November 15, 2013 4th Circuit published opinion

Hartford Fire Insurance Company v Harleyville Mutual Insurance Company et al.

Harleyville field a declaratory judgment suit in North Carolina to determine how a $1 million settlement should be apportioned among the responsible insurers. Hartford filed a declaratory suit in South Carolina state court on the same issue. The state case was removed to federal court. The South Carolina federal court ruled the insured contractor, who did not consent to removal, was a nominal party without interest in the case and dismissed the suit based on the pending earlier case in North Carolina. The panel affirmed. Noting that how to determine if a party is a nominal party in the removal context was an open question, the panel rejected the tests adopted by other circuits and instead held that the test for whether a party is nominal is a case specific factual determination whether the party in questions has an interest in the outcome of the case. It reasoned that the other tests veered away from this analysis and it is consistent with tests for nominal parties in other contexts. The panel affirmed as neither the North Carolina nor the South Carolina suits sought monetary damages, injunctive relief or any other remedy against the contractor. The panel also held as speculative the possibility the contractor will be held liable in another action, allege another insurer is responsible for some of that future judgment then claim against Hartford. The panel finally noted its decision will eliminate gamesmanship and forum shopping while preserving the substantive rights of parties with real interest at stake

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