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Texas Farmers Insurance Co. v. Louisiana-Pacific Corp.

United States District Court, E.D. Texas, Sherman Division

June 6, 2017

TEXAS FARMERS INSURANCE COMPANY as subrogee of Jose Prince and as subrogee of Jose Nieves
v.
LOUISIANA-PACIFIC CORPORATION

          MEMORANDUM OPINION AND ORDER

          AMOS L. MAZZANT UNITED STATES DISTRICT JUDGE

         Pending before the Court is Defendant Louisiana-Pacific Corporation's Motion for Severance (Dkt. #15). After considering the relevant pleadings, the Court finds that the motion should be granted.

         BACKGROUND

         Louisiana-Pacific Corporation (“LP”) manufactures TechShield, a radiant barrier product used in home construction. The TechShield product reflects a roof's radiant heat away from a home's attic, leading to improved energy efficiencies and lowering utilities costs to homeowners. (Dkt. #15 at p. 2).

         Both Jose Prince's (“Prince”) and Jose Nieves' (“Nieves”) residences had the TechShield product installed, which was designed, manufactured, marketed, sold, and distributed by LP. (Dkt. #7 at ¶ 7). Texas Farmers Insurance Company (“Farmers”) insured both Prince's and Nieves' real and personal property (Dkt. #7 at ¶ 6). On May 23, 2015, lightning struck the Nieves residence in Round Rock, Texas. (Dkt. #15 at p. 3). The following day, lightning struck the Prince residence in Frisco, Texas during a different storm. Each house caught fire after being struck by lightning, causing substantial structural damage to the residences as well as damage to personal property. Farmers, in its amended complaint, alleges that the lightning strikes at both homes “energized” the TechShield radiant barrier (Dkt. #7 at ¶ 9). Farmers also alleges that TechShield caused both fires because TechShield “failed to withstand and safely dissipate the lighting induced current, ” and “ignited a fire” in the homes' attic space that spread by igniting “nearby combustibles” in each attic (Dkt. 16 at pp. 1-2). Therefore, Farmers claims that LP's “improper design, manufacture, and marketing” of TechShield caused the damage. As a result of the home fires, Farmers, pursuant to insurance policies it had with both Prince and Nieves, paid them $432, 477.50 and $468, 419.16, respectively (Dkt. # 16 at p. 10).

         On November 22, 2016, Farmers, as subrogee of both Prince and Nieves, submitted an amended complaint alleging strict products liability, negligence, and breach of implied warranties claims to recoup damages paid to Prince and Nieves as a result of the fires. (Dkt. #16). Farmers joined its claims under Rule 18 of the Federal Rules of Civil Procedure for each independent home fire. On December 23, 2016, LP filed this Motion to Sever the two claims brought by Farmers, arguing that Rule 21 of the Federal Rules makes bringing the claims together unwarranted (Dkt. #15). LP asserts that the Court should sever the two claims because they do not arise out of the same transaction or occurrence; do not share common issues of law or fact; will require different evidence and witnesses to prove them; and joining the claims together would be costly, inefficient, and prejudicial to LP (Dkt. #15). On January 5, 2017, Farmers filed a response (Dkt. #16). On January 12, 2017, LP filed a reply (Dkt. #17).

         LEGAL STANDARD

         Rule 21 of the Federal Rules of Civil Procedure establishes that “[o]n motion or on its own, the court may at any time, on just terms, add or drop a party, ” and “[t]he court may sever any claim against a party.” Fed.R.Civ.P. 21. Under Rule 21, a “district court has the discretion to sever an action if it is misjoined or might otherwise cause delay or prejudice.” Applewhite v. Reichhold Chems., 67 F.3d 571, 574 (5th Cir. 1995). Trial courts have broad discretion to sever issues to be tried before it. Brunet v. United Gas Pipeline Co., 15 F.3d 500, 505 (5th Cir. 1994). But courts will refuse to sever claims if “the court believes that it only will result in delay, inconvenience, or added expense.” In re Rolls Royce Corp., 775 F.3d 671, 680 n.40 (5th Cir. 2014).

         Severance under Rule 21 creates “two separate actions or suits where previously there was but one.” U.S. v. O'Neil, 709 F.2d 361, 368 (5th Cir. 1983). When a single claim is severed, it proceeds as a “discrete, independent action, and a court may render a final, appealable judgment in either one of the resulting actions.” Id.

