New York excess line brokers; and in 1990 it collected $ 8,592,520 through 44 New York excess line brokers. (Fitzpatrick Doc. App. Ex. B.) Because the court has personal jurisdiction over Anglo as a result of the business that Anglo does in New York, the court need not reach Fitzpatrick's contention that jurisdiction also exists pursuant to CPLR 302.
Anglo moves to dismiss Fitzpatrick's third-party complaint pursuant to Rule 14(a), F.R. Civ. P., under which a defendant may implead a third party "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." Rule 14(a), F.R. Civ. P. The purpose of the rule is to promote judicial economy and to protect the resources of the parties. Consolidated Rail Corp. v. Metz, 115 F.R.D. 216, 219 (S.D.N.Y. 1987) (Kram, J.). A district court, which possesses considerable discretion in deciding whether impleader is warranted, should consider four factors in making its determination: "(1) whether the movant deliberately delayed or was derelict in filing its motion; (2) whether prejudice will result to the third party defendant; (3) whether the trial of the principal action would be delayed or unduly complicated; and (4) whether the proposed third party complaint states a claim under which relief may be granted." Id. at 218-19. Anglo does not aver that the third-party complaint was filed in an untimely manner or that permitting impleader would in any way delay the trial of the main action.
Anglo warns that if the impleader complaint proceeds, Anglo will be prejudiced because the jury "may possibly be inappropriately influenced in its verdict on [plaintiffs'] claim, especially since [plaintiffs are] the owner[s] of Anglo." (Anglo Am. Ins. Co. Mem. in Support of Mot. to Dismiss 3d-Party Compl. at 25.) This forecast, which does not include a prediction about the manner in which the jury might be influenced, is too vague to persuade the court to exercise its discretion to dismiss the impleader complaint.
Anglo argues that the trial of the main action will be complicated by the impleader of Anglo. First, Anglo claims that inclusion of Anglo will multiply the issues, thus confusing and distracting the jury. Central to both the main action and the third-party action is the question whether Fitzpatrick made negligent misrepresentations during the sale of Anglo. Of course, addition of the third-party action will add the issues of (1) when, under English law and the terms of Anglo's articles of incorporation, Fitzpatrick would be entitled to indemnification and (2) whether Fitzpatrick has fulfilled those conditions. The first issue is primarily one of law, and as the court makes determinations of law there is no danger that allowing the issue into the case will unduly confuse the jury.
The second issue will present a number of determinations of fact for the jury to make. As the court has not yet decided under what conditions the articles of incorporation entitle Fitzpatrick to indemnification, see discussion infra pp. 28-29, it is not possible to know exactly what questions the jury will have to decide. However, it seems fair to predict that the primary question will be whether Fitzpatrick made the contested representations while executing his duties for Anglo. "Rule 14 does not require that the facts and legal issues in the third-party claim be completely identical to those in the main action." Argonaut Ins. Co. v. Halvanon Ins. Co., 545 F. Supp. 21, 23 (S.D.N.Y. 1981) (Werker, J.). The similarity of the facts underlying the third-party and main actions convinces the court that impleader would serve the interests of judicial economy. The court notes that if, at a later stage in the proceedings, it finds that trying the main and third-party actions together would complicate matters and distract the jury, the court can sever the actions for the purposes of trial. Id. at 23 n.1.
Anglo warns that if impleader is permitted, Anglo will be forced to bring any counterclaims that it may have against Fitzpatrick. Anglo does not, however, state whether there are in fact grounds to support counterclaims or what those counterclaims might be, so the court can hardly rely on this as a basis for its decision. Anglo also contends that judicial economy would be served by dismissal because if Fitzpatrick is found liable to the plaintiffs he will not be entitled to indemnification. However, the court has not yet determined under what conditions Fitzpatrick might be entitled to indemnification, so this argument is premature.
