## Facts

- Infants Children & Youth Ltd. (IC&Y) owned a Mercedes-Benz that was driven by IC&Y’s president, Gerald Green.
- Green personally insured the Mercedes through a policy issued by Metropolitan Insurance Co. (Metropolitan).
- In December 1990, the Mercedes caught fire and sustained property damage.
- Metropolitan paid Green $62,556.60 in insurance proceeds after applying Green’s $1,000 deductible.
- After paying the loss, Metropolitan obtained a subrogation interest and title to the vehicle was transferred to Metropolitan from IC&Y.
- In 1992, just before the limitations period expired, Metropolitan filed suit in a Pennsylvania state court in Green’s name against Daimler Benz, AG (manufacturer) and the vehicle’s wholesaler and retailer, alleging negligence and recklessness causing a defect that led to the fire.
- Defendants removed the action to the U.S. District Court for the Eastern District of Pennsylvania based on diversity jurisdiction.
- Defendants moved for summary judgment, arguing that Green was not the real party in interest under Federal Rule of Civil Procedure 17(a) because Metropolitan owned the subrogated claim.
- In response, Green requested that Metropolitan be substituted (or alternatively joined) as the plaintiff.

## Issues

1. Whether Green was the real party in interest under Federal Rule of Civil Procedure 17(a) when Metropolitan paid the loss (less a deductible), took title to the vehicle, and held the subrogation interest.
2. If Green was not the real party in interest, whether Rule 17(a) required dismissal or instead permitted substitution of Metropolitan as plaintiff (including whether substitution would relate back despite the statute of limitations).

## Decision

- The court held that Green was not the real party in interest because Metropolitan paid the loss and acquired title and the subrogation interest, leaving Metropolitan as the owner of the claim (apart from Green’s deductible).
- The court denied defendants’ request for a case-ending remedy based on the real-party-in-interest defect.
- The court granted Green’s request to substitute Metropolitan as the plaintiff under Rule 17(a).
- The court held that the substitution related back to the original filing date, so the action was not barred by the statute of limitations.
- The court treated Pennsylvania practice allowing suit in the insured’s name as explaining why the case was filed that way in state court, but ruled that Rule 17(a) controlled once the case was in federal court.

## Legal Principles

- An action in federal court must be prosecuted in the name of the real party in interest. (Fed. R. Civ. P. 17(a).)
- Rule 17(a) bars dismissal for failure to name the real party in interest until a reasonable time is allowed for ratification, joinder, or substitution of the proper party.
- When an insurer pays the loss and acquires the insured’s interest in the property (including by transfer of title), the insurer is generally the real party in interest as to the subrogated claim.
- In a removed diversity case, federal procedural rules govern party status in federal court even if state procedure allowed the insurer to sue in the insured’s name in state court.
- Substitution of the real party in interest under Rule 17(a) may relate back when the claim arises from the same events, the defendants had notice of the claim, and the change corrects the plaintiff’s identity rather than adding a new cause of action.

## Conclusion

Green lacked the ownership stake needed to be the real party in interest because Metropolitan paid the loss and took title, but the court applied Rule 17(a) to avoid forfeiture of the claim by substituting Metropolitan as plaintiff and treating that substitution as relating back to the original, timely filing.


Green v. Daimler Benz, AG, 157 F.R.D. 340 (1994)