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  • Litigation Section Blog
    January 29, 2021

    Unwilling Plaintiff: Appeals Court Weighs In on Compulsory Joinder

    In Nelson v. Loessin, a Wisconsin appeals court recently ruled that it is improper to force individuals with potential claims against defendants to litigate these claims in the same suit. Christina Davis Sommers discusses Loessin’s reasoning and the case’s implications.

    Christina Davis Sommers

    A Wisconsin appeals court recently held in Nelson v. Loessin1 that joinder statutes cannot be used by defendants to bring all injured parties involved in the same accident into same lawsuit.

    According to the appeals court, neither Wis. Stat. section 803.03  "Joinder of persons needed for just and complete adjudication," nor Wis. Stat. section 803.05  "Third-party practice," can be used by a defendant causing an accident to force all injured parties into a single lawsuit.

    Nelson v. Loessin: Facts

    In 2017, six individuals riding in a van suffered injuries in a car accident in which the van was struck from behind by David Loessin, who was allegedly under the influence of alcohol at the time. In 2018, two of the six passengers, the Nelsons, sued Loessin and his insurer Allstate for compensatory and punitive damages. Loessin’s policy with Allstate had limits of $100,000 per person and $300,000 per occurrence.

    Loessin and Allstate filed a third-party complaint against the remaining four van passengers (the Rosenthals and the Eastons), naming them as third-party defendants in the Nelsons’ suit. The third-party complaint alleged that the Rosenthals and Eastons must be joined in the action because they were

    necessary parties to [the Nelsons’] lawsuit because their absence [left] Loessin and Allstate … subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of their claimed interests.

    Loessin and Allstate acknowledged that they had no claim against the Rosenthals or Eastons. They nevertheless argued that joinder was proper because they were entitled to one judgment in one action that determined the claims of all six individuals injured in the accident.

    The Rosenthals and Eastons, who had not completed treatment for their injuries, moved to dismiss the third-party complaint, a motion that the circuit court denied. An appeal followed.

    Christina Davis Sommers Christina Davis Sommers, George Washington University 2009, is an attorney with Corneille Law Group, Green Bay, where her practice includes personal injury defense, medical malpractice, and construction defect litigation.

    The Holding

    The court of appeals first held that the Rosenthals and Eastons could not be brought into the Nelsons’ lawsuit by way of Wis. Stat. section 803.07, because that statute explicitly stated that, “Persons having claims against the plaintiff [here, the Nelsons] may be joined as defendants and required to interplead when their claims are such that the plaintiff is or may be exposed to double or multiple liability,” but the Rosenthals and Eastons had no claim against the Nelsons. Rather, they had potential claims against Loessin and Allstate (emphasis added).

    Nor did this statute provide a mechanism for bringing the other four passengers into the same suit based on its dictate that a “defendant exposed to similar liability may obtain such interpleader by way of cross claim or counterclaim.”

    The court held that the statute’s plain language governed and applied only to those who were already parties, because a cross claim or counterclaim could not be made against a nonparty. Because neither the Rosenthals nor the Eastons were parties to the lawsuit, section 803.07 provided no basis for Loessin and Allstate to bring them into the suit.

    Nor did section 803.05 provide a basis for upholding the third-party complaint. That statute allows

    a defending party as a third-party plaintiff [to] cause a summons and complaint to be served upon a person not a party to the action who is or may be liable to the defending party for all or part of the plaintiff’s claim against the defending party, or who is a necessary party under [section] 803.03 (emphasis added).

    Neither the Rosenthals nor the Eastons could be liable to Losessin or Allstate for all or part of the Nelsons’ claim, so the only way the third-party complaint was proper was if the Rosenthals or the Eastons were “necessary parties” within the meaning of Wis. Stat. section 803.03(1). Section 803.03(1) provides that a person “shall be joined as a party” in an action “if”:

    (a) In the person’s absence complete relief cannot be accorded among those already parties; or
    (b)The person claims an interest relating to the subject of the action and is so situated that the disposition of the action in the person’s absence may:
    1. As a practical matter impair or impeded the person’s ability to protect that interest; or
    2. Leave any of the persons already parties subject to a substantial risk of incurring double, multiple or otherwise inconsistent obligations by reason of his or her claimed interest.

