United States District Court, W.D. Tennessee, Western Division
H. MAYS, JR. UNITED STATES DISTRICT JUDGE.
the Court are three motions. The first is Cross-Defendant
Belle City Amusements, Inc.'s (“Belle City”)
January 4, 2019 Motion for Summary Judgment. (ECF No. 101.)
Amusements of America, Inc. (“AOA”) and Delta
Fair, Inc. have brought crossclaims against Belle City for
indemnity and defense. Belle City seeks summary judgment on
those crossclaims on the ground that Belle City's
contract with AOA does not obligate it to indemnify or defend
AOA and Delta Fair for their losses in this litigation. AOA
and Delta Fair responded on February 1, 2019. (ECF No. 103.)
Belle City replied on February 15, 2019. (ECF No. 104.)
second motion is AOA and Delta Fair's January 18, 2019
Motion to Dismiss. (ECF No. 102.) AOA and Delta Fair seek the
voluntary dismissal without prejudice of their crossclaims
against Belle City. Belle City responded on February 15,
2019. (ECF No. 105.) AOA and Delta Fair replied on February
28, 2019. (ECF No. 108.)
third motion is AOA and Delta Fair's April 17, 2019
Motion to Substitute Liberty Corporate Capital, Ltd. (ECF No.
113.) AOA and Delta Fair seek to substitute their insurer,
Liberty Corporate Capital, Ltd. (“Liberty”), in
their place. They ask that, if the Court substitutes Liberty,
it also grant Liberty leave to amend the crossclaims against
Belle City and add new claims against ACE American Insurance
Company (“ACE”), Belle City's insurer, which
is not currently a party to this suit. Belle City responded
on May 1, 2019. (ECF No. 115.) AOA and Delta Fair replied on
May 15, 2019. (ECF No. 118.)
following reasons, Belle City's Motion for Summary
Judgment is DENIED. AOA and Delta Fair's Motion to
Dismiss is DENIED. AOA and Delta Fair's Motion to
Substitute is GRANTED IN PART and DENIED IN PART.
suit began as a tort case but has become an indemnity
dispute. It arises from the electrocution of Edward Alan
Yearta at the Delta Fair & Music Festival (the
“Fair”) in Memphis, Tennessee on August 30, 2016.
(ECF No. 103-1 ¶ 2.) The Fair was a large event that
included several promoters, contractors, and vendors. Three
of those companies are currently parties to this lawsuit: (1)
Delta Fair, the entity that hosted the Fair; (2) AOA, a
provider and operator of amusement park rides that contracted
with Delta Fair to provide rides for the Fair; and (3) Belle
City, a provider and operator of amusement park rides that
subcontracted with AOA to provide certain rides for the Fair.
(Id. ¶¶ 9, 14, 20.)
August 30, 2016, Yearta was setting up a ride at the Fair,
the Alpine Bob. (Id. ¶¶ 2-3.) Yearta was
an employee of Prime Time Amusements, a non-party contractor
at the Fair. (Id. ¶ 3.) At the same time Yearta
was setting up the Alpine Bob, AOA employees were setting up
an AOA-owned ride, the Ring of Fire. (Id. ¶ 4.)
The Alpine Bob and the Ring of Fire were both plugged into a
generator owned by Belle City. (Id. ¶¶
3-4.) As AOA employees were constructing the Ring of Fire,
the ride collided with an overhead power line. (Id.
¶ 5.) Electricity from the power line flowed through the
Ring of Fire, through Belle City's generator, through the
Alpine Bob, and into Yearta. (Id.) Yearta was
injured. (Id. ¶ 2.)
filed a Complaint on February 21, 2017, which he amended on
June 2, 2017. (ECF Nos. 1, 25.) Yearta alleged that AOA,
Delta Fair, Belle City, and Universal Fairs, LLC
(collectively, the “Defendants”) negligently
caused his injuries. (ECF No. 25 ¶¶ 46-59.) At an
October 24, 2018 mediation, Yearta agreed to settle his
claims against the Defendants. (ECF No. 103-1 ¶ 26.) A
settlement agreement releasing Yearta's claims was
executed on December 6, 2018. (ECF No. 104-1 ¶ 29.) The
settlement agreement gave Yearta the right to purchase an
annuity funded by the settlement proceeds. (Id.
¶ 35.) That annuity was funded on or around December 27,
2018. (Id.) Liberty, AOA and Delta Fair's
insurer, paid the entire $2, 075, 000 settlement amount.
