insurance loss in question. Since it is undisputed that Schaffer was a permanent resident of the
insured location at the time of the loss, defendant concludes that Schaffer is a necessary party to this
action such that this single litigation can bring about complete resolution.

A careful application of the Rule 19(b) factors compels the conclusion that Schaffer is an
indispensable party to this complaint and that this complaint should be dismissed for non-joiner. A
judgment rendered in Schaffer’s absence would be prejudicial to defendant because defendant in its
answer have alleged valid affirmative defenses involving Schaffer as a resident of the insured
location; protective provisions of a possible judgment would not alleviate defendant’s difficulty in
defending this case without Schaffer; defendant could be subject to multiple lawsuits since under the
insurance policy Schaffer could institute an action in Illinois state court; and the plaintiff does have
an adequate remedy if the action is dismissed for non-joinder in the Illinois State court system.

Plaintiff argues that Schaffer is not an insured under the policy and therefore not
indispensable to this action, since Sharon Valentine is the named insured and since this court already
held that Sharon Valentine was the real party in interest. As discussed earlier, in ruling that Sharon
Valentine was the real party in interest, this court ruled upon a motion to dismiss for lack of
jurisdiction, and in ruling on the motion to dismiss, neither side found it necessary to include with
the motion to dismiss a copy of the insurance policy at issue. Accordingly, based solely on the
allegations of the complaint, Sharon Valentine was the only real party in interest at that time.

Now in opposition to the joining Schaffer, plaintiff included a copy of the insurance policy
at issue, after a specific request from this court that a copy be included, and upon review of the
insurance policy at issue, this court finds that Schaffer is an insured under the policy as a permanent

resident of the insured location and therefore an additional real party in interest.


CONCLUSION
For all the reasons stated, this court finds in equity and in good conscience that Schaffer is
an indispensable party to this complaint. Defendant’s motion to add Schaffer is granted and this case
is dismissed with prejudice for non-joinder of a party. All previous dates are stricken, All other

pending motions are moot.

ENTER:

2 err

JAMES F. HOLDERMAN
United States District Judge

DATE: August 16, 2002


interest or leave those already parties to this action subject to a substantial risk of incurring multiple
or inconsistent obligations. Fed.R.Civ.P. 19(a). In reviewing the claims of both sides, this court
finds that Schaffer’s absence subjects defendant to a substantial risk of incurring inconsistent
obligations. As a result, Schaffer should be joined to this lawsuit.

When the joinder of an absent party would destroy diversity jurisdiction, as would be the case
here, Rule 19(a) is inapplicable. Krueger v. Cartwright, 996 F.2d 928, 932 (7th Cir. 1993)(citations
omitted). Under such circumstances, this court must then determine under Rule 19(b) whether, in
equity and good conscience, the action should proceed among the parties before it or should be

dismissed because the absent person is indispensable. Pasco Intern. (London) Ltd. v. Stenograph

Corp., 637 F.2d 496, 500 (7th Cir. 1980). Rule 19(b) sets out four factors to guide this court’s
judgment: (1) to extent to which a judgment rendered in the person’s absence might be prejudicial
to him or those already parties; (2) the extent to which the prejudice can be lessened or avoided by
protective provisions in the judgment, by the shaping of relief, or by other measures; (3) the extent
to which a judgment rendered in the person’s absence will be adequate; and (4) the extent to which
the plaintiff will have an adequate remedy if the action is dismissed for non-joinder.
ANALYSIS

In arguing that Schaffer is an indispensable party, defendant state that the plaintiff sustained
aloss on August 14, 2000, to the subject residence at 12979 Whipple Road and thereafter submitted
a claim to the defendant. During the investigation of the claim, defendant determined that the loss
was caused by an arson fire and assert the affirmative defense that the entire insurance policy is void.
In making its defense, defendants allege that either plaintiff or Schaffer or both knowingly and with

intent to commit fraud concealed or misrepresented material factsor circumstances relating to the


The policy provides: “9. Insured - means you and the following persons if permanent
residents of your household: a. relatives, b. anyone under the age of 21 ...” (Policy, Definitions, p.3
9). It is undisputed in this litigation that Schaffer was a permanent resident of the insured location
12979 Whipple Road, Sycamore, Illinois 60178. The question is whether Schaffer was a member
of the household under the insurance policy. Defendant argues that the term “household” includes
people who live together in the same house at 12979 Whipple Road. Plaintiff argues that the term
“household” means Sharon Valentine’s household specifically and since Sharon Valentine did not
live at 12979 Whipple Road but lived in Texas only those who lived with Sharon Valentine in Texas
can be considered part of her household and thereby insured under the insurance policy. Plaintiff
asserts that since Sharon Valentine and Schaffer were not permanent residents of the same
household, Schaffer cannot be an insured under the insurance policy.

