United States District Court, D. Massachusetts
THE PHOENIX INSURANCE COMPANY, a/s/o Annette Defarias and Paul Defarias, Plaintiff,
WILLIAM DELANGIS d/b/a American Door, Window & Insulation, Defendant.
REPORT AND RECOMMENDATION ON MOTION TO DISMISS OF THE DEFENDANT, WILLIAM DELANGIS d/b/a/ AMERICAN DOOR, WINDOW & INSULATION (#8)
M. PAGE KELLEY, Magistrate Judge.
On March 11, 2014, The Phoenix Insurance Company, as subrogee of Annette Defarias and Paul Defarias ("the homeowners"), filed a negligence complaint against William Delangis d/b/a American Door, Window & Insulation, for property damage to the Defariases' home. Plaintiff paid the homeowners $199, 675.50 for the damage done to their home in a fire and now seeks to recover that amount from Defendant. Delangis has moved to dismiss the complaint under Rule 12(b)(7), Fed. R. Civ. P., for failure to join the homeowners under Rule 19, Fed. R. Civ. P., arguing that they are necessary and indispensable parties.
II. The Facts
According to the allegations of the complaint, Phoenix is a duly organized insurance company under the laws of the state of Connecticut authorized to issue policies of insurance within the Commonwealth of Massachusetts. (#1 ¶ 1.) The Defariases are owners of a home in Saugus, Massachusetts which, at the relevant time, was insured by Plaintiff. (#1 ¶¶ 1, 6, 19, 21.) Delangis is a contractor who resides in Saugus, Massachusetts; he does business under the name American Door, Window & Insulation. (#1 ¶ 2.) The jurisdictional basis for the suit is diversity between the parties with damages in excess of $75, 000 under 28 U.S.C. § 1332. (#1 ¶ 3.)
In 2013 the homeowners received an energy audit on their home under a program called Mass. Save. (#1 ¶ 7.) Based on the results of the audit, it was recommended that their house be insulated. Id. Because they were eligible for financial assistance, they contacted Lynn Economic Opportunity, Inc., which in turn contracted with Delangis to install blown in cellulose insulation into their home. (#1 ¶¶ 8, 9.)
Defendant installed the blown in cellulose insulation into the home in April 2013. (#1 ¶ 10.) During a test of the furnace at the house on April 17, 2013, a fire started in the heating vent. (#1 ¶ 11.) An investigation into the origin and cause of the fire revealed that the blown in cellulose insulation installed by Delangis had dropped down into the furnace through a gap directly over the heating vent. (#1 ¶¶ 14, 15.) The insulation ignited when the furnace was turned on. (#1 ¶ 17.) The fire caused smoke damage throughout the home. (#1 ¶ 12.)
Phoenix made payments totaling $199, 675.50. to the homeowners for the damage. (#1 ¶ 19.) Consequent to these payments, Plaintiff became subrogated to the Defariases' rights in that amount against Delangis. (#1 ¶ 21.) Phoenix alleges that Delangis' work was negligent and, as a result of that negligence, the cellulose insulation ignited when the furnace was turned on, causing significant damage to the interior of the house as well as the contents in the home. (#1 ¶¶ 16, 17, 18.) Plaintiff seeks to recover the amount it paid to its insureds from Delangis, plus prejudgment interest, costs and attorneys' fees.
Defendant has filed a motion to dismiss (#8) pursuant to Fed.R.Civ.P. 12(b)(7) for "failure to join a party under Rule 19." Delangis argues that in a partial subrogation case such as the one at bar, both the subrogor and the subrogee, i.e., the homeowners and Phoenix, are necessary and indispensable parties. Joining the homeowners as parties to this action, however, would destroy diversity given that both the homeowners and Delangis reside in the Commonwealth of Massachusetts. In the absence of complete diversity the Court would have no jurisdiction, and so Defendant asserts the complaint must be dismissed.
Phoenix opposes the motion to dismiss, arguing that under Fed.R.Civ.P. 19, the Defariases are not necessary parties to this litigation and, even if they were, they are not indispensable parties. (#10.)
