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Royal Sun Alliance Insurance PLC v. TA Operating LLC

April 12, 2010


The opinion of the court was delivered by: Robert P. Patterson, Jr., U.S.D.J.


Defendant TA Operating LLC ("TA") moves for leave to amend its answer and to implead third-party defendants. Plaintiff Royal Sun Alliance Insurance PLC ("Royal Sun") opposes the impleading of the third party defendants.

I. Background

For the reasons stated at the March 1, 2010 teleconference, the motion for leave to implead is denied with respect to the unnamed "John Doe" defendants, representing the criminals responsible for the theft. To date, there is no indication the thieves will ever be identified and apprehended. If TA is found liable and the thieves are later arrested, TA will be able to bring an action for indemnification or contribution at that time. To add unidentified John Doe defendants to this action at this time would overly complicate and delay the discovery process and trial.

At oral argument on April 6, 2010, an agreement was reached not to implead one or more Johnson & Johnson companies ("the J&J Entities") that manufactured the pharmaceuticals in question, sold them to the purchasers, and contracted with a common carrier for delivery to the purchasers. Per the agreement, the Court will determine at a later date, on the facts and the law in this case, whether the J&J Entities can be found comparatively negligent in the cargo losses as a matter of law. If the Court so determines, the jury will be asked to determine what, if any, percentage of fault is attributable to the seller of the goods, i.e. to the J&J Entities collectively. (See Transcript of April 6, 2010 Conference.)

The only question remaining before the Court is whether to permit TA to implead Prime, Inc. ("Prime"), the trucking company in charge of the delivery of the two pharmaceutical shipments at issue. TA argues that Prime, through its agents, maintained exclusive control over the shipments at the time they were stolen, one in Tennessee and one in Ohio. Therefore, TA argues, in the event it is held liable to Royal Sun, it is entitled to indemnification and/or contribution from Prime.

II. Discussion

In determining whether to grant leave to interplead pursuant to Rule 14, the Court considers four factors: "(i) whether the movant deliberately delayed or was derelict in filing the motion; (ii) whether impleading would unduly delay or complicate the trial; (iii) whether impleading would prejudice the third-party defendant; and (iv) whether the third-party complaint states a claim upon which relief can be granted." Too, Inc. v. Kohl's Dep't Stores, Inc., 213 F.R.D. 138, 140 (S.D.N.Y. 2003).

As a threshold matter, TA moved to add additional parties before February 15, 2010 -- the deadline to amend the pleadings and add parties as pursuant to the Court's scheduling order, as modified on December 14, 2009. Further, there are still over two and a half months remaining before the previously-set deadline to complete fact discovery. Under these circumstances, TA's motion is not the product of deliberate or undue delay.

It is undisputed that Prime and its agents were directly involved in the two cargo shipments at issue. It is equally clear that the two shipments were in the custody, care and control of Prime at the time they were stolen. Prime and its drivers who were in charge of the two shipments will be involved with this litigation, whether as parties or as witnesses. Prime's addition as a party will not overly complicate discovery, nor will it delay or complicate a trial. Because Prime has been aware of the cargo thefts since they occurred and Prime will be involved in the discovery for this case regardless of the outcome of this motion, Prime would not be unfairly prejudiced by being joined as a party. Therefore, the sole remaining issue is whether a third party complaint against Prime states a claim on which relief may be granted.

Royal Sun claims it has settled any claim it has against Prime, including any potential tort claims, and Prime, as a settling tortfeasor, is not subject to a contribution action or subject to joinder by TA. See Tenn. Code Ann. § 29-11-105.

Royal Sun's argument, relying on § 29-11-105, that any claim against Prime is not viable is unavailing. First, it appears that Prime did not "settle" a tort claim, but rather paid their contractual damage limitation of $250,000 per lost shipment. TA correctly points out that -- as a non-party to the contract -- it cannot be bound by the contract between the shipper and the carrier. Nothing in a contractual liquidated damages clause between Prime and JOM will bar an otherwise appropriate right of indemnification or right to a determination of comparative fault.

Royal Sun's position is that (1) Prime should not be joined in this case; (2) TA is barred by law from seeking contribution or indemnification from Prime; and (3) any award against TA is set off only by the settling amount and not the percentage of fault fairly attributable to Prime. Royal Sun's position is inequitable because Royal Sun's view of the law: (i) creates the possibility of liability for TA over and above its relative share of fault with no possible recovery against Prime; and (ii) creates the possibility of double-recovery by Royal Sun.

Second, and more importantly, the statutes and case law relied on by Royal Sun for its position that Prime is released as a settling ...

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