Under Illinois law, a contract is to be construed strictly against the drafter. Liautaud v.

Liautaud, 221 F.3d 981, 986 (7th Cir. 2000)(citations omitted). When a valid contract exists, the

proper interpretation of any disputed terms in that contract is a question of law for the court to

determine. Florida East Coast Ry. Co. v. CSX Transp., Inc., 42 F.3d 1125, 1128 (7th Cir.1994). In

this case, the contract is silent as to the scope of the word “household” because the policy assumes
that the named insured would establish a household at the insured location. Even though, the
contract is silent as to the scope of the word “household,” the term “household” is not ambiguous.
Accordingly, giving clear and unambiguous terms in the contract their ordinary and natural meaning,

CSX Transp., Inc. v. Chicago and North Western Transp. Co.. Inc., 62 F.3d 185, 190 (7th Cir. 1995),

the term “household” appears to mean a collective body of persons residing under one roof. See e.g.,

Neidhoefer_v. Automobile Ins. Co. of Hartford, Conn., 182 F.2d 269, 272 (7th Cir. 1950).



~ AO 450(Rev. 5/85)Judgment in a Civil Case

United States District Court
Northern District of Dlinois

Eastern Division

SCHAFFER JUDGMENT IN A CIVIL CASE
v. Case Number: 02 C 34

ILLINOIS FARMERS INSURANCE

co

0 Jury Verdict. This action came before the Court for a trial by jury. The issues have been
tried and the jury rendered its verdict.

| Decision by Court. This action came to trial or hearing before the Court. The issues
have been tried or heard and a decision has been rendered.

IT IS HEREBY ORDERED AND ADJUDGED that this court finds in equity and in good
conscience that David Schaffer is an indispensable party to this complaint. Defendant’s
motion to add David Schaffer is granted and this case is dismissed with prejudice for non-
joinder of a party. All previously set dates are stricken. All other pending motions are moot.

Michael W. Dobbins, Clerk of Court

Date: 8/16/2002 IL ¢ LK

J. Smith, Peputy Clerk



* Minute Order Form (06/97)

AG | United States District Court, Northern District of Illinois

f Assigned Judge Sitting Judge if Oth
or Magistrate jude . James F. Holderman than Assitned Sedge
CASE NUMBER 02 C34 DATE 8/16/2002
CASE SCHAFFER etc vs. ILLINOIS FARMERS INSURANCE CO
TITLE

of the motion being presented,]

[In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature

CIFRCP4(m) ClLocal Rule 41.1 OFRCP41(a\(1) 4 FRCP41(a)(2).

di) ff [For further detail see order attached to the original minute order.]

MOTION:

DOCKET ENTRY:

ql) oO Filed motion of [ use listing in “Motion” box above.]

(2) o Brief in support of motion due

(3) Qo Answer brief to motion due___. Reply to answer briefdue___.

(4) Oo Ruling/Hearingon___setfor___at

(5) Oo Status hearing[held/continued to] [set for/re-set for]on___setfor__at

(6) o Pretrial conference[held/continued to] [set for/re-set for]on__setfor__—at__
(7) oO Trial[set for/re-set for] on__at

(8) im} [Bench/Jury trial] [Hearing] held/continued to_____at

(9) oO This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

(10) WM [Otherdocketentry] Pursuant to Memorandum Opinion and Order entered this day, this court finds
in equity and in good conscience that David Schaffer is an indispensable party to this complaint.
Defendant’s motion to add David Schaffer is granted and this case is dismissed with prejudice for non-
joinder of a party. All previously set dates are stricken. Al] other pending motions are moot.

No notices required, advised in open court.

No notices required. umber of notices

/ | Notices mailed by judge’s staff.

Notified counsel by telephone. date de

Docketing to mail notices.

Mail AO 450 form.

dockotiggNort
Copy to judge/magistrate judge.
8/16/2002
ate mailed notice
courtroom
Is deputy’s 1s
initials a

ee oy
“Dhheltinte reveived in” 7
central Clerk's Office mailing deputy ntals



According the term “household” its ordinary and natural meaning, however, does not answer the
scope to which the term “household” applies.

