Cooper v. Goethe , 373 S.C. 132 ( 2007 )

Chief Justice TOAL.

We certified this case for review from the court of appeals pursuant to Rule 204(b), SCACR. Government Employee’s Insurance Company (“GEICO”) appeals the family court’s denial of its petition to join or intervene in Ronnie Cooper’s (“Cooper”) family court proceeding involving the validity of his common law marriage with Yolanda Goethe (“Goethe”). We affirm

Factual / procedural Background

GEICO brought a declaratory judgment action against Cooper to determine the parties’ rights pursuant to an automobile insurance policy issued to Goethe. Specifically, Cooper claims he is entitled to stack underinsured motorist coverage provided by the Goethe policy on the grounds that he is a Class I insured. GEICO denied Cooper’s claim, alleging that Cooper is not a Class I insured because he is neither the spouse nor resident relative of Goethe.

After GEICO denied Cooper’s claim to stack coverage, Cooper filed an action in family court seeking an order validating his common law marriage to Goethe since 1991. GEICO petitioned the family court to permit it to join the action pursuant to Rule 19, SCRCP, or to intervene pursuant to Rule 24, SCRCP. As grounds supporting its motion, GEICO alleged that the family court’s decision on the parties’ common law marriage would impact GEICO’s ability to protect its interests under the insurance policy issued to Goethe.

After a hearing on the petition, the family court denied GEICO’s motion. The family court found that GEICO was not a necessary party for joinder and did not have standing to intervene. GEICO appeals raising the following issues for review:

I. Did the family court err in denying GEICO’s petition to join Cooper’s family court action regarding the validity of a common law marriage?

II. Did the family court err in denying GEICO’s petition to intervene in Cooper’s family court action regarding the validity of a common law marriage?

Standard of Review

The decision to grant or deny a motion to join an action pursuant to Rule 19, SCRCP, or intervene in an action pursuant to Rule 24, SCRCP, lies within the sound discretion of the trial court. See Berkeley Elec. Coop., Inc. v. Town of Mt. Pleasant, 302 S.C. 186, 189, 394 S.E.2d 712, 714 (1990); and Hunnicutt v. Rickenbacker, 268 S.C. 511, 517, 234 S.E.2d 887, 890 (1977). “This Court will not disturb the lower court’s decision on appeal unless a manifest abuse of discretion is found resulting in an error of law. Moreover, the error of law must be so opposed to the lower court’s sound discretion as to amount to a deprivation of the legal rights of the party.” Jeter v. South Carolina Dep’t of Transp., 369 S.C. 433, 633 S.E.2d 143, 146 (2006).

Law / Analysis

I. Joinder

GEICO argues that the family court erred in denying its petition for joinder pursuant to Rule 19, SCRCP. We disagree.

Rule 19(a), SCRCP provides in-pertinent part:

A person who is subject to service of process and whose joinder will not deprive the court of jurisdiction over the subject matter of the action shall be joined as a party in the action if (1) in his absence complete relief cannot be accorded among those already parties, or (2) he claims an interest relating to the stobject of the action and is so situated that the disposition of the action in his absence may (i) as a practical matter impair or impede his ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of his claimed interest.

Id. (emphasis added). “The principle behind this Rule is that whenever possible persons materially interested in the action should be joined so that they may be heard and a complete determination had.” Rule 19, SCRCP note.

GEICO alleges that Cooper and Goethe commenced the family court action to bolster Cooper’s position against GEICO in the pending litigation involving Cooper’s rights under the Goethe policy. The crux of GEICO’s argument for joinder is that failure to join it as a party in the family court action will perpetuate a fraud on the court and ultimately impair GEICO’s ability to protect its interests under the insurance policy. We find that although GEICO may be affected by the outcome of the family court action, its interest is insufficient to meet the requirements for joinder pursuant to Rule 19(a)(2)®, SCRCP.

GEICO relies on Rule 19(a)(2)®, SCRCP to support its motion for joinder. This provision of the rule allows a party to join an action where “he claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may as a practical matter impair or impede his ability to protect that interest.” Id. In the instant case, however, GEICO has failed to show that it has an interest relating to the subject of the action. The family court action involves the subject of whether Cooper and Goethe are common law married, and GEICO’s economic interest under the Goethe policy is merely tangential to the family court action. While the existence of a common law marriage may impact GEICO’s liability to Cooper, GEICO has no real interest in the subject matter before the family court.

Furthermore, the family court did not err in finding that GEICO was not a necessary party to the family court action. This Court has interpreted Rule 19, SCRCP to require that a party be a “necessary party” to be joined in an action pursuant to the rule. See Slatton v. Slatton, 289 S.C. 128, 130, 345 S.E.2d 248, 249 (1986). “A necessary party is one whose rights must be ascertained and settled before the rights of the parties to the action can be determined.” Id.

