David J. Waxse, United States Magistrate Judge.
Pending before the Court is Defendant's Motion to Join Additional Parties (doc. 5). More specifically, Defendant Continental Western Insurance Company, Inc. ("Continental Western") requests the Court add Cheney Construction Company, Inc. ("Cheney Construction"), The Kansas County Association Multiline Pool ("KCAMP") and The Ken Ebert Design Group ("The Ebert Group") as additional plaintiffs to this cause of action. For the reasons stated below, Defendant's Motion is granted to the extent that the proposed parties will be added as counterclaim defendants to this action.
Factual Background
In May 1998, the Marshall County Board of County Commissioners ("Marshall County") entered into a written contract with Cheney Construction to provide and install a new roof on the Marshall County Courthouse and Administration Building ("the Courthouse"). Defendant Continental Western provided insurance coverage for Cheney Construction during the relevant time period.
Relevant to the issue before the Court, Marshall County subsequently alleged Cheney Construction was negligent in performing the roof installation work under the contract and, as a result of that negligence, the Courthouse suffered water and other damage. A dispute then arose as to whether the damages to the Courthouse were caused by Cheney Construction's allegedly negligent performance or by problems that existed prior to the time Cheney Construction performed its work.
On January 20, 2000, representatives from Marshall County, Cheney Construction and Continental Western met in an attempt to resolve a disagreement regarding who should be financially responsible for repairs to the roofing system, as well as for contamination clean-up due to water leaks from the roof damage. Marshall County maintains the parties resolved their disagreement at this meeting and, after the meeting, the attorney for Marshall County prepared a letter purporting to memorialize the terms of the settlement agreement allegedly reached. According to the Letter Agreement, the parties stipulate to the following settlement terms:
• An independent expert will be retained to examine and inspect the entire roofing system. The examination and inspection will include any work to correct or remedy any problem or defect observed. Costs related to inspection, examination and any repair and/or remedial work shall be borne by Cheney and/or Continental and the expert shall contract directly with Cheney and/or Continental.
• Continental will retain — at its own expense — an expert to inspect, investigate and test for microbial contamination at the Courthouse;
• design and implement a plan to decontaminate, dryout and clean the building; and
• monitor the decontamination, dryout and cleaning.
The expert shall contract directly with Cheney and/or Continental.
• Continental will retain — at its own expense — a separate contractor to perform the remedial work necessary to decontaminate or clean the building
and such contractor shall contract directly with Cheney and/or Continental.
• Costs associated with correcting deficiencies in the Courthouse HVAC system shall be borne by Marshall County.
• The consideration or incentive of the parties in entering into the settlement agreement is to settle the issues pertaining to the roof, roofing system, ventilation and HVAC systems.
• The reports, recommendations and findings of any expert shall be conclusive and cannot be challenged by any party. The parties will abide by and be bound by the results of any testing, inspections and/or examinations conducted by the experts and will perform such work or services as set forth in the reports, opinions or determinations made by such experts.
The Letter Agreement was signed by all parties on or about January 26, 2000. A little over a year later, Marshall County filed suit against Continental Western for breaching the terms of the executed Letter Agreement and the insurance policy between Continental Western and Cheney Construction. The suit, filed in Marshall County, Kansas and removed to federal court as the above-styled action, seeks (1) a declaratory judgment regarding enforceability of Continental Western's obligations under the Letter Agreement and the insurance policy between Continental Western and Cheney Construction; (2) specific performance on behalf of Continental Western with respect to the Letter Agreement and the insurance policy between Continental Western and Cheney; and (3) monetary damages for breach of the contractual terms of the Letter Agreement and the insurance policy between Continental Western and Cheney Construction.
In its Answer and Counterclaim, Continental Western refutes Marshall County's contention that the parties resolved at the January 20, 2000 meeting their disagreement regarding who should be financially responsible for repairs to the Courthouse. Instead, Continental Western asserts the parties reached only a tentative agreement and that such tentative agreement dealt only with the limited issue of how the necessary repairs would be evaluated and determined. To that end, Continental Western also asserts in its Answer and Counterclaim that the Letter Agreement lacks consideration, is ambiguous and based on mutual mistake, contains no merger clause, fails to take into account the potential liability of Ebert and KCAMP for the alleged damages to the Courthouse and fails to take into account that the Courthouse roof was leaking prior to Cheney Construction installing the new roof. As relief in its counterclaim, Continental Western seeks a declaratory judgment construing the legal effect, if any, of the January 2000 Letter Agreement to each party to the Letter Agreement. In addition, Continental Western seeks a declaratory judgment
Continental Western also seeks a declaratory judgment construing the legal effect of a Letter Agreement signed by the parties in April 2000. The parties, however, failed to submit to the Court a copy of this Letter Agreement.
