Gross v. Hanover Ins. Co.
138 F.R.D. 53 (1991)
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Rule of Law:
Under Federal Rule of Civil Procedure 14(a), a defendant may implead a third party who 'is or may be liable' for all or part of the plaintiff's claim, even if the third party's liability is contingent or not yet certain, provided the benefits of judicial efficiency outweigh any potential prejudice to the other parties.
Facts:
- Plaintiff consigned approximately $217,800 worth of diamonds to '3-R Jewelers' and left an additional $48,000 worth of jewels at the store for safekeeping.
- 3-R Jewelers was owned by Anthony Rizzo, who employed his brother, Joseph Rizzo.
- A theft occurred at the 3-R store, resulting in the loss of all of the plaintiff's jewels.
- Anthony Rizzo knew his brother Joseph had a cocaine habit but continued to employ him at the store.
- A witness observed a man enter the store on the night of the theft, speak with Joseph, and go into a back room with a paper bag.
- Joseph Rizzo told police that two men stole the jewels from an open safe while he was in a back room retrieving a warranty card.
- Anthony Rizzo told police it 'Looked like Joey was setting place up.'
- Plaintiff subsequently filed a claim with his insurer, defendant Hanover Insurance Company, for $75,000 to cover the losses.
Procedural Posture:
- Plaintiff filed a lawsuit against Hanover Insurance Company in the U.S. District Court for the Southern District of New York to recover proceeds from an insurance policy.
- Hanover Insurance Company served its original answer to the complaint.
- More than ten days after serving its answer, Hanover Insurance Company moved, pursuant to Federal Rule of Civil Procedure 14(a), for leave to file a third-party complaint against Joseph Rizzo and Anthony Rizzo.
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Issue:
Does Federal Rule of Civil Procedure 14(a) permit a defendant insurance company to implead third parties whose alleged negligence or intentional acts may have caused the insured loss, even if the third parties' liability is not yet certain?
Opinions:
Majority - Leisure, District Judge
Yes. Federal Rule of Civil Procedure 14(a) permits the impleader because the third parties may be liable to the defendant for the plaintiff's claim. The purpose of Rule 14(a) is to promote judicial efficiency by allowing related claims to be resolved in a single action. The court must balance the benefits of impleader against potential prejudice to the plaintiff and third-party defendants. Here, the claims against the Rizzos arise from the same core of facts as the plaintiff's insurance claim. The rule's 'is or may be liable' language explicitly allows for impleader even when the third party's liability is contingent and not yet established. The well-established practice of allowing insurers to implead parties potentially liable through subrogation further supports this conclusion. The plaintiff's conclusory claims of prejudice from expanded discovery are outweighed by the significant judicial economy gained by resolving these related issues in one proceeding.
Analysis:
This case illustrates the broad discretion district courts have in applying FRCP 14(a) to promote judicial economy. The decision reinforces that a defendant does not need a certain or guaranteed claim to implead a third party; a potential or contingent claim is sufficient as long as it arises from the same nucleus of operative facts. This is particularly significant for defendants in subrogation contexts, like insurance companies, as it allows them to bring the potentially tortious third party into the original action rather than filing a separate lawsuit after a judgment. It sets a precedent that a plaintiff's mere assertion of prejudice due to delay or expanded discovery is often insufficient to overcome the strong policy favoring the efficiency of impleader.
