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denying a motion to amend the complaint to implead a third-party defendant under Rule 14(c) because the plaintiffs had already sued the third-party defendant and lost, rendering such proceedings barred under res judicata
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CIVIL ACTION NO. 03-1705, SECTION "I" (3)
October 21, 2003
ORDER AND REASONS
Before the Court is Sportsman's Cove, Inc.'s Motion for Leave to File Third Party Complaint. On October 15, 2003, the matter came on for oral hearing before the undersigned Magistrate Judge, with counsel for the parties participating. Thereafter, the matter was deemed submitted for determination. For the following reasons, the defendant's motion for leave to amend is DENIED.
PROCEDURAL BACKGROUND
On June 13, 2003, plaintiffs, Dan M. Cliffe, Suzanne V. Cliffe and James A. Cliffe ("the Cliffes") filed the captioned lawsuit for personal injury against the defendant, Sportsman's Cove, Inc. ("Sportsman's Cove"), pursuant to the general maritime law. The plaintiffs seek damages for injuries allegedly sustained by Dan Cliffe in a boating incident involving a seventeen (17) foot Mako equipped with a 1996 Suzuki DT140 hp outboard motor. Plaintiffs claim that, on June 17, 2001, Dan M. Cliffe was operating the aforesaid boat when, without warning, the vessel turned hard to starboard, slamming his back into the rear of the vessel and causing him to be ejected. The Cliffes aver that Sportsman's Cove's employees were the last individuals to perform any maintenance work on the subject boat and that it is liable for negligent repair in a number of particulars, including but not limited to the alleged negligent "[f]allure to properly tighten an airbox bolt which subsequently came loose and entered the #4 carburetor causing severe damage and adversely affecting the operation of the vessel" and "[f] allure to properly tighten the trim tab located below the propeller on the outboard [Suzuki] motor. . . .
See Plaintiffs' Complaint, at para. 10 [Rec. Doc. No. 1].
Pursuant to Fed.R.Civ.P. 14, Sportsman's Cove seeks to bring in the third-party manufacturers of the Suzuki DT140 hp outboard motor, to wit: American Suzuki Motor Corporation and/or Suzuki Motor Corporation (hereinafter referred to collectively as "Suzuki"). More particularly, Sportsman's Cove denied the allegations of negligence against it, but asserts that parts it replaced and repaired were manufactured by Suzuki, which company may be wholly or partly liable either to Sportsman's Cove or to the plaintiffs. The defendant timely filed its motion for leave to amend. Sportsman's Cove urges the Court to grant leave to amend, contending that joinder of Suzuki will facilitate the trial of this matter.
See Scheduling Order dated August 20 [Rec. Doc. No. 7].
The Cliffes disagree and submit that this is a maritime matter and that a Rule 14(c) action cannot lie, claiming that res judicata together with the settlement bar rule obviate any claims the plaintiffs and Sportsman's Cove may have against Suzuki. The Cliffes explain that a prior proceeding in this Court by the plaintiffs against Suzuki regarding this very same incident culminated in a jury verdict in favor of the Suzuki entities. Plaintiffs note that the verdict exonerated Suzuki from any and all liability to the plaintiffs.
See Judgment dated April 10, 2003 [Rec. Doc. No. 107] entered in the matter entitled Dan M. Cliffe, et al v. American Suzuki Motor Corporation and Suzuki Motor Corporation, USDC/ E. D. La. Civil Action No. 01cv2949 "B" (4), submitted as Exhibit "A" to the plaintiffs' Memorandum in Opposition to the Sportsman's Cove's Motion for Leave to Amend.
Following entry of the judgment in Suzuki's favor, plaintiffs filed a Fed.R.Civ.P. 59 motion for new trial, which was denied by Judge Lemelle on May 16, 2003. A review of the record in the prior matter reveals that the plaintiffs did not appeal the judgment and the plaintiffs do not contend that they did.
See Minute Entry entered May 19, 2003 [Rec. Doc. No. 114 in Case No. 01-2949"B"(4)].
