Osborne v. Bed Bath & Beyond, Inc. et al
Filing
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MEMORANDUM OPINION. Signed by District Judge Michael F. Urbanski on 10/8/12. (tob)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF VIRGINIA
ROANOKE DIVISION
JANET L. OSBORNE, M.D., FACOG,
FACS,
Plaintiff,
v.
BED BATH & BEYOND, INC. and
LOSOREA PACKAGING, INC.,
Defendants.
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Civil Action No. 7:12-cv-99
By:
Michael F. Urbanski
United States District Judge
MEMORANDUM OPINION
Before the court is defendant Bed Bath & Beyond, Inc.’s (“BBB”) Motion for Leave to
File a Third-Party Complaint (Dkt. # 23) against NHG Liquidation, Inc. f/k/a/ NAPA Home &
Garden, Inc. (“NAPA”) and Fuel Barons, Inc. (“Fuel Barons”). A hearing was held on August
13, 2012, after which the court took the motion under advisement and requested the parties file
additional information on the issue within seven days. Both parties filed supplemental briefs,
and the issue is now ripe for adjudication. For the reasons set forth below, BBB’s motion (Dkt. #
23) is GRANTED.
Rule 14(a)(1) of the Federal Rules of Civil Procedure permits a defendant, as a thirdparty plaintiff, to file a claim against a “nonparty who is or may be liable to it for all or part of
the claim against it.” A third-party claim must be derivative of the main claim and is allowable
where a third-party plaintiff seeks reimbursement for all or part of what may be potentially owed
the plaintiff. See Kohl’s Dep’t Stores, Inc. v. Target Stores, Inc., 214 F.R.D. 406, 413 (E.D. Va.
2003). “Typically, proper third party claims involve one joint tortfeasor impleading another, an
indemnitee impleading an indemnitor, or a secondarily liable party impleading one who is
primarily liable. Absent such derivative liability, a third party claim must fail.” Watergate
Landmark Condo. Unit Owners’ Assoc. v. Wiss, Janey, Elstner Assoc., Inc., 117 F.R.D. 576, 578
(E.D. Va. 1987). “Granting leave to bring a third-party into an action pursuant to Rule 14(a)(1)
falls within the sound discretion of the trial judge and should be liberally construed.” Wright v.
Bigger, No. 5:08-CV-62, 2008 WL 4900566, at *1 (N.D. W.Va. Nov. 13, 2008) (citing
Baltimore & Ohio R.R. Co. v. Saunders, 159 F.2d 481, 483-84 (4th Cir. 1947)); see also
Laughlin v. Dell Fin. Servs., L.P., 465 F. Supp. 2d 563, 565 (D.S.C. 2006) (Rule 14 is to be
liberally construed).
In this case, plaintiff has filed a products liability case against BBB for injuries she
sustained while using certain products—a “firepot” and “FIREGEL”—sold at BBB’s Roanoke
store. BBB claims the firepot and FIREGEL at issue were manufactured by Fuel Barons and
distributed by NAPA, and that BBB contracted with NAPA to design, manufacture, package,
label and supply for retail sale the firepot and FIREGEL products. In its proposed third-party
complaint, BBB raises breach of contract and breach of warranty claims against NAPA and Fuel
Barons and asserts that if it is held liable to plaintiff for the injuries she sustained, it is entitled to
indemnification and/or contribution from these companies. See Dkt. # 23, at Ex. C. Such claims
are actionable under Virginia law1 and are the proper subjects of a third-party complaint. See
Lewis v. City of Bluefield, 48 F.R.D. 435, 437 (S.D. W.Va. 1969) (“In determining whether
there is a right to indemnity or contribution under the circumstances presented in a particular
case, where federal jurisdiction is founded upon diversity, a federal court must apply the law of
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See, e.g., Va. Code Ann. § 8.01-34 (when contribution among wrongdoers enforced), §§ 8.2-313 (express
warranties), 8.2-314 (implied warranty of merchantability), & 8.2-315 (implied warranty of fitness for a particular
purpose); Safeway, Inc. v. DPI Midatlantic, Inc., 270 Va. 285, 289, 619 S.E.2d 76, 79 (2005) (“An express
indemnity agreement reflects the ‘loss distribution agreed to by the contracting parties.’”); Nationwide Mut. Ins. Co.
v. Minnifield, 213 Va. 797, 800, 196 S.E.2d 75, 77-78 (1973) (“The right to contribution is based upon the equitable
principle that where two or more persons are subject to a common burden it shall be borne equally.”).
