Court Opinion

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Opinions of the United
2007 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

8-28-2007

Gen Refractories Co v. First State Ins Co
Precedential or Non-Precedential: Precedential

Docket No. 05-4708

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                                        PRECEDENTIAL

          UNITED STATES COURT OF APPEALS
               FOR THE THIRD CIRCUIT

                         No. 05-4708

          GENERAL REFRACTORIES COMPANY,

                                                Appellant

                              v.

   FIRST STATE INSURANCE CO.; WESTPORT INSURANCE
     CORPORATION, SUCCESSOR TO, OR formerly known as
               PURITAN INSURANCE COMPANY;
      LEXINGTON INSURANCE COMPANY; CENTENNIAL
    INSURANCE COMPANY; GRANITE STATE INSURANCE
        COMPANY; POTOMAC INSURANCE COMPANY
   OF ILLINOIS; HARTFORD ACCIDENT & INDEMNITY CO.;
  GOVERNMENT EMPLOYEES INSURANCE CO.; REPUBLIC
      INSURANCE CO.; SENTRY INSURANCE COMPANY,
       SUCCESSOR TO, OR formerly known as VANLINER
  INSURANCE COMPANY formerly known as GREAT SW FIRE
INSURANCE CO.; AMERICAN INTERNATIONAL INS. CO.; AIU
 INSURANCE COMPANY; HARBOR INSURANCE COMPANY;
   ST. PAUL TRAVELERS CO., SUCCESSOR TO, OR formerly
      known as AETNA CASUALTY & SURETY COMPANY;
   AMERICAN EMPIRE INSURANCE CO.; ACE USA INC., AS
 SUCCESSOR TO INTERNATIONAL INSURANCE COMPANY

        On Appeal from the United States District Court
           for the Eastern District of Pennsylvania
                   (D.C. Civ. No. 04-3509)
         Honorable Edmund V. Ludwig, District Judge

                    Argued June 14, 2007

          BEFORE: FUENTES, GREENBERG and
               NYGAARD, Circuit Judges

                              1
                      (Filed: August 28, 2007)

Barry L. Katz (Argued)
225 City Avenue, Suite 14
Bala Cynwyd, PA 19004

   Attorney for Appellant General Refractories Co.

John N. Ellison
Michael Conley (Argued)
Jocelyn A. Gabrynowicz
Anderson Kill & Olick, P.C.
1600 Market Street, Suite 2500
Philadelphia, PA 19103

Amy Bach
42 Miller Ave.,
Mill Valley, CA 94941

   Attorneys for Amicus Curiae United Policyholders
   in support of General Refractories Co.

Francis P. Maneri (Argued)
Dilworth Paxson LLP
3200 Mellon Bank Center
1735 Market Street
Philadelphia, PA 19103-7595

   Attorneys for Appellee Westport Insurance Corp.
   (successor to Puritan Insurance Co.)

Paul M. Hummer
Joseph Monahan
Saul Ewing LLP
Centre Square West
1500 Market Street, 38th Floor
Philadelphia, PA 19102-2186

   Attorneys for Appellee American Empire
   Surplus Lines Insurance Company

Marc P. Gorfinkel

                                 2
Rivkin Radler, LLP
926 RexCorp Plaza
Uniondale, NY 11556-0926

Wendy H. Koch
Koch & Corboy
101 Greenwood Avenue
Suite 460
Jenkintown Plaza, PA 19046

   Attorneys for Appellee Sentry Insurance Co.

Cynthia Ruggerio
Christie, Pabarue, Mortensen & Young
1880 John F. Kennedy Boulevard, 10th Floor
Philadelphia, PA 19103

   Attorneys for Appellee One Beacon America Insurance
   Company, as successor in interest to Potomac
   Insurance Company (improperly identified as
   Potomac Insurance Company of Illinois)

Kevin E. Wolff
Karen H. Moriarty
Couglin Duffy, LLP
350 Mount Kemble Avenue
Morristown, NJ 07962-1917

   Attorneys for Appellee Centennial Insurance Company

                     OPINION OF THE COURT

GREENBERG, Circuit Judge.

                         I. INTRODUCTION

       Plaintiff General Refractories Company (“GRC”) appeals
from the district court’s dismissal of its declaratory judgment and

                                   3
breach of contract action against 16 defendant insurance companies1
for failure to join parties as defendants pursuant to Federal Rule of
Civil Procedure 12(b)(7). In particular, it asks us to consider whether
the district court erred in determining that various insurers GRC did
not name in its complaint as defendants, i.e., the absent insurers, were
both “necessary” and “indispensable” to this action as Federal Rule of
Civil Procedure 19 defines those terms. For the reasons that follow,
we conclude that they were neither, and, accordingly, we will reverse.

            II. FACTS AND PROCEDURAL HISTORY

       GRC is a manufacturer, distributor, and seller of asbestos-

       1
        In its complaint GRC named as defendants the following 16
insurance companies: First State Insurance Co. (i/c/o Hartford Accident
& Indemnity Co.); Westport Insurance Co. (f/k/a Puritan Insurance Co.);
Lexington Insurance Co.; Centennial Insurance Co.; Granite State
Insurance Co.; Potomac Insurance Co. of Illinois; Hartford Accident and
Indemnity Co.; Government Employees Insurance Co.; Republic
Insurance Co.; Sentry Insurance Co. (f/k/a Vanliner Insurance Co. and
Great Southwest Fire Insurance Co.); American International Insurance
Co.; AIU Insurance Co.; Harbor Insurance Co.; St. Paul Travelers (f/k/a
Aetna Casualty & Surety Co.); American Empire Insurance Co.; and
ACE USA (as successor to International Insurance Co.). J.A. at 59a-
61a.

