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09-2022 R.G. Wegman Construction Co. v. Admiral Ins. Co.

By: WISCONSIN LAW JOURNAL STAFF//January 14, 2011//

09-2022 R.G. Wegman Construction Co. v. Admiral Ins. Co.

By: WISCONSIN LAW JOURNAL STAFF//January 14, 2011//

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Civil Procedure
Diversity jurisdiction

An insured pursuing a bad faith action against its insurer cannot defeat diversity jurisdiction by naming the plaintiff in the underlying action as a defendant.

“Budrik, like Wegman, is a citizen of Illinois, so if he’s really a defendant the requirement of complete diversity of citizenship is not satisfied. But a party isn’t permitted to destroy federal diversity jurisdiction by naming as a defendant someone against whom he does not seek relief. See Walden v. Skinner, 101 U.S. 577, 589 (1879). Otherwise Wegman could have forced the case to be remanded to the state court by naming Rod Blagojevich, or any other Illinois citizen, as a ‘nominal’ defendant. It would be different if Budrik were an indispensable party, which is to say a party in whose absence the suit could not proceed. E.g., American National Bank & Trust Co. v. Bailey, 750 F.2d 577, 582 (7th Cir. 1984); Mattel, Inc. v. Bryant, 446 F.3d 1011, 1013-14 (9th Cir. 2006); Salt Lake Tribune Publishing Co. v. AT&T Corp., 320 F.3d 1081, 1095-97 (10th Cir. 2003). He is not.”

“It is true that Budrik, unlike Blagojevich, may have a practical interest in this suit because he is a judgment creditor of Wegman, having yet to be paid the judgment entered against Wegman, which is broke; probably he’ll never be paid unless Wegman replenishes its coffers by winning this suit. That might be a basis for Budrik’s intervening in this litigation, Rosquist v. Soo Line R.R., 692 F.2d 1107, 1110 (7th Cir. 1982); Yates v. Transamerica Ins. Co., 928 F.2d 199, 200 (6th Cir. 1991); Travelers Indemnity Co. v. Dingwell, 884 F.2d 629, 637 (1st Cir. 1989), but if so it would be intervention on the plaintiff side of the litigation, and so would not destroy diversity. Anyway Budrik has not sought to intervene, and has made no appearance either in the district court or in this court.”

Reversed and Remanded.

09-2022 R.G. Wegman Construction Co. v. Admiral Ins. Co.

Appeal from the United States District Court for the Northern District of Illinois, Zagel, J., Posner, J.

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