III. The Law
Rule 12(b)(7), Fed. R. Civ. P., provides that a defendant may move to dismiss a claim when a plaintiff fails to join a required party under Rule 19, Fed.R.Civ.P. Cabrera-Morales v. UBS Trust Co., 769 F.Supp.2d 67, 70 (D. P.R. 2011); Raytheon Co. v. Continental Cas. Co., 123 F.Supp.2d 22, 32 (D. Mass. 2000) ("Dismissal under Rule 12(b)(7) is governed by Rule 19 of the Federal Rules of Civil Procedure." (footnote omitted)). Although the First Circuit has yet to have occasion specifically to address the question of who carries the burden on a motion brought pursuant to Rule 12(b)(7),
those courts of appeals that have addressed the issue all lay the burden upon the defendant.... We adopt this standard as our own. Therefore, compulsory joinder or dismissal for failure to join an indispensable party will only be ordered where the movant has carried the burden of producing evidence which shows the nature of the interest possessed by the absentee and that the protection of that interest will be impaired by the absence.
Weinstein-Bacal v. Wendt-Hughes, 2012 WL 538235, at *3 (D. P.R. Feb. 17, 2012) (internal quotation marks and citations omitted); In re Mendez Garcia, 2014 WL 1464850, at *2 (Bkrtcy. D. P.R. Apr. 15, 2014); Axis Ins. Co. v. Hall, 287 F.R.D. 110, 113-114 (D. Me. 2012); Plymouth Yongle Tape (Shanghai) Co., Ltd. v. Plymouth Rubber Co., LLC, 683 F.Supp.2d 102, 112 (D. Mass. 2009). "In deciding a motion to dismiss under Rule 12(b)(7), a court is not limited to the pleadings' and may consider other relevant extra-pleading evidence.'" Axis Ins. Co., 287 F.R.D. at 113 (quoting 5C Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1359, at 68 (3d ed. 2004) (additional citation omitted)); Plymouth Yongle Tape (Shanghai) Co., Ltd., 683 F.Supp.2d at 112; Colon v. Blades, 570 F.Supp.2d 204, 209 (D. P.R. 2008); Raytheon Co., 123 F.Supp.2d at 32. In order to carry its burden under Rule 12(b)(7), the moving party "may submit affidavits or other relevant evidence." Blades, 570 F.Supp.2d at 209 (internal citations omitted); Weinstein-Bacal, 2012 WL 538235, at *3; Raytheon Co., 123 F.Supp.2d at 32.
Rule 19 deals with situations where "a lawsuit is proceeding without a party whose interests are central to the suit." Bacardi International Ltd. v. V. Suarez & Co., Inc., 719 F.3d 1, 9 (1st Cir.), cert. denied, 134 S.Ct. 640 (2013); Charest v. Federal National Mortgage Association, 9 F.Supp.3d 114, 129 (D. Mass. 2014). The Court is tasked with engaging in an analysis that is "fact-bound and driven by the nature of the issues" at hand. Bacardi International, 719 F.3d at 9-10; Charest, 9 F.Supp.3d at 129. When undertaking this analysis, the Court must take into account the policies underlying Rule 19, "including the public interest in preventing multiple and repetitive litigation, the interest of the present parties in obtaining complete and effective relief in a single action, and the interest of absentees in avoiding the possible prejudicial effect of deciding the case without them." Picciotto v. Continental. Cas. Co., 512 F.3d 9, 15-16 (1st Cir. 2008) (citation omitted); Charest, 9 F.Supp.3d at 129.
Rule 19 provides for joinder of required parties when feasible, Fed.R.Civ.P. 19(a), and for dismissal of suits when joinder of a required party is not feasible and that party is indispensable, Fed.R.Civ.P. 19(b). The First Circuit has explained the purpose of Rule 19 and how it works:
Rule 19 is designed to protect the interests of parties who are not yet involved in ongoing litigation. To measure how critical those interests are, the rule instructs courts to engage in a two-part analysis. Parties should be joined, when feasible, if they are necessary to the action according to the criteria laid out in Rule 19(a). If a necessary party cannot be joined in the action without divesting the court of subject-matter jurisdiction, Rule 19(b) lays out additional criteria for determining whether the party is indispensable.' If the court finds that the party is anything less than indispensable, the ...