In this case, the family court had no need to ascertain or settle GEICO’s rights before it determined the rights of Cooper and Goethe in their action to recognize their common law marriage. GEICO argues that the family court’s reliance on this definition of necessary party as defined in Slatton is misplaced because it is based on a repealed section of the South Carolina Code. See Slatton, 289 S.C. at 130 n. 1, 345 S.E.2d at 249 n. 1. Although Slatton does not interpret Rule 19, SCRCP, we note (1) that the repealed statute, S.C.Code Ann. § 15-5-200 (1976), upon which the definition of “necessary party” is based was replaced with Rule 19, SCRCP, (2) that this Court recognized the continued application of the definition despite the repeal of the statute, and (3) that the Court decided Slatton after the adoption of Rule 19, SCRCP. Accordingly, the definition of necessary party as used in Slatton remains an accurate articulation of the law of South Carolina.

The dissent argues that a finding by the family court validating the existence of the common law marriage between Cooper and Geothe will increase GEICO’s burden of proof in its pending declaratory judgment action, thereby impairing GEICO’s ability to protect its economic interest in the payment of insurance benefits. This argument misses the mark. First, GEICO’s interest is merely peripheral to the subject matter of the family court action. Second, while it is true that GEICO may need to meet an increased burden of proof, GEICO maintains the ability to protect any economic interest which may be affected by the family court action. Although the rules of joinder and intervention are to be liberally construed, permitting GEICO to join in a family court action in which it has no real interest stretches beyond liberal construction and creates a situation in which any party with a remotely tangential interest will be allowed to interject themselves into pending litigation. We do not interpret the rules to allow such manipulation.

For these reasons, we hold that the family court did not err in denying GEICO’s petition to join the family court action pursuant to Rule 19, SCRCP.

II. Intervention

GEICO argues that the family court erred in denying its petition to intervene pursuant to Rule 24, SCRCP. We disagree.

Rule 24(a), SCRCP provides:

Upon timely application anyone shall be permitted to intervene in an action: (1) when a statute confers an unconditional right to intervene; or (2) when the applicant claims an interest relating to the property or transaction which is the subject of the action and he is so situated that the disposition of the action may as a practical matter impair or impede his ability to protect that interest, unless the applicant’s interest is adequately represented by existing parties.

Generally, the rules of intervention should be liberally construed where judicial economy will be promoted by declaring the rights of all affected parties. Berkeley Elec. Coop., 302 S.C. at 189, 394 S.E.2d at 714. Accordingly, the Court should consider the practical implications of a decision denying or allowing intervention. Id. However, a party must have standing to intervene in an action pursuant to Rule 24, SCRCP. Bailey v. Bailey, 312 S.C. 454, 458, 441 S.E.2d 325, 327 (1994). A party has standing if the party has a personal stake in the subject matter of a lawsuit and is a “real party in interest.” Id. “A real party in interest ... is one who has a real, actual, material or substantial interest in the subject matter of the action, as distinguished from one who has only a nominal, formal, or technical interest in, or connection with, the action.” Id. (citations omitted).

We find that GIECO does not have “an interest relating to the property or transaction which is the subject of the action” as required by Rule 24(a)(2), SCRCP. Additionally, we hold that the family court correctly found GEICO lacked standing because GEICO does not have an interest in the subject matter of the family court action. Stated differently, GEICO has no real interest in 'whether Cooper and Goethe have a valid common law marriage. GEICO’s interest is in the financial implications of the family court’s decision, which is peripheral to the subject matter before the court. This interest is insufficient to warrant GEICO’s intervention in Cooper’s family court action under Rule 24(a)(2), SCRCP.

GEICO claims that this Court’s decision in Bailey is inapplicable and distinguishable from the case at hand. In Bailey, the former wife’s prior attorneys moved to intervene in a divorce proceeding for the purposes of challenging the parties’ settlement agreement. Id. at 454, 441 S.E.2d at 325. The Court found that the attorneys did not have standing to intervene because the order directing payment from the former husband to the former wife in care of attorneys did not direct payment of fees and that the attorneys could litigate fee disputes in an alternative forum. Id. The Court further stated that intervention is only appropriate where the party seeking intervention has “a real proprietary interest in the subject matter of the proceedings;” an interest which is merely “peripheral and not the real interest at stake” will not warrant intervention. Id.

GEICO’s purported distinction is not persuasive. Similarly to the analysis in Bailey, we find that the subject matter of the family court action in the instant case is the validity of a common law marriage, which does not involve a determination of insurance benefits. Accordingly, GEICO does not have standing to intervene in the family court action because it does not have an interest sufficiently related to the subject matter of the action.

For these reasons, we hold that the family court did not err in denying GEICO’s petition to intervene in Cooper’s family court action.

Conclusion

For the foregoing reasons, we affirm the family court’s order denying GEICO’s petition to join or intervene in Cooper’s family court action.

MOORE, WALLER and BURNETT, JJ., concur. PLEICONES, J., dissenting in a separate opinion.