Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.


January 29, 1986

ARTEX INDUSTRIES, INC., Defendant; ARTEX INDUSTRIES, INC., Third-Party Plaintiff, vs. SEAPORT MARKETPLACE, INC., Third-Party Defendant



Plaintiff National Bank of Canada ("NBC") sues Artex Industries, Inc. ("Artex") for $79,600 which NBC paid on Artex's behalf to a supplier of granite, and then by mistake credited back to Artex. As appears below, there is no material factual dispute about this claim, and NBC is entitled to summary judgment in its favor.

 Defendant Artex has impleaded Seaport Marketplace, Inc. ("Seaport"), *fn1" for whom Artex obtained the granite and performed substantial other work for which Artex claims there is an unpaid outstanding balance of $420,000 plus restitution of the $79,600 worth of granite. Seaport has moved to dismiss this third-party claim as being substantially unrelated to the main claim by NBC and, as appears below, Seaport's motion is granted.

 NBC is a Canadian corporation; Artex is a New Jersey corporation. The court has diversity jurisdiction under 28 U.S.C. § 1332(a).


 In 1982 Artex entered into a contract with Tishman Construction Corporation ("Tishman") to deliver and install granite at the Seaport Market Place in New York City. In connection with that contract Artex ordered granite from Granit Bussiere, Inc. ("Granit"), a Canadian company, for an agreed purchase price of $79,600. (Plaintiff's Rule 3(g) Statement, P 1; Third-Party Complaint, PP 8,9.)

 In June, 1983 Granit allegedly informed Artex that it would not ship any granite to Artex unless payment was guaranteed (Third-Party Complaint, P 12), and on June 7, 1983 Tishman promised to make good to Artex the $79,600 for the granite, if Artex would pay Granit. (Third-Party Complaint P 13.)

 On June 8, 1983 Artex directed Chemical Bank of New York ("Chemical Bank") to pay $79,600 to Granit. (Plaintiff's Rule 3(g), Statement, P 2; Third-Party Complaint, 14.) Soon thereafter Morgan Guaranty Trust Company of New York ("Morgan Guaranty"), at the direction of Chemical Bank, transferred $79,600 to NBC with instructions to transfer the funds to Granit. (Plaintiff's Rule 3(g) Statement, 3.) *fn2" NBC proceede[d to pay $79,600 to Granit's account. (Plaintiff's Rule 3(g) Statement, P 6.) NBC's New York branch, however, in the mistaken belief that NBC had been unable to transfer the funds to Granit, returned $79,600 to Morgan Guaranty for credit to Artex. (Plaintiff's Rule 3(g) Statement, 7; Answer, 7.) NBC was therefore out of pocket $79,600. (ibid.) Artex alleges that on June 8, 1983, after Tishman allegedly failed to guarantee or reimburse Artex's payment to Granit, it instructed Chemical Bank to reverse the transfer of funds to Granit (Third-Party Complaint, P 16), but apparently Granit understandably kept the funds.

 The granite ordered by Artex from Granit was delivered and installed at the Seaport Market Place in July, 1983. (Plaintiff's Rule 3(g) Statement, P 9; Third-Party Complaint, P 21.) When NBC discovered that it had mistakenly returned the $79,600 to Artex it attempted unsuccessfully to obtain reimbursement from Morgan Guaranty and Chemical Bank, and on August 21, 1984 NBC wrote to Artex requesting repayment of the funds. (Plaintiff's Rule 3(g) Statement, PP 10-12.)

 In its complaint NBC alleges that as a result of NBC's mistaken payment and Artex's refusal to reimburse NBC, Artex converted $79,600 and was unjustly enriched in that amount. (Complaint, PP 8-11, 14-16.) *fn3" In its third-party complaint Artex claims that Seaport owes it $420,465 for work done pursuant to the contract, for work performed pursuant to change orders authorized by Tishman, and for other work not called for in the contract or change orders performed by Artex. (Third-Party Complaint, PP 25-28.) In addition Artex claims that Seaport was unjustly enriched at least in the amount[ of $79,600, the value of the stone installed by Artex at the Seaport Market Place. (Third-Party Complaint, PP 29-32.)

 Seaport's Motion to Dismiss the Third-Party Complaint

 Fed. R. Civ. P. 14 provides that "[a]t any time after commencement of the action a defending party . . . 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 him for all or part of the plaintiff's claim against him." The rule was "designed to eliminate multiple and repetitive lawsuits and trials by allowing for a single presentation of evidence when multiple claims turn upon identical or similar proof." Sirota v. Solitron Devices, Inc., 97 F.R.D. 732, 736 (S.D.N.Y. 1983); see also Oliner v. McBride's Industries, Inc., 106 F.R.D. 14, 20 (S.D.N.Y. 1985). The interest in judicial economy which underlies the rule is advanced, of course, only when "the defendant's right against the third party is merely the outgrowth of the same aggregate or core of facts which is determinative of the plaintiff's claim." Dery v. Wyer, 265 F.2d-804, 807 (2d Cir. 1959).

 Further, "[t]he mere fact that the alleged third-party claim arises from the same transaction or set of facts as the original claims in not enough." Farmers Production Credit Ass'n of Oneonta v. Whiteman, 100 F.R.D. 310, 312 (N.D.N.Y. 1983)(quoting 6 Wright & Miller, Federal Prac. & Pro. § 1446, at 257 (1971)). The essential purpose of Rule 14 requires that defendant's third-party claim derive from the main claim, and that "the claim of liability to the defendant and third-party plaintiff accrue only upon a finding of defendant's liability to the plaintiff on the main claim." Index Fund, Inc. v. Hagopian, 417 F. Supp. 738, 744 (S.D.N.Y. 1976).

 The requirements for impleader under Rule 14 are not met here. As Artex sets forth in its third-party complaint, its claim is for "monies due and owing to [Artex] for work done pursuant to a contract with Tishman in which the stone sent by [Granit] was used and installed." (Third-Party Complaint, P 1.) It is true that the funds originally transferred by Artex through NBC to Granit were in payment for stone to be used on the Seaport Market Place project. However, that minimal overlap between the main claim and the otherwise unrelated disputes involved in the third-party claim is not enough to allow the latter to stand. Farmers Production, 100 F.R.D. at 312. The outcome of the third-party claim must be contingent on the outcome of the main claim, and here Seaport's ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.