential causes and show that they were in the exclusive control of the defendant, the res ipsa loquitur claim must fail. Slease, 684 N.E.2d at 499. Maroules has identified at least one potential cause of her injury in the control of the defendants–the failure to take notice that the studs might decay and to replace them before they do. We agree with the district court, therefore, that Maroules has demonstrated the element of exclusive control as defined expansively under Indiana law.

 

[13][14] Maroules however, must also demonstrate that the accident is of the type that does not ordinally happen if those who have the management and control exercise proper care. Finding that Maroules had failed this second res ipsa loquitur requirement, the district court concluded that, “[u]nlike the numerous cases cited by the plaintiff, there is no evidence in this case that the defendants’ conduct fell below the standard of care that the law imposes on the drivers or owners of tractor-trailers.” (R. at 46, p. 13). Maroules objects to the district court’s statement that “the plaintiff has not come forth with any circumstantial evidence from which a reasonable jury could find that the defendants failed to exercise reasonable care.” (R. at 46, p. 12). It is unclear to which requirement Maroules objects. It is true that the doctrine of res ipsa loquitur does not require a plaintiff to submit evidence of causation. Gipson, 563 N.E.2d at 671. After all, res ipsa loquitur is a doctrine of common sense. It allows a trier of fact to draw an inference of negligence when evidence of causation is lacking. Id. at 671. We do not, however, interpret the district court’s language as demanding anything more than the usual requirements for the application of res ipsa loquitur. To invoke the doctrine a plaintiff must “present evidence that … the accident is one which in the ordinary course of things does not happen if those who control the instrumentality use proper care.” Cergnul, 785 N.E.2d at 331. And although a plaintiff may rely upon common sense and experience or expert testimony, the plaintiff still has the burden of showing that the injury was one that would not ordinarily occur in the absence of proper care on the part of those controlling the instrumentality. Ross, 825 N.E.2d at 894.

 

[15][16] Although res ipsa loquitur is a doctrine of common sense, expert testimony is required when the issue of care is beyond the realm of the layperson, that is, where a fact-finder cannot determine whether a defendant’s conduct fell below the applicable standard of care without technical input from an expert witness. Syfu, 826 N.E.2d at 704-05. The Shull court cited Prosser for the proposition that:

[i]n the usual [res ipsa] case the basis of past experience from which the conclusion may be drawn that such events usually do not occur without negligence, is one common to the whole community, upon which the jury are simply permitted to rely. Even where such a basis of common knowledge is lacking, however, expert testimony may provide a sufficient foundation.

Shull, 477 N.E.2d at 927 (citing Prosser, Handbook of the Law of Torts, §  39, P.215 (4th Ed.1971)). Although the need for expert testimony generally arises in cases involving medical malpractice where the issues surrounding diagnosis and treatment are complex, the notion that a plaintiff may establish the second prong of res ipsa loquitur–the “proper care” prong–by using either common knowledge or expert testimony applies to cases outside of the medical malpractice realm as well. See, e.g., Newell v. Westinghouse Elec. Corp., 36 F.3d 576, 581 (7th Cir.1994); Shambaugh & Son v. Carlisle, 730 N.E.2d 796, 798 (Ind.Ct.App.2000), vacated on other grounds, 763 N.E.2d 459 (Ind.2002); Shull, 477 N.E.2d at 929. This case presents questions that simply cannot be determined by a fact-finder without some understanding of the standard of proper or reasonable care in the industry. See Syfu, 826 N.E.2d at 705; Shull, 477 N.E.2d at 927. After all, Jumbo claims that the proper care of wheel assembly studs involves regular visual inspection and replacement only when any stud on the wheel shows signs of wear or breakage. (R. at 40, Ex. 2, p. 78). Maroules claims, instead, that the standard of care requires that truck owners and operators “take notice of the tendency of parts of machinery to decay from age, or wear out by use, … make reasonable inspection [and] … change[ ] the wheel studs periodically instead of waiting for one of them to break .” (Appellant Br. at 22). Only expert testimony, and not our own common sense, can tell us which is correct. Furthermore, only an expert could tell us whether this is the type of accident that might happen even if those who have management and control of trucks and their wheel assemblies exercise the kind of care Maroules proposes. In other words, it is possible that this type of accident happens randomly even when truck drivers and owners periodically inspect their wheel assemblies and change the wheel studs prophylactically as Maroules argues they should. Our past experience and common knowledge is not sufficient to answer these questions. Consequently, we conclude that Maroules has failed to show by common sense or expert testimony that the injury was one that would not ordinarily occur in the absence of proper care on the part of those controlling the instrumentality. Syfu, 826 N.E.2d at 705.

 

[17][18] On a final note, much ado has been made in this case about the intersection of Indiana’s res ipsa loquitur law and the federal procedural rules for summary judgment. At oral argument, Maroules’ attorney stated that he did not think it appropriate for federal summary judgment procedure to upset Indiana state law concerning res ipsa loquitur. Although state law provides the substantive law in a diversity action, summary judgment procedure is governed by federal law. Jean v. Dugan, 20 F.3d 255, 262-63 (7th Cir.1994), Mayer v. Gary Partners and Co., Ltd., 29 F.3d 330, 334 (7th Cir.1994). Federal law defines the standard for evaluating the sufficiency of the evidence. Mayer, 29 F.3d at 335. If reasonable persons could not find that the evidence justifies a decision for a party on each essential element, the court can grant summary judgment using federal standards. Id. Federal courts may therefore grant summary judgment under Rule 56 upon concluding that no reasonable jury could return a verdict for the party opposing the motion, even if the state would require the judge to submit an identical case to the jury. McEwen v. Delta Air Lines, Inc., 919 F.2d 58, 60 (7th Cir.1990).

 

In any event, we do not think this case presents a conflict between federal and state law. As Maroules argues, “[o]nce the plaintiff presents evidence to bring herself within the operation of res ipsa loquitur, the inference of negligence is to be weighed by a jury and summary judgment is not proper.” (Maroules Reply Br. at 8). As explained above, however, Maroules, has not presented sufficient evidence to bring herself within the operation of the res ipsa loquitur doctrine. Consequently, summary judgment must be granted for Jumbo, and the judgment of the district court is AFFIRMED.

 

In the district court Maroules also made a straight forward negligence claim. Maroules raises only the res ipsa loquitur arguments on appeal.

 

— F.3d —-, 2006 WL 1679405 (7th Cir.(Ind.))