Main Menu

Federal Court Permits Defendant's Third-Party Claim But Denies Insurer's Similar Motion As Time Barred

Posted In Discovery
Federal Ins. Co. v. Lighthouse Constr., Inc., 230 F.R.D. 387 (D.Del. 2005). A subrogation action was brought by a property insurer to recover for loss incurred by a roof collapse against a building contractor. The contractor sought leave of the Court to file a third-party complaint against the erection contractor. The insurer also sought leave to file a claim against the erection contractor. The Court held that the contractor could file a third-party claim for indemnity against the erection contractor. However, the Court also ruled that the plaintiff-insurer was barred by a two-year statute of limitations from filing a third-party claim against the erection contractor. Plaintiff Federal Ins. Co. ("Federal") filed this action against defendant Lighthouse Construction ("Lighthouse") and others in 2003 in relation to a 2003 roof collapse of a 1995 building. The 1995 building was owned by Del-Homes Catalog Group ("De-Homes") and leased to Client Logic. Eziba.Com and a group of companies ("Eziba") entered into a contract with Client Logic to provide certain services in connection with Eziba's business. Eziba used the 1995 building to warehouse its business' personal property and insurance coverage was provided by Federal. The collapse was engineered by a substantial amount of snow. After the collapse, Federal made payments to Eziba reduced by a salvage amount. Federal then brought this subrogation action against Lighthouse and other parties claiming negligence. A second action was brought by Millers Capital Insurance Company ("Millers Capital") against Lighthouse based on the same claim of roof collapse. In that action, Lighthouse brought claims against East Coast Erectors, Inc. (" East Coast") as a third-party defendant, for contribution and indemnification. The parties agreed on consolidation of the cases. The Court permitted Lighthouse to bring a third-party claim against East Coast based on contractual indemnification although East Coast claimed that there was no written contract between them permitting indemnification. This was because the parties manifested an intent to enter into a contract or partially performed it. Therefore, the Court permitted Lighthouse to assert the third-party claim against East Coast and a claim for contractual indemnity against it. Federal requested the Court for leave to file a Rule 14(a) claim against East Coast contending that because East Coast had been a party in this action, it should permit Federal to join East Coast too. East Coast countered by stating that it was joined in the Miller suit and not the Lighthouse suit and therefore Federal was barred from joining East Coast as a third-party in the present suit by the statute of limitations. The Court held that East Coast's argument related to the two different actions was not a valid basis for denying the motion. However, interpreting Rule 14(a) and case law on that rule, the Court held that Federal had not satisfied Rule 15(c)(3)'s requirement for relating back the claim to the date of the complaint. Therefore, although the claim originated from the same transaction or occurrence as the claims alleged in the original complaint, Federal did not demonstrate that it was mistaken as to the identity of the proper party to be served such that "East Coast knew or should have known that, but for the mistake, the action would have been brought against it." Therefore, the Court held that Federal's claim was barred by the statute of limitations and could not successfully relate back. Accordingly, the Court granted Lighthouse's motion to file a third-party complaint against East Coast but denied Federal's Rule 14(a) motion to join East Coast as a third-party defendant. Authored by: Raj Srivatsan 302-888 6831 Share
Back to Page