Plaintiffs highlight the fact that in their prior action, the jury determined that the accident in question was not proximately caused by a characteristic or defect in the 1996 Suzuki Motor. Plaintiffs argue that res judicata operates as a bar, and thus, Suzuki cannot be forced to pay any part of a judgment which the plaintiffs may obtain against Sportsman's Cove. Additionally, the plaintiffs argue that, sometime after judgment issued in this case, they entered a "settlement agreement" with Suzuki. The arrangement entitled, "Restrictive Release and Indemnity Agreement," specifically refers to the damages claimed by the Cliffes, past, present and future, arising out the June 17, 2001 incident involving Dan Cliffe.
See Restrictive Release and Indemnity Agreement executed on October 3, 2003 (i.e. a full two weeks after Sportsman's Cove filed the aforesaid Motion for Leave to Amend and add the Suzuki entities as third-party defendants and four plus months after Judge Lemelle denied plaintiffs' Motion for New Trial in prior lawsuit against Suzuki).
See Restrictive Release and Indemnity Agreement executed October 3, 2003 [attached as Exhibit "B" to the Plaintiff's Opposition to Sportsman's Coves' Motion for Leave to Amend].
For its part, Sportsman's Cove contends that it is disingenuous to characterize the Suzuki entities as "settling defendants," considering that the prior matter was prosecuted to final judgment, exonerating them from any liability to the plaintiffs. Sportsman's Cove argues that the settlement bar rule, by its terms, does not apply in this case as the aforesaid bar pertains to the claims of "a non-settling tortfeasor [who] initiates a post-settlement action for contribution of damages against a co-defendant who entered into an earlier settlement with the plaintiff." Defendant highlights that, as of this moment, Suzuki is neither a party to this case nor a co-defendant and that it is questionable whether it "settled" any of the plaintiff's' claims against it. In this vein, Sportsman's Cove emphasizes that the plaintiffs prosecuted their claims against Suzuki to final judgment. Moreover, the defendant submits that application of the settlement bar under the peculiar facts presented in this case would constitute a perversion of the rule and its intended purpose.
See Sportsman's Cove's Reply Memorandum, at p. 2 (citing Hardy v. Gulf Oil Corp., 949 F.2d 826 (5th Or. 1992), inter alia).
See Sportsman's Cove's Reply Memorandum, at p. 3.
It is not disputed that Sportsman's Cove was not a party to the prior proceeding in any capacity and that the prior judgment is not res judicata as to any claims that Sportsman's Cove may have relative to the apportionment of "other" fault.
ANALYSIS
Under the "settlement bar rule" (referred to hereinafter as the Amclyde rule), a co-defendant does not have a right of contribution against a settling defendant. The rationale underlying this rule is to protect the finality of settlements.Discussing the settlement bar rule in an admiralty context, the United States Supreme Court stated that a proportionate share approach adequately protects non-settling defendants' contribution rights. Under the proportionate share approach applicable to maritime personal injury claims, money paid by settling defendants extinguishes any claim that the injured party has against the released tortfeasor and also diminishes the claim that the injured party has against the other tortfeasors by the amount of the equitable share of the obligation of the released tortfeasor. The Supreme Court further stated that: "Under [the proportionate share] approach, no suits for contribution are permitted, nor are they necessary, because the non-settling defendants pay no more than their share of the judgment."
See Amclyde, 511 U.S. at 209.
Id., at 209 (emphasis added); Boca Grande Club, Inc. v. Florida Power Light Company, 511 U.S. 222 (1994) (same).
In Cargill Ferrous International Division of Car gill, Inc. v. M/V Princess Margherita, et al 2001 WL 1426678 (E. D. La.), the court dismissed the third party claim seeking contribution and indemnity against Bossclip, Ltd. The plaintiff (Cargill) had previously dismissed its claims against Bossclip with prejudice and without the benefit of a settlement agreement. The court observed:
Cargill Ferrous International Division of Cargill, Inc. v. M/V Princess Margherita, et al, 2001 WL 1426678 *1 (E. D. La.) (Duval, J.) (emphasis added).
