Henn et al v. Fidelity National Title Insurance Company

Filing 33

MINUTE ORDER: IT IS HEREBY ORDERED that 21 Defendant Fidelity National Title Insurance Company's Corrected Motion for Leave to File Third-Party Complaint Pursuant to Fed. R. Civ. P. 14(a) is hereby GRANTED. IT IS FURTHER ORDERED that the Cler k of the Court shall accept Defendant's Third-Party Complaint #[21-1] for filing as of the date of this Order. IT IS FURTHER ORDERED that Defendant Fidelity National Title Insurance Company's Motion for Leave to File Third-Party Complaint Pursuant to Fed. R. Civ. P. 14(a) # 16 is DENIED as moot. By Magistrate Judge Kristen L. Mix on 05/21/13. (alvsl) (Main Document replaced on 5/21/2013 pursuant to clerical error) (alvsl).)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 12-cv-03077-RM-KLM
PRESTON B. HENN, individually, and
BETTY D. HENN, individually,
Plaintiffs,
v.
FIDELITY NATIONAL TITLE INSURANCE COMPANY, a California Corporation,
Defendant.
_____________________________________________________________________
ORDER
_____________________________________________________________________
ENTERED BY MAGISTRATE JUDGE KRISTEN L. MIX
This matter is before the Court on Defendant Fidelity National Title Insurance
Company’s Motion for Leave to File Third-Party Complaint Pursuant to Fed. R. Civ.
P. 14(a) [Docket No. 16; Filed March 7, 2013] and Defendant Fidelity National Title
Insurance Company’s Corrected Motion for Leave to File Third-Party Complaint
Pursuant to Fed. R. Civ. P. 14(a) [#21; Filed March 11, 2012] (the “Motion”). On April 1,
2013, Plaintiffs filed a Response [#25]. On April 12, 2013, Defendant filed a Reply [#26].
The Court has reviewed the Motion, the Response, the Reply, the entire docket, and the
applicable law, and is sufficiently advised in the premises.
I. Background
This matter was initiated by Plaintiffs on November 26, 2012. See generally Compl.
[#1]. On November 28, 2012, Plaintiffs filed their Amended Complaint in which they assert
a claim for breach of contract and a claim for bad faith breach of contract based on
1

Defendant’s denial of benefits under a title insurance policy. Am. Compl. [#7] at 6-9. On
February 22, 2013, Defendant filed a Designation of Non-Parties at Fault Pursuant to Colo.
Rev. Stat. § 13-21-111-.5(3), stating that Jacoby Enterprises, Inc., the Estate of Vince J.
Higens, and Pitkin County Title, Inc., “may be wholly or partially at fault for the claimed
losses or damages that are the subject of this proceeding.” Designation of Non-Parties at
Fault [#14] at 1.
It is undisputed that Defendant issued a title insurance policy to Plaintiffs. Am.
Compl. [#7] at ¶ 6; Ans. [#13] at ¶¶ 7-8. It is also undisputed that Plaintiffs were sued in
state court by a non-party regarding an easement the non-party claimed on Plaintiffs’
property. Am. Compl. [#7] at ¶¶ 9-17; Ans. [#13] at ¶¶ 9, 11-12, 14-16. Plaintiffs claim that
they made a demand on Defendant for defense and indemnity relating to the action brought
in state court against Plaintiffs and that Defendant breached the title insurance contract by
denying coverage. Am. Compl. [#7] at ¶¶ 18, 38-39, 43, 46, 48-53. Plaintiffs seek
monetary damages, including the diminution in value of the real property because of the
easement, interest, costs, and attorney’s fees. Id. at 9; Scheduling Order [#22] at § 5.
Defendant disputes Plaintiffs’ allegations and, in its Motion, alleges that the actions
of third-party Pitkin County Title, Inc. (“Pitkin”) “caused or contributed to Plaintiffs’ damages
and has caused damages to Fidelity.” Motion [#21] at 4. Specifically, Defendant avers that
Pitkin violated the agency agreement entered into by Defendant and Pitkin, which
authorized Pitkin to issue title insurance to Plaintiffs on behalf of Defendant, by altering the
title insurance form without Defendant’s approval. Id. at 3. Defendant claims that Pitkin:
deleted Policy Exceptions 1, 2, 3, and 4, without written authorization from
Fidelity. Deleted Policy Exception No. 2 provides that the policy does not
insure against loss or damages by reason of “Easements, or claims of
2

