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April 6, 1988


The opinion of the court was delivered by: Foreman, Chief Judge:


This matter is before the Court on third-party defendant Insulating & Materials Corporation's ("I & M") Motion to Dismiss Marathon Oil Company's ("Marathon") Third-Party Complaint; Marathon's Motion to Dismiss the Amended Complaint for lack of subject matter jurisdiction; Marathon's Motion for Set-off; and plaintiff Danny Stifle's Motion to Drop a Misjoined Party.

  1.  Plaintiff's Motion to Drop a Misjoined Party and
      Marathon's Motion to Dismiss the Amended Complaint.

On January 4, 1988, plaintiff filed an Amended Complaint that added I & M, which has its principal place of business in Illinois, as a defendant. Under the original complaint, this Court had subject matter jurisdiction by virtue of 28 U.S.C. § 1332. Because plaintiff is a citizen of Illinois, adding I & M as a defendant destroyed the diversity of citizenship between the plaintiff and defendants. Subsequently, defendant Marathon moved to dismiss the Amended Complaint for lack of subject matter jurisdiction and plaintiff responded with a Motion to Drop the Misjoined Party, I & M, pursuant to Rule 21 of the Federal Rules of Civil Procedure.

Rule 21 provides that

    Misjoinder of parties is not grounds for
  dismissal of an action. Parties may be dropped or
  added by order of the court on motion of any
  party or of its own initiative at any stage of
  the action and on such terms as are just. Any
  claim against a party may be severed and
  proceeded with separately.

Fed.R.Civ.P. 21. It is well-settled that courts may properly avoid dismissing an action where joinder has destroyed diversity by eliminating the party whose presence causes the jurisdictional defect under Rule 21. Nevertheless, a court may not drop a party under Rule 21 if his presence is needed for just adjudication under Rule 19. Filippini v. Ford Motor Co., 110 F.R.D. 131, 133-34 (N.D.Ill. 1986); Erie Mach. Prods., Inc. v. Mazak Yamazuki Mach. Corp., 574 F. Supp. 1056, 1058 (E.D.Wis. 1983); C. Wright, A. Miller & M. Kane, Federal Practice and Procedure § 1658 (1986).

Subdivision (b) of Fed.R.Civ. 19 provides that if joinder of a party is not feasible because, among other considerations, it will destroy subject matter jurisdiction, the court

  shall determine whether in equity and good
  conscience the action should proceed among the
  parties before it, or should be dismissed, the
  absent person being thus regarded as
  indispensable. The factors to be considered by
  the court include: first, to what extent a
  judgment rendered in the person's absence might
  be prejudicial to the person or those already
  parties; second, the extent to which, by
  protective provisions in the judgment, by the
  shaping of relief, or other measures, the
  prejudice can be lessened or avoided; third,
  whether a judgment rendered in the person's
  absence will be adequate; fourth, whether the
  plaintiff will have an adequate remedy if the
  action is dismissed for nonjoinder.

Marathon's memorandum opposing plaintiff's motion alleges that once plaintiff added I & M as a defendant, I & M became a necessary and indispensable party under Rule 19. (Document No. 82). Marathon cites no authority for this proposition and characterizes plaintiff's motion as simply "a further illustration of the lack of good faith on the part of plaintiff and Insulating on the purported settlement between them." (Document No. 82, p. 4).

Disregarding plaintiff's motives, it is apparent to this Court "in equity and good conscience" that I & M is not indispensable within the meaning of Rule 19(b). Marathon initially protected its interests by impleading I & M as a third-party defendant pursuant to Fed.R.Civ.P. 14. That plaintiff and I & M have reached a settlement, thereby releasing I & M from any liability in this action, does not prejudice Marathon. Section 302(c) of the Contribution Among Joint Tortfeasors Act provides:

    (c) When a release or covenant not to sue or
  not to enforce judgment is given in good faith to
  one or more persons liable in tort arising out of
  the same injury or the same wrongful death, it
  does not discharge any of the other tortfeasors
  from liability for the injury or wrongful death
  unless its terms so provide but it reduces the
  recovery on any claim against the others to the
  extent of any amount stated in the release or the
  covenant, or in the amount of the consideration
  actually paid for it, whichever is greater.

Ill.Rev.Stat. ch. 70, ¶ 302(c) (1985).

Thus, any judgment rendered against Marathon will be reduced to the extent of the amount stated in the release. Marathon's complaint that the settlement between plaintiff and I & M was not entered in good faith is not supported ...

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