United States District Court, W.D. Arkansas, El Dorado Division
LOUISIANA COMMERCE & TRADE ASSOCIATION, SELF INSURERS FUND PLAINTIFF
WEST FRASER, INC. DEFENDANT
O. Hickey, United States District Judge
the Court is a Motion to Dismiss filed by Defendant West
Fraser, Inc. (ECF No. 6). Plaintiff Louisiana Commerce &
Trade Association, Self Insurers Fund has filed a response to
the Motion. (ECF No. 9). The matter is ripe for the
Court's consideration. For the reasons discussed below,
the motion is granted.
Louisiana Commerce & Trade Association, Self-Insurers Fund
("LCTA") is a workers' compensation
self-insurance fund organized in Louisiana. Kentwood Brick
and Tile Manufacturing Company, Inc. ("Kentwood")
was a member of the LCTA's Self-Insurers Fund during the
time pertinent to this action. In 2010, Adam Davis, Jr., a
truck driver employed by Kentwood, was injured in a forklift
accident. The accident occurred on Defendant West
Fraser's property in Huttig, Arkansas. Davis alleges
that, at the time of the accident, he was acting within the
scope of his employment. The forklift was operated by a West
Fraser employee, and Davis alleges that the employee was also
acting within the course and scope of his employment when the
March 6, 2013, Davis filed suit against West Fraser in this
Court (Davis v. West Fraser, Case No.
1:13-cv-01019), alleging that West Fraser was vicariously
liable for the negligence of its employee who caused the
forklift accident and Davis's resulting injuries. LCTA
was allowed to intervene in the 2013 case as Kentwood's
self-insurance fund. Thereafter, Davis filed a motion to
dismiss. Upon Davis's motion, the Court dismissed
Davis's claim without prejudice and conditioned any
re-filing of his claim on payment of West Fraser's
November 16, 2015, LCTA filed suit against West Fraser in
Union County Circuit Court for compensation related to
Davis's accident and injuries. On January 8, 2016, Davis
also filed suit against West Fraser in Union County Circuit
Court for compensation regarding the forklift accident. Both
of these cases were subsequently removed to this Court. In
the present case, LCTA's complaint alleges that West
Fraser is liable for the negligence of its employee through
the doctrine of respondeat superior. LCTA seeks to recover
the amount it has paid Davis in workers' compensation
benefits and asserts that it is entitled to the amount of any
future payments to Davis.
Fraser seeks to dismiss LCTA's complaint, arguing that
procedural defects in the complaint require dismissal. First,
West Fraser alleges that its costs from the 2013 case that
this Court required to be paid before re-filing Davis's
claims have not been paid. As a result, West Fraser states
that LCTA's complaint should be dismissed. Second, West
Fraser argues that because LCTA is not the real party in
interest in this action, its claim must be dismissed.
Fraser argues that LCTA's complaint should be dismissed
because a condition precedent has not been satisfied. In the
Court's order dismissing Davis's 2013 case against
West Fraser, the Court stated that Davis should pay West
Fraser's costs in the amount of $1, 767.25 should Davis
refile his claim. Davis v. West Fraser, Inc., Case
No. 1:13-cv-01019, ECF No. 45. Under Arkansas law, an
insurer-subrogee acquires the same rights and defenses as its
insured-subrogor and predecessor in interest. See Shelter
Ins. Co. v. Arnold, 940 S.W.2d 505, 507 (Ark. App.
1997). Therefore, as subrogee to Davis, LCTA must satisfy the
condition this Court established for Davis to refile his
negligence claim against West Fraser. LCTA does not dispute
that this condition has not been satisfied. Therefore, LCTA
cannot bring its claim against West Fraser without first
paying West Fraser's costs.
Fraser next argues that LCTA's complaint should be
dismissed because Davis, not LCTA, is the real party in
interest. Because this is a federal diversity case, the Court
will apply federal procedural rules but Arkansas substantive
law, which is the law of the forum state. See Perry v.
Johnson, 641 F.3d 953, 955-956 (8th Cir. 2011) (citing
Salve Regina Coll. v. Russell, 499 U.S. 225, 226,
111 S.Ct. 1217 (1991)).
action must be brought in the name of the real party in
interest. Fed.R.Civ.P. 17(a)(1). The purpose of Rule 17(a) is
to ensure that the defendant will face only one suit and will
obtain the benefit of res judicata. Curtis Lumber Co., v.
Louisiana Pacific Corp., 618 F.3d 762, 771 (8th Cir.
2010). The Court looks to Arkansas substantive law to
determine whether LCTA, as subrogee to Davis, is the real
party in interest in the action. See Tri-National, Inc.
v. Yelder, 781 F.3d 408, 411-412 (8th Cir. 2015)
(stating that, in diversity cases, state substantive law is
consulted to determine whether a subrogee is the real party
in interest). Subrogation is when an insurer (subrogee) puts
itself into the shoes of the insured (subrogor) to assert the
insured's rights against a third party. See
Progressive Halcyon v. Salvidar, 2013 Ark. 69, 2013 WL
655234, at *5 (2013). Arkansas subscribes to the "made
whole" doctrine, which stipulates that an insurer is not
entitled to subrogation until the insured has been made whole
for its loss. Id. When an insurer has only partially
reimbursed the insured for its loss, the insured is the only
real party in interest and any action for recovery against a
third party must be brought in its name. Farm Bureau Ins.
Co. v. Case Corp., 878 S.W.2d 741, 742 (Ark. 1994).
states in its complaint that it seeks reimbursement for
compensation payments it will make to Davis for an indefinite
span of time. This indicates that as subrogee, LCTA has not
paid for the entire loss suffered by subrogor Davis and that
Davis has not been made whole for that loss. Therefore, Davis
is the only real party in interest because he has not been
completely reimbursed for his loss and that LCTA cannot
attempt subrogation. See Salvidar 2013 Ark. at *7;
Farm Bureau 878 S.W.2d at 742. Also, the fact that
Davis is bringing the same claim against West Fraser
separately and simultaneously indicates that LCTA is not
truly standing in Davis' place to assert his right as
required under the principles of subrogation. See
Salvidar at *7. Moreover, it defeats the purpose of Rule
17, which seeks to ensure that West Fraser will face only one
suit. See Curtis Lumber, 618 F.3d at 771. LCTA
cannot reasonably contend that it is asserting a right on
behalf of Davis while Davis is asserting that same right in a
different action. Consequently, LCTA cannot be considered the
real party in interest in this action.
has not satisfied the condition precedent necessary to file
its claim. Further, LCTA is not the real party in interest to
this action. Accordingly, West Fraser's Motion to Dismiss
(ECF No. 6) is ...