        In its brief before this court, defendants make a distinction
between “certain defendants” (i.e., those defendants responding to
GRC’s appeal) and “defendants” generally (i.e., those defendants named
by GRC in its complaint). The term “certain defendants” is defined as
including: Puritan Insurance Co. (n/k/a Westport Insurance Corp.);
OneBeacon America Insurance Co. (successor-in-interest to Potomac
Insurance Co., which company is identified by appellants as Potomac
Insurance Co. of Illinois); Sentry Insurance Co.; Centennial Insurance
Co.; and American Empire Surplus Lines Insurance Co. Appellees’ br.
at 1 n.1. We nevertheless regard all defendants as appellees as the
district court dismissed the action as to all of them, though we
sometimes use the term “defendants” as including only the appellees
participating in this appeal. The context makes clear how we are using
the term.

                                   4
containing products that plaintiffs have named as a defendant in
thousands of asbestos-related lawsuits filed throughout the United
States in both state and federal courts. GRC maintains that from 1979
to 1986, it purchased excess and umbrella liability insurance policies
from either defendants or their predecessors-in-interest.2
Notwithstanding its acquisition of these policies, GRC’s attempts to
obtain coverage from defendants for asbestos claims filed against it
have met with little success thus far.3 See Gen. Refractories Co. v.
First State Ins. Co. (“GRC”), 234 F.R.D. 99, 100 (E.D. Pa. 2005)
(“Plaintiff submitted these claims to its comprehensive general
liability insurers, which tendered defenses and indemnification until
their policy limits were exhausted. On one basis or another, all of
defendants’ policies purport to exclude asbestos-related personal
injury claims; and defendants denied coverage.”) (internal citations
omitted).

         On July 23, 2004, GRC filed a two-count complaint in the
district court against defendants. First, GRC sought a declaratory
judgment “that any asbestos-related exclusions in [defendants’]
Policies [we]re invalid and unenforceable” and that defendants were
required “to pay for GRC’s defense of the Underlying Actions, and to
reimburse GRC for, or pay on behalf of GRC, any and all judgments
or settlements reached in the Underlying Actions, until such time as
the total aggregate limits of each of the foregoing insurance policies
have been exhausted.” J.A. at 69-70. Second, GRC stated a breach of
contract claim, alleging that defendants had “refused to honor their
obligations to provide GRC with a defense or indemnification in and
for the Underlying Actions” and seeking, among other things, “[t]he
entry of an award requiring the Defendants to pay GRC all monetary
damages suffered by GRC caused by their breaches, including,
without limitation, compensatory damages, consequential damages,
prejudgment interest, post-judgment interest, and attorneys’ fees and
costs.” Id. at 70-71. It is undisputed that GRC expressly chose not to
name all of the insurers that provided it with coverage because it
believed that some of the policies were subject to releases, their limits

       2
       Excess insurers are those who contract to provide coverage only
when the amount of the claim is beyond that of a primary insurer.
       3
         It appears GRC did not seek coverage from its excess and
umbrella insurers until after it had exhausted its coverage under those
policies not containing asbestos-related exclusions. See Appellant’s br.
at 3 & n.1.

                                   5
had been exhausted, or the insurers who had issued the policies were
insolvent or non-diverse from GRC.4

        After GRC filed its complaint, five of the 16 excess and
umbrella insurance companies named as defendants moved to dismiss
the same pursuant to Federal Rule of Civil Procedure 12(b)(7) for
failure to join indispensable parties under Federal Rule of Civil
Procedure 19. Defendants predicated their motions on the theory that
GRC had failed to name all of the excess and umbrella insurers that
had provided it with coverage from 1979 to 1986, and that these
absent insurers were indispensable to the action.5 Significantly, if
GRC had joined the absent insurers in the action, the district court
would not have had subject matter jurisdiction as some of these
insurers were non-diverse.

        The district court agreed with defendants in an order issued
September 27, 2005. In the order the court reached two particularly
significant conclusions for present purposes: First, insofar as GRC
acknowledged that “at least one of the policies in dispute follows
form to a policy issued by an Absent Insurer [i.e., Century Indemnity
Co.],” the court concluded that the absent insurer was a “necessary”
party under Rule 19(a).6 GRC, 234 F.R.D. at 101. The court went on
to observe that:

       4
         GRC subsequently, without objection from defendants, obtained
an order of the district court dismissing one named defendant on grounds
that it was non-diverse.
       5
          The district court listed the following companies as “absent
insurers”: National Union Fire Insurance Co. of Pittsburgh; The
American Insurance Co.; California Union Insurance Co.; Granite State
Insurance Co.; Mission Insurance Co.; Old Republic Insurance Co.;
Century Indemnity Co.; Insurance Co. of the State of Pennsylvania;
American Centennial Insurance Co.; and The Protective National
Insurance Co. of Omaha. GRC, 234 F.R.D. at 101 n.2. According to the
district court, “[t]he extent of the Absent Insurers’ coverage is as much
as $155 million; the named defendants, as much as $221 million.” Id.
       6
         Specifically, the district court cited GRC’s acknowledgment that
a policy issued by Great Southwest Fire Insurance Co. followed form to
a policy issued by Lexington Insurance Co., which, in turn, followed
form to a policy issued by Century Indemnity Co. GRC, 234 F.R.D. at
101 n.7.

                                   6
       Without the Absent Insurers, it is highly unlikely that a
       judgment could be fashioned that would not be either
       unduly favorable or prejudicial to . . . some of the other
       parties. It is also unlikely that a plaintiff’s award
       would be adequate if rendered against fewer than all
       potentially responsible insurers. No shaping of the
       judgment could avoid these coverage issue
       possibilities.

