Neal v. 21ST Mortg. Corp.

• Decision Date: 06 February 2009
• Docket Number: Civil Action No. 4:08CV56TSL-LRA.
• Citation: 601 F.Supp.2d 828
• Parties: Carol S. NEAL, Plaintiff v. 21ST MORTGAGE CORPORATION, Defendant. 21st Mortgage Corporation, Third-Party Plaintiff v. Martin, Rogers & Mitts, LLP and Walter T. Rogers, Third-Party Defendants.
• Court: U.S. District Court — Southern District of Mississippi

601 F.Supp.2d 828

Carol S. NEAL, Plaintiff v. 21ST MORTGAGE CORPORATION, Defendant.

21st Mortgage Corporation, Third-Party Plaintiff v. Martin, Rogers & Mitts, LLP and Walter T. Rogers, Third-Party Defendants.

Civil Action No. 4:08CV56TSL-LRA.

United States District Court, S.D. Mississippi, Eastern Division.

February 6, 2009.

Charles W. Wright, Jr., Palmer, Wright & Williamson, Meridian; MS, for Plaintiff.

Edward E. Lawler, Jr., R. Keith Foreman, McKay, Simpson, Lawler, Franklin & Foreman, PLLC, Ridgeland, MS, for Defendant.

James G. Wyly, III, Kyle Stuart Moran, Mark V. Watts, Phelps Dunbar, LLP, Gulfport, MS, for Third-Party Defendants.

MEMORANDUM OPINION AND ORDER

TOM S. LEE, District Judge.

This cause is before the court on the motion of third-party defendants Martin, Rogers & Mitts, LLP and Walter T. Rogers (collectively Rogers) to dismiss the third-party complaint pursuant to Rules 12(b)(6) and 14(a) of the Federal Rules of Civil Procedure. Third-party plaintiff 21st Mortgage Corporation (21st Mortgage) has responded in opposition to the motion, and the court, having considered the parties' memoranda of authorities, together with the complaint and the third-party complaint, and exhibits thereto, concludes that the motion is well taken and should be granted.

On June 9, 2008, plaintiff Carol Neal filed this action against 21st Mortgage for alleged violation of the Truth-in-Lending Act, 15 U.S.C. § 1601 et seq. According to the complaint, in January 2008, plaintiff contracted to purchase a mobile home from Johnson Mobile Homes. 21st Mortgage financed the purchase, taking a security interest in the mobile home and land owned by plaintiff. Plaintiff alleges that following the closing, she timely exercised her right to rescind the transaction, and yet 21st Mortgage, in violation of the Truth-in-Lending Act, refused to release its security interest unless she paid 21st Mortgage various attorney and appraisal fees of $1,169.

On December 15, 2008, with leave of court, 21st Mortgage filed a third-party complaint against Rogers, the closing attorney on the loan transaction. In its third-party complaint, 21st Mortgage asserts that the first notice it received that Neal claimed to have exercised her right to rescind was upon being served with Neal's complaint in this cause, and it alleges specifically that "neither Rogers, nor his law firm, nor the Plaintiff, provided 21st Mortgage with Notice of Right to Rescind." 21st Mortgage further asserts that Neal's allegations that it refused to cancel its Deed of Trust and release its lien are "wholly without merit," and it states that as soon as it was informed via Neal's complaint that she claimed to have exercised her right to rescind, it repeatedly sought to contact Rogers to obtain copies of the Notice of Right to Rescind. 21st Mortgage denies any liability for the alleged failure to cancel Neal's deed of trust, asserting that Rogers, as the closing attorney, had "[e]ach and every responsibility for closing the transaction, including, but not limited to the title examination and reports, document preparation, lien perfection [and] conducting the closing," and that Rogers also had the responsibility to record a cancellation of the deed of trust. It alleges that, "at the very least, [Rogers] had a duty to advise 21st Mortgage that it should record and execute a cancellation of the Deed of Trust." 21st Mortgage charges, finally, that if it is found liable to Neal, then it will be entitled to judgment against Rogers for contribution and/or indemnity of any and all damages for which it is found liable to Neal.