         ANALYSIS

         Farmers properly joined the Prince and Nieves claims under Rule 18. Rule 18 is a broad joinder rule, permitting parties to “join as many claims as it has against an opposing party.” Fed.R.Civ.P. 18. However, not all claims properly joined under Rule 18 should proceed to a single trial. The official commentary of Rule 18 states, “it is emphasized that amended Rule 18(a) deals only with pleading, ” and “a claim properly joined as a matter of pleading need not be proceeded with together with the other claims if fairness or convenience justifies separate treatment.” Fed.R.Civ.P. 18: Notes of Advisory Committee of Rule - 1966 Amendment. This district recognizes that severance is “especially appropriate” if trying claims together would “confuse the jury due to legal and factual differences.” Delce v. AMTRAK, 180 F.R.D. 316, 319 (E.D. Tex. 1998); see Charles Alan Wright, et al., Fed. Prac. & P. § 1583 (April 2017) (“Rule 18(a) only deals with joinder as an initial matter; the district court may decide that for convenience, or to avoid prejudice, properly joined claims should be treated separately for trial purposes.”). Thus, the Court finds fairness, efficiency, jury confusion, and possibility of prejudice the primary considerations in the severance analysis.

         Farmer argues, and the Court recognizes, that courts often utilize Rule 21 to sever claims improperly joined under Rule 20 of the Federal Rules. However, the Court may utilize Rule 20 cases in determining whether to sever properly joined Rule 18 claims. Our district has maintained that Rule 21 “should be read in conjunction with Rules 18, 19 and 20, ” because Rule 21 contains no standards governing its operation, but is invoked when violation of another rule occurs. Americans for Fair Patent Use, LLC v. Sprint Nextel Corp., No. 2:10-CV-237-TJW, 2011 WL 98279, at *2 (E.D. Tex. Jan. 12, 2011). And the Fifth Circuit has held that “district courts have considerable discretion to deny joinder when it would not facilitate judicial economy and when different witnesses and documentary proof would be required for plaintiff's claims.” Acevedo v. Allsup's Convenience Stores, Inc., 600 F.3d 516, 522 (5th Cir. 2010). Therefore, the Court finds it appropriate to utilize Rule 20 cases in determining whether to sever properly joined claims to the extent they weigh on fairness, judicial economy, and prejudice.

         LP's motion for severance asserts multiple reasons as to why trying the Prince and Nieves claims together would cause unfairness, inconvenience, and prejudice to LP. First, LP asserts that vastly different witnesses and documentary proof will be necessary to adjudicate each claim. As stated above, this Court has broad discretion to sever claims when “different witnesses and documentary proof would be required” to prove each claim, and severance is appropriate if trying the claims together would “confuse the jury due to legal and factual differences.” Acevedo, 600 F.3d at 522; Delce, 180 F.R.D. at 319. District courts in the Fifth Circuit have considered such factors when deciding to grant motions to sever. For example, in Guilbeau, the Western District of Louisiana considered a motion to sever medical patients' claims against medical product manufacturers. See Guilbeau v. Wyeth, Inc., No. 09-1652, 2010 WL 2216710, at *2 (W.D. La. May 28, 2010). The court concluded that because each plaintiff's “witnesses would necessarily include the individual plaintiff and all of his or her physicians, healthcare facility representatives and fact witnesses, undue prejudice and unnecessary jury confusion would likewise occur.” Id.

         Here, each claim will likewise involve the individual homeowner, vendors that conducted repairs to each home, investigators who examined each individual home, and other witnesses with knowledge unique to only one of the claims. For example, seven distinct companies have information unique to the Nieves claim, and ten distinct companies have information unique to the Prince claim (Dkt. #15 at p. 8). While Farmers contends that all of the witnesses in these companies are damages witnesses, the damages Prince and Nieves suffered will require entirely different calculations resulting from claim-specific testimony. If tried together, the jury would have to consider extensive testimony regarding the conditions unique to each house before the fire, the resulting structural damage unique to each house, property damage unique to each claim, as well as living expenses unique to both Prince and Nieves, which is likely to cause confusion. Guilbeau, 2010 WL 2216710, at *2. Additional witnesses likely to testify in this case include: the Round Rock and Frisco Fire Departments, the cause and origin investigators who examined each house, the claims adjusters for both Prince and Nieves, as well as Prince and Nieves themselves. These witnesses will only be able to testify regarding the specific fire in which they were involved. This will result in even more technical, claim-specific testimony that the jury will have to distinguish between each claim throughout. Farmers asserts that the cause and origin expert's testimony will include “common indicators” at both fire scenes unique to radiant barrier fires generally. However, Farmers must still use its witnesses and experts to prove that TechShield was the cause in fact of each individual fire to prevail on their strict products liability and negligence claims. See Gill v. Ethicon Inc., No. ...


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