Adding Parties and Claims
Impleader is a process by which a third party is brought into a lawsuit by a defendant. The third party becomes a participant in the lawsuit and is known as a third party defendant.
Interpleader occurs when a third party enters into a lawsuit, usually to determine that party’s rights with regard to property at issue in the lawsuit.
Intervention is the process by which a third party is allowed to join a lawsuit. The third party may become a co-plaintiff, co-defendant, or take an independent position in the lawsuit. There are two types of intervention: intervention of right and permissive intervention.
Joinder is the process by which one or more parties or claims are added to a lawsuit. The court recognizes two types of joinder. Necessary joinder occurs when the parties or claims must be added to the lawsuit in order for the suit to proceed. Permissive joinder occurs when the parties or claims are permitted to be added to the lawsuit; if they are not added, the court will still allow the lawsuit to proceed.
This subchapter focuses on the different procedures for adding parties and claims to a lawsuit. As discussed in the previous subchapter on discovery, both parties gather facts and information prior to trial during the discovery process. During this time, new information may shed light on parties and claims that should be added to the ongoing lawsuit in an effort to fully settle the rights concerning property or an incident. The law encourages the consolidation of lawsuits because it reduces the court’s workload and because it expedites the adjudication of rights. It also seeks to avoid inconsistent judgments for lawsuits resulting from the same injury. Consolidating cases that are based on similar facts, parties or circumstances helps to accomplish both goals. Therefore, the Federal Rules of Civil Procedure recognize four different legal mechanisms to achieve this goal: joinder, impleader, interpleader and intervention. These legal mechanisms attempt to expedite lawsuits and to achieve finalization of parties’ rights as quickly and conveniently as possible by adding parties and claims to a pending lawsuit. This subchapter will briefly summarize these four mechanisms. The federal rules offer a useful model from which one can gain knowledge of these concepts; such knowledge can be transferred to gain an understanding of the rules in any jurisdiction.
Joinder is a process by which parties and claims are added to an ongoing lawsuit. The typical litigation scenario begins with a plaintiff who enters into a lawsuit by suing a defendant. The plaintiff has a claim against the defendant for which he or she seeks some type of relief. However, sometimes another party has a role in the lawsuit, or there may be additional legal claims which arose out of the same controversy. In these situations, joinder may be invoked to combine these parties and claims. As always, it is necessary to properly ascertain whether jurisdiction may be acquired over the parties and claims before trying to join them in a lawsuit.
Rules 18 through 21 of the Federal Rules of Civil Procedure establish the joinder process. Rule 18 permits the joinder of claims or remedies that a plaintiff may have against a defendant. Rules 19and 20 establish the procedures and requirements for joinder of parties. Rule 21 addresses the improper joinder of parties as well as the failure to join parties who should have been joined.
Rule 20 permits the joinder of parties when the claims arise out of the same events and they involve the same legal questions. Two or more plaintiffs may join together and sue a defendant. Alternatively, a plaintiff may sue two or more defendants. Joinder of parties under Rule 20 is not required and is often referred to as “permissive” joinder. Initially, the decision belongs to the plaintiff as to whether to join two or more defendants in a lawsuit or to bring separate lawsuits.
Hard Stuff, Inc. was hired to install some new sidewalks on Main Street. Chuck, a cement mixer, was hired by Hard Stuff, Inc., to mix the concrete for a paving job and deliver it to the work site. Mary, a local school teacher, was driving her car in the general vicinity of the work site. Chuck and Mary collided, spilling cement all over the rear of her car. Mary may decide to bring a negligence lawsuit against Chuck. However, she could also join Hard Stuff, Inc., in the lawsuit since Chuck was employed by the company and since he was working at the time of the accident (and therefore acting as an agent for the company). Chuck and Hard Stuff, Inc. may also sue Mary for negligence in the collision with Chuck. All of these potential lawsuits arise from the same event– the collision of Mary’s car with Chuck’s truck. If Mary is filing the initial complaint, it is her decision as to whether to bring a lawsuit against Chuck, Hard Stuff, Inc., or both in the same action.
Joinder under Rule 19 is different from joinder under Rule 20 because Rule 19 joinder involves a party that is necessary to the action. As a result, this type of joinder is often referred to as “necessary” or “compulsory” joinder.
