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Narine v. Dave West Indian Products Corp.

November 7, 2007


The opinion of the court was delivered by: Go, United States Magistrate Judge


Plaintiff Eric Narine brings this action against defendant Dave West Indian Products Corp. ("Dave West") alleging fraud, unjust enrichment and violation of the New York General Business Law § 349. Dave West moves for leave to file a third-party action against Bissoon Narine ("Bissoon"), plaintiff's brother. By electronic order dated August 7, 2007, the Honorable Edward R. Korman referred plaintiff's motion to me for decision.*fn1


Plaintiff, a Maryland resident, alleges that Dave West is a New York corporation with its principal place of business in New York. Complaint (ct. doc. 1) at ¶¶ 4-5. In October 2006, Dave West employed Bissoon at its store, "The Carribean Market," in Takoma Park, Maryland (the "store"). Id. at ¶¶ 6-7. While Bissoon worked at the store, plaintiff loaned defendant $5,000. Id. at ¶ 10.

In November 2006, the store's managers and defendant's President, along with two Takoma Park police officers, confronted Bissoon and accused him of stealing from the store. Id. at ¶¶ 12-15. After being told that he would be arrested and reported to immigration officials if he did not agree to pay defendant for the value of the stolen items, Bissoon agreed in writing that he would reimburse defendant for the items that he allegedly stole. Id. at ¶¶ 17, 19. After Bissoon signed the agreement, defendant's representatives threatened to have Bissoon arrested and deported if he did not give them $5,000. Id. at ¶ 25. On November 18, 2006, plaintiff paid $5,000 to defendant on his brother's behalf. Id. at ¶ 28. After defendant again threatened to take action against Bissoon, plaintiff agreed on December 3, 2006 to surrender certain personal property to defendant and to assume responsibility for Bissoon's obligation to reimburse defendant. Id. at ¶ 37. Pursuant to that agreement, plaintiff surrendered personal property with a replacement value of approximately $35,000. Id. at ¶¶ 38-39.

Plaintiff commenced this action on February 14, 2007. See ct. doc. 1. Plaintiff alleges that the accusations against his brother are false and are part of an extortion scheme by defendant to avoid paying back the $5,000 loan and to obtain additional funds from plaintiff. On June 6, 2007, defendant filed an amended answer to the complaint, asserting a counterclaim for breach of contract. See ct. doc. 13. By motion filed on July 31, 2007, defendant seeks leave to file a third-party action against Bissoon for contribution or indemnity on the theory that defendant's liability for plaintiff's fraud claim was caused by Bissoon's confession, which defendant then communicated to plaintiff. See ct. doc. 18 at 6. Defendant also seeks to bring independent claims against Bissoon for fraud and conversion.


Rule 14(a) of the Federal Rules of Civil Procedure provides that a party may implead 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). To sustain an impleader action, "the third party's liability must be in some way dependent on the outcome of the main claim or the third party must be potentially secondarily liable as a contributor to the defendant." Santos v. Delta Machinery, No. 06 Civ. 13269, 2007 WL 1098690, at *1 (S.D.N.Y. Apr. 11, 2007); see Bank of India v. Trendi Sportswear, Inc., 239 F.3d 428, 438 (2d Cir. 2000). Leave of the court must be obtained if more than 10 days have elapsed since the third-party plaintiff filed his answer, as in this case. Id. The decision to permit a defending party to implead a third-party defendant rests in the trial court's discretion. Bank of India, 239 F.3d at 438.

