UNITED STATES DISTRICT COURT FOR THE 

DISTRICT OF NEW HAMPSHIRE

James and Sue Scott, and

Stephen and Ellen St. Louis

v. Civil No. 06-cv-286-JD

Opinion No. 2007 DNH 062

First American Title

Insurance Company

O R D E R

James and Sue Scott and Stephen and Ellen St. Louis bring

claims against First American Title Insurance Company, on their

own behalf and on behalf of a putative class, alleging breach of

the duty of good faith and fair dealing and unjust enrichment. 

First American moves to dismiss on the ground that its agents,

Advantage Title Services, Inc., and Caruso & Caruso, are

indispensable parties. The plaintiffs oppose the motion.

Standard of Review

A defendant may move to dismiss a case for nonjoinder of

indispensable parties. 28 U.S.C. § 12(b)(7). Dismissal for

nonjoinder is appropriate only if the outsider is both necessary

to the case under Federal Rule of Civil Procedure 19(a) and

indispensable under Rule 19(b). United States v. San Juan Bay

Marina, 239 F.3d 400, 405 (1st Cir. 2001). When deciding a §

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12(b)(7) motion, the court must initially accept the allegations

in the complaint as true but may also consider extrinsic evidence

submitted by the parties. Davis Cos. v. Emerald Casino, Inc.,

268 F.3d 477, 479-80 (7th Cir. 2001); Raytheon Co. v. Cont’l Cas.

Co., 123 F. Supp. 2d 22, 32 (D. Mass. 2000). The defendant bears

the burden of showing that the plaintiff failed to join a

necessary and indispensable party. Lenon v. St. Paul Mercury

Ins. Co., 136 F.3d 1365, 1372 (10th Cir. 1998); Ilan-Gat Eng’rs,

Ltd. v. Antigua Int’l Bank, 659 F.2d 234, 242 (D.C. Cir. 1981). 

Background

In this case, the plaintiffs allege that James and Sue Scott

bought a home in 1999 with a mortgage issued by Ameriquest

Mortgage Company, which was covered by title insurance with

Ameriquest named as the insured. The Scotts refinanced in 2003

and purchased First American title insurance for that mortgage

through First American’s agent, Advantage. The title insurance

on the refinanced mortgage was sold at the standard rate. 

Stephen and Ellen St. Louis also had a mortgage, covered by

title insurance, which they refinanced in 2003 and again in 2004. 

In each case, the St. Louises bought title insurance, with their

lender named as the insured. In the refinancing transaction in

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1As is noted below, the court need not address the issue of

indispensable parties and, therefore, does not address the

plaintiffs’ questionable assertion that this case is based on

federal question jurisdiction through the Class Action Fairness

Act.

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2004, First American’s agent, Caruso, sold the title insurance at

the standard rate. 

Discussion

The plaintiffs allege that First American breached the

implied duty of good faith and fair dealing and was unjustly

enriched because their title insurance was sold at the standard

rate rather than the lower reissue rate. First American contends

that Advantage and Caruso are necessary parties in this case

because the plaintiffs’ claims are based on the actions of

Advantage and Caruso. First American then asserts that Advantage

and Caruso are indispensable because their joinder would destroy

complete diversity of citizenship as required by 28 U.S.C. §

1332. The plaintiffs contest both elements of Rule 19.1

A necessary party is one whose absence will prevent complete

relief among the current parties or who “claims an interest

relating to the subject of the action and is so situated that the

disposition of the action in the person’s absence may (i) as a

practical matter impair or impede the person’s ability to protect

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that interest or (ii) leave any of the persons already parties

subject to a substantial risk of incurring double, multiple, or

otherwise inconsistent obligations by reason of the claimed

interest.” Fed. R. Civ. P. 19(a). First American asserts that

without joinder of Advantage and Caruso “complete relief

certainly cannot be granted.” Motion at 4. First American also

asserts that without joinder, the plaintiffs could bring claims

in state court against Advantage and Caruso “and possibly subject

First American to inconsistent liability.” Id.

In support of its Rule 19 theory, First American relies

heavily on an unpublished disposition, Z & B Enters., Inc. v.

Tastee-Freez Int’l, Inc., 2006 WL 123775 (1st Cir. Jan. 18,

2006). In that case, the plaintiffs sued Tastee-Freez after

purchasing a franchise that did not work out as expected. Id. at

*1. The plaintiffs purchased the franchise from “JF” under a

contract between them, and never signed a franchise agreement

with Tastee-Freez. Id. The plaintiffs also entered a contract

related to the franchise with “ATF.”

When the franchise failed, the plaintiffs brought suit

against JF and ATF in state court, and at the same time sued

Tastee-Freez in federal court. Id. In federal court, the

plaintiffs alleged claims against Tastee-Freez based on

derivative liability for the actions of JF and ATF and on the

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indemnity provision in the franchise agreement that the

plaintiffs never signed. Id. The plaintiffs also sought

rescission of their contracts with JF and ATF. The district

court concluded that JF and ATF were indispensable parties and

dismissed the case. 