Although AmCIyde did not specifically discuss actions for tort indemnity, it is clear that the analysis is applicable to such a claim. In D.N.H. Towing Co., Inc., 1998 WL 51835 (E. D. La.) (Vance, J.), the court held that as a result of settlement, the claims for contribution and indemnity were barred. See Pacific Employers Ins. Co. v. M/TIVER CHAMPION, 1996 WL 139724 (March 27, 1996); Mayer v. Cornell University, Inc., 1995 WL 945757. In Luke v. Signal Oil Gas Co., 523 F.2d 1190, 1191 (5th Cir. 1975), the court stated that a dismissal with prejudice has the force and effect of a full release. Clearly a dismissal with prejudice is a full release, and the released party would have the identical rights as a party that is released by a formal settlement agreement under the AmCIyde rule.
Id.
In In re D.N.H. Towing Co., 1998 WL 51835 (E. D. La.), Judge Vance observed that "McDermott bars most contribution and indemnification claims against a settling co-defendant." The Court noted the exception of the wholly separate and distinct recovery for maintenance and cure, which constitutes an exception to the Amclyde rule. However, there is no such recovery at issue in the instant case. In In re DNH Towing, the court dismissed all of the non-settling defendant's contribution claims against the settling tortfeasor, with the exception of contribution and/or indemnity for the maintenance and cure recovery.
In re D.N.H. Towing Co., 1998 WL 51835, *2 (E. D. La.).
See id. (citing Bertram v. Freeport McMoran Inc., 35 F.3d 1008, 1017-18 (5th Cir. 1994), Liberty Seafood, Inc. v. Herndon Marine Products, Inc., 38 F.3d 755, 757 (5th Cir. 1994)); Durgin v. Crescent Towing Salvage, Inc. 2002 WL 31365365 *4 (E. D. La.) (Engelhardt, J.).
ln re DMH. Towing Co., 1998 WL 51835, *3 (E. D. La.).
Turning to Sportsman's Coves' third party claims for contribution and/or indemnity, its argument urging this Court to grant leave to amend to add such claims ignores the rulings of the Supreme Court in Amclyde and Boca Grande, supra. Indeed, [u]nder [the proportionate share] approach, no suits for contribution are permitted, nor are they necessary, because the non-settling defendants pay no more than their share of the judgment." In the case at bar, there is an order (i.e., final judgment), dismissing the plaintiffs' claims against Suzuki with prejudice. The April 10, 2003 judgment and May 16, 2003 Minute Entry Order denying plaintiffs' Motion for New Trial in the first lawsuit were never appealed to the Fifth Circuit. Like the order in Cargill Ferrous, supra, the aforesaid judgment has the force and effect of a full release.
Amclyde, 511 U.S. at 209 (emphasis added); Boca Grande Club, Inc., 511 U.S. at 222.
Rule 15 evinces a bias in favor of leave to amend and provides that it "shall be freely given when justice so requires." Fed.R.Civ.P. 15(a). However, it is by no manner or means automatic. In this case there appears to be "substantial reason" to deny the defendant's motion for leave to amend. The Amclyde rule together with the concept of the futility of the requested amendment, counsel mightily in favor of denying defendant's motion.
See Stripling v. Jordan Prod. Co., 234 F.3d 863, 872 (5th Cir. 2000); Dussouy v. Gulf Coast Inv. Corp., 660 F.2d 594, 597-98 (5th Cir. 1981). See also Foman v. Davis, 371, U.S. 178, 182 (1962); Price v. Pinnacle Brands, Inc., 138 F.3d 602, 608 (5th Cir. 1998).
See In re Southmark, 88 F.3d 311, 315 (5th Cir. 1996); Wimm v. Jack Eckerd Corp., 3 F.3d 137, 139, (5th Cir. 1993).
Jacobsen v. Osborne, 133 F.3d 315, 318 (5th Cir. 1998); Lefalle v. Dallas Independent School District, 28 F.3d 521, 524 (5th Cir. 1994).
It would indeed constitute a bootless exercise to allow the amendment sought, only to have the contribution and indemnity claims dismissed pursuant to McDermott v. Amclyde, supra, once Suzuki is made a co-defendant. Accordingly,
IT IS ORDERED that the defendant's Motion for Leave to Amend is DENIED.