Rule 19 states that a party is necessary to a lawsuit when one of two conditions arise: (1) the party must be present in order to award “complete relief”, or (2) the party has an interest in the action so that his or her interest cannot be represented and protected without that party appearing in the lawsuit. This also applies when the party’s absence may expose other parties to double or inconsistent outcomes. For example:
Mark purchases a watch from a street vendor for $50. Mark takes that watch and sells it to James for $500. The next day, Mark discovers that the watch is worth significantly more. Mark asked James for to return the watch, but James states that he is the rightful owner of the watch. Mark contests ownership, stating that he was misled by an appraiser as to the value of the watch and seeks to have it returned. Mark sues James, asking the court to force James to return the watch. However, it turns out that the watch was originally stolen from Stan before Mark ever bought it. Stan states that the watch is a family heirloom and wants to recover it.
In this scenario, Mark’s lawsuit against James without the presence of Stan cannot be fully litigated because the issue of ownership of the watch cannot be settled without him. Stan has a vested interest in the lawsuit because he is the original owner of the watch. Therefore, it would be difficult to determine the rights of ownership of the watch without involving Stan. Since ownership of the watch cannot be awarded without addressing Stan’s ownership rights, it would be problematic for the court to award ownership to Mark or James when the watch belongs to Stan. Therefore, Stan would probably be considered a necessary party to litigation.
There may be situations in which joinder of parties is necessary under Rule 19 but it is not possible because the court has no jurisdiction over the necessary party. As discussed in earlier subchapters, the courts must have proper jurisdiction over all parties (and claims) in order to hear a lawsuit. Those rules still apply in cases where a party is determined to be necessary to a lawsuit. In these cases, the courts are permitted to use their discretion to determine whether it is fair to proceed without the absent party. If the court determines that the case cannot go on without the necessary party over whom the court has no jurisdiction, the court must dismiss the case. See FRCP Rule 12(b)(7).
In addition to the joinder of parties, the rule also permits the joinder of claims. Rule 18 of the Federal Rules of Civil Procedure permits the joinder of any claims a party may have against another party, even if they arise out of a different transaction or series of events. This includes claims and requests for relief. For example:
In the previous example, where Mark has brought a lawsuit against James, assume that James had also broken a contract with Mark for the purchase of his car (a transaction unrelated to the watch). James may join his claim for breach of contract with the lawsuit concerning ownership of the watch.
Regarding both joinder of parties and claims, the other rules contained in the Federal Rules of Civil Procedure apply, such as the rules regarding service of process, jurisdiction, motion practice, and pleading rules.
See Smallwood v. Illinois Central R. Co., 342 F.3d 400, 407 (5th Cir. 2003).
Rule 14 governs the procedures and requirements of impleader, also sometimes known as third-party practice. A plaintiff may file a lawsuit against one defendant, while there is another party who may be responsible to reimburse the defendant for some or all of the judgment sought by the plaintiff. Take the following example:
John and Craig are in their respective cars driving down Center Street. They are at a red light, with John in back of Craig’s car. Suddenly, Susan speeds out of nowhere, hitting John’s car, which in turn hits Craig’s car. Craig sues John for negligence and seeks to recover for damage sustained to his car.
In the above example, John may be responsible for the damage sustained by Craig’s car (if John was negligent). However, it may not be solely John’s fault. John alleges that had it not been for Susan’s negligent driving, John would not have struck Craig’s car. Therefore, John asserts that Susan should be held liable for some or all of the damages imposed by Craig’s lawsuit against John. (This is also known as “contribution” between defendants). If John is able to pass off all of his liability to Susan (or an insurance provider), John would not be responsible for the judgment. In this case, Rule 14 would permit John to implead Susan into the lawsuit. By impleading a third party defendant (Susan), the original plaintiff (Craig) is now engaged in a lawsuit against the original defendant; and the original defendant (John) is a plaintiff against Susan. John is now known as the third party plaintiff. Susan is called the third party defendant.
When a party is brought into an action using the impleader device, it is important to understand that the original plaintiff is not suing third party defendant directly. (Craig is not suing Susan directly.) Rather, the original defendant is trying to pass any judgment against him onto the third party defendant. Therefore, the third party defendant (Susan) may attack either the original plaintiff’s claim (which, if successful, would extinguish the lawsuit) or the original defendant’s derivative claim (which, if successful, would extinguish the impleader).
As with joinder, the remaining Federal Rules of Civil Procedure apply with regard to pleadings, motions, and notice and jurisdiction requirements.
See Tate v. Frey, 735 F.2d 986, 989 (6th Cir. 1984).
Interpleader is a procedure that typically involves litigation amongst several parties, where there is a possibility of double liability. Typically, this issue arises when there are claims made on an insurance policy. When an insurance company must pay out the proceeds pursuant to a policy, there may be many potential parties who will argue that they should be the beneficiaries. If an insurance company was to pay some of the parties but it is later revealed that they are the wrong beneficiaries, the insurance company would be forced to pay out twice. Therefore, the insurance company would be subject to multiple liabilities.
Rule 22 and the federal statute 28 U.S.C. § 1335 discuss the interpleader doctrine, which is an attempt to alleviate the confusion and delay by requiring parties known as “stakeholders” to settle their claims in one action. In the insurance case, all of the potential beneficiaries would appear in one action and allow the court to determine to whom the insurance company should pay what amounts. In this manner, the insurance company is protected from the potential of multiple liabilities. For example:
Insure Co., an insurance company, supplies insurance coverage to people across the country. Mona, an elderly woman, had a life insurance policy under Insure Co. She became ill and died. Insure Co., attempted to distribute the proceeds of the policy and notified all of Mona’s family members of the impending distribution of funds. Carla, Mona’s eldest daughter who was named as the beneficiary, had died in a car accident. There was a dispute among Mona’s surviving family members. Charlie, Mona’s son, argued that he should receive the policy proceeds. Jackie, Mona’s youngest daughter, argued she was the appropriate beneficiary. Rather than distributing the funds to the wrong party, Insure Co., the stakeholder in this scenario, would have the defendants Charlie and Jackie settle their dispute in an interpleader action before finalizing the proceeds distribution.
Under Rule 22, the parties are permitted to introduce a broad range of interpleading claims. However, there are some limitations with regard to Rule 22 interpleader. First, venue and diversity of jurisdiction issues still apply. However, under the statutorily created version of interpleader found in 28 U.S.C. §1335, venue and jurisdictional limitations do not apply. This means that in cases brought under the statutory interpleader, the stakeholder can bring the action and any parties who don’t show up to assert their rights in the property will simply lose those rights. For example:
In the example above (Mona’s insurance policy), the parties who had the dispute were Charlie and Jackie. Assume that Insure Co. filed the interpleader action in federal court in Delaware, where Insure Co. is incorporated. Charlie and Jackie both live in California, and so the Delaware court has no jurisdiction over Charlie or Jackie. Nevertheless, in a statutory interpleader action, Insure Co. would simply have to give Charlie and Jackie notice of the action. If Charlie and/or Jackie fail to show up for the hearing in the case, the Delaware court’s ruling is still binding upon the insurance policy and all those who have claims over it. Thus, Insure Co. will be relieved from the potential for multiple liability if it follows the Delaware court’s ruling regarding the disposition of the policy.
Rule 24 controls intervention, or the introduction of a nonparty who has an interest in a lawsuit. The nonparty wishes to protect its rights by presenting a claim or defense or both. There are two types of intervention. First, there is intervention as of right, where the party intervening, known as the intervenor, has an interest in property or a transaction which is subject to a lawsuit. The intervenor must show that the judgment of the ongoing lawsuit has the potential to impair his or her interests. The intervenor must show that his or her interests are not represented by either party in the lawsuit. Once this is shown, the intervenor has the inherent right to enter the lawsuit and does not need the permission of a party or the court to do so.
The alternative form of intervention, permissive intervention, allows for intervention where the intervenor’s claim or defense has a common question of law or fact with the ongoing lawsuit. Permissive intervention is subject to the discretion of the sitting court. The court may decide to allow or disallow the intervention in this case.
See Hussain v. Boston Old Colony Ins. Co., 311 F.3d 623, 631 (5th Cir. 2002).