On appeal, the First Circuit concluded that JF and ATF were

necessary parties under Rule 19(a) because the plaintiffs were

seeking rescission of their contracts with JF and ATF, which

relief could not be granted in their absence. The court also

concluded that the plaintiffs’ federal claims in combination with

their state court suit against JF and ATF could subject TasteeFreez to inconsistent liability or double obligations. Id. at

*2. Dismissal of the case based on Rule 19(b) was affirmed.

As an initial matter, First American failed to note that

“[w]hile an unpublished opinion of [the First Circuit] may be

cited . . . , a panel’s decision to issue an unpublished opinion

means that the panel sees no precedential value in that opinion.” 

1st Cir. R. 36.0(c). Therefore, the Tastee-Freez opinion carries

little or no weight in deciding matters in this case. See In re

Merrimac Paper Co., Inc., 420 F.3d 53, 60 (1st Cir. 2005).

 In addition, First American misunderstands the basis for

the court’s conclusion in Tastee-Freez. Before addressing the

merits of the Rule 19 issue, the First Circuit considered “the

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relationships between the present and absent parties, and

Plaintiffs’ theories for imposing liability upon [Tastee-Freez]

for the actions of its alleged agents.” Id. at 3. The court

noted that while JF and ATF were responsible for most of the

actions that formed the basis of the plaintiffs’ claims against

Tastee-Freez, the plaintiffs had failed to show that JF and ATF

were acting as Tastee-Freez’s agents. The court also noted that

the plaintiffs claimed that Tastee-Freez’s liability arose from

an indemnity provision in the franchise agreement, which did not

apply to the plaintiffs who had not signed a franchise agreement,

but could obligate Tastee-Freez to indemnify JF under the

franchise agreement between them. 

In applying Rule 19(a), the First Circuit concluded that JF

and ATF were necessary parties because of the plaintiffs’ claim

for contract rescission could not be completely resolved without

them and because of the implications of the indemnity provision. 

The court did not find, as First American represents, that JF and

ATF were necessary parties because they were Tastee-Freez’s

agents and were responsible for the actions that formed the basis

of the plaintiffs’ claims. 

In this case, First American does not dispute that Advantage

and Caruso were acting as its agents in the challenged

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2It is established in New Hampshire, “that the insurance

agent’s acts are imputed to the insurer to the extent permitted

by common law, and the insurer is bound by those acts.” Hodge v.

Allstate Ins. Co., 130 N.H. 743, 745 (1988).

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transactions with the Scotts and St. Louises.2 The plaintiffs do

not seek rescission of agreements with Advantage and Caruso. No

parallel action is pending in state court. Further, First

American has not suggested that the plaintiffs’ claims are based

on contract provisions that would raise obligations owed by

Advantage or Caruso to First American, or vice versa. Therefore,

the analysis in the Tastee-Freez case is inapposite here.

First American also asserts that the plaintiffs’ good faith

and fair dealing claim raises issues that can only be resolved by

including its agents as parties. In support of that theory,

First American argues that because the agents sold the insurance

to the plaintiffs they are responsible for any breach of the duty

of good faith and fair dealing. Although the argument is

difficult to follow, First American appears to contend that

because its agents’ actions caused the alleged breach, they must

be parties. That argument ignores the doctrine of vicarious

liability. To the extent First American argues that adjudication

of the claim could cause harm to Advantage and Caruso based on

evidence of their alleged misconduct, that is an insufficient

basis for finding them to be necessary parties. See Pujol v.

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Shearson/Am. Express, Inc., 877 F.2d 132, 136-37 (1st Cir. 1989). 

In addition, because discovery is available from third parties,

such as Advantage and Caruso, it is not necessary to join them as

parties to obtain information material to the case from them. 

See John Carr Powers v. City of Seattle, --- F.3d ---, 2007 WL

1140426 at *2 (W.D. Wash. Apr. 16, 2007). 

First American contends that the agents are necessary to the

unjust enrichment claim because they calculated the premiums that

were charged, had “first hand knowledge of the alleged

overcharge,” and retained most of the premiums. The agents’

involvement in the transactions does not demonstrate that

complete relief cannot be granted between the present parties or

that the agents have an interest in the litigation that requires

their participation as parties. See Fed. R. Civ. P. 19(a);

Pujol, 877 F.3d at 126-37. Again, the agents’ involvement in and

knowledge of circumstances that are the basis for the claims in

this case are matters for discovery not joinder.

Because First American has not shown that Advantage and

Caruso are necessary parties, there is no need to address the

indispensable party analysis under Rule 19(b).

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Conclusion

For the foregoing reasons, the defendant’s motion to dismiss

(document no. 42) is denied.

SO ORDERED.

____________________________

Joseph A. DiClerico, Jr.

United States District Judge

May 3, 2007

cc: Christopher D. Baucom, Esquire

Elizabeth T. Ferrick, Esquire

Wilbur A. Glahn, III, Esquire

Douglas W. King, Esquire

Charles A. Newman, Esquire

Edward K. O'Brien, Esquire

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