Id. at 102. Accordingly, the court found that all the absent insurers,
rather than just Century Indemnity Co., were “indispensable” parties
under Rule 19(b). Id. The court thus dismissed GRC’s complaint as
joining the absent insurers would destroy diversity of citizenship
jurisdiction. It indicated, however, that GRC could refile the action in
state court “where all defendants may be joined in one action and
complete relief afforded.” Id. GRC moved for reconsideration of that
order, but the court denied that motion on October 27, 2005. GRC
has appealed from these two orders.

                         III. JURISDICTION

         The district court had diversity of citizenship jurisdiction over
this declaratory judgment and breach of contract action pursuant to 28
U.S.C. § 1332. We have jurisdiction over the final order of the
district court dismissing GRC’s complaint and the order denying
reconsideration of that order pursuant to 28 U.S.C. § 1291.

        To the extent that the district court premised its Rule 19(a)
determination that the absent insurers’ joinder was necessary on a
conclusion of law, our review is plenary. Janney Montgomery Scott,
Inc. v. Shepard Niles, Inc., 11 F.3d 399, 404 (3d Cir. 1993). By
contrast, we would review any subsidiary findings of fact for clear
error only. Id.7 Our review of the district court’s Rule 19(b)
determination that the absent insurers were indispensable, and
dismissal is required because their joinder would destroy subject

       7
         We note, however, that we are not reaching our result by
rejecting the findings of historical facts underlying the district court’s
order of dismissal or order denying reconsideration. Thus, our opinion
depends on our conclusions of law rather than on the resolution of
disputed findings of fact.

                                    7
matter jurisdiction in diversity, is for abuse of discretion. Id. at 403;
see also Koppers Co. v. Aetna Cas. & Sur. Co., 158 F.3d 170, 174 (3d
Cir. 1998).

                           IV. DISCUSSION

         Federal Rule of Civil Procedure 19 specifies the circumstances
in which the joinder of a particular party is compulsory. In reviewing
the district court’s conclusion in this regard, we first must determine
whether the absent insurers should be joined as “necessary” parties
under Rule 19(a). If they should be joined, but their joinder is not
feasible inasmuch as it would defeat diversity of citizenship (as would
be the case here), we next must determine whether the absent parties
are “indispensable” under Rule 19(b).8 Should we answer this
question in the affirmative, the action cannot go forward. Janney
Montgomery Scott, 11 F.3d at 404 (citing Bank of Am. Nat’l Trust &
Sav. Ass’n v. Hotel Rittenhouse Assocs., 844 F.2d 1050, 1053-54 (3d
Cir. 1988)). Relatedly, should we decide that the district court erred
in its conclusion that the absent insurers were “necessary” parties
under Rule 19(a), we need not reach or decide the question of whether
it abused its discretion by holding the absent insurers were
“indispensable” under Rule 19(b), though we are not precluded from
doing so to reach an alternative basis for our result. Id.

       A. Rule 19(a)

       Under Rule 19(a), the joinder of parties is compulsory or
“necessary” if their joinder is “feasible.” Specifically, the rule states
in material part:

       A person who is subject to service of process and
       whose joinder will not deprive the court of jurisdiction
       over the subject matter of the action shall be joined as
       a party in the action if (1) in the person’s absence
       complete relief cannot be accorded among those

       8
         We note that GRC did not join insurers who were insolvent or
whose policies had been exhausted. GRC should be commended for
omitting them as a plaintiff should not make a person a party to a
lawsuit, and thereby require it to incur defense expenses, unless there is
a good reason to do so.

                                    8
        already parties, or (2) the person 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 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.

Courts treat clauses (1) and (2) in the disjunctive just as the rule
phrases them. See Koppers, 158 F.3d at 175 (“As Rule 19(a) is stated
in the disjunctive, if either subsection is satisfied, the absent party is a
necessary party that should be joined if possible.”). Additionally, and
as we discussed above, a holding that joinder is compulsory under
Rule 19(a) is a necessary predicate to a district court’s discretionary
determination under Rule 19(b) that it must dismiss a case because
joinder is not feasible (i.e., will defeat diversity) and the party is
indispensable to the just resolution of the controversy. See Janney
Montgomery Scott, 11 F.3d at 405.

                1. Rule 19(a)(1)

        Under Rule 19(a)(1) we ask whether complete relief may be
accorded to those persons named as parties to the action in the
absence of any unjoined parties. As should be apparent, we
necessarily limit our Rule 19(a)(1) inquiry to whether the district
court can grant complete relief to persons already named as parties to
the action; what effect a decision may have on absent parties is
immaterial. Angst v. Royal Maccabees Life Ins. Co., 77 F.3d 701,
705 (3d Cir. 1996) (“Completeness is determined on the basis of those
persons who are already parties, and not as between a party and the
absent person whose joinder is sought.”); Janney Montgomery Scott,
11 F.3d at 405 (same).

        The district court, relying on Gould, Inc. v. Arkwright Mutual
Insurance Co., No. 3 CV-92-403, 1995 WL 807071 (M.D. Pa. Nov. 8,
1995), found that because “at least one of the policies in dispute
follows form to a policy issued by an Absent Insurer [i.e., Century
Indemnity Co.],” it was necessary to determine whether that absent
insurer “or any other” absent insurer was indispensable under Rule
19(b). GRC, 234 F.R.D. at 101. We hold that the court erred in its

