Ward v. Auto-Owners Insurance Company, 3:19-cv-01163

Charles Ward died in a July 18, 2017 work-related collision allegedly caused by Lisa Price; Auto-Owners insured the work truck with $1,000,000 UIM coverage.
Teena Ward, as administrator of Charles’s estate, claimed underinsured motorist (UIM) benefits after Price’s insurer (Erie) offered its $100,000 policy limit.
Auto-Owners advanced $100,000 to Teena in exchange for a Receipt & Assignment protecting Auto-Owners’ subrogation rights and requiring Teena to protect those rights.
Teena later alleged delays and bad-faith handling by Auto-Owners and received a $150,000 offer from Auto-Owners; she sued Auto-Owners for breach of contract and bad faith in federal court asserting diversity jurisdiction.
Auto-Owners moved to dismiss under Fed. R. Civ. P. 12(b)(7) and 19, arguing Price is a necessary and indispensable party whose joinder would destroy diversity; court denied the motion without prejudice for more factual development.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the tortfeasor (Price) is a necessary/indispensable party under Rule 19	Teena argues the policy and assignment do not expressly require suing Price, so Price is not necessary	Auto-Owners contends Teena contractually must protect subrogation rights and therefore must join Price; failure to join prejudices its rights	Court held the record is insufficient to find Price necessary/indispensable and denied dismissal without prejudice pending further factual development
Whether Teena’s failure to sue Price necessarily breaches duty to protect insurer’s subrogation interest	Teena says she has no interest in suing Price and asserts Price lacks assets beyond policy limits	Auto-Owners asserts not suing may prejudice its subrogation rights and joinder is required to protect them	Court concluded it cannot determine breach/prejudice on current record because neither side produced evidence on Price’s solvency or efforts to pursue recovery

Glancy v. Taubman Ctrs., Inc., 373 F.3d 656 (6th Cir.) (three-step framework for Rule 19 analysis)
Hooper v. Wolfe, 396 F.3d 744 (6th Cir.) (federal Rule 19 analysis may be guided by state law in diversity cases)
Posner v. St. Paul Fire & Marine Ins. Co., 821 N.E.2d 173 (Ohio 2004) (insured’s failure to sue tortfeasor breaches duty to protect insurer’s subrogation interest unless tortfeasor is judgment proof)
Ferrando v. Auto-Owners Mut. Ins. Co., 781 N.E.2d 927 (Ohio) (prejudice to insurer from insured’s failure to pursue tortfeasor is presumed absent contrary evidence)