Court Opinion

ID: 2820899
Source: CourtListenerOpinion
Date Created: 2015-07-28 17:01:13.464476+00
Date Added: 2024-06-11T12:51:40.169513
License: Public Domain

NOT PRECEDENTIAL

                       UNITED STATES COURT OF APPEALS
                            FOR THE THIRD CIRCUIT
                                 _____________

                                      No. 13-4126
                                     _____________

                                  STEPHEN P. KOONS,
                                                            Appellant
                                             v.

                          XL INSURANCE AMERICA, INC.;
                        GREENWICH INSURANCE COMPANY
                                 _____________

                      Appeal from the United States District Court
                         for the Eastern District of Pennsylvania
                                   (No. 2:11-cv-02956)
                     District Judge: Honorable William H. Yohn, Jr.

                    Submitted Pursuant to Third Circuit LAR 34.1(a)
                                    April 23, 2015

             Before: CHAGARES, JORDAN and BARRY, Circuit Judges.

                                   (Filed: July 28, 2015)
                                       ____________

                                        OPINION*
                                      ____________

CHAGARES, Circuit Judge.

       Stephen P. Koons appeals the District Court’s order denying his motion for

summary judgment and granting summary judgment in favor of the defendant,

*
 This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
Greenwich Insurance Company.1 Non-party Erie Insurance Exchange has filed a motion

in this Court to substitute for Koons, which was referred to us by the motions panel. For

the following reasons, we will deny Erie’s motion to substitute, vacate the judgment of

the District Court, and remand with instructions to dismiss the case as moot.

                                            I.

      We write solely for the parties and therefore recite only the facts necessary to our

disposition. We have previously had occasion to summarize the somewhat complicated

factual background of this matter, Koons v. XL Ins. Am., Inc., 516 F. App’x 217 (3d Cir.

2013), and we assume familiarity with that decision.

      Briefly, this action involves an insurance coverage dispute arising from the death

of Jeremy Andre, an employee of Koons’s company who was killed by a garbage

disposal truck on the job. After his death, Andre’s estate sued Koons personally (the

“Andre action”). Greenwich and XL Insurance America refused to defend or indemnify

Koons in the Andre action, and he brought this action seeking to force them to do so,

among other claims.    Koons appealed the District Court’s initial grant of summary

judgment in favor of the defendant insurance companies, and we reversed and remanded,

holding that there were disputed issues of material fact. Koons, 516 F. App’x at 222–23.

In the meantime, another insurer, Erie Insurance Exchange, stepped in to defend Koons in

the Andre action.

1
 Though XL Insurance America, Inc. remains a named party in the caption, the case was
concluded as to it when Koons declined to appeal a prior decision of the District Court
granting summary judgment in its favor.
                                            2
       On remand, the parties renewed cross-motions for summary judgment and the

District Court again granted summary judgment. Koons timely appealed. While this

appeal was pending, Erie settled the Andre action and Koons assigned to it all rights he

may have with respect to this action. See Erie Mot. to Sub. ¶ 8; Erie Reply in Support of

Mot. to Sub. Ex. B. Erie thus filed a motion to substitute as the appellant, arguing that it

is the true party in interest and is entitled to appear as Koons’s subrogee on the basis of

the assignment. Erie Mot. to Sub. ¶ 9. Greenwich opposes the motion, and the motions

panel referred it to us to resolve as part of the appeal.

                                               II.

       The District Court had diversity jurisdiction. 28 U.S.C. § 1332. Koons contends

that we have final-order jurisdiction, pursuant to 28 U.S.C. § 1291. However, as

explained further below, we conclude the case is moot and, therefore, we lack subject-

matter jurisdiction. See Already, LLC v. Nike, Inc., 133 S. Ct. 721, 726 (2013)

(explaining that a mooted case is no longer a “‘Case’ or ‘Controversy’ for purposes of

Article III”).

                                              III.

                                              A.

       The first question presented by this appeal is whether Koons has standing to

pursue it. The familiar requirements of standing are (1) an injury in fact, (2) a causal

connection between the injury and the conduct complained of, and (3) a likelihood that

the injury will be redressed by a favorable decision on the claim. Lujan v. Defenders of

Wildlife, 504 U.S. 555, 560 (1992). The injury in fact must be concrete, particularized,

                                               3
and either actual or imminent. Id. Greenwich argues that Koons no longer has any injury

that this action is capable of redressing because he has been fully indemnified in the

underlying Andre action.

       Our decision in Wheeler v. Travelers Insurance Co., 22 F.3d 534 (3d Cir. 1994),

largely controls. There, the plaintiff sued Travelers for reimbursement of medical

expenses. We held that she lacked standing because “Medicare paid the medical

expenses for which she seeks a recovery” and “she concede[d] that she will be obliged to

remit any payment she now receives from Travelers to Medicare.” Id. at 538 (quotation

marks omitted). She therefore did not have the requisite personal interest in the litigation

to satisfy Article III’s case or controversy requirement. Id.; see also Simon v. E. Ky.