                                     9
conclusion.9

         Pennsylvania law, which the parties agree governs the
substantive aspects of this action to the extent of establishing the
scope of defendants’ liability, plainly holds that once multiple
policies have been triggered for an indivisible loss (as is the case
here), the insured is “free to select the policy or policies under which
it is to be indemnified.” J.H. France Refractories Co. v. Allstate Ins.
Co., 626 A.2d 502, 508 (Pa. 1993) (determining whether various
insurance companies were liable for the defense and indemnification
of an insured for asbestos-related claims and, if so, how that liability
should be apportioned). Further, “[w]hen the policy limits of a given
insurer are exhausted,” the insured “is entitled to seek indemnification
from any of the remaining insurers which was on the risk.” Id.
Cognizant of insurers’ fear that a single company might be “stuck”
with full liability for an injury, the Pennsylvania Supreme Court
added that its opinion “does not alter the rules of contribution or the
provisions of ‘other insurance’ clauses in the applicable policies.
There is no bar against an insurer obtaining a share of indemnification
or defense costs from other insurers under ‘other insurance’ clauses or
under the equitable doctrine of contribution.” Id. Given these legal
precepts, there can be no doubt that, as in J.H. France, liability for
coverage in the instant matter is similarly joint and several. See also
Koppers Co. v. Aetna Cas. & Sur. Co., 98 F.3d 1440, 1449 (3d Cir.
1996) (noting that in J.H. France the Pennsylvania Supreme Court
held that “the insurers whose coverage had been triggered were
jointly and severally liable for the full amount of the claim up to
policy limits, and . . . the insured was entitled to select the policy or
policies under which it would be indemnified”).

        We have recognized that where liability is joint and several
among multiple parties, a court may grant complete relief with respect
to any one of them subject, of course, to policy limits. Janney
Montgomery Scott, 11 F.3d at 406 (citing cases for proposition that
where liability is joint and several, a plaintiff may sue them separately
in federal court). Accordingly, it follows that the absent insurers

        9
         In its order, the district court did not indicate the subsection of
Rule 19(a) on which it based its conclusion that either Century
Indemnity Co. or any of the other absent insurers were “necessary”
parties to this action. GRC, 234 F.R.D. at 101. The court’s reliance on
Gould provides no further illumination on the matter. See 1995 WL
807071, at *3-4. We thus consider each of the subsections in turn.

                                    10
generally, and Century Indemnity Co. in particular, are not
“necessary” parties under subsection (a)(1) of Rule 19 as the court
can grant complete relief to GRC from any insurer it named as a party
to this action.10 See id.; see also UTI Corp. v. Fireman’s Fund Ins.
Co., 896 F. Supp. 389, 393 (D.N.J. 1995) (noting “where liability is
several, complete relief may be granted in a suit against any one of
the severally liable parties”).

         Defendants rely on a district court’s decision in City of
Littleton v. Commercial Union Assurance Cos., 133 F.R.D. 159 (D.
Colo. 1990), to support their argument, but that case is not
inconsistent with our conclusion that GRC may obtain complete relief
in this case without the joinder of the absent insurers.11 In City of
Littleton the plaintiffs sued one of their primary insurance carriers as
well as two excess insurance carriers, seeking coverage for potential
hazardous waste cleanup liability. The defendants moved to dismiss
the complaint, alleging that two of the plaintiffs’ primary insurance
carriers not named to the suit were “indispensable” parties under Rule
19. In conducting its Rule 19(a)(1) analysis, the district court agreed
that, at least with respect to the excess insurers, the absent primary
insurers were “necessary” parties to the suit as otherwise it could not
accord complete relief to the plaintiffs. Id. at 163.

        In particular, the City of Littleton court deemed significant the
circumstances that (1) the liability of at least one excess insurer was
dependent upon a determination of whether the absent primary
insurers’ policies provided coverage; (2) one of the excess insurer’s
policy provisions could not be triggered until the obligations of all the
primary insurers had been determined; and (3) one of the plaintiffs

       10
         Notably, neither side disputes that at least some of the policies
issued by defendants in GRC’s complaint do not follow form to those of
the absent insurers. See appellees’ br. at 5 (“A number of the insurers
that GRC named as defendants provided coverage that either follows
form to, or otherwise refers to definitions, terms and conditions of one
or more of these absent underlying policies.”) (emphasis added). Given
the rules of joint and several liability, regardless of what the district
court believed with respect to Century Indemnity Co., it is difficult to
understand why the court did not hold that at least these other parties
were not “necessary” under Rule 19(a)(1).
       11
         Of course, City of Littleton would not bind us even if it
involved a situation not distinguishable from that at issue here.

                                   11
purportedly was breaching a contract provision by failing to proceed
against all primary carriers.12 Id. Accordingly, the court concluded
that issuance of a declaratory judgment would fail to dispose of the
controversy and would not serve a useful purpose. Id. On this point,
it explained that:

        Although I could construe the absent insurers’ policies,
        any declaration on [their] liability would not bind
        them, the plaintiffs or the named defendants. Thus, the
        finality of any judgment as to the excess insurers’
        liability would be entirely contingent on judgment in a
        necessary, parallel state court suit between the
        plaintiffs and the absent insurers. The present
        defendants likely would be joined in that suit in which
        issues identical to those presented here would be
        considered. In a Rule 19(a)(1) inquiry, I must consider
        the public’s interest in avoiding repeated lawsuits on
        the same subject matter. . . . No useful purpose would
        be served by a partial judgment when there is a
        substantial risk of duplicative litigation.

Id. (citations omitted).

        To be sure, in making its analysis under Rule 19(a)(1), a court
should consider the interests of “the public in avoiding repeated
lawsuits on the same essential subject matter.” Fed. R. Civ. P. 19
advisory committee’s notes. Rule 19(a)(1), however, similarly
“stresses the desirability of joining those persons in whose absence
the court would be obliged to grant partial or ‘hollow’ rather than
complete relief to the parties before the court.” Id. In this case,
considering Pennsylvania’s joint and several liability rules which
supply the governing substantive law, GRC’s failure to name the
absent insurers to its suit plainly will not result in it obtaining
“partial” or “hollow” relief if it is successful in its suit. See Janney
Montgomery Scott, 11 F.3d at 406 (recognizing that where liability is
joint and several among multiple parties, complete relief may be
granted with respect to any one of them). To this end, the advisory

        12
         Although the district court focused on a policy issued by
American Excess Insurance Company in its analysis, it observed that the
policy of Granite State Insurance Company (the other excess carrier
named as a defendant in the action) “similarly conditions coverage.”
City of Littleton, 133 F.R.D. at 163.