Easements, not shown by the public records.” Deleted Policy Exception No.
3 provides that the policy does not insure against loss or damage by reason
of “Discrepancies, conflicts in boundary lines, shortage in area,
encroachments, any facts which a correct survey and inspection of the
premises would disclose and which are not shown by the public records.”
Id. at 3-4.

As a result of Pitkin’s actions, Defendant claims that Pitkin “is liable to

[Defendant] for all or part of any damages awarded to Plaintiffs, as well as damages
incurred by Fidelity in defending against Plaintiff’s [sic] claims.” Id. at 4-5.
In their Response, Plaintiffs argue that because their claims against Defendant and
Defendant’s claims against Pitkin are based on two separate contracts, the Motion should
be denied. Resp. [#25] at 7. Plaintiffs further argue that the disputes do not share a
common factual background. Id. at 8-9. Finally, Plaintiffs allege that granting the Motion
“would significantly prejudice [Plaintiffs], would unnecessarily expand the scope of this
litigation, and would complicate the trial.” Id. at 9.
In its Reply, Defendant argues that granting the Motion will promote judicial
economy, will not prejudice Plaintiffs, will not complicate discovery, will not delay the
litigation, and that many of the issues that will be litigated between Plaintiffs and Defendant
will also be litigated between Defendant and Pitkin. Reply [#26] at 2.
II. Analysis
Defendants may file a third-party complaint where a third-party defendant “is or may
be liable to it for all or part of the claim against it” Fed. R. Civ. P. 14(a)(1). A claim under
Fed. R. Civ. P. 14(a) must depend, at least in part, on the resolution of the primary lawsuit.
Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 376 (1978). However, Rule 14(a)
“does not require identity between the primary and third-party claims.” Maxfour Eng’rs &
Architects, LLC v. ARB, Inc., 233 F.R.D. 602, 605 (D. Colo. 2006). Further, “[t]he fact that
3

the third-party defendant is not subject to the primary claims asserted by the plaintiff is no
obstacle to third-party practice.” Id. (citations omitted).
“The general purpose of Rule 14 is to settle related matters in one litigation as far
as possible and obtain consistent results from identical or similar evidence, thus preventing
a duplication of effort for the courts and serving the interests of judicial economy.” Patten
v. Knutzen, 646 F.Supp. 427, 429 (D. Colo. 1986). Federal Rule of Civil Procedure 14(a)
“should be liberally construed to accomplish its purpose but it is not a catchall for
independent litigation.” U.S. Fidelity & Guar. Co. V. Perkins, 388 F.2d 771, 773 (10th Cir.
1968). “Whether third-party defendants may be brought in and retained in the action is
ordinarily a matter addressed to the sound discretion of the trial judge. If impleading a third
party defendant would require the trial of issues not involved in the controversy between
the original parties without serving any convenience, there is no good reason to permit the
third-party complaint to be filed.” U.S. Fidelity & Guar. Co., 388 F.2d at 773 (internal
quotation and citation omitted); Farmers & Merchs. Mut. Fire Ins. Co. v. Pulliam, 481 F.2d
670, 673 (10th Cir. 1973) (holding that “granting of leave of a defendant to prosecute a third
party proceeding under F.R.C.P. 14 rests in the sound discretion of the trial court”).
However, “[a] timely motion for leave to implead a third party should be freely granted
unless doing so ‘would prejudice the plaintiff, unduly complicate the trial, or would foster
an obviously unmeritorious claim.’” American Intern. Ins. Co. v. Central Sprinkler Co., Civil
Action No. 09-cv-02098-PAB-KMT, 2012 WL 1413106, at *1 (D. Colo. March 31, 2010).
(quoting Saine v. A.I.A., Inc., 582 F.Supp. 1299, 1309 (D. Colo. 1984)).1

