Professional Documents
Culture Documents
No. 13-1834
Appeal from the United States District Court for the Southern
District of West Virginia, at Charleston.
Joseph R. Goodwin,
District Judge. (2:13-cv-01859)
Argued:
Decided:
They
subsequently
filed
in
federal
district
court
Petitioners
parties
under
28
U.S.C.
1332.
Hanna
argues
that
I.
A.
On
Lamp II
August
and
(Innovative),
provided
Hanna
(Builders
1,
2009,
Hanna
Innovative
for
the
with
Warranty)
signed
Design
&
construction
Builders
that
covered
of
contract
with
Clark
Construction,
LLC
Warranty
new
home.
and
workmanship
Lamp
Certificate
and
materials
for one year, mechanical systems and appliances for two years,
2
The Builders
136.
Lamp,
Innovative,
and
several
subcontractors
and
some
point
before
the
closing,
Lamp
and
Innovative
Home
Insurance
Company,
and
the
New
Home
Warranty
The
2-10
the
Warranty
Builders
offered
Warranty:
one
nearly
year
identical
on
the
protection
homes
as
workmanship,
two
The 2-10
signed
with
[her]
Builder.
J.A.
143.
Hanna
contains
Innovative
to
no
enroll
evidence
her
that
home
in
Hanna
the
Additionally, the
authorized
2-10
Lamp
Warranty.
and
Hanna
admits that she first heard that her home had been enrolled in
the 2-10 Warranty in the fall of 2010, but contends that she did
not
learn
about
the
arbitration
clause
until
documents
were
or
the
two
additional
adjustment
of
her
warranty
entities
claims
(the
involved
Claims
in
the
Adjusters).
with
the
warranties
construction
of
of
habitability
the
home;
(3)
breach
and
merchantability;
of
(4)
under
the
[2-10
Warranty];
(6)
fraud
and
J.A. 321.
state law.
Furthermore, Hanna contends that the arbitration provision
in
the
2-10
Warranty
grounds.
The
petition
that
is
Warranty
they
unenforceable
Companies
intended
to
on
various
indicated
plead
in
state
their
arbitration
law
federal
as
an
C.
On
February
1,
2013,
the
Warranty
Companies
filed
In the petition
the
arbitration
predicated
their
U.S.C. 1332.
was
petition
pending.
on
The
diversity
Warranty
jurisdiction
Companies
under
28
entire
controversy
diverse parties.
underlying
the
petition
included
non-
were
(FAA)
and
diverse
Moses
H.
and
that
Cone
the
Federal
Memorial
6
Arbitration
Hospital
v.
Act
Mercury
in
the
state
court
action
need
not
be
joined
as
power
under
28
U.S.C.
2283
to
halt
the
state
court
factors
bearing
upon
abstention,
ultimately
concluding
find
that
the
arbitration
issue
J.A. 325.
can
only
be
resolved
simply
ordered
the
petition
dismissed.
The
Warranty
II.
We first consider the threshold issue of subject matter
jurisdiction.
court
has
subject
matter
jurisdiction,
that
it
erred
in
River
abstention
doctrine,
7
and
that
the
arbitration
clause
is
enforceable
against
Hanna.
We
do
not
reach
the
is
question
of
jurisdiction exists.
law,
we
review
de
novo
Because
whether
such
Kokkonen
v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994).
District
courts
may
only
hear
case
when
they
possess
v.
Allapattah
Servs.,
Inc.,
545
in
challenged,
federal
must
demonstrate
546,
552
(2005)
it
the
Exxon Mobil
must
federal
allege
courts
and,
when
jurisdiction
court,
U.S.
the
judiciary
to
matter,
then
the
case
must
be
dismissed.
The Warranty Companies argue that the district court has
subject
matter
jurisdiction
on
two
grounds:
diversity
of
is
well
established
that
does
not
create
federal
n.
32
(1983).
jurisdiction
for
the
Thus,
the
Warranty
only
potential
Companies
source
petition
is
of
the
Hanna, as a
are
completely
diverse
from
her.
Rather,
she
of Ark., LLC v. Rutherford, 605 F.3d 483, 486 (8th Cir. 2010)
([D]iversity of citizenship is determined by reference to the
parties named in the proceeding before the district court, as
well as any indispensable parties who must be joined pursuant to
Rule 19.) (internal quotation marks omitted). 1
A.
Rule 19 of the Federal Rules of Civil Procedure sets forth
a two-step inquiry for courts to determine whether a party is
necessary and indispensable.
its
relationship
to
the
matter
under
consideration.
Teamsters Local Union No. 171 v. Keal Driveaway Co., 173 F.3d
915, 917 (4th Cir. 1999).
Id. at 917-18.
case
should
is
drastic
remedy
[that]
be
employed
only
indispensable
party
analysis)
10
is
the
dispute
over
arbitrability
and
the
need
generated
by
the
2-10
Warranty
See
A party
We
begin here with Rule 19(a)(1)(B), which provides that a nonjoined party is necessary to an adjudication if it claims an
interest relating to the subject of the action and its absence
would
either
conflict
interest,
Rule
subject
substantial
to
obligations
with
its
19(a)(1)(B)(i),
because
risk
of
or
of
the
ability
leave
incurring
interest,
to
an
Rule
protect
existing
the
party
inconsistent
19(a)(1)(B)(ii).