                                   12
committee’s notes to Rule 19 “note[] particularly” that “the
description [of persons to be joined under subdivision (a)] is not at
variance with the settled authorities holding that a tortfeasor with the
usual ‘joint-and-several’ liability is merely a permissive party to an
action against another with like liability.” Fed. R. Civ. P. 19 advisory
committee’s notes (internal citation omitted). The fact that the public
might be subject to “repeated suits on the same subject matter” thus
poses no bar to our conclusion that the absent insurers are not
“necessary” parties to this case under Rule 19(a)(1).13

        Finally, defendants express some concern that because GRC
has failed to produce proof that it has exhausted the absent underlying
insurance policies, they would be prejudiced if the action were to
proceed. See Gould, 1995 WL 807071, at *1, 4 (finding plaintiff
could proceed against its excess insurance carriers only if the policy
limits of its absent underlying insurance carrier had been exhausted
and, thus, that the absent underlying insurance carrier was a necessary
party under Rule 19(a)). Our holding in Koppers, 158 F.3d 170,
which is binding precedent, and which we decided after Gould, which
is not binding precedent, makes clear that defendants’ concerns are
largely unfounded.

        In Koppers, we considered whether INA, a non-diverse excess
insurer, was a necessary and indispensable party to an action brought
by the appellant, Koppers, against the appellees, certain underwriters
from Lloyd’s of London and certain London market insurance
companies (the “London Insurers”), under Rule 19. The London
Insurers urged that we answer this question in the affirmative, arguing

       13
          We also point out that it would be completely speculative to
conclude that GRC ever will bring additional coverage actions similar
to that here. At the very least, the parties’ briefs do not indicate that
GRC has such an action pending although they do reference earlier
actions GRC brought seeking coverage. GRC indicates, however, that
the policies involved in those cases did not have “asbestos-related
exclusions.” Appellant’s br. at 3 n.1. In any event, given Vale
Chemical Co. v. Hartford Accident & Indemnity Co., 516 A.2d 684 (Pa.
1986), a case we discuss below, we do not believe that there is any
chance that GRC would sue the defendants here and the non-diverse
Pennsylvania absent insurers in the Pennsylvania state courts seeking
similar relief. Indeed, it appears that if we affirm, GRC’s opportunity
to assert that it is entitled to recover from any of the defendants will be
gone forever.

                                    13
they could not be held “liable to pay on their excess policies unless
and until the underlying insurers–including INA–have paid or have
been held liable to pay the full amount of their underlying policies.”
Id. at 174. To this end, the London Insurers submitted that “their
policies [we]re directly excess to [the INA policies] and contingent
upon their liability under them . . . and that payment or liability under
the underlying policies is a condition precedent to any obligations that
the London Insurers might incur.” Id. (internal quotations and
citation omitted). Upon reviewing the relevant policies, we found that
satisfaction of a $1,050,000 deductible to be paid by Koppers or INA,
among others, was required before the London Insurers’ excess policy
was triggered. Id. at 176. Based on this understanding (i.e., that any
liability on the London Insurers’ part was independent of INA’s), we
held that “insofar as liability under the London Policies is concerned,
complete relief can be accorded to the parties present to this litigation
without the joinder of INA. Accordingly . . . INA is not a necessary
party under Rule 19(a)(1).” Id.

         Defendants in this action have provided no reason – and we
can perceive of none – why we should not reach the same result here
as we did in Koppers. At most, the question of whether the
underlying policies have been exhausted to the extent that their
exhaustion is a condition prerequisite to defendants’ monetary
liability to make payments on their policies will be an issue at trial.
In this regard, we point out that we are not holding who is or is not
ultimately liable in this case. Rather, we are determining the question
of who are necessary and indispensable parties.

               2. Rule 19(a)(2)

        Notwithstanding a determination that complete relief may be
accorded to those persons already named as parties to an action, a
court still may deem a party “necessary” under subsection (a)(2) of
Rule 19. Unlike subsection (a)(1), subsection (a)(2) requires the court
to take into consideration the effect that resolution of the dispute
among those parties before it may have on any absent parties. See
Fed. R. Civ. P. 19(a)(2).

                       a. Rule 19(a)(2)(i)

        Under Rule 19(a)(2)(i), the court must decide whether
determination of the rights of those persons named as parties to the
action would impair or impede an absent party’s ability to protect its
interest in the subject matter of the litigation. Fed. R. Civ. P.

                                   14
19(a)(2)(i); see also Janney Montgomery Scott, 11 F.3d at 409 (“[I]t
must be shown that some outcome of the federal case that is
reasonably likely can preclude the absent party with respect to an
issue material to the absent party’s rights or duties under standard
principles governing the effect of prior judgments.”). Defendants
argue that the “absent insurers whose policies must be interpreted in
[this] declaratory judgment action have an interest relating to the
subject of the action – the interpretation of their policies – and the
disposition of the action in their absence might, as a practical matter,
impair their ability to protect the interpretation of their policies.”
Appellees’ br. at 17. As our holding in Janney Montgomery Scott
makes clear, defendants’ position is without support.

        In Janney Montgomery Scott, the defendant and its parent
corporation were co-obligors on a contract with the plaintiff.
Claiming that the contract had been breached, the plaintiff filed a suit
in the district court against the defendant and in state court against the
defendant and its parent corporation. In a situation similar to that
facing GRC here with respect to non-diverse parties, the defendant’s
parent corporation was a citizen of Pennsylvania. Consequently, its
joinder to the district court case would have resulted in the case’s
dismissal inasmuch as the district court’s jurisdiction was based on
diversity of citizenship and the plaintiff was a Pennsylvania citizen.
Janney Montgomery Scott, 11 F.3d at 401-02. The defendant
subsequently filed a motion for judgment on the pleadings predicated
on the plaintiff’s failure to join the defendant’s parent corporation in
the action as a defendant under Rule 19. The district court granted
the motion, in part based on its holding that the defendant’s parent
corporation was a “necessary” party to the suit under Rule 19(a)(2)(i)
because “it was likely that any decision reached in the federal action
would affect the pending state court action . . . as persuasive
precedent against [the absent parent corporation].” Id. at 406
(internal quotations and citation omitted).

        The plaintiff appealed and we disagreed with the district
court’s conclusion, explaining:

       We are not sure what the district court means by the
       phrase ‘persuasive precedent.’ To the extent it
       involves the doctrine of stare decisis, we are not
       inclined to hold that any potential effect the doctrine
       may have on an absent party’s rights makes the absent
       party’s joinder compulsory under Rule 19(a) whenever
       ‘feasible.’ Such a holding would greatly expand the

                                   15
       class of ‘necessary’ or compulsory parties Rule 19(a)
       creates. Moreover, to whatever extent the rule’s
       phrase ‘as a practical manner impair or impede’ has
       broader meaning than that given by principles of issue
       preclusion, we think the effect of the federal decision
       must be more direct and immediate that the effect a
       judgment in [defendant’s] favor would have on [its
       absent parent corporation] here. . . . In any event, we
       do not believe any possibility of a ‘persuasive
       precedent’ requires joinder under subsection
       19(a)(2)(i).[14]

Id. at 407; see also UTI, 896 F. Supp. at 393 (“In Janney, the Third
Circuit expressly rejected the proposition that where a piece of
litigation may result in a ‘persuasive precedent’ against an absent
party, the disposition of the action in that party’s absence would
impair or impede that party’s ability to protect its interest within the
meaning of Rule 19(a)(2)(i).”). Inasmuch as defendants proffer
nothing more than a reincarnation of the “persuasive precedent”
argument we have rejected, we similarly do not deem the absent
insurers in this case to be “necessary” parties to GRC’s suit under
Rule 19(a)(2)(i).

                       b. Rule 19(a)(2)(ii)

        Finally, under Rule 19(a)(2)(ii), a court must decide whether
continuation of the action would expose named parties to the
“substantial risk of incurring double, multiple, or otherwise
inconsistent obligations by reason of the claimed interest.”
According to defendants, the very real possibility of prejudice arises
from the likelihood that subsequent litigation will produce
inconsistent obligations with those a court may determine they have
here. For example, defendants contend that the district court in this
case could determine that the exclusions contained in the policies are
unenforceable, requiring them to indemnify GRC for its asbestos-
related losses in the underlying actions, while a second court in a later

       14
         In Janney, we phrased the Rule 19 question as follows:
“[W]hether the district court could give complete relief to the parties
before it without prejudice to them or the absent person, [the parent
corporation], in a breach of contract action against only one of the two
co-obligors that might be liable to [plaintiff], the obligee on the
contract.” Janney Montgomery Scott, 11 F.3d at 402.

                                   16
action against the absent insurers for contribution and/or
indemnification could reach a contrary conclusion, thus foreclosing
recovery by defendants for their losses in whole or in part. Similarly,
defendants hypothesize:

       The same problem would exist if, following a trial in
       federal court and a victory for GRC, GRC were to
       select one of the policies issued by a Defendant in this
       matter covering Year A for coverage and the chosen
       insurer then sued Absent Insurer No. 1 covering Year
       B for contribution in state court. In the state court
       action, the [asbestos-related] exclusion might well be
       honored, thereby defeating the contribution claim[,]
       which could not happen if all insurers’ rights were
       determined in the same action.

Appellees’ br. at 22. Again, we reject defendants’ position given our
holding in Janney Montgomery Scott.

        In addition to its finding that the defendant’s parent
corporation was a “necessary” party to the suit under Rule 19(a)(2)(i),
the district court in Janney Montgomery Scott made the same
determination under Rule 19(a)(2)(ii). Specifically, the district court
reasoned that “continuation of this action in [the parent corporation’s]
absence may expose [the defendant] to a substantial risk of incurring
double or inconsistent obligations because [the defendant] may be
found liable under the Agreement in the federal action while [the
parent corporation] may be found not liable in the state court action.”
Janney Montgomery Scott, 11 F.3d at 411 (internal quotations and
citation omitted).

          Even though we acknowledged that “[i]t is, of course, possible
. . . that if [the defendant] is held liable in the federal action, it may
ultimately be responsible for the entire claim if [its parent
corporation] is found not liable in the State Court Action,” we
nonetheless concluded that “[t]his is not . . . the double liability that
Rule 19(a)(2)(ii) refers to.” Id. (internal quotations and citation
omitted). On this point, we explained first that the district court’s
conclusion necessarily was grounded on the unstated premise that if
the defendant was found liable on the agreement, its parent
corporation must be as well. We rejected this premise inasmuch as it
was “contradicted by the law’s refusal to consider the real possibility
that one court could find [the defendant] liable while another was
finding [the absent parent corporation] not liable in separate

                                   17
proceedings to which the rules of claim or issue preclusion do not
apply.” Id.; see also Field v. Volkswagenwerk AG, 626 F.2d 293,
301-02 (3d Cir. 1980) (“[T]he possibility of a subsequent adjudication
that may result in a judgment that is inconsistent as a matter of logic,
[does not] trigger the application of Rule 19.”), disagreed with on
other grounds by Newman-Green, Inc. v. Alfonso-Larrain, 490 U.S.
826, 833 n.7, 109 S. Ct. 2218, 2223 n.7 (1989). We added that:

       The possibility that [the defendant] may bear the whole
       loss if it is found liable is not the equivalent of double
       liability. It is instead a common result of joint and
       several liability and should not be equated with
       prejudice. Inherent in the concept of joint and several
       liability is the right of a plaintiff to satisfy its whole
       judgment by execution against any one of the multiple
       defendants who are liable to him, thereby forcing the
       debtor who has paid the whole debt to protect itself by
       an action for contribution against the other joint
       obligors.