    The court of appeals held that section 803.03(1)(a) was inapplicable to the third-party complaint filed by defendants because complete relief could be accorded among the existing parties – the Nelsons, Losessin, and Allstate – without bringing anyone else into the action.

    And because neither the Rosenthals nor the Eastons had yet “claim[ed] an interest” in the subject of the Nelsons’ lawsuit, they were not necessary parties under section 803.03(1)(b) either. The appeals court rejected the idea that joinder was proper because the Rosenthals and/or the Eastons might assert a claim based on the accident in the future.

    Finally, the permissive joinder statute, Wis. Stat. section 803.04(1), was of no assistance to Loessin and Allstate, because that statute only applied to situations where individuals were seeking to join in a lawsuit and, as the court succinctly put it, “joinder of plaintiffs is at the option of the plaintiffs; it cannot be demanded as a matter of right by the defendants.”

    Implications of Loessin

    Loessin and Allstate sought to litigate in one suit the claims (or potential claims) of six individuals injured in one accident, but Nelson makes clear that there is no way to force individuals with potential claims against defendants to litigate these claims in the same suit as one brought by other accident victims.

    Wis. Stat. section 803.03(1)(a) is inapplicable to a situation in which some – but not all – accident victims bring suit against defendants, because the others injured in the accident are not “necessary parties” without which relief could not be afforded against the parties already in the litigation.

    In other words, any plaintiff can sue any defendant, even if other plaintiffs might have a claim against the defendant related to the same accident, because these other potential plaintiffs can obtain relief by filing their own lawsuit against the defendant.

    Part of the reason the Loessin court held that the nonplaintiffs injured in the accident were not necessary parties was because they had not “claimed an interest” in the subject matter of the suit. In assessing whether they were necessary parties, the court found relevant that they had not made any demand of the defendants, nor had they engaged in negotiations with them in an attempt to resolve a claim.

    Because Wis. Stat. section 803.03(1)(b)(2) provides for compulsory joinder when

    The person claims an interest relating to the subject action and is so situated that the disposition of the action in the person’s absence may … [l]eave any of the persons already parties subject to a substantial risk of incurring double, multiple or otherwise inconsistent obligations by reason of his or her claimed interest.

    Loessin may have been decided differently had the Rosenthals or the Eastons already made claims related to the accident or tried to resolve their claims through negotiation with American Family.

    But even if this had happened, the court made clear that compulsory joinder was only appropriate if the defendant could do more than speculate that, absent joinder, it would likely face double, multiple, or inconsistent obligations – alleging that it would face inconsistent results absent joinder was not enough.

    Accordingly, a defendant seeking to join as plaintiffs individuals involved in the same accident as present plaintiffs will have an uphill battle in doing so based on the plain language of, and Loessin’s interpretation of, the joinder statutes.

    This article was originally published on the State Bar of Wisconsin’s Litigation Section Blog. Visit the State Bar sections or the Litigation Section web pages to learn more about the benefits of section membership.

    Endnote

    1 Nelson v. Loessin, 2020 WI App 72, (Oct. 28, 2020).

    ​​​​​​




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    Litigation Section Blog is published by the State Bar of Wisconsin; blog posts are written by section members. To contribute to this blog, contact Matthew Lein and Nelson Phillips III and review Author Submission Guidelines. Learn more about the Litigation Section or become a member.

    Disclaimer: Views presented in blog posts are those of the blog post authors, not necessarily those of the Section or the State Bar of Wisconsin. Due to the rapidly changing nature of law and our reliance on information provided by outside sources, the State Bar of Wisconsin makes no warranty or guarantee concerning the accuracy or completeness of this content.

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