United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
Honorable Marvin E. Aspen United States District Judge.
before us is Defendant American Family Insurance
Company's ("American Family") motion to join
The Austin 1900 Building Corporation ("Austin
1900") as a plaintiff in this suit brought by Plaintiff
CXA Corporation ("CXA") against American Family for
breach of an insurance contract. (Mot. for Joinder (Dkt. No.
28).) For the reasons stated below, we deny American
Family issued an insurance policy to Austin 1900 effective
March 31, 2014 through March 31, 2015 for the property at
6001 West Dickens Avenue, Chicago, Illinois (the
"insured property" or the "property").
(Compl. (Dkt. No. 1), Ex A atPg. ID #12.) Austin 1900 has
owned the insured property at all times relevant to this
lawsuit. (Compl. ¶ 8.)
insurance policy contains a mortgageholders clause which
provides coverage specifically to the mortgageholder for loss
in certain circumstances. (Id., Ex. A. at Pg. ID
#99.) Two sections of that clause are relevant here. First,
under Section 2(b), American Family promises to provide
coverage to the property's mortgageholder for covered
losses. (Id.) Second, under Section 2(d), American
Family promises to provide coverage to the mortgageholder in
some instances for losses that are not covered.
(Id.) Section 2(d) provides that, when the insurer
denies a claim because of the named insured's act or
failure to comply with the policy terms, the insurer may
still provide coverage to the mortgageholder so long as the
mortgageholder has "notified [the insurer] of any change
in ownership, occupancy or substantial change in risk known
to the mortgageholder." (Id.)
insurance policy identifies the mortgageholder of the
property as CLMG Corporation as Servicer for Beal Bank -
Nevada ("Beal Bank" or "CLMG").
(Id. at Pg. ID #78.) On or around January 8, 2014,
Beal Bank assigned the note, mortgage, and loan documents for
the insured property to LNV Corporation. (Compl., Ex. B at
Pg. ID #130-31.) On that same day, LNV Corporation assigned
the note, mortgage, and loan documents for the insured
property to CXA. (Id. at Pg. ID #124-25.) On the
basis of that assignment, CXA claims it is the mortgageholder
of the property. (Compl. ¶ 15.)
around December 15, 2014, the roof collapsed at the property.
(Id. ¶ 18.) After the roof collapsed, Austin
1900 submitted an insurance claim, which American Family
denied. (Compl., Ex. C at Pg. ID #136-37.) CXA claims a right
to the insurance claim because it alleges it is the
mortgageholder of the property. In a July 23, 2015 letter,
American Family stated that the collapse resulted from
uncovered "long term wear and tear, rot and
deterioration, " and therefore it would not "honor
any claim for damage or repair." (Id.) CXA
contends that "snow and ice accumulation" caused
the roof to collapse, and therefore American Family should
pay for the loss. (Compl. ¶ 18.) The disagreement over
whether American Family should have covered the loss forms
the basis of the present suit. (Id. ¶¶
filed suit against American Family on December 17, 2015,
alleging that American Family breached its insurance contract
with CXA, as mortgageholder, when it refused to pay CXA for
losses associated with the roof collapse at the insured
property. American Family filed the instant motion for
joinder of Austin 1900 on July 26, 2016. (Mot. for Joinder.)
governs joinder of mandatory parties. Fed.R.Civ.P. 19(a). The
aim of Rule 19 is to "permit joinder of all materially
interested parties to a single lawsuit so as to protect
interested parties and avoid waste of judicial
resources." Askew v. Sheriff of Cook Cnty.,
Ill. 568 F.3d 632, 634 (7th Cir. 2009); Moore v.
Ashland Oil, 901 F.2d 1445, 1447 (7th Cir. 1990). The
party moving for joinder has the burden to demonstrate that
we should join the absent party if feasible. Florian v.
Sequa Corp., No. 98 C 7459, 2002 WL 31844985, at *3
(N.D. 111. Dec. 18, 2002) (citing Pudela v. Swanson,
No. 91 C 3559, 1996 WL 754106, at *4 (N.D. 111. Dec. 31,
1996); cf. NanoeXa Corp. v. Univ. of Chicago, No. 10
C 7177, 2011 WL 4729797, at *1 (N.D. 111. Oct. 6, 2011)
(observing that, for the purposes of a Rule 12(b)(7) motion
to dismiss for failure to join a party under Rule 19, it is
the moving party's burden to demonstrate the absent party
is a necessary and indispensable party under Rule 19).
determine if an absent party must be joined under Rule 19, we
first determine whether the absent party is "required to
be joined if feasible" under Rule 19(a). Davis Cos.
v. Emerald Casino, Inc., 268 F.3d 477, 481 (7th Cir.
2001); Moore, 901 F.2d at 1447. A party is required
to be joined if feasible if:
(A) in that person's absence, the court cannot accord
complete relief among existing parties; or
(B) that person claims an interest relating to the subject of
the action and is so situated that disposing of the action in
the person's absence may:
(i) as a practical matter impair or impede the person's
ability to protect the interest; or (ii) leave an existing
party subject to a substantial risk of incurring double,
multiple, or otherwise ...