Janney Montgomery Scott, 11 F.3d at 412. To this end, we explicitly
noted that “[a]n outcome adverse to [the defendant] in [the plaintiff’s]
present action against it does not have any legal effect on whatever
right of contribution or indemnification [the defendant] may have
against [its parent corporation].” Id.

        Our holding in Janney Montgomery Scott squarely addresses,
and defeats, those arguments defendants make with respect to why the
absent insurers should be deemed “necessary” parties to GRC’s suit
under Rule 19(a)(2)(ii). As we outlined above, defendants’ primary
concern is that inconsistent judgments from the state and federal
courts effectively could foreclose their indemnification and/or
contribution claims against the absent insurers. However, Janney
Montgomery Scott makes clear that the possibility defendants may
have to shoulder the entire loss if found liable is a necessary
consequence of joint and several liability. Further, it bears noting that
the imposition of joint and several liability is intended to ensure that
GRC, and not defendants, be afforded the coverage for which it
contracted. See J.H. France Refractories, 626 A.2d at 508 (“In order
to accord [the insured] the coverage promised by the insurance
policies, [the insured] should be free to select the policy or policies
under which it is to be indemnified.”). Accordingly, defendants
similarly cannot be deemed “necessary” parties under Rule
19(a)(2)(ii). See also UTI, 896 F. Supp. at 394.

                                   18
       B. Rule 19(b)

        Even if we assumed that the district court correctly concluded
that the absent insurers were “necessary” parties under Rule 19, we
nonetheless would find that they were not “indispensable” under that
rule. As we noted above, when a party is deemed “necessary” under
Rule 19(a), joinder must occur if feasible. If joinder of a “necessary”
party would divest the district court of subject matter jurisdiction (i.e.,
destroy diversity), a court must determine whether “in equity and
good conscience” the action should proceed without that party, or
whether the court should dismiss it, “the absent person being thus
regarded as indispensable.” Fed. R. Civ. P. 19(b). Put another way, a
finding of indispensability under Rule 19(b) necessitates dismissal for
lack of subject matter jurisdiction.

       Under Rule 19(b), the four factors listed, though not
exhaustive, are “the most important considerations” in determining
whether a party is indispensable. Gardiner v. V.I. Water & Power
Auth., 145 F.3d 635, 640 (3d Cir. 1998). These factors are:

       first, to what extent a judgment rendered in the
       person’s absence might be prejudicial to the person or
       those already parties; second, the extent to which, by
       protective provisions in the judgment, by the shaping
       of relief, or other measures, the prejudice can be
       lessened or avoided; third, whether a judgment
       rendered in the person’s absence will be adequate;
       fourth, whether the plaintiff will have an adequate
       remedy if the action is dismissed for nonjoinder.

Fed. R. Civ. P. 19(b).

         Though it did not consider the four factors explicitly the
district court found with respect to Rule 19(b):

       Without the Absent Insurers, it is highly unlikely that a
       judgment could be fashioned that would not be either
       unduly favorable or prejudicial to . . . some of the other
       parties. It is also unlikely that a plaintiff’s award
       would be adequate if rendered against fewer than all
       potentially responsible insurers. No shaping of the
       judgment could avoid these coverage issue
       possibilities.

                                    19
GRC, 234 F.R.D. at 102. The district court added that GRC could
refile its action in a state court “where all defendants may be joined in
one action and complete relief afforded.” Id. We conclude again that
the district court was mistaken.

        The first and second factors under Rule 19(b) are “to what
extent a judgment rendered in the person’s absence might be
prejudicial to the person or those already parties,” and to what extent
such prejudice “can be lessened or avoided.” Notably, the first factor
under Rule 19(b) “overlaps considerably with the Rule 19(a)
analysis.” Gardiner, 145 F.3d at 641 n.4 (citing Wright, Miller &
Kane, Federal Practice & Procedure § 1608 at 91). As we discussed
above, given the rules of joint and several liability, it is possible that
GRC can recover fully from those insurers it already has named as
defendants in the present action. Id. at 641 (finding no prejudice to
either plaintiff or absent party where plaintiff could recover fully from
defendant, the party with whom plaintiff claimed it had a contract,
and defendant failed to present specific evidence of prejudice); see
also UTI, 896 F. Supp. at 395 (noting defendant insurance company’s
potential liability for the entire loss “results from [the plaintiff’s]
absolute right under the Pennsylvania Supreme Court’s decision in
J.H. France to select the policy or policies under which it is to be
indemnified” and thus does not constitute prejudice within the
meaning of Rule 19(b)) (internal quotations and citation omitted).

        We also take note of our particularly relevant precedent for
present purposes that, “‘[a] defendant’s right to contribution or
indemnity from an absent non-diverse party does not render that
absentee indispensable pursuant to Rule 19.’” Janney Montgomery
Scott, 11 F.3d at 412 (quoting Bank of Am. Nat’l Trust & Sav. Ass’n,
844 F.2d at 1054). Indeed, defendants are free to pursue any claim
for contribution or indemnification they might have against the absent
insurers in a separate action.15 While “[w]e recognize that this is a

       15
        As we noted during oral argument, defendants alternatively
might consider “vouching in” the absent insurers in the current action.
Under this common law practice:

       [A] defendant in an action gives notice of the suit to
       another person who is liable over to the defendant in
       respect to the matter sued upon, whether by contract or
       by implication of law, offering the other person the
       opportunity to appear and defend the action. If the liable

                                   20
less convenient remedy for [defendant],” it is nonetheless “a means of
resolving [defendant’s] claim of the risk of inconsistent obligations.”
Gardiner, 145 F.3d at 642.

