Travelers Insurance Co. v. Busy Electric Co.

• Decision Date: 17 July 1961
• Docket Number: No. 18778.,18778.
• Citation: 294 F.2d 139
• Parties: TRAVELERS INSURANCE COMPANY, Appellant, v. BUSY ELECTRIC COMPANY, Z. Kermit Remy and Raymond Voelker, Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

294 F.2d 139 (1961)

TRAVELERS INSURANCE COMPANY, Appellant, v. BUSY ELECTRIC COMPANY, Z. Kermit Remy and Raymond Voelker, Appellees.

No. 18778.

United States Court of Appeals Fifth Circuit.

July 17, 1961.

COPYRIGHT MATERIAL OMITTED

Michael J. Molony, Jr., Jones, Walker, Waechter, Poitevent, Carrere & Denegre, New Orleans, La., for defendant and appellant and third party plaintiff, the Travelers Ins. Co.

Dermot S. McGlinchey, Carl J. Schumacher, Jr., New Orleans, La., for third party defendant and appellee, Z. Kermit Remy and Raymond Voelker, d/b/a Busy Electric Co.; Lemle & Kelleher, New Orleans, La., of counsel.

Before CAMERON, BROWN and WISDOM, Circuit Judges.

JOHN R. BROWN, Circuit Judge.

We deal here with the problem of third party impleader sought by a defendant tort-feasor against another tortfeasor. Complicating what is otherwise a simple application of a rule simply stated, F.R.Civ.P. 14, 28 U.S.C.A., is the fact that this is a diversity case. Both the enabling Act, 28 U.S.C.A. § 2072, and Erie combine to forbid the accidental creation of a substantive right through the operation of this procedural device.

As with so much of the business of the Federal District Courts in Louisiana, this started as a suit under the Direct Action Statute to transport a purely local controversy from its civil law surroundings to a common law oasis with its appealing jury trial. LSA-R.S. 22:655. Lumbermen's Mutual Casualty Co. v. Elbert, 1954, 348 U.S. 48, 75 S.Ct. 151, 99 L.Ed. 59; Travelers Indemnity Co. v. Bengtson, 5 Cir., 1956, 231 F.2d 263, at page 264; McClendon v. T. L. James & Co., 5 Cir., 1956, 231 F.2d 802, at page 803.

It simplifies matters to talk of the parties as they actually are. The plaintiff, Numa Schomaker, was an employee of Busy Electric Company.¹ Busy Electric had a contract with the Housing Authority of New Orleans (HANO) to make certain repairs to the electrical distribution system at one of its projects in the city. While Schomaker was engaged in performing this work, he was severely injured when a light pole broke at its base throwing him to the ground. Schomaker, as plaintiff, sued HANO.² Taking full advantage of the permissible concept of notice pleading, F.R.Civ.P. 8(a), the complaