PROVIDENT BANK v. PATTERSON
Legal provision: Federal Rules of Civil Procedure, including Appellate Procedure (or relevant rules of a circuit court)
Argument of Norman Paul Harvey
Chief Justice Earl Warren: Number 28, Provident Tradesmens Bank and Trust Company, Administrator of the Estate John R.Lynch, etcetera, Petitioner versus George M.Patterson, Administrator of the Estate of Donald Cionci et al.
Mr. Norman Paul Harvey: May it please the Court.
Chief Justice Earl Warren: Mr.Harvey.
Mr. Norman Paul Harvey: Sir, in summary of what was said yesterday and in our brief.
The suggested order of the minority of the Third Circuit would by the very order suggested contemplate additional litigation.
It contemplates litigation by the party who was not a -- the person who not a party in order to resolve his right.
It is quite possible that in asserting his rights, either in a federal court or in a state court a conclusion directly contrary to the conclusion reached in the instant case in the District Court could be reached.
Justice Byron R. White: And what if it were?
Mr. Norman Paul Harvey: Then it would have one decision saying that there was no coverage for Cionci.
You would have another decision saying it was coverage for Cionci.
And these two decisions would be in conflict.
The order of the Court doesn't say what it would do in that situation where the proposed order of the minority --
Justice Byron R. White: Yes but what's the impact on Dutcher?
Mr. Norman Paul Harvey: The impact on Dutcher is that he may be completely lost with no coverage due to the fact of the decision in one of these courts.
Justice Byron R. White: Can you spell that out?
Mr. Norman Paul Harvey: Yes sir.
If Dutcher should prevail in a coverage case in Delaware County, under that, he would be in --
Justice Byron R. White: But how was -- what do you mean prevail?
Mr. Norman Paul Harvey: That is if he should obtain a verdict in an action against the Lumbermens and Cionci.
Justice Byron R. White: That there was coverage or that there wasn't?
Mr. Norman Paul Harvey: That there was no coverage for Cionci then, Dutcher would be entitled to the entire fund that he had provided by purchasing a policy.
However, at the same time, there would be a finding in the District Court, Federal District Court in Philadelphia that Cionci was entitled --
Justice Byron R. White: Yes, but that's --
Mr. Norman Paul Harvey: -- to the coverage of the policy.
Justice Byron R. White: That's your client's problem, not Dutcher's.
All that mean is that -- all that mean is that the insurance company pays out money under this federal judgment that he will have an issue here where coverage was found.
And then if Dutcher would do -- isn't in this case, prevails against the insurance company in another suit, it may be the insurance company has -- will pay double payments but that's not -- that should -- that isn't Dutcher's problem.
Mr. Norman Paul Harvey: I think also Your Honor --
Justice Byron R. White: Well, isn't that true?
Mr. Norman Paul Harvey: I think it's true if you conclude that the carrier is going to have to suffer double liability, yes.
Justice Byron R. White: Well, we're talking about whether Dutcher is an indispensable party.
We're not talking about the insurance company.
Mr. Norman Paul Harvey: Oh, I think sir, even under Rule 19 as amended, consideration must be given to the question of whether or not somebody is going to suffer double liability because of the holding in the case where a party should -- a person should be a party and is not a party.
Justice Byron R. White: Well, isn't that somebody who know the indispensable party?
Mr. Norman Paul Harvey: Not necessarily.
I would -- in reading the rule, I didn't get that impression sir and in reading the articles --
Justice Byron R. White: Of course the Court of Appeals didn't even get to analyzing the factors under Rule 19, did they?
Mr. Norman Paul Harvey: I don't think they did, I don't think the minority opinion --
Justice Byron R. White: Well, it happened, the judgment stand?
Mr. Norman Paul Harvey: As far as the judgment standing, it isn't the position of the respondent here that the majority opinion necessarily has to prevail.
If there is another way in this same action of bringing to a conclusion the coverage question in a decision that's binding on Dutcher, who is the name ensured --
Justice Byron R. White: By the way, could you tell me, is there any -- has there been any suggestion in this litigation by anybody that Dutcher is bound by this suit in a sense that he and the insurance company's interest are the same or that they are in brevity and therefore res judicata would apply to Dutcher if we try to litigate this question?
Mr. Norman Paul Harvey: That has not been contended by anyone.
The majority says he is not bound by it.
The dissenting opinion says that Dutcher is not bound by it and Dutcher is not a party.
So I don't think that the Court had any jurisdiction of him and I don't think it could be said that because in an action in which he was not a party, his insurance carrier lost a contract action that he is bound by that situation.
Justice Byron R. White: Well, so you're really arguing that he is an indispensable party in this suit, mostly because the insurance company might pay, say, double liability and Dutcher prevails against -- to these other actions.
Mr. Norman Paul Harvey: I think it goes much further than that Your Honor and I think my time is running out.
Justice Byron R. White: Oh, I'm sorry.
Mr. Norman Paul Harvey: I think that the overall importance of this case is not this one decision but the fact that the federal declaratory judgment act has been a great help in solving problems and in cutting down litigation.
And in the insurance field of making it unnecessary to go through the extensive trial of tort action because frequently when a decision has arrived at on the coverage, then settlements are worked out.
The federal declaratory judgment act is often available when no state act is available.
If a --
Justice Thurgood Marshall: Excuse me, one thing worries me, in the original declaratory judgment action, if Lumbermens had moved to join Dutcher as an indispensable party and Dutcher was joined as a party defendant, diversity is drawn and out goes the lawsuit, is that right?
Mr. Norman Paul Harvey: If he has joined as a defendant, yes sir.
Justice Thurgood Marshall: But why didn't Lumbermens moved to join it as a defendant in the trial court?
Mr. Norman Paul Harvey: There wouldn't have been any diversity if he were made a defendant if he were in the case as a plaintiff.
Justice Thurgood Marshall: Well, if you could've -- you could have avoided all this litigation by doing that, couldn't you?
Mr. Norman Paul Harvey: Well, we were in no way --
Justice Thurgood Marshall: But what if they (Voice Overlap) --
Mr. Norman Paul Harvey: -- connected with the case then, sir.
Justice Thurgood Marshall: But what if he is -- well, Lumbermens lost?
Mr. Norman Paul Harvey: Lumbermens lost?
Justice Thurgood Marshall: Would it be fair that what Lumbermens was doing was doing on a sure way, if the judgment went against him, they raised indispensable party for it.
If it's not with them, is it alright?
Mr. Norman Paul Harvey: No sir because we never did raise the point.
The point was raised by the Court of Appeals sua sponte.
We felt we are perfectly right on the Pennsylvania law and had every right to reverse the District Court.
We did not raise the indispensable party.
That was raised by the Court of Appeals and --
Justice Abe Fortas: No, supposing Justice Marshall's questions to you, the only person here that may be hurt by the failure to join Dutcher as I understand it is Lumbermens, the insurer.
Mr. Norman Paul Harvey: That might be so except that Dutcher --
Justice Abe Fortas: Oh, now just a moment, just a moment --
Mr. Norman Paul Harvey: I'm sorry sir.
Justice Abe Fortas: If that is so, assume for the moment that that is so the fact of the matter is that Lumbermens have no time to move to make Dutcher a party.
And my basic problem that I have with this case is why Court of Appeals' sua sponte injected itself here in the absence of a motion on your part.
If anybody is hurt by this, it's Lumbermens.
I don't see that Dutcher is hurt.
Anybody is hurt by -- or if he is hurt, he could have come in.
But nobody made a motion to join Dutcher on a belated stage in this case.
The Court of Appeals raised this on its own motion and when you match that against the language of the Rule, there's a lot of difficulty with the -- reversing the decision of the District Court here on this ground.
Mr. Norman Paul Harvey: I don't know the rationale that was followed in not joining Dutcher.
If we had been involved in the case at that stage, I doubt that I would have joined Dutcher because I don't think an insurance company having a fiduciary relationship to its insured has any right to bring its insured into litigation that will bind him.
If other --
Justice Abe Fortas: Well, I suppose that what you're --
Mr. Norman Paul Harvey: -- party would want to bind him --
Justice Abe Fortas: -- your position right now is in effect that he should be joined with some of the -- fiduciary relationship here, it's just a belated assertion of a position that has a bearing on that.
Mr. Norman Paul Harvey: My position is not that he should be joined.
My position is that if he joined as was suggested from the bench yesterday by the Court, then the Lumbermens has nothing to do with that and Dutcher will be represented in the action in the lower court.
There is no controversy at this time between Dutcher, the name insured and his insurance carrier, the Lumbermens, no controversy exists there.
Now I would like to say, if I may sir this final word that if any stamp of approval of this Court is placed on this limited sort of piecemeal handling of this coverage problem, without overstating it, it's going to have a nationwide effect, because throughout the country, these suits are started all the time to decide coverage problems.
And if they can be started and the person that is important to a litigation as Dutcher can't be joined and it's going to be a piecemeal decision of the coverage question which will encourage more litigation of the same question, then the efficacy of the declaratory judgment action is going to be lost on a 50-state basis.
I thank you, Your Honors.
Justice Abe Fortas: Well may I ask you, if you don't mind, this is one question, I am -- a fairly question.
I wonder if that is so indispensable party doctrine may be -- if it still exist, may be viewed one that has life and a momentum of its own.
On the other hand it maybe viewed as one that has invoked only in the interests of some party to the litigation.
And in that event, it's at least arguable and it's the medium, that party to invoke it at an appropriate stage, I mean at the trial stage and not the -- unless it's not available unless it is invoked at that time, I suggest that is a possible alternative to your last statement.
Mr. Norman Paul Harvey: But if Your Honor please, it seems to me, in reading the articles that probably prompted this new Rule 19 that they contemplate, and then to the litigation which is somewhat synonymous with the contemplation of declaratory judgment act that it should be final and decisive and not a piecemeal situation after the declaratory judgment action is over.
And I suggest to you Your Honor that the answer is not to have people such as the Lumbermens who have no controversy with another person such as this named insured at its parallel to drag that person into litigation and force him to engage counsel by the action of the insurance carrier which is suppose to protect that name.
I think it's the obligation of the person bringing this action to bring it properly.
Another point sir that is stressed in all the cases --
Justice Abe Fortas: My question is whether it's your obligation -- it was your obligation to have objected seasonably.
That's the question that I'm raising.
I agree with you that it is the obligation of the claimant to join the necessary parties.
But the question is whether this particular objection in the circumstances can be -- can prevail in view of the fact that it was raised at the trial.
Mr. Norman Paul Harvey: But sir, I only can say, to -- with regards to that that Dutcher is an innocent party, he doesn't have anything to do with whether he became a party or not.
And he's certainly going to be put because of litigation personally, if there is an order such as suggested by the minority of the Third Circuit.
And as a matter of fact I'm not reading that into the minority opinion and minority opinion specifically contemplates Dutcher's starting further litigation.
Justice Byron R. White: Well, could I ask you this, who calls Dutcher as the witness in this other's lawsuit where he did testify and it was found -- the jury found coverage, is that in the federal court or the state court?
Mr. Norman Paul Harvey: That was in the federal court, sir.
Justice Byron R. White: In a companion suit in the federal court?
Mr. Norman Paul Harvey: It was tried at the same time.
Justice Byron R. White: Yes.
And he did litigate?
He did testify?
Mr. Norman Paul Harvey: He did testify, sir.
Justice Byron R. White: And did the insurance company called him?
Mr. Norman Paul Harvey: Yes, he was called by counsel in representing the carrier.
Justice Byron R. White: And the carrier lost that lawsuit?
Mr. Norman Paul Harvey: That's correct Your Honor.
Justice Byron R. White: Yes, thank you.
Chief Justice Earl Warren: Mr.Adler.
Argument of Avram G. Adler
Mr. Avram G. Adler: May it please the Court.
Perhaps I spoke too quickly in my first opportunity to address the jury and I did not give the antecedent history as clearly as I should have done.
Counsel representing the Estate of Lynch brought a suit against the Estate of Cionci who was the driver and it's now admitted that he was the driver.
In an investigation showed that Cionci had no assets whatsoever.
These were all very serious and reasonable.
The Estate of Lynch then brought a declaratory judgment action against Lumbermens to determine whether there would be coverage for Cionci so that this suit would not be a mere academic exercise.
The Lumbermens then motioned to bring in all the other injured parties, Dutcher was never brought in, and the suit went forward on that basis and a jury found coverage as to -- by the record verdict and by an actual verdict on the evidence, a jury found coverage.
Chief Justice Earl Warren: Who made the motion you just spoke off?
Mr. Avram G. Adler: Lumebermens Mutual Insurance Company to bring in the other claimants, at no time even at the pre-trial, the day requested Dutcher be brought in as an indispensable party.
There is no question that Dutcher would be a plaintiff in this case.
They answer Mr.White because by Mr.Harvey's own admission, there is a per -- there is a potential conflict between Dutcher and the insurance company so that he would be a possible --
Justice Byron R. White: Isn't there a provision in Rule 19 for making somebody into involuntary plaintiffs in a proper case?
Mr. Avram G. Adler: That could have been done had the issue been raised.
It was not raised --
Justice Byron R. White: Do you say that Dutcher's interest really -- he could be on either side of this case, I suppose?
Mr. Avram G. Adler: He could be either -- on either side and this is a question that troubled me a great deal.
Justice Byron R. White: Tell me how he could be a plaintiff, would you?
Mr. Avram G. Adler: Well, as Mr.Harvey pointed out, he says that if Dutcher loses in the Delaware Country actions, he would then have a suit against Lumbermen which then indicates a potential conflict between Lumbermens and Dutcher and therefore he could be a made a plaintiff.
And therefore, under no circumstances, just to cover the approach that Your Honor made yesterday.
At best, the Court could have under 19 (a) merely sent the case back to include Dutcher as an involuntary plaintiff.
The majority opinion for reasons which we do not understand seemed intended to establish a substantive complex and to work the thrust of the modern approach in Rule 19.
But if I may just briefly sketch this -- the approaches that we -- that are to be taken, if the majority opinion approach is taken, then there will not be just a possible conflict as Mr.Harvey points out.
But there will be three poss -- or four possible conflicts, because under Pennsylvania rules, each of these cases would be litigated and then each of these various claimants would then have to bring a separate garnishment action and you could get three separate conflicting approaches as to the coverage question, which would be a sheer nightmare.
The declaratory judgment action in this case was the most economical way of determining the issue.
Now, under 19 (a), if Your Honors were to send it back under 19 (a) to make Ducther an involuntary plaintiff, then being the law of the case that the Pennsylvania Dead Man's Rule applies.
And by sending it back under 19 (a), the Court recognizes the interest of Dutcher and it has been argued here as to the interest of Dutcher by counsel for the insurance company, then it means the various estates would prevail because under the Pennsylvania presumption, Dutcher could not testify and again they would get their directive verdict.
And the only person who could suffer would be the live plaintiff who was severely injured and he might get a conflicting result.
And Lumbermens gets an opportunity to relitigate that issue and submit that again toa jury which I humbly submit they do not deserve.
They've had their day in court.
Under no circumstances can Dutcher suffer.
Now, it has been argued that Dutcher may be found a defendant in the Delaware County cases and then he can sue the insurance company.
But as Your Honors pointed out, only the insurance company would suffer thereby.
But even under those circumstances, under the opinion suggested -- under the order suggested by Judge Freedman in his dissenting opinion, the judgment here would await the resolution of those Delaware County cases.
If Dutcher is found not guilty in this action, and there's a good chance of that because all he did was hand the keys to these men and these men took the car away and Cionci was driving at 90 miles an hour and crossed the median strip, the likelihood that Dutcher would be found guilty as a defendant is highly unlikely.
And if he is found absolved in those Delaware County cases, then there is no conflict at all.
And Lumbermens pays the -- judgment that been found in these cases.
And it is significant as I pointed out yesterday that despite the fact that Lumbermens represents Dutcher in those cases, those cases have stayed on the books for eight years even though Delaware County is a short docket county and they've done nothing to resolve it.
But taking Judge Freedman's opinion one step further, we as the counsel for the claimants and the counsel for all claimants are in this Court today, we are willing to accept a conditional order which says that we will limit our claims against all the defendants including Dutcher to the $100,000 policy.
So that by affirming the order of the lower court and making it conditional, then Dutcher has no danger at all and in fact he hasn't any, and Lumbermens has no danger of paying out more than their contractual limit.
And this can be done under 19 (b), the whole thrust, and that's the importance of this case.
Ninth -- New Rule 19 set up various means by which this whole concept of indispensable party can be put aside for pragmatic considerations.
And the rule makers kept using that word pragmatic consideration.
It is not at all unknown for a court to so do, to put a condition on the affirmance of an order.
And we would accept such a condition.
And under that posture, and we set this in our brief, Lumbermens has not met that challenge.
They have not answered this premise as I advanced yesterday and as I advanced now, the reason for that is that Lumbermens wants to relitigate this thing.
They want a second day in Court.
And I say to Your Honors, this case has been on the books for nine years and it was no fault to the plaintiffs that it was on the books for nine years.
The Court of Appeals sat on this case for almost two years for reasons which we do not understand and then ordered an argument in bond.
This case was ordered on the trial list within five months after it was first filed, so that we have not delayed, but it has been in courts for a long time.
This Court has within its power, the opportunity to terminate this litigation by making such a conditional order and all counsel have authorized me to say that they would accept such a condition, that all the claims of all the plaintiffs will be limited to the insurance coverage of a $100,000.
The issue has been litigated under -- the importance of this case is that the Rule 19 gives the opportunity to the Courts to use these pragmatic considerations to be practical as opposed to the impractical.
And this is the first important case under Rule 19, and this case could be a guide stone to the lower courts in getting away from this rigid approach to the indispensable party context.
Justice Byron R. White: But wouldn't that --
Mr. Avram G. Adler: Thank you.
Justice Byron R. White: -- even if it -- even if there's no indispensable party here under 19, and you suggest we apply 19, even if this party, if Dutcher is indispensable, you'd say that incorporates 19 (a) don't you in terms of what would might be called necessary party rather than an indispensable party that it is (Voice Overlap) --
Mr. Avram G. Adler: That --
Justice Byron R. White: -- and if it's feasible to join him and there's reason enough to join him, he ought to be joined.
Mr. Avram G. Adler: That is correct Your Honor and 19 (a) would prevail.
However, if there were no means by which this case can be terminated now, if we go back under 19 (a), there is a chance of injustice to Harris.
However this Court by a conditional order, and 19 (b) does give that opportunity, could say we affirm this judgment under conditions that the plaintiffs agree or signed a certificate or a motion that they will limit their claims to all the defendants $200,000 and that terminates the litigation and either Dutcher nor the defendant can be hurt thereby.
They've had their day in Court.
Justice Byron R. White: Would you make (Inaudible) the Court of Appeals?
Mr. Avram G. Adler: No sir, I did not because this was raised sua sponte at the first argument and at the second argument we argue that the question that the Dutcher is being an indispensable party.
I did make it however Your Honors in my brief in this case, perhaps I should have made it in the Court of Appeals --
Justice Byron R. White: If you did represent one -- who do you represent?
Mr. Avram G. Adler: I represent the --
Justice Byron R. White: You don't represent all of -- you don't represent all the injured people or all that was injured?
Mr. Avram G. Adler: I represent the Estate of Lynch and counsel --
Justice Byron R. White: Yes, but that's all?
Mr. Avram G. Adler: I -- and counsel for the other two parties.
The Estate of Smith and Harris is in Court and is present and he joins with me in that offer to the Court.
And I have so stated it in my brief.
Justice Byron R. White: Mr.Harris who is compelled to believe --
Mr. Avram G. Adler: Mr.Nelson who is counsel for the other two claimants joined with me in that.
We seek to terminate this litigation and we submit that this is an opportunity under the practical aspects of Rule 19 to solve it.
Thank you Your Honors.