Unpublished Disposition, 857 F.2d 1477 (9th Cir. 1988)

MEMORANDUM^* 

Industrial Indemnity Co. of Alaska (Industrial) appeals the district court's grant of summary judgment on the issue of insurance coverage and denial of its motion to realign the parties. We review the grant of summary judgment de novo, O.S.C. Corp. v. Apple Computer, Inc., 792 F.2d 1464, 1466 (9th Cir. 1986), but will reverse the denial of realignment only for abuse of discretion.

A. Industrial argues that the district court erred in ruling that the truck involved in the accident was owned by and registered to the "Roger Sires and Larry Buss" partnership (Sires & Buss). Industrial contends that the truck was owned by and registered to the two men individually, and that Industrial did not, by the terms of its policy, insure Bethel Mechanical Contractors (Bethel) for accidents arising from use of vehicles owned by or registered to its partners.

Industrial fails to controvert the overwhelming evidence that the truck was owned by and registered to Sires & Buss. The partnership was in the rental equipment business. Partnership Agreement, Supplemental Excerpt of Record at 68. Industrial does not dispute that the truck was purchased with Sires & Buss funds, and, " [u]nless the contrary intention appears, property acquired with partnership funds is partnership property." Alaska Stat. Sec. 32.05.030(b) (1986). Moreover, Sires & Buss insured the truck as an "owned vehicle" with Providence Washington Insurance Company; this coverage, fully consistent with Bethel's "non-owned vehicle" coverage, is further evidence of Sires & Buss' ownership.

Industrial contends, however, that a genuine issue of fact is created by the title and registration, which list the owner as "Sires Roger or Buss Larry." It argues that Messrs. Sires and Buss registered the truck in their individual names, not in the name of the Sires & Buss partnership. We find this argument unpersuasive. Alaska law requires the owner of a vehicle to apply for title and registration, see Alaska Stat. Secs. 28.10.021, .201, .211(a)-(b) (1984 & Supp.1987), but the application form does not provide for registration of a vehicle by a partnership. The exact name of the partnership is unclear: Various permutations of Larry Buss' and Roger Sires' names are used in the partnership agreement, partnership financial accounts, IRS forms and other documents. When the partners filled out the form using both their names, they had the option of using the conjunctive ("and") or the disjunctive ("or"). They chose the disjunctive to allow each partner to release title without the other's signature; this is fully consistent with Alaska law, which provides that a general partner, acting alone, can bind the partnership. Uniform Partnership Act, Alaska Stat. Sec. 32.05.040(a) (1986). We find nothing to suggest that the partners intended to register the truck to themselves in their individual capacities. The district court did not err by granting summary judgment.

B. Industrial also claims that the district court abused its discretion by refusing to realign the parties to the declaratory judgment action. While " [t]he courts, not the parties, are responsible for aligning the parties according to their interests in the litigation," Dolch v. United California Bank, 702 F.2d 178, 181 (9th Cir. 1983) (citing Indianapolis v. Chase Nat'l Bank, 314 U.S. 63, 69 (1941)), realignment was not required here. The parties were properly aligned when the suit was first brought, as plaintiff Chicago Insurance Co. (Chicago) then had an active controversy with defendant Oscar Kilbuck over its liability for the accident, and with defendant Industrial over the extent of Chicago's liability as excess insurer. See American Motorists Ins. Co. v. Trane, 657 F.2d 146, 149, 151 (7th Cir. 1981). Neither Kilbuck nor Industrial chose to cross-complain over the issue of Industrial's liability.

Only after Chicago and Kilbuck settled did the controversy between Industrial and Kilbuck become the only active one. Kilbuck had already chosen to pursue his claims against Industrial in state court. The district court recognized that realignment would force Kilbuck to litigate his claims in federal court, to the possible detriment of his state action. By denying Industrial's motion to realign, the district court freed the parties to bring their claims in the forum of their choice. Under these circumstances, the court properly denied the motion to realign. See Augustin v. Mughal, 521 F.2d 1215, 1216-17 (8th Cir. 1975) (cross-claims are permissive, not compulsory).

AFFIRMED.