(Id. ¶ 33.) The Court dismissed Yearta's
claims on April 3, 2019. (ECF No. 112.)
only claims remaining are AOA and Delta Fair's
crossclaims against Belle City. AOA filed its crossclaim on
June 16, 2017 and filed an amended crossclaim on July 14,
2017. (ECF Nos. 31, 42.) Delta Fair filed its crossclaim on
September 4, 2018. (ECF No. 96.) AOA and Delta Fair seek
indemnity and defense from Belle City for their losses in
this litigation pursuant to a July 24, 2016 Independent
Attraction Contract (“IAC”) between AOA and Belle
City that set out the terms of Belle City's
subcontracting engagement with AOA. (ECF No. 42-2.) AOA
drafted the IAC. (ECF No. 103-1 ¶ 19.) The IAC obligated
Belle City to provide eight rides at the Fair. (ECF No. 42-2
¶ 3.) The IAC's indemnity clause states:
SUBCONTRACTOR [Belle City] further agrees to indemnify and
defend AMUSEMENTS OF AMERICA, VIVONA FAMILY ENTERTAINMENT,
DELTA FAIR INC., AGRICENTER INTERNATIONAL, SHELBY COUNTY
GOVERNMENT and its officers, employees, agents and other
subcontractors for, and to hold AMUSEMENTS OF AMERICA, VIVONA
FAMILY ENTERTAINMENT, DELTA FAIR INC., AGRICENTER
INTERNATIONAL, SHELBY COUNTY GOVERNMENT and its officers,
employees, agents and other subcontractors harmless against,
any and all injuries, claims, losses or liabilities which
result from any acts or omissions of SUBCONTRACTOR or of any
[of] SUBCONTRACTOR'S employees, agents or subcontractors
in connection with the engagements hereunder or which may
otherwise arise in connection with the SUBCONTRACTOR'S
(Id. ¶ 17.) The IAC's choice-of-law clause
states that the “agreement shall be deemed made in the
State of New Jersey and shall be construed in accordance with
the laws of New Jersey.” (Id. ¶ 21.)
Jurisdiction and Choice of Law
Court has found that it has diversity jurisdiction over this
action. (ECF No. 112 at 4-5.) Following the Court's April
3, 2019 dismissal of Yearta, the Court retains supplemental
jurisdiction over the indemnity crossclaims pursuant to 28
U.S.C. § 1367. See 6 Charles A. Wright et al., Federal
Practice and Procedure § 1433 (3d ed. 2019) (noting that
“crossclaims under Rule 13(g) fall within the ancillary
jurisdiction of the court” as codified in 28 U.S.C.
§ 1367 “and need not present independent grounds
of federal jurisdiction”); see also Progressive
Cas. Ins. Co. v. Belmont Bancorp, 199 F.R.D. 219, 223
(S.D. Ohio 2001) (“If a cross-claim is brought under
the ‘same core of facts' as the original complaint,
a court needs no further basis for jurisdiction.”)
(quoting Lasa Per L'Industria Del Marmo Societa v.
Alexander, 414 F.2d 143, 146 (6th Cir. 1969));
Coleman v. Casey Cty. Bd. of Educ., 686 F.2d 428,
430 (6th Cir. 1982) (“[T]he federal court may
adjudicate a cross-claim because of its relationship to the
main action for which federal jurisdiction is
substantive law applies to state law claims in federal court.
See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78-80
(1938). When there is no dispute that a certain state's
substantive law applies, the court need not conduct a
choice-of-law analysis sua sponte. See GBJ Corp. v. E.
Ohio Paving Co., 139 F.3d 1080, 1085 (6th Cir. 1998).
The parties agree in their respective memoranda that New
Jersey substantive law governs AOA and Delta Fair's
crossclaims under the IAC, which contains a choice-of-law
clause selecting New Jersey law. (ECF No. 101-1 at 7; ECF No.
103 at 12.) The Court applies New Jersey law to AOA and Delta
Standard for Summary Judgment
Federal Rule of Civil Procedure 56, a court must grant a
party's motion for summary judgment “if the movant
shows that there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of
law.” Fed.R.Civ.P. 56(a). The moving party must show
that the nonmoving party, having had sufficient opportunity
for discovery, lacks evidence to support an essential element
of its case. See Fed.R.Civ.P. 56(c)(1); Peeples v. City
of Detroit, 891 F.3d 622, 630 (6th Cir. 2018).
confronted with a properly supported motion for summary
judgment, the nonmoving party must set forth specific facts
showing that there is a genuine dispute for trial. See
Fed.R.Civ.P. 56(c). “A genuine dispute exists when the
plaintiff presents significant probative evidence on which a
reasonable jury could return a verdict for her.”
EEOC v. Ford Motor Co., 782 F.3d
753, 760 (6th Cir. 2015) (en banc) (internal
quotation marks and citation omitted). The nonmoving party
must do more than simply “‘show that there is
some metaphysical doubt as to the material facts.'”
Lossia v. Flagstar Bancorp, Inc., 895 F.3d 423, 428
(6th Cir. 2018) (quoting Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 586 (1986)).
considering whether to grant summary judgment, the court
should “consider the evidence in the light most
favorable to the non-moving party and draw all reasonable
inferences in that party's favor.” McKay v.
