After a 1997 Ford Escort allegedly caught fire while parked inside the plaintiff’s building, the plaintiff’s insurer, General Casualty, paid its insured under the terms of the casualty insurance policy in place at the time of the fire. Nevertheless, the insured filed suit against Ford Motor Company to recover its deductible and excess damages, alleging negligent design and manufacture of the Escort in the U.S. District Court for the Northern District of Illinois.
Despite having a potential subrogation claim against Ford, General Casualty was not a co-plaintiff in its insured’s suit at the time it was filed. Subsequently, Ford moved for joinder of the insurer, presumably to avoid a separate subrogation action. Ford argued that General Casualty, as a partial subrogee, was a real party in interest subject to joinder under Fed. R. Civ. P. 17(a).
The insured opposed the motion, arguing that Illinois state law applied, under which joinder of a partial subrogee is not compulsory. The Plaintiffs also pointed to the fact that General Casualty agreed to furnish an affidavit by which the company would agree to submit to and be bound by the judgment in its insured’s case.
In deciding the motion, the court bifurcated its analysis between state and federal law. The court began by noting that whether a party is a “real party in interest” is a matter of state substantive law. Citing Brook Inns, Inc. et al. v. S&R Hi-Fi and TV [1] and other Illinois authority, the Court readily concluded that “an insurer with subrogation rights to an insured’s claim ‘owns’ a claim and is a real party in interest.”
By contrast, joinder is a procedural matter, and therefore the court continued its analysis in the context of federal law. The Seventh Circuit has long established that a subrogee who is a real party in interest is subject to joinder, upon a defendant’s motion.[2] Already having found that General Casualty was a partial subrogee, and therefore a real party in interest, the court held that the insurer may be joined under federal Rule 17(a), and granted Ford’s motion.
[1] 249 Ill. App. 3d 1064, 618 N.E.2d 734, 743 (Ill. Ct. App. 1993).
[2] Wadsworth et al. v. U.S. Postal Service et al., 511 F.2d 64 (7th Cir. 1975).
Cars R Us Sales and Rentals, Inc. v. Ford Motor Co., 2009 U.S. Dist LEXIS 51478