Where a contract is silent as one of its terms, the analysis of interpreting a contract begins
with the language of the contract itself. If the language unambiguously answers the question at issue,

the inquiry is over. Emergency Medical Care, Inc. v. Marion Medical Hospital, 94 F.3d 1059,

1060-61 (7th Cir.1996) (citations omitted) (interpreting Illinois law). Accordingly, in reading the
contract as a whole, giving meaning and effect to each provision, in order to derive the intentions
of the parties, see e.g., WCC Funding Ltd. v. GAN International, 871 F.Supp. 1017, 1024
(N.D.I1.1994), it is clear that the intention of the parties was that the defendant would provide
insurance at 12979 Whipple Road which the contract defines as the insured location or the residence
premises, and that the defendant would provide insurance on the resident premises to the named
insured person and to unnamed, unspecified other individuals, if those individuals were permanent
residents and relatives or permanent residents and under the age of 21. Accordingly, this court finds
it illogical, plaintiff s position, that the intention of the parties would be for the defendant to provide
insurance coverage on a Illinois residence to persons who live together in the same house in Texas
if they are related to the insured or under the age of 21. So based on the language of the contract it
must be that the parties fully intended for the defendant to provide insurance coverage for those
persons living permanently at the insured location who were relatives of Sharon Valentine or under
21 years of age. Accordingly, since it is undisputed the Schaffer was a Sharon Valentine’s son and
made his permanent residence at 12979 Whipple Road, this court finds Schaffer an insured under

the policy and thereby an indispensable party to this litigation.


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
)
MARK SCHAFFER, as Independent )
Administrator of the Estate of )
SHARON FAYE VALENTINE )
)
Plaintiff, ) No. 02 C 034
)
v. )
)
ILLINOIS FARMERS INSURANCE ) DOCKETED
COMPANY, ) AUG 1 9 2002
)
Defendant. )
)

MEMORANDUM OPINION AND ORDER

JAMES F. HOLDERMAN, District Judge:

On January 2, 2002, plaintiff Mark Schaffer, independent administrator of the estate of
Sharon Faye Valentine, filed a two-count complaint against defendant Illinois Farmers’ Insurance
Company. On July 9, 2002, defendant filed this motion to add David A. Schaffer (“Schaffer”) as
a necessary party pursuant to Federal Rule of Civil Procedure 19. For the following reasons, this
court finds Schaffer to be an indispensable party. Joining Schaffer to this action, however, would
deprive this court of subject-matter jurisdiction. Accordingly, pursuant to Federal Rule of Civil
Procedure 12(b)(7), this case is dismissed for failure to join a party under Rule 19.

PROCEDURAL BACKGROUND
The alleged failure of defendant to fulfill its contractual obligations under an insurance policy

is at the center of this controversy. Count I of the complaint properly alleges a claim for breach of

SO


an insurance contract in an amount in excess of $75,000. Count II of the complaint asks for attorney
fees and other taxable costs under section 155 of the Illinois Insurance Code. On July 9, 2002,
defendant filed a motion to dismiss the complaint for lack of diversity jurisdiction pursuant to
Federal Rule of Civil Procedure 12(b)(1).

In the motion to dismiss, defendant argued that this court lacked diversity jurisdiction
because Schaffer, Sharon Valentine’s son and a resident of Illinois, should be a party to this suit as
the true and real party in interest. Defendant argued that Schaffer is the real party in interest because
he occupied the insured residence 12979 Whipple Road, Sycamore, Illinois 60178 for approximately
eighteen months during which time he paid the mortgage and tax payments, made repairs to the
residence, considered the residence as his own and intended to purchase the residence at some time
in the future. In making that argument, however, defendant failed to cite any legal authority
establishing that a real party in interest under an insurance policy is defined by occupancy of the
insured residence in lieu of the named individual party to the insurance contract. Since the general
rule is that the citizenship of the real party in interest is determinative in deciding whether the district

court has diversity jurisdiction, Betar v. De Havilland Aircraft of Canada, Ltd., 603 F.2d 30, 32 (7th

Cir. 1979), and since the residence insured by the policy in question was owned by and insured under
the name of Sharon Valentine, this court denied defendant’s motion to dismiss for lack of
jurisdiction.
STANDARD OF REVIEW
Rule 19(a) lists the criteria for determining whether an absent party should be joined if
feasible. Schaffer is such a party if(1) the court cannot accord complete relief to those already parties

or (2) disposition of this action will as a practical matter impair Schaffer’s ability to protect his