• construing the policy of insurance issued to Cheney Construction by Continental Western to determine Continental Western's liability to Marshall County under the policy;
• construing the policy of insurance issued to Marshall County by KCAMP to determine whether said policy provides coverage for the alleged damages to the Courthouse; and
• construing the extent of Ebert's liability for the alleged damages to the Courthouse.
Consistent with the prayer for relief set forth in its counterclaim, Continental Western now moves, pursuant to Fed.R.Civ.P. 13(h), to add Cheney Construction, KCAMP and The Ebert Group as parties to this lawsuit. More specifically, Continental Western asserts Cheney Construction is subject to compulsory joinder pursuant to Fed.R.Civ.P. 19 or, in the alternative, that all three of the proposed parties should be joined pursuant to Fed.R.Civ.P. 20, the federal rule governing permissive joinder.
Discussion
The federal rules expressly authorize joinder of non-parties to a counterclaim if such joinder is made pursuant Rule 19 or 20 of the Federal Rules of Civil Procedure. Fed.R.Civ.P. 13(h) ("[p]ersons other than those made parties to the original action may be made parties to a counterclaim or cross-claim in accordance with the provisions of Rules 19 and 20."); see, also, NAL II, Ltd. v. Tonkin, 705 F. Supp. 522, 529 (D.Kan. 1989). Rule 19 deals with compulsory joinder of necessary and indispensable parties, while Rule 20 deals with permissive joinder of parties. More specifically, Rule 20 provides for permissive joinder under the following circumstances:
All persons . . . may be joined in one action as defendants if there is asserted against them jointly, severally, or in the alternative, any right to relief in respect of or arising out of the same transaction, occurrence, or series of transactions or occurrences and if any question of law or fact common to all defendants will arise in the actions.
Applying these rules to the facts presented, permissive joinder of Cheney Construction, KCAMP and The Ebert Group will be allowed if:
(1) Defendant Continental Western asserts joint, several, or alternative relief against them; (2) the requested relief arises out of the same transaction or occurrence underlying the claim for relief against Defendant Continental Western; and (3) any common question of law or fact will arise in this action. The Court finds all three factors are met here.
With respect to the first factor, Defendant Continental Western seeks a declaratory judgment against all three proposed parties — Cheney Construction, KCAMP and The Ebert Group — with respect to liability for alleged damages to the Courthouse. The Court therefore finds that the first factor is met.
The Court also finds that the second factor is met. Marshall County filed suit against Continental Western for breaching the terms of the executed Letter Agreement and for breaching the terms of the insurance policy between Continental Western and Cheney Construction . Plaintiff's Petition at ¶ 36, p. 11 ("Continental Western's refusal to perform its obligations under the Letter Agreement are in breach of that contract and its obligations under the insurance policy, in which [Marshall] County has an interest. As a result, there exists a justiciable controversy between [Marshall] County and Continental Western as to the enforceability of Continental Western's obligations set forth in the Letter Agreement and Continental Western's obligations under the insurance policy.") (emphasis added).
Based on these claims, if the Letter Agreement at issue ultimately is declared invalid by the Court, Marshall County's suit will go forward on claims for declaratory relief, specific performance and monetary damages on grounds that Continental Western is liable to Marshall County pursuant to the terms of the Continental Western-Cheney Construction insurance contract. If Continental Western's alleged liability is premised on breach of the insurance contract between Continental Western and Cheney Construction, then a request for declaratory judgment necessarily requires the Court to apportion liability for damage to the Courthouse. Thus, the relief sought by Marshall County in the original petition is the same relief sought by Defendant Continental Western in its Counterclaim against the three proposed parties, i.e., a declaration as to the rights and responsibilities of the various parties associated with damage to the Courthouse roof.
Finally, the Court finds that the third factor is also met, in that common questions of fact and law will certainly exist with regard to declaration of rights and responsibilities of the parties associated with damage to the Courthouse roof.
Based on this discussion, and without addressing the merits of the alleged Counterclaim, the Court holds that the Counterclaim allegations are sufficient to allow permissive joinder of Cheney Construction, KCAMP and The Ebert Group pursuant to Rules 13(h) and 20. The Court therefore will grant Defendant's Motion to the extent Defendant seeks to join Cheney Construction, KCAMP and The Ebert Group as counterclaim defendants to this action.
Because the Court will allow the permissive joinder of all three proposed parties, the Court need not address whether joinder of Cheney Construction is required pursuant to Fed.R.Civ.P. 19.
IT IS SO ORDERED.