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the state where such court is held.” (citing Erie v. Tompkins, 304 U.S. 64 (1938) and Klaxon
Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (1941))).
Plaintiff objects to BBB’s request to bring in NAPA and Fuel Barons as third-party
defendants because both of these companies are engaged in bankruptcy proceedings. In July
2011 and January 2012, NAPA and Fuel Barons, respectively, filed for protection under Chapter
11 of the United States Bankruptcy Code. The United States Bankruptcy Court for the Northern
District of Georgia has entered orders granting BBB limited relief from the automatic stay in
both cases and authorizing BBB to file a third-party claim against these entities. The bankruptcy
court limited discovery to the bankruptcy setting and made clear that BBB cannot enforce or
collect any judgment against NAPA or Fuel Barons except by filing proofs of claims in the
bankruptcy court. Plaintiff argues that these orders prevent her from asserting claims against the
third-party defendants pursuant to Rule 14(a)(3), thereby destroying the derivative nature of the
potential third-party claims. To be sure, plaintiff may not be able to assert claims against NAPA
and Fuel Barons without first obtaining relief from the automatic stay. This fact, however, has
no impact on the derivative nature of the potential third-party claims. Central to the question of
whether a third-party claim can be maintained under Rule 14(a) is whether NAPA and Fuel
Barons’ liability is derivative of, or secondary to, BBB’s liability to plaintiff. See
Watergate,117 F.R.D. at 577; see also Laughlin, 465 F. Supp. 2d at 566. In this case, it is.
Additionally, plaintiff argues that an August 10, 2012 order entered by the bankruptcy
court is further evidence that the third-party complaint should not be allowed. This order, which
was entered only in NAPA’s bankruptcy proceeding, approves the trustee’s plan for
disbursement of insurance proceeds to victims. Plaintiff suggests there is no money left to be
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distributed, and thus, there is no point in allowing the third-party complaint. But that is not for
this court to decide.2
Furthermore, the court finds there would not be any undue prejudice to the plaintiff in
allowing BBB’s third-party claim. Plaintiff contends that because NAPA and Fuel Barons may
choose not to participate in this litigation, as the bankruptcy order allows them to do, the jury
will be confused by the empty chairs at trial. This issue can be remedied by an instruction from
the court. Additionally, the extent of discovery that can proceed as to NAPA and Fuel Barons
has been limited by the bankruptcy court and is not likely to result in substantial expense to
plaintiff.
In sum, BBB has established that its third-party claim is proper under Rule 14. “One of
the primary objectives of third-party procedure is to avoid circuity and multiplicity of actions.”
Noland Co. v. Graver Tank & Mfg. Co., 301 F.2d 43, 50 (4th Cir. 1962); see also Laughlin, 465
F. Supp. 2d at 565 (the purpose of Rule 14 is to “‘accomplish in one proceeding the adjudication
of the rights of all persons concerned in the controversy and to prevent the necessity of trying
several related claims in different lawsuits.’” (quoting Deutsche Bank National Trust Co. v.
Tyner, 233 F.R.D. 460, 462 (D.S.C. 2006))). In the interest of judicial economy, and because
Rule 14 is to be liberally construed, see id., BBB’s Motion for Leave to File a Third Party
Complaint (Dkt. #23) will be GRANTED. An appropriate Order will be entered.
Entered: October 8, 2012
/s/ Michael F. Urbanski
Michael F. Urbanski
United States District Judge
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Indeed, the court notes that on September 28, 2012, a stipulated order was entered allowing BBB to file a proof of
claim and assert an unsecured claim against NAPA. In re: NHG Liquidiation, Inc., f/k/a Napa Home & Garden,
Inc., No. 11-69828-mgd, Dkt. # 494 (Bankr. N.D. Ga. Sept. 28. 2012).
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