Federspiel, 823 F.3d 862, 866 (6th Cir. 2016).
“Summary judgment is appropriate where reasonable minds
could not disagree as to the conclusion to be drawn from the
evidence.” FDIC v. Jeff Miller Stables, 573
F.3d 289, 299 (6th Cir. 2009). Although summary judgment must
be used carefully, it “is an integral part of the
Federal Rules as a whole, which are designed to secure the
just, speedy, and inexpensive determination of every action[,
] rather than a disfavored procedural shortcut.”
Id. at 294 (quotation marks and citations omitted).
AOA and Delta Fair's Motion to Substitute
Delta Fair move to substitute their insurer Liberty in their
place in this litigation. (ECF No. 113.) As an alternative
request for relief, Liberty moves to intervene under Rule 24
of the Federal Rules of Civil Procedure. (Id.) AOA
and Delta Fair also request that, if the Court grants their
motion to substitute Liberty, it also grant Liberty leave to
amend the crossclaims against Belle City and add new claims
against ACE. (Id.) Belle City does not oppose AOA
and Delta Fair's request to substitute Liberty. (ECF No.
115 at 1.) Belle City does oppose AOA and Delta Fair's
request that the Court grant Liberty leave to amend.
Substitution of Liberty for AOA and Delta Fair
Rule of Civil Procedure 25(c) provides for the substitution
of parties when a transfer of interest has occurred after a
suit is filed. See 7C Charles Alan Wright et al., Federal
Practice and Procedure § 1958 (3d ed. 2019). Rule 25(c)
If an interest is transferred, the action may be continued by
or against the original party unless the court, on motion,
orders the transferee to be substituted in the action or
joined with the original party. The motion must be served as
provided in Rule 25(a)(3).
Fed. R. Civ. P. 25(c). Rule 25 “is merely a procedural
device designed to facilitate the conduct of a case, and does
not affect the substantive rights of the parties or the
transferee.” Iron Workers Local No. 25 Pension Fund
v. Watson Wyatt & Co., No. 04-cv-40243, 2008 WL
1924884, at *1 (E.D. Mich. Apr. 30, 2008) (citing 6 James Wm.
Moore et al., Moore's Federal Practice § 25.32 (3d
ed. 2010)). It “does not require that parties be
substituted or joined after an interest has been
transferred.” The Charter Oak Fire Ins. Co. v. SSR,
Inc., No. 11-cv-0118, 2015 WL 10890126, at *4
(E.D. Ky. July 13, 2015). “An order of joinder is
merely a discretionary determination by the trial court that
the transferee's presence would facilitate the conduct of
the litigation.” 7C Wright et al.,
supra, § 1958.
diversity case, the substantive law of the forum state
determines the real party in interest. See Certain
Interested Underwriters at Lloyd's v. Layne, 26 F.3d
39, 42-43 (6th Cir. 1994) (“[T]he real party in
interest is the person who is entitled to enforce the right
asserted under governing substantive law. . . . Of course,
the governing substantive law in diversity actions is state
law.”) (citations omitted). In Tennessee, “upon
payment of a loss, an insurance carrier becomes the real
party in interest with respect to its subrogation
claim.” Solectron USA, Inc. ex rel. Fidelity &
Deposit Co. of Md. v. FedEx Ground Package Sys., Inc.,
520 F.Supp.2d 904, 911 (W.D. Tenn. 2007) (quoting
Kentucky Nat'l Ins. Co. v. Gardner, 6 S.W.3d
493, 499 (Tenn. Ct. App. 1999)). “Immediately upon the
payment of [a claim], ” insurance companies are
“subrogated to the rights of their insureds, ”
and are “the real plaintiffs in interest.”
Id. (quoting Nat'l Cordova Corp. v. City of
Memphis, 380 S.W.2d 793, 796-97 (Tenn. 1964)).
paid the entire settlement between Yearta and the Defendants.
(ECF No. 104-1 ¶ 33.) It is now the real party in
interest as to AOA and Delta Fair's indemnity crossclaims
against Belle City. The Court grants AOA and Delta Fair's
request to substitute Liberty and directs the Court Clerk to
alter the case caption accordingly.
the Court grants AOA and Delta Fair's motion to
substitute Liberty, it need not consider Liberty's
alternative request to intervene under Rule 24. (See ECF No.
113-1 at 14-17.) Substitution is the appropriate remedy here.
See Ray Capital, Inc. v. M/V Newlead Castellano, No.
16-cv-0093, 2017 WL 4079082, at *5 (S.D. Ga. Sept. 13, 2017)
(noting that a “motion to intervene  based on a
transfer of one or more of the Defendants'
interests” is “more properly considered a motion
to substitute pursuant to Rule 25(c)”). The Motion to
Substitute is GRANTED as to the substitution of Liberty.