June 7, 2013
BEST INDUSTRIES (PVT), LTD., Plaintiff,
PEGASUS MARITIME, INC., PEGASUS SHIPPING, INC., and DCE TRUCKING CORP., Defendants. PEGASUS MARITIME, INC. and PEGASUS SHIPPING, INC., Third-Party Plaintiffs,
M/V APL PEARL, her engines, tackle, boilers, etc., in rem, APL CO. PTE LTD., AMERICAN PRESIDENT LINES, LTD., and HANJIN SHIPPING CO., LTD., in personam, Third-Party Defendants.
Julius Vincent Reppert, Esq., Reppert Kelly LLP, New York, NY, for Plaintiff.
Justin Matthew Heilig, Esq., Hill Rivkins LLP, New York, NY, for Defendants Pegasus Maritime, Inc. and Pegasus Shipping, Inc.
Randolph H. Donatelli, Esq., Cichanowicz, Callan, Keane, Vengrow & Textor, New York, NY, for Third-Party Defendants.
MEMORANDUM OPINION AND ORDER
SHIRA A. SCHEINDLIN, District Judge.
I. BACKGROUND AND SUMMARY
Defendants Pegasus Maritime, Inc. and Pegasus Shipping, Inc. (collectively, "Pegasus") filed a third-party complaint against third-party defendants Hanjin Shipping Co., APL Co., and American President Lines, Ltd. (collectively, "third-party defendants"), and also against a vessel in rem. All causes are designated as admiralty claims under Federal Rule of Civil Procedure 9(h).
Because this action stems from an admiralty claim, Pegasus invoked the liberal third-party practice provisions of Rule 14(c), which in addition to ordinary impleader rules, allows third-party plaintiffs to "demand judgment in the [original] plaintiff's favor against the third-party defendant." The Rule then provides that "the third-party defendant must defend under Rule 12 against the plaintiff's claim as well as the third-party plaintiff's claim; and the action proceeds as if the plaintiff had sued both the third-party defendant and the third-party plaintiff."
Plaintiff Best Industries (Pvt), Ltd. ("Best") subsequently emailed a "Stipulation and Order of Partial Dismissal" to the Clerk of the Court. This Stipulation purports to dismiss Best's claims against the in personam third-party defendants, presumably via Rule 41(a)(1)(A)(ii). Pegasus responded by letter to this Court arguing that the Stipulation should not be accepted because Pegasus does not consent and because it has the right to assert Best's claims within the current action, regardless of Best's wishes, under Rule 14(c)(2). For the following reasons, I am persuaded by Pegasus's argument and decline to order the proposed stipulation.
A. Rule 14 Precludes Dismissal
Rule 14(c)(2) states:
The third-party plaintiff may demand judgment in the plaintiff's favor against the third-party defendant. In that event, the third-party defendant must defend under Rule 12 against the plaintiff's claim as well as the third-party plaintiff's claim; and the action proceeds as if the plaintiff had sued both the third-party defendant and the third-party plaintiff.
The question is whether the third-party plaintiff, having demanded judgment against a third-party defendant in favor of the original plaintiff, may continue to prosecute that claim even if the plaintiff wishes to dismiss its claims against the third-party defendant. While there does not appear to be any controlling precedent on this precise issue, both the plain text and the purposes of Rule 14(c)(2) suggest that such third-party claims may not be dismissed by stipulation without the consent of the third-party plaintiff.
The plain text of Rule 14(c)(2) does not simply give plaintiff the option to bring direct claims against a third-party defendant - indeed, that would be the ordinary procedure for impleader under Rule 14(a)(3). Instead, Rule 14(c)(2) clearly states that it is the third-party plaintiff who may demand judgment in the plaintiff's favor. The Rule's text does not provide plaintiff with the choice to withdraw claims against a third-party defendant. Indeed, the Rule states that if the third-party plaintiff demands judgment in favor of the plaintiff, "the third-party defendant must defend under Rule 12...."
While authority on the matter is extremely limited,  the only case that can be considered on point confirms this reading. In Texaco Exploration & Production Co. v. AmClyde Engineered Products Co.,  the original plaintiff moved to strike the addition of a third-party defendant against whom the original plaintiff's claims were asserted by a third-party plaintiff under Rule 14(c)(2). The Fifth Circuit explained that when claims are made against a third-party defendant under Rule 14(c)(2), "the plaintiff is then required to assert his claims directly against the third-party defendant."
An examination of the purposes of Rule 14(c) further supports the conclusion that plaintiff cannot dismiss a 14(c)(2) impleader against a third-party defendant without the consent of the third-party plaintiff. "Rule 14(c) was designed to expedite and consolidate admiralty actions by permitting a third-party plaintiff to demand judgment against a third-party defendant in favor of the plaintiff." The Rule 14(c)(2) provisions were included to incorporate admiralty's history of "liberal third-party practice" into the Federal Rules of Civil Procedure, including "defendant's traditional right to demand judgment directly in favor of plaintiff." Because, as discussed above, the text of the Rule also supports this conclusion, the Rule should be interpreted to maintain this "traditional right."
B. The Stipulation Does Not Meet the Requirements of Rule 41
Furthermore, the requirements of Rule 41(a)(1)(A)(ii) were not met in this case. The Rule requires that "a stipulation of dismissal [be] signed by all parties who have appeared." Both Pegasus and the third-party defendants have appeared,  and the claims against the third-party defendants originated in Pegasus's Third-Party Complaint. Pegasus did not sign the Stipulation.
The case law confirms this understanding of Rule 41. In one case, plaintiff sought to dismiss only a select number of defendants from the action after they had appeared. The stipulation was signed by plaintiff and only the defendants for whom the action was to be dismissed. The district court held that dismissal by stipulation under Rule 41(a)(1)(A)(ii) was unavailable, since not all parties had signed the stipulation.
For all of the reasons stated above, Best and the third-party defendants may not dismiss by stipulation the claims brought by Pegasus in favor of Best under Rule 14(c)(2) without the agreement of all parties in the case. As such, this Court rejects the proposed stipulation.