Rule 14(a) "'was designed to permit the liberal joinder of parties so that judicial energy could be conserved and consistency of results guaranteed.'" State of New York v. Solvent Chemical Co., Inc., 875 F. Supp. 1015, 1021 (W.D.N.Y. 1995) (quoting Olympic Corp. v. Societe Generale, 462 F.2d 376, 379 (2d Cir. 1972)); see Nova Prods., Inc. v. Kisma Video, Inc., 220 F.R.D. 238, 240 (S.D.N.Y. 2004) (impleader promotes judicial efficiency by permitting the adjudication of several claims in a single action and thus eliminate "circuitous, duplicative actions"); Shafarman v. Ryder Truck Rental, Inc., 100 F.R.D. 454, 458-59 (S.D.N.Y. 1984). Generally, motions for leave to implead third parties should be freely granted "unless to do so would prejudice the plaintiff, unduly complicate the trial, or would foster an obviously unmeritorious claim." Shafarman, 100 F.R.D. at 459; see Nova Prods., 220 F.R.D. at 240; Too, Inc. v. Kohl's Dep't Stores, Inc., 213 F.R.D. 138, 140 (S.D.N.Y. 2003); Fed. R. Civ. P. 14 advisory committee's note, 1963 amendment. In addition, courts may consider whether the movant deliberately delayed or was derelict in filing the motion. See Nova Prods., 220 F.R.D. at 240.

Defendant argues that if its accusations of theft are false and it is liable to plaintiff for fraud, then Bissoon is liable to the defendant for contribution or indemnification because it relied on Bissoon's false confession. As discussed below, defendant's proposed third-party claim against Bissoon is "obviously unmeritorious."

Generally, the applicable state substantive law applies to determining whether there is a basis for third-party liability. See White v. ABCO Eng'g Corp., 221 F.3d 293, 307 (2d Cir. 2000); Columbus McKinnon Corp. v. China Semiconductor Co., Ltd., 867 F. Supp. 1173, 1177 (W.D.N.Y. 1994); Friedman v. Hartmann, 787 F. Supp. 411, 420 (S.D.N.Y. 1992). Although the parties neither discuss the choice of law issue nor provide any state law pertinent to the issues raised by the instant motion, this Court must, as in any diversity case, first apply the forum state's choice of law rules. See White Plains Coat & Apron Co., Inc. v. Cintas Corp., 460 F.3d 281, 284 (2d Cir. 2006). Under New York's rules, the "first question to resolve in determining whether to undertake a choice of law analysis is whether there is an actual conflict of laws." Curley v. AMR Corp., 153 F.3d 5, 12 (2d Cir. 1998). In this case, New York and Maryland are the only jurisdictions with laws potentially applicable. As discussed below, there is no conflict as to the laws regarding indemnification and fraud, but there is an actual conflict between Maryland and New York with respect to a third party plaintiff's right to contribution.

In New York, a third party defendant may be liable for contribution, notwithstanding the absence of its direct liability to the injured plaintiff, where the third party defendant breached a special duty to the third party plaintiff.*fn2 See Garrett v. Holiday Inns, Inc., 58 N.Y.2d 253, 258-61, 447 N.E.2d 717, 719-21 (1983) (finding town liable for contribution to motel owner even absent duty owed by town to motel guests). In contrast, Maryland follows the Uniform Contribution Among TortFeasors Act ("UCATA"), Md. Code, Cts. & Jud. Proc. §§ 3-1401, et seq. Under Maryland law, to impose liability for contribution, a joint tortfeasor must be directly liable to the plaintiff. Montgomery County v. Valk Mfg. Co., 317 Md. 185, 199, 562 A.2d 1246, 1253 (1989); see Pyramid Condominium Assoc. v. Morgan, 606 F. Supp. 592, 598 (D. Md. 1985); Parler & Wobber v. Miles & Stockbridge, 359 Md. 671, 686-87, 756 A.2d 526, 534 (2000). In light of this conflict, the Court must decide which state's law to apply.

Under New York's choice of law rules, fraud claims are governed by the state in which the injury is deemed to have occurred, which is usually where the plaintiff is located. See Sack v. Low, 478 F.2d 360, 366 (2d Cir. 1973); Telecom Int'l America, Ltd. v. AT&T Corp., 67 F. Supp. 2d 189, 207 n.16 (S.D.N.Y. 1999). Since plaintiff is a Maryland resident and all the relevant events occurred in Maryland, Maryland law applies to the proposed third-party claims sounding in fraud. As there is no conflict between Maryland and New York law relating to indemnification and fraud, I apply Maryland law to ...

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