Welfare Rights Org., 426 U.S. 26, 39 (1976) (holding that Article III requires that the

individual who seeks to invoke the jurisdiction of the federal courts “stand to profit in

some personal interest”).

       Similarly, Koons no longer has anything personally to gain from a favorable

outcome to this litigation. As Erie made clear in its motion to substitute, it has fully

indemnified Koons in the Andre action, Erie Mot. to Sub. ¶ 8, and Koons has signed over

to Erie his right to any recovery in this action, Erie Reply in Support of Mot. to Sub. Ex.

B. Thus, as in Wheeler, Koons no longer has any personal stake in the eventual outcome.

       There is a slight difference between this case and Wheeler, because Koons was

only indemnified by Erie after he had brought this action, whereas the plaintiff in

Wheeler had already been reimbursed by Medicare when she filed suit. Thus, Koons

unquestionably had standing at the outset of the litigation, whereas Wheeler did not. This

                                              4
merely transforms the question into one of mootness. See McNair v. Synapse Grp., Inc.,

672 F.3d 213, 227 n.17 (3d Cir. 2012) (recognizing that the “Article III problem might

sound in mootness if Appellants initially had standing to seek injunctive relief but lost

it”); Altman v. Bedford Cent. Sch. Dist., 245 F.3d 49, 69 (2d Cir. 2001) (“[I]f the plaintiff

loses standing . . . during the pendency of the proceedings . . ., the matter becomes moot,

and the court loses jurisdiction.”). And Article III’s requirement that the “case or

controversy be ‘actual [and] ongoing’ extends throughout all stages of federal judicial

proceedings, including appellate review.” Rendell v. Rumsfeld, 484 F.3d 236, 240–41

(3d Cir. 2007) (quoting Khodara Envtl., Inc. v. Beckman, 237 F.3d 186, 193 (3d Cir.

2001) (alteration in original)). Given Koons’s lack of an ongoing interest in the

litigation, the case as to him is moot.

                                             B.

       The question remains as to whether Erie should be allowed to substitute for Koons

and continue to prosecute the appeal by stepping into Koons’s proverbial shoes. Erie

indemnified and defended Koons in the underlying Andre action and has moved to

substitute as Koons’s subrogee and the real party in interest. Erie contends that it is

subrogated to Koons’s rights and interests in the litigation and thus can properly be

substituted as the appellant.

       We disagree. Allowing Erie to substitute in at this stage would not entail simply

changing the name of the party and adjudicating precisely the same issues as it does

when, for example, a relevant government official is replaced in office. See Fed. R. App.

P. 43(c)(2). Rather, it would require the resolution of potentially complex issues of

                                              5
Erie’s equitable subrogation rights, which were not considered by the District Court in

the first instance and have only been briefed here as part of Erie’s motion to substitute,

not in the parties’ principal briefs. Absent unusual circumstances, we do not consider

issues that are raised for the first time on appeal, let alone issues that arise for the first

time in appellate motion papers. See, e.g., Common Cause of Pa. v. Pennsylvania, 558
F.3d 249, 263 (3d Cir. 2009).

         Moreover, Erie contends that its assertion of equitable subrogation is without

prejudice to its right to seek indemnity and contribution. Erie Reply in Support of Mot.

to Sub. 4. If we allow Erie to substitute here to consider its equitable subrogation claim,

or remand to the District Court to consider the issue in the first instance, we would

unnecessarily bifurcate the resolution of these two interrelated claims. Equitable

subrogation would be decided in federal court while the related indemnity and

contribution claims proceeded in state court.2 Judicial economy is best served by

resolving those claims in a single action, especially where the issues have not yet been

considered by the District Court. This is also in line with Pennsylvania state policy. See

McShea v. City of Phila., 995 A.2d 334, 346 (Pa. 2010) (explaining that the Pennsylvania

Rules of Civil Procedure require joining “all causes of action which arise from the same

transaction or occurrence”). Finally, we have found no precedent for the use of Federal

Rule of Appellate Procedure 43 to substitute a subrogee for a party.

         Ordinarily, the procedure for disposing of a case that has become moot in the

course of an appeal is to vacate the judgment and remand to the District Court with a

2
    To be clear, we express no opinion on the merits of these or any other of Erie’s claims.
                                                6
direction to dismiss. See United States v. Munsingwear, 340 U.S. 36, 39 (1950). This

rule is used “to prevent a judgment, unreviewable because of mootness, from spawning

any legal consequences.” Id. at 41. We find no reason to depart from the usual rule here

and will vacate and remand with instructions to dismiss.

                                           IV.

      For the foregoing reasons, we will deny Erie Insurance Exchange’s motion to

substitute, vacate the District Court’s judgment, and remand with instructions to dismiss

the case as moot.

                                            7