Summary
concluding that the impleader of a third-party defendant with a duty to indemnify the third-party plaintiff "would not unnecessarily complicate the case"
Summary of this case from Wilmington Tr. v. PatelOpinion
Civil No. 3:04-CV-819-H.
July 16, 2004
MEMORANDUM OPINION AND ORDER
Before the Court are Defendant Tuesday Morning Corporation's Motion for Leave to (1) Join Additional Party and (2) File Original Third-Party Complaint and Cross-Claims, filed June 15, 2004; Defendant Consumer Product Recovery, L.L.C.'s Response, filed June 30, 2004; and Defendant Ross Marks's Response, filed June 30, 2004. Upon review of the pleadings, briefs, and relevant authorities, the Court is of the opinion for the reasons stated below that Tuesday Morning's motion should be GRANTED in part and DENIED in part.
I. BACKGROUND
Plaintiffs filed this trademark infringement action against Defendants Consumer Products Recovery L.L.C., d/b/a Division Sales ("CPR"), Tuesday Morning Corporation ("Tuesday Morning"), and Ross Marks ("Marks"), among others, on April 19, 2004. In its answer, CPR asserted that it did not do business as Division Sales and that CPR had not been formed at the time of the alleged improper sales. In the parties' Joint Status Report filed on May 26, 2004, Plaintiffs asserted that they intended to amend their complaint to name Division Sales U.S., LLC ("Division Sales"), in place of CPR. According to Plaintiff, Division Sales was identified by CPR as the entity that "sold the allegedly Counterfeit Jewelry to Tuesday Morning." ( See Joint Status Report, filed May 26, 2004.)
In the instant motion, Tuesday Morning seeks leave to join Division Sales as a party and to file a Third-Party Complaint against Division Sales and Cross-Claims against Defendant Marks, an employee of CPR and/or Division Sales allegedly involved with the sale of the subject jewelry to Tuesday Morning. Tuesday Morning's proposed Original Third-Party Complaint and Cross-Claims asserts a claim for indemnity against Division Sales and claims against Division Sales and cross-claims against Marks for fraud and negligent misrepresentation. Division Sales and Marks would only be liable for the claims asserted by Tuesday Morning if Tuesday Morning were found liable to Plaintiffs; Tuesday Morning continues "to believe and contend that the [subject jewelry] was authentic and properly branded in compliance with the law." (Proposed Original Third-Party Complaint and Cross-Claims at 7.)
Defendant CPR opposes Tuesday Morning's motion. CPR argues that joinder is permissive. CPR argues that Tuesday Morning could assert its claims in a separate suit if and when it is found liable to Plaintiffs. CPR argues that allowing the joinder of Division Sales, and the filing of the Proposed Original Third-Party Complaint and Cross-Claims, would complicate the instant case unnecessarily.
Defendant Marks also opposes Tuesday Morning's motion. Marks argues that the proposed cross-claims do not satisfy Rule 9(b)'s requirement that the averments of fraud be stated with particularity. Because the proposed Original Third-Party Complaint and Cross-Claims would have to be dismissed pursuant to Rule 9(b), Marks argues, the Court should deny leave to file it.
Since Tuesday Morning filed its motion, and CPR and Marks filed their responses, Plaintiffs have settled all their claims against CPR, Marks, and Division Sales and the Court has entered an agreed permanent injunction and final judgment as to these parties. See Permanent Injunction and Final Judgment on Consent, filed July 14, 2004.
Although Division Sales was never joined by Plaintiffs as a party, the agreed permanent injunction and final judgment was signed by Division Sales attorney on behalf of the company and applies to all claims or potential claims between Plaintiffs and Division Sales.
II. ANALYSIS
Federal Rule of Civil Procedure 14(a) governs third-party practice. It provides:
At any time after commencement of the action a defending party, as a third-party plaintiff, may cause a summons and complaint to be served upon a person not a party to the action who is or may be liable to the third-party plaintiff for all or part of the plaintiff's claim against the third-party plaintiff. The third-party plaintiff need not obtain leave to make the service if the third-party plaintiff files the third-party complaint not later than 10 days after serving the original answer. Otherwise the third-party plaintiff must obtain leave on motion upon notice to all parties to the action.
FED.R.CIV.P. 14(a). Rule 15 governs amended and supplemental pleadings. Rules 19 and 20 govern the joinder of additional persons or parties to an action.
Although Tuesday Morning files for leave to join Division Sales pursuant to Rule 19 or 20, the Court concludes that this is unnecessary as Division Sales would automatically be added as a third-party defendant if the Court grants Tuesday Morning leave to file their proposed Third-Part Complaint pursuant to Rule 14. Therefore, the Court DENIES Tuesday Morning's motion for leave to join an additional party.
Additionally, because Marks is no longer a defendant in this case, having settled with Plaintiffs before the Court ruled on this motion, the Court DENIES as moot Tuesday Morning's motion for leave to cross-claim against Marks. The Court notes that Tuesday Morning's proposed cross-claims were insufficient under Rule 9(b) as it did not plead fraud with particularity.
Impleader is available when the third-party defendant is or may be "liable secondarily to the original defendant in the event that the latter is held liable to the plaintiff." United States v. Joe Grasso Son, Inc., 380 F.2d 749, 751 (5th Cir. 1967). In the instant case, Tuesday Morning claims that if it is found liable to Plaintiffs for trademark infringement, it has a right to indemnity from Division Sales. Tuesday Morning claims that Division Sales agreed to indemnify Tuesday Morning if the warranty that the subject jewelry did not infringe on any trademark right in the purchase order was breached. ( See Proposed Third-Party Complaint and Cross Claims at 6.) The Court concludes that impleader is appropriate in this case and that it would not unnecessarily complicate the case. Therefore, the Court GRANTS Tuesday Morning's Motion for Leave to File a Third-Party Complaint against Division Sales.
Tuesday Morning claims Division Sales warranted that the subject jewelry would not infringe on anyone's intellectual property rights. ( See Proposed Third-Party Complaint and Cross Claims at 6.)
III. CONCLUSION
Tuesday Morning's Motion for Leave to Join Additional Party is DENIED, Tuesday Morning's Motion for Leave to File Original Third-Party Complaint is GRANTED as to Division Sales, and Tuesday Morning's Motion for Leave to file Cross-Claims against Ross Marks is DENIED as moot.
Because the Court has only granted Tuesday Morning's motion in part, Tuesday Morning is DIRECTED to file a Third-Party Complaint that conforms with this Memorandum Opinion and Order no later than noon, July 30, 2004.
SO ORDERED.