1

The Court notes that Defendant’s Motion was timely filed on March 11, 2013, more
than two months prior to the May 15, 2013 deadline for joinder of parties. See Scheduling

4

The Court finds that the filing of Defendant’s third-party complaint against Pitkin will
not “prejudice the plaintiff, unduly complicate the trial, or . . . foster an obviously
unmeritorious claim.”2 American Intern. Ins. Co., 2012 WL 1413106, at *1 (quoting Falcone
v. MarineMax, Inc., 659 F.Supp.2d, 401 (E.D.N.Y. 2009)). Here, Plaintiffs argue that
Defendant’s third-party complaint against Pitkin would “virtually doubl[e] the facts, issues,
length and complexity of both discovery and trial.” Resp. [#25] at 9. However, Plaintiffs
have already indicated that they intend to depose Pitkin as part of the litigation of their
claims against Defendant. Scheduling Order [#22] at 11. While some additional discovery
may be needed as a result of Defendant’s complaint against Pitkin, it will not be so unduly
burdensome as to prejudice Plaintiffs, particularly when Plaintiffs already intend to seek
discovery from Pitkin. Further, as Defendant argues, the issues regarding Pitkin’s alleged
breach of the agency agreement “will be part of the litigation regardless because these
issues . . . will be raised by way of [Defendant’s] presentation of its defenses to Plaintiffs’
claims.” Reply [#26] at 5. To the extent Pitkin’s alleged negligence in performing it’s
contract with Defendant or its alleged breach of its contract with Defendant exposed
Defendant to the claims asserted by Plaintiff, Defendant’s claims against Pitkin “fit nicely

Order [#22] at § 9(a).
2

The Court will not address the merits of Defendant’s claims against Pitkin at this stage
of the litigation, Plaintiffs do not do so and the Court is not required to engage in a detailed
analysis of the proposed third-party complaint at this early stage of the litigation. A simple
review of the proposed third-party complaint reveals a document that includes the basic
elements of a complaint and attaches documentary support relating to its breach of contract
claim. Furthermore, Defendant filed a Certificate of Review Pursuant to Colo. Rev. Stat. § 1320-602 [#24]. The Certificate of Review states that “a professional with expertise in the areas of
the alleged negligent conduct” alleged against Pitkin in the third-party complaint “reviewed the
known facts” and “concluded that the filing of the claims against” Pitkin “does not lack
substantial justification within the meaning of Colo. Rev. Stat. § 13-17-102(4).” Cert. of Review
[#24] at 1-2.

5

within Rule 14(a).” Maxfour, 233 F.R.D. at 605.
Further, the Court has jurisdiction over the proposed third-party claims pursuant to
28 U.S.C. § 1332. The amount sought exceeds $75,000. Third-Party Complaint [#21-1]
at ¶ 4. As alleged in the proposed third-party complaint, Plaintiffs are citizens of Florida,
Defendant is a California corporation, and Pitkin is a Colorado corporation with its principle
place of business in Aspen, Colorado. Id. at ¶¶ 1-3.
III. Conclusion
Accordingly,
IT IS HEREBY ORDERED that the Motion [#21] is hereby GRANTED.
IT IS FURTHER ORDERED that the Clerk of the Court shall accept Defendant’s
Third-Party Complaint [#21-1] for filing as of the date of this Order.
IT IS FURTHER ORDERED that Defendant Fidelity National Title Insurance
Company’s Motion for Leave to File Third-Party Complaint Pursuant to Fed. R. Civ. P. 14(a)
[#16] is DENIED as moot.
Dated: May 21, 2013

6