Opinion
No. CIV 03-1473 JB/ACT.
July 2, 2004
Douglas A. Baker, Martha G. Brown, Modrall, Sperling, Roehl, Harris Sisk, P.A., Albuquerque, New Mexico, Attorneys for the Plaintiff Cyprus and Counter-Defendant Amax Minerals Company.
David L. Plotsky, Albuquerque, New Mexico, Attorney for the Defendant, Counter-Claimant, and Third-Party Plaintiff Duran Sand and Gravel, Inc.
Douglas A. Baker, Martha G. Brown, Modrall, Sperling, Roehl, Harris Sisk, P.A., Albuquerque, New Mexico, and C. Mark Kittredge, Brown Bain, P.A., Phoenix, Arizona, Attorneys for Third-Party Defendant Phelps Dodge Corporation.
ORDER
THIS MATTER comes before the Court on the Third Party Defendant's Motion to Dismiss, filed February 19, 2004 (Doc. 14). The Court held a hearing on this motion on May 13, 2004. Based on the reasoning given on the record at the hearing on this motion, and consistent therewith, the Court finds that Duran Sand and Gravel, Inc.'s third party complaint against Phelps Dodge Corporation fails to comply with the applicable rules and should be dismissed.
Rule 14 of the Federal Rules of Civil Procedure provides the basis for third party complaints.
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.
Fed.R.Civ.P. 14(a). The United States Court of Appeals for the Tenth Circuit has stated that "[r]ule 14's provision for impleading parties is narrow: the third-party claim must be derivative of the original claim."King Fisher Marine Service, Inc. v. 21st Phoenix Corp., 893 F.2d 1155, 1158 n. 1 (10th Cir. 1990).
The impleader rule is liberally construed to avoid duplicative litigation, and contains the term "claim," which is defined transactionally in the Federal Rules. Because of this, there may be some temptation to use a transactional test for the propriety of impleader. But the test for joinder of a third party under the impleader rule is not transactional. Thus, it differs from the standards for compulsory counterclaims and cross-claims, which are appropriate only if they arise from the same "transaction or occurrence" as the underlying suit. Impleader, in contrast, is narrower. It must involve an attempt to pass on to the third party all or part of the liability asserted against the defendant. Thus, it must be an assertion of the third-party defendant's derivative liability to the third-party plaintiff. An impleader claim cannot be used to assert any and all rights to recovery arising from the same transaction or occurrence as the underlying action.
3 Moore's Federal Practice § 14.04[3][a] (Matthew Bender 3d ed. 2003).
In this breach of contract action, Duran has stated a third party complaint against Phelps Dodge on the basis that Duran is uncertain whether Cyprus Amax or Phelps Dodge is the real party in interest. See Third Party Complaint at 8-9, filed January 22, 2004 (Doc. 7) ("In the event Phelps Dodge Corporation is actually the real party in interest, Duran incorporates and alleges against Phelps Dodge Corporation each and every allegation made against Cyprus in its counterclaim."). Thus, Duran is attempting to use rule 14 to assert a claim for breach of contract directly against Phelps Dodge. Because rule 14 is not the mechanism by which a defendant may bring a counterclaim against a non-party, the Court will dismiss Duran's third party complaint against Phelps Dodge. IT IS ORDERED that the Third Party Defendant's Motion to Dismiss is granted. The Court will dismiss Duran Sand and Gravel, Inc.'s third party complaint against Phelps Dodge Corporation without prejudice. Phelps Dodge will continue to participate in discovery as if it were a party. Duran Sand and Gravel, Inc. may, if discovery reveals a factual basis to do so, renew its attempt to bring Phelps Dodge Corporation into this action as a party.
At the hearing on this motion, counsel for Phelps Dodge represented to the Court that it would agree to participate in discovery as if it were a party. See Clerk's Minutes at 1, filed May 13, 2004 (Doc. 23). The Court hereby incorporates that representation into its Order. Because it is factually unclear whether Duran's breach of contract claim is appropriately brought against Cyprus Amax or Phelps Dodge, the Court will dismiss the third-party complaint without prejudice such that Duran may move for leave of Court to bring Phelps Dodge into this action under the applicable rules if it becomes necessary and appropriate to do so. Cf. Fed.R.Civ.P. 13(h) (" Joinder of Additional Parties. Persons other than those made parties to the original action may be made parties to a counterclaim or cross-claim in accordance with the provisions of Rules 19 and 20.").