Western Maryland Railway Co. v. Harbor Insurance Co

910 F.2d 960 (1990)

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Nature of the Case

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Facts

Ps suffered from a large amount of asbestosis claims filed by railroad employees under the Federal Employers' Liability Act (FELA). Ps then sued Ds, carriers of the railroads' indemnity and liability insurance. In Chesapeake & Ohio, three railroads sued forty insurers, seeking damages and a declaration of the railroads' rights under about six hundred policies. In Western Maryland, filed the same day, one railroad sued nine insurers, seeking similar relief under forty similar policies. All of the defendants in Western Maryland were also defendants in Chesapeake & Ohio, and the plaintiff in Western Maryland was a wholly owned subsidiary of one of the plaintiffs in Chesapeake & Ohio. Thirty-six of the insurance policies issued to the plaintiff in Western Maryland were also issued to some of the plaintiffs in Chesapeake & Ohio. All of the policies imposed 'occurrence limits' for personal injury and property damage claims and all imposed 'aggregate limits' for claims based on 'occupational diseases.' The issue in each lawsuit was whether occupational disease claims included the FELA claims based on asbestosis. The suits were before the same district judge. Ds in both actions moved concurrently to dismiss. In Chesapeake & Ohio, Ds maintained that that action could not justly be adjudicated without the plaintiff in Western Maryland and that because Western Maryland could not be joined in Chesapeake & Ohio without destroying diversity, the court should dismiss under Fed. R. Civ. P. 19. Ds in Western Maryland repeated the arguments that they made in Chesapeake & Ohio, averred that the Western Maryland action was 'duplicative, and merely a device to create diversity of citizenship,' and asked the court to dismiss. The court ruled that the railroads were not necessary parties within the meaning of rules 19(a)(1) or 19(a)(2)(i), but that the railroads were necessary parties under 19(a)(2)(ii). In its 19(a)(2)(ii) analysis, the court first contrasted the parties' respective positions on how to characterize the FELA claims for asbestosis: as occupational disease claims, subject to the policies' aggregate limits, or as claims for bodily injury, covered only by the limits per occurrence. The 'four plaintiffs are claimants to a common, limited fund.' The court held that the failure to join all of the railroads would leave all of the insurers 'subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations.' Joining the railroads in the two suits would undo diversity of citizenship in both and thus deprive the court of jurisdiction. The court then decided 'in equity and good conscience' that neither action should proceed without the absent parties. Fed. R. Civ. P. 19(b). It, therefore, dismissed both cases.