South Carolina Electric & Gas Co. v. Ranger Construction Co.

Citations: 539 F. Supp. 578; 35 Fed. R. Serv. 2d 496; 1982 U.S. Dist. LEXIS 12552Docket: Civ. A. 81-1472-1

Court: District Court, D. South Carolina; May 24, 1982; Federal District Court

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The United States District Court for the District of South Carolina addressed motions related to a products liability action involving South Carolina Electric & Gas Company (Plaintiff) and three defendants: Ranger Construction Company, Inc., McClure Associates, Inc., and General Electric Company. The Plaintiff moved to amend its complaint to remove Ranger as a party-defendant, asserting that Ranger was not an indispensable party and its inclusion could undermine the court's subject matter jurisdiction due to a lack of complete diversity of citizenship. The Defendants, GE and McClure, sought to dismiss the case on similar grounds, arguing that Ranger is a South Carolina corporation, which would prevent complete diversity since the Plaintiff is also based in South Carolina. 

The Plaintiff's motion was made under Federal Rules of Civil Procedure 15 and 21, allowing for the dismissal of non-diverse parties if they are not essential to the case. The court recognized that non-diverse defendants can be removed to preserve jurisdiction, referencing established case law that supports this practice. The incident at the center of the litigation involved damage to a transformer owned by the Plaintiff, allegedly caused by the negligence of the Defendants during the energization of a switch station at the Medical University of South Carolina.

The trial court has the discretion to allow a plaintiff to drop a non-diverse defendant to retain jurisdiction, as established in Caperton v. Beatrice Pocahontas Coal Co. Courts have ruled that denying such a motion could constitute an abuse of discretion if the non-diverse party is not indispensable and no prejudice arises for the remaining defendants, as seen in Kerr v. Compagnie De Ultramar and Neeld v. American Hockey League. Rule 21 of the Federal Rules of Civil Procedure permits the dropping or adding of parties at any stage of the action, and a claim against a party may be severed and handled separately.

Before exercising this discretion, the court must assess whether the non-diverse defendant is indispensable under Rule 19. Generally, a non-diverse defendant liable for joint and several torts is not considered indispensable in diversity cases and may be dismissed. This principle is supported by cases like Weaver v. Marcus, Windert Watch Co. Inc. v. Remex Electronics, and others. In Weaver v. Marcus, the Fourth Circuit reversed a trial court's denial of a motion to dismiss a non-diverse defendant, ruling that he was not indispensable since joint tort-feasors can be sued separately. Similarly, in Causey v. Burgess, the court addressed jurisdiction issues when both a defendant and the plaintiff were from the same state, concluding that joint tort-feasors are necessary parties collectively, but not individually indispensable for jurisdictional purposes.

Judge Simons ruled that when an agent commits a tort within the scope of their agency, both the agent and principal are considered joint tort-feasors, allowing the injured party to sue either one without the obligation to join both. The court emphasized that a plaintiff's right to choose which joint tort-feasor to sue should not be impeded by other defendants seeking to include additional parties. The judge granted the Plaintiff's Motion to Dismiss Defendant Burgess to achieve necessary diversity of citizenship. The ruling clarified that in the current case, the defendants are being sued jointly, and their liability is joint and several, meaning Ranger is not an indispensable party under Rule 19 and can be dismissed to ensure diversity. 

The court rejected the argument that dropping Ranger would affect jurisdiction due to the expiration of the statute of limitations, stating that dismissing a non-diverse defendant can retroactively perfect jurisdiction even after the limitations period has run. The judge concluded that allowing the dismissal of Ranger would not prejudice the remaining defendants since the plaintiff could have originally chosen to sue them alone. 

The court ordered the dismissal of Ranger from the case to establish diversity jurisdiction and denied the motion to dismiss for lack of subject matter jurisdiction from General Electric Company and McClure Associates, Inc. The court acknowledged the potential for an immediate appeal regarding the legal question involved, granting the defendants the right to seek relief in the Court of Appeals for the Fourth Circuit. Further proceedings in this Court were stayed pending that appeal.