Price v. CTB, Inc.
168 F. Supp. 2d 1299 (2001)
Rule of Law:
Under Federal Rule of Civil Procedure 14(a), a defendant may implead a third-party manufacturer based on a theory of common law implied contractual indemnity if the defendant alleges that the manufacturer's defective product is the source of the liability for which the defendant is being sued.
Facts:
- Lateo, Inc., a building contractor, constructed chicken houses for various Alabama farmers.
- In the construction, Lateo used nails manufactured by Illinois Tool Work, Inc. (ITW).
- The farmers sued Lateo, alleging poor workmanship, fraudulent misrepresentation of materials, and negligent construction.
- Lateo contended that if there were defects in the chicken houses, they were caused by defectively designed nails manufactured by ITW.
- Lateo's position was that if it were found liable to the farmers, the true fault would lie with ITW, and ITW should therefore be responsible for the damages.
Procedural Posture:
- Alabama farmers sued Lateo, Inc. in state court for breach of contract, fraud, and negligence.
- The case was removed to the U.S. District Court for the Middle District of Alabama.
- Lateo filed a motion for leave to file a Third-Party Complaint against Illinois Tool Work, Inc. (ITW), the nail manufacturer.
- After initially failing to properly serve ITW's agent, Lateo successfully served the Third-Party Complaint, asserting claims for breach of warranty, product liability, and common law indemnity.
- Third-Party Defendant ITW filed a Motion to Dismiss the Third-Party Complaint, arguing it was improperly impleaded under Rule 14 and that the claim was barred by laches.
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Issue:
Does a defendant contractor properly implead a third-party product manufacturer under Federal Rule of Civil Procedure 14(a) based on a theory of implied contractual indemnity, when the contractor alleges the manufacturer's defective product is the true cause of the damages for which the contractor is being sued?
Opinions:
Majority - De Ment, District Judge
Yes. A defendant contractor properly impleads a third-party manufacturer under these circumstances. Federal Rule of Civil Procedure 14(a) allows a defendant to bring in a third party whose liability is derivative of the original claim, meaning the defendant is trying to pass on all or part of the liability. Although Alabama law does not permit contribution among joint tortfeasors, it recognizes the equitable doctrine of implied contractual indemnity. This doctrine allows a seller who is without fault to be indemnified by the responsible manufacturer after being required to pay a judgment. Citing analogous reasoning from Illinois courts, the court finds that this common law doctrine provides the necessary substantive legal basis for the procedural act of impleader. The standard for impleader is not whether the third party is definitely liable, but whether it 'may be liable,' which justifies allowing the factual record to be developed.
Analysis:
This opinion clarifies that the procedural mechanism of impleader under Rule 14 requires a valid substantive legal theory to support it. The court demonstrates a willingness to look to common law principles, even from other jurisdictions, to find such a basis when local precedent is sparse, in this case applying the doctrine of implied indemnity. This reinforces the principle of judicial efficiency by allowing a defendant to bring a manufacturer into the primary lawsuit, thereby resolving all related liability claims in a single action. It solidifies the ability of parties in the supply chain to shift ultimate responsibility to the manufacturer whose defective product allegedly caused the harm.
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