Anglo's final argument is that English law and Anglo's articles of incorporation do not permit Anglo to indemnify Fitzpatrick for any liability that he might be found to have to plaintiffs. Where there is no basis for holding the third-party defendant secondarily liable to the third-party plaintiff, impleader is inappropriate. Index Fund, Inc. v. Hagopian, 417 F. Supp. 738, 743 (S.D.N.Y. 1976) (Tenney, J.). Fitzpatrick, who was a director of Anglo at the time of the sale of Anglo, seeks indemnification from Anglo pursuant to Article 13(a) of Anglo's Articles of Association, which reads:
Every Director or other officer of the Company shall be indemnified out of the assets of the Company against all losses or liabilities which he may sustain or incur in or about the execution of the duties of his office or otherwise in relation thereto, including any liability incurred by him in defending any proceedings, whether civil or criminal, in which judgment is given in his favour or in which he is acquitted or in connection with any application under Section 144 or Section 727 of the [United Kingdom Companies] Act  in which relief is granted to him by the Court, and no Director or other officer shall be liable for any loss, damage or misfortune which may happen to or be incurred by the Company in the execution of the duties of his office or in relation thereto. But this Article shall only have effect in so far as its provisions are not avoided by Section 310 of the Act.
(Third-Party Compl. Ex. B.) Anglo contends that Article 13(a) permits indemnification only against liability owed to the corporation, not to third parties, and that section 310 of the English Companies Act of 1985 likewise permits indemnification only of liability owed to the corporation.
Both Fitzpatrick and Anglo apply the law of the United Kingdom to this dispute. "In the absence of a strong countervailing public policy, the parties to litigation may consent by their conduct to the law to be applied." Walter E. Heller & Co. v. Video Innovations, Inc., 730 F.2d 50, 52 (2d Cir. 1984); see also Wm. Passalacqua Builders, Inc. v. Resnick Developers S., Inc., 933 F.2d 131, 137 (2d Cir. 1991). New York's choice of law rules, which apply here because the court is sitting in diversity, Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 85 L. Ed. 1477, 61 S. Ct. 1020 (1941), mandate the use of the "grouping of contacts" test. In re Allstate Ins. Co., 81 N.Y.2d 219, 226, 597 N.Y.S.2d 904, 613 N.E.2d 936 (1993). Anglo is a British company, its Articles were adopted in the United Kingdom, (3d Party Compl. Ex. B), and its sole place of business is in London. (Mitchell Aff. P 3.) There is no evidence before the court warranting the application of the law of another jurisdiction. Therefore, the court will apply the law of the United Kingdom to this dispute.
Pursuant to Rule 44.1, F.R. Civ. P., once an issue of foreign law has been properly raised, a federal court may make a determination of that law as a matter of law, and in making that determination "may consider any relevant material or source, including testimony, whether or not submitted by a party or admissible under the Federal Rules of Evidence." Rule 44.1, F.R. Civ. P. "Foreign law should be argued and briefed like the domestic law," Curtis v. Beatrice Foods Co., 481 F. Supp. 1275, 1285 (S.D.N.Y. 1980) (Pollack, J.) (quoting Pollack, Proof of Foreign Law, XXVI Am. J. Comp. L. 470, 475 (1978)), aff'd, 633 F.2d 203 (2d Cir. 1980), and as with domestic law judges should use both their own research and the evidence submitted by the parties to determine foreign law. Ackermann v. Levine, 788 F.2d 830, 838 (2d Cir. 1986).
Where the issue of foreign law has not been addressed by the courts of the foreign jurisdiction, then a federal court must engage in the two-step process of determining what the courts of the forum state would predict that the courts of the foreign jurisdiction would find. Rogers v. Grimaldi, 875 F.2d 994, 1002 n.10 (2d Cir. 1989). Although the procedure by which New York courts predict the content of unsettled foreign law is itself somewhat ambiguous, the Second Circuit has indicated that it
believe[s] that New York courts would, as a matter of substantive interpretation, presume that the unsettled common law of another state would resemble New York's but that they would examine the law of the other jurisdiction and that of other states, as well as their own, in making an ultimate determination as to the likely future content of the other jurisdiction's laws.