Rogers has moved to dismiss the third-party complaint pursuant to Federal Rules of Civil Procedure 12(b)(6) and 14(a) contending that the claims asserted by 21st Mortgage are not proper in the context of a third-party action, and further, that even if the complaint were arguably proper under Rule 14(a), it nevertheless fails to state a claim under Rule 12(b)(6). Rule 14(a), which governs third-party practice in federal court, states, in relevant part:

At any time after commencement of the action a defending party, as a thirdparty plaintiff, may cause a summons and complaint to be served upon a person not a party to the action who is or may be liable to the third-party plaintiff for all or part of the plaintiff's claim against the third-party plaintiff.

Fed. R. Civ. Proc. 14(a). Under this rule, a third-party claim must be for some form of derivative or secondary liability of the third-party defendant to the third-party plaintiff. See United States v. Joe Grasso & Son, Inc., 380 F.2d 749, 751 (5th Cir. 1967) (recognizing that impleader is appropriate "only in cases where the third party's liability [is] in some way derivative of the outcome of the main claim," i.e., "the third party must necessarily be liable over to the defendant for all or part of the plaintiff's recovery, ..., or that the defendant must attempt to pass on to the third party all or part of the liability asserted against the defendant. . . ."). Typically, this requirement that the third-party claim be for derivative or secondary liability is met by an allegation of a right of indemnity, contribution, subrogation or warranty. In this case, 21st Mortgage purports to sue Rogers for contribution and/or indemnity. In the court's opinion, however, it has failed to state a viable claim for either.

As a matter of law, 21st Mortgage cannot state a claim against Rogers for contribution. Because Rule 14 does not create any substantive rights but rather merely governs the procedure for impleading third parties, the court must look to state law to determine whether there is a substantive right to the relief sought. McClellan v. Poole, 692 F.Supp. 687, 689 (S.D.Miss., 1988) (citing 6 C. Wright and A. Miller, Federal Practice and Procedure § 1451 (1971)). Only where state law provides a substantive basis for recovery is impleader permissible. Id. Under Mississippi law, a defendant has no right to implead a third-party defendant in order to seek contribution from a joint tortfeasor who has not been sued by the plaintiff. See Estate of Hunter v. General Motors Corp., 729 So.2d 1264 (Miss.1999) (finding impleader improper as defendant had no substantive right to contribution in light of long-stating rule in Mississippi that contribution among joint tortfeasors is unavailable absent a joint judgment against the tortfeasors); McClellan, 692 F.Supp. at 689 (recognizing that in states like Mississippi that require the plaintiff to secure a joint judgment against tortfeasors as a precondition to the accrual of any right of contribution between or among them, "`an alleged joint tortfeasor who was not sued by the original plaintiff cannot be made a third-party defendant'") (quoting Wright & Miller § 1451) 21st Mortgage asserts, alternatively, that in the event it is held liable to Neal, it will be entitled to indemnity from Rogers. Yet the complaint discloses no basis for this conclusory assertion. Under Mississippi law,

An obligation to indemnify may arise from a contractual relation, from an implied contractual relation, or out of liability imposed by law. When one person is required to pay money which another person in all fairness should pay, then the former may recover indemnity from the latter in the amount which he paid, provided the person making the payment has not conducted himself in a wrongful manner so as to bar his recovery.

Bush v. City of Laurel, 215 So.2d 256, 259 (Miss.1968) (citations omitted). See also T & S Express, Inc. v. Liberty Mut. Ins. Co., 847 So.2d 270 (Miss.Ct.App.2003). 21st Mortgage's claim against Rogers cannot be for contractual or implied contractual indemnity as its complaint explicitly denies any express or implied contractual relationship with Rogers. Presumably, then, its claim is grounded in a theory of implied indemnity.¹ "In Mississippi,...