However,
under
there
either
of
are
enough
these
potentially
standards
to
prejudicial
warrant
the
Rule
19(a)(1)(B)(i)
directs
us
to
consider
non-joined
through
direct
pecuniary
interest
in
the
dispute
the
2-10
contract.
The
identical claims.
Warranty
Companies
seek
arbitration
of
Although
joint
tortfeasors
from
state
court
liability.
Companies
to
insure
defects
like
natural
interest
contract.
The
those
in
2-10
the
Warranty
Builders
alleged
any
by
obligates
liability
Hanna,
adjudication
for
giving
of
the
the
the
Warranty
construction
Builders
terms
of
that
Lamp
and
Innovative
are
critical
to
the
AnimalFeeds Intl Corp., 559 U.S. 662, 684 (2010) (holding that
12
on
determination
of
whether
Lamps
and
Innovatives
legally
binding
on
Hanna.
Such
ruling
could
have
Rite Aid of S.C., Inc., 210 F.3d 246, 251-52 (4th Cir. 2000).
Rule 19(a)(1)(B)(ii) is a separate basis for finding a nonjoined party necessary and protects the existing parties to the
action from incurring . . . otherwise inconsistent obligations
because of the [non-joined partys] interest.
The existence of
or
more
obligations.
of
the
parties
will
be
subject
to
conflicting
If the Warranty
different
tribunals
merited
adjudication
of
entire
case
We decline to impose
no
good
reasons
sounding
in
380
(rejecting
multiplying
district
procedures
courts
that
the
fair
or
efficient
might
that
lead
had
to
effect
of
inconsistent
results).
Finally,
Rule
19(a)(1)(A)
sets
forth
another
necessity
cannot
above
accord
complete
discussion
relief
concerning
the
among
existing
overarching
parties.
legal
and
must
have
the
Builders
14
present
as
parties
to
fully
resolve
the
dispute
arising
from
the
alleged
construction
If Hanna is
to
join
insurers
as
parties
would
potentially
cause
it
omitted).
was
legally
entitled
to
full
coverage)
(emphasis
that
if
necessary
party
cannot
be
Rule 19(b)
joined
without
As discussed
Innovative,
allegedly
as
they
are
responsible
for
enrolling
the
[insurance]
conduct).
the
policy,
and
this
suit
concerns
[its]
defendants
together
and
adjudicating
all
of
her
claims
clear
tribunals
how
the
might
be
district
required
court
to
could
rule
on
do
the
so.
Here, it is
Different
validity
of
the
of
construction
defects
in
Hannas
home,
which
could
might
off
such
confusion,
and
the
prospect
of
See
The
third
factor
addresses
the
adequacy
of
judgment
interest
consistent,
of
the
and
courts
efficient
and
the
public
settlement
of
in
complete,
controversies.
rulings.
Thus
this
factor
also
points
to
the
See Natl
state
dispute.
is
entirely
capable
of
adjudicating
this
The suit arises wholly from state law and, in the event it goes
to trial, the witnesses and exhibits common to Hannas claims
against all the co-defendants are readily available.
Illinois, 186 F.3d at 442.
Companies
have
arbitration
already
clause
in
begun
the
Owens-
to
state
address
court
the
and
validity
[u]nder
of
the
the
FAA,
at 442.
All four Rule 19(b) factors point to the Builders being
indispensable to the petition.
final
point,
however,
is
critical.
The
Warranty
means
they
arbitrability claim.
enforcement
of
are
due
federal
forum
for
their
arbitration
agreements
is
clear,
it
does
not
the
agreements.
(4th
Cir.
rigorous
enforcement
of
all
arbitration
The
Supreme
Court
recognized
this
courts
decision
to
abstain
from
exercising
460
But
question
in
unlike
Moses
in
H.
the
Cone
were
case
that
joined
before
all
in
us,
the
the
there
was
necessary
petition
to
no
and
indispensable
parties
compel
arbitration.
exercise
rather,
the
of
federal
task
is
jurisdiction
to
by
ascertain
the
district
whether
court;
there
exist
Id. at 25 n. 32.
unflagging
obligation
to
exercise
the
assert
authorized.
jurisdiction
where
it
congressionally
not
LLP
is
Cocchi,
132
S.
Ct.
23,
19
(2011)
(per
curiam)
jurisdiction
for
all
petitions
under
of
the
FAA
All it
arbitration
agreements
as
general
matter,
there
is
no
courts).
interest
undermine
in
In
honoring
our
sum,
Moses
H.
arbitration
conclusion
that
Cone
and
agreements
subject
matter
the
does
undisputed
nothing
to
jurisdiction
is
lacking here.
III.
For the foregoing reasons we hold that the petition of the
Warranty Companies cannot proceed in federal court because the
joinder of necessary and indispensable parties would extinguish
the power of the court to hear the case.