Fidelity & Deposit Company of Maryland v. Jack Isom Construction Co., Inc. et al

Filing 51

OPINION AND ORDER: For the reasons set forth in the Opinion and Order, the Motion for Leave to File Third Party Complaint 46 is DENIED. Signed by Magistrate Judge Andrew P Rodovich on 11/15/2018. (jss)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
LAFAYETTE DIVISION
FIDELITY & DEPOSIT COMPANY OF
MARYLAND,
Plaintiff,
v.
BILLY JACK ISOM,
Defendant.

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Case No. 4:17-cv-21

OPINION AND ORDER
This matter is before the court on the Motion for Leave to File Third-Party Complaint
[DE 46] filed by the defendant, Billy Jack Isom, on August 31, 2018. For the following reasons,
the motion is DENIED.
Background
The plaintiff, Fidelity & Deposit Company of Maryland, initiated this matter on February
27, 2017. Fidelity alleged that the defendants, Jack Isom Construction Co., Inc. and Billy Jack
Isom, were liable for their failure to reimburse Fidelity for its damages and losses incurred from
Bonded Projects. Fidelity has indicated that on or about May 13, 2005 Billy Jack, as president
for Jack Isom Construction Company, executed an Agreement of Indemnity with Fidelity
relating to the Bonded Projects. Fidelity contends that Billy Jack has failed to reimburse Fidelity
for its losses, as required by the Agreement of Indemnity.
On September 25, 2017, the court entered a default judgment against the defendants. The
court vacated the default judgment against Billy Jack on April 17, 2018. Therefore, the claims
asserted in this matter now relate only to Billy Jack. Billy Jack filed his answer on May 10,
2018. However, he did not file a third-party complaint with his answer.

Billy Jack now has filed a motion requesting leave to file a third-party complaint against
Billy Ray Isom. Billy Jack contends that he did not sign the Agreement of Indemnity. Rather,
he has argued that Billy Ray signed the Agreement. Moreover, Billy Jack has indicated that
Billy Ray took over Jack Isom Construction in 2005 and that Billy Ray sold all the assets and
terminated Jack Isom Construction. Therefore, it is Billy Jack’s contention that it is necessary
for Billy Ray to brought into this matter as a third-party defendant to answer to his stewardship
and control of the Jack Isom Construction Company since 2005. Fidelity filed a response in
opposition on September 14, 2018, and Billy Jack did not file a reply.
Discussion
Federal Rule of Civil Procedure 14(a)(1) states that “[a] defending party may, as thirdparty plaintiff, serve a summons and complaint on a nonparty who is or may be liable to it for all
or part of the claim against it.” A defendant must seek leave of court to file a third-party
complaint if more than fourteen days have passed since it served its original answer. Rule
14(a)(1). The decision to grant leave to file a third-party complaint is committed to the
discretion of the trial court. Highlands Insurance Co. v. Lewis Rail Service Co., 10 F.3d 1247,
1251 (7th Cir. 1993).
Courts interpreting this rule have recognized that “[t]he third-party defendant must be
secondarily liable [derivative liability] to the third-party plaintiff in the event the third-party
plaintiff is found to be liable to the plaintiff.” Greene Line Mfg. Corp. v. Fibreboard Corp., 130
F.R.D. 397, 399 (N.D. Ind. 1990). “The rule is not altered merely by the fact that the alleged
third-party claim grew out of the same transaction.” U.S. Gen., Inc. v. City of Joliet, 598 F.2d
1050, 1053 (7th Cir. 1979). “The distinguishing characteristic of a claim filed pursuant to Rule
14(a) is that the defendant is attempting to transfer to the third-party defendant the liability

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asserted against the defendant by the original plaintiff.” Green, 130 F.R.D. at 399 (quoting
Forum Ins. Co. v. Ranger Ins. Co., 711 F. Supp. 909, 915 (N.D. Ill. 1989).
Billy Jack has requested leave to file his third-party complaint against Billy Ray. Billy
Jack contends that it is necessary for Billy Ray to be brought into the instant matter. Billy Jack
asserts that he did not sign the Agreement of Indemnity, rather he believes that it was signed by
Billy Ray. The third-party complaint has alleged that the alleged misconduct asserted in the
complaint was within the purview and responsibility of Billy Ray.
Fidelity contends that Billy Jack’s claims against Billy Ray are for fraudulent control of
Jack Isom Construction and for fraudulently signing Billy Jack’s name to the Agreement of
Indemnity. Fidelity asserts that Billy Ray is not required to indemnify Billy Jack for his failure
to pay or indemnify Fidelity. Therefore, Fidelity has argued that the third-party claim does not
arise from Fidelity’s claim and therefore is improper.
The court finds that under Rule 14(a), Billy Ray could not be added as a third-party
defendant because Billy Jack has not alleged facts sufficient to establish secondary liability
against Billy Ray. Fidelity maintains that the Agreement of Indemnity was signed by Billy Jack.
However, Fidelity contends that even if the Agreement of Indemnity was signed by Billy Ray,
Billy Jack had issued a general power of attorney to Billy Ray to act and sign on his behalf.
Fidelity represents that the general power of attorney was valid at the time the Agreement of
Indemnity was executed. [J. Kutch Aff. 5-6]. Therefore, Billy Ray’s signature on behalf of Billy
Jack was valid and thus binding at the time the Agreement of Indemnity was executed. In light
of the power of attorney, Billy Jack would be unable to pass any judgment against him onto Billy
Ray. Billy Jack has not disputed these allegations. Therefore, Billy Jack’s proposed third-party
claim is improper under Rule 14(a).

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Based on the foregoing reasons, the Motion for Leave to File Third-Party Complaint [DE
46] is DENIED.
ENTERED this 15th day of November, 2018.
/s/ Andrew P. Rodovich
United States Magistrate Judge

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