        The third factor under Rule 19(b) is “whether a judgment
rendered in the person’s absence will be adequate.” Specifically, this
element allows the court to consider whether the relief it grants will
prove an adequate remedy for the plaintiff. Provident Tradesmens
Bank & Trust Co. v. Patterson, 390 U.S. 102, 112, 88 S. Ct. 733, 739
(1968). Certainly with respect to defendants, the court can resolve
GRC’s claim in the present action and this factor weighs in GRC’s
favor. See Gardiner, 145 F.3d at 642. Additionally, and also as we
noted above, “the possibility that the defendant[s] may have a claim
for contribution or indemnity does not render an absentee
indispensable. The right to contribution and indemnity should not,
therefore, be considered to cause inadequacy of the resulting
judgment.” Id. Moreover, as the Court indicated in Provident, the
adequacy criterion “refer[s] to [the] public stake in setting disputes by
wholes,” 390 U.S. at 111, 88 S.Ct. at 739, and we surely will not hold
that this stake is so great that it trumps the rules not otherwise
requiring a plaintiff to join all potentially liable parties in joint and
several liability situations.

        Finally, the fourth Rule 19(b) factor – whether the plaintiff has
a remedy if the action is dismissed – similarly “counsels strongly
against dismissal in this case.” Gardiner, 145 F.3d at 642. In Vale
Chemical Co. v. Hartford Accident & Indemnity Co., 516 A.2d 684,

       person does not avail himself or herself of the
       opportunity to defend, he or she may be precluded from
       relitigation issues decided in the action.

59 Am. Jr. 2d Contracts § 262 (2007); see also Glick v. White Motor
Co., 458 F.2d 1287, 1292 n.8 (3d Cir. 1972). Significantly, although
vouching in has “largely been supplanted by the modern third party
practice,” it has not been eliminated, but rather has been “supplemented
thereby.” U.S. Wire & Cable Corp. v. Ascher Corp., 167 A.2d 633, 636
(N.J. 1961). We think that in view of the simplicity of the procedure and
its capacity to by pass jurisdictional hurdles, it is surprising that
defendants do not attempt to use it more frequently. We, of course,
express no opinion on the question of whether it would be feasible “to
vouch in” the absent insurers, as defendants have not done so. We only
advance that possibility which seems to have escaped them.

                                   21
686 (Pa. 1986), the Pennsylvania Supreme Court reiterated its oft-
stated precedent that “where claims are asserted against an insured,
the persons asserting the claims are indispensable parties in a
declaratory judgment action on the issue of coverage between the
insured and the insurance carrier. The failure to join a claimant
whose interests would be affected has been held to be fatal error.”
Relying on this pronouncement from the Pennsylvania Supreme Court
in Vale, GRC argues that if forced to refile its action in a
Pennsylvania state court, the state in which defendants themselves
believe that GRC should have brought this action and now can
proceed, GRC necessarily would be required to add the tens of
thousands of plaintiffs that have sued it throughout the country. GRC
asserts that the impracticality of such a requirement plainly would
affect its ability to proceed.16 Defendants answer that Rule 19, rather
than Pennsylvania state law as set forth in Vale, should govern our
analysis. For the following reasons, we conclude that defendants’
position is mistaken.

        To be sure, “in a diversity case the question of joinder is one
of federal law.” Provident Tradesmens Bank & Trust Co., 390 U.S. at
125 n.22, 88 S. Ct. at 125 n.22. State law, however, is not wholly
irrelevant to the court’s analysis. See Shetter v. Amerada Hess Corp.,
14 F.3d 934, 937 (3d Cir. 1994) (noting “state law may provide
assistance in determining the interests of the party in question”).
Here, state law, as expressed by the Pennsylvania Supreme Court in
Vale, indicates that, practically speaking, GRC would be left without
a remedy if we affirm the dismissal of this action. After all, even
though, as defendants point out, Vale does not control a Rule 19
determination, certainly it would be applicable in a subsequent action
in the Pennsylvania courts. Inasmuch as Rule 19 counsels that courts
should consider whether there is any assurance that the plaintiff, if
dismissed, could sue effectively in another forum where better joinder
would be possible,” this factor weighs in GRC’s favor and tends to
show that the district court abused its discretion in finding the absent
insurers to be indispensable as GRC could not bring the Pennsylvania
state court action that the district court believed would give it an

       16
          United Policyholders, which has filed an amicus curiae brief,
contends that it might be more than merely impractical to sue all the
plaintiffs in the underlying actions in the Pennsylvania state courts.
Rather, it would be impossible because “[m]any of these claimants have
no connection to Pennsylvania and cannot be sued there.” Amicus
Curiae br. at 17.

                                  22
adequate remedy. See Fed. R. Civ. P. 19 advisory committee’s notes.

         With the above considerations in mind, we conclude that the
district court abused its discretion in finding the absent insurers
“indispensable” under Rule 19(b).

                          V. CONCLUSION

        For the foregoing reasons, we will reverse the district court’s
order of September 27, 2005, dismissing this action as well as the
order of October 27, 2005, denying reconsideration of the order of
September 27, 2005, and will remand the case to the district court for
further proceedings consistent with this opinion.17

       17
          Though we are taxing costs in GRC’s favor we direct that only
defendants who moved to dismiss this action in the district court, joined
in such a motion, or participated as appellees on this appeal by filing a
brief or their attorneys entering an appearance that was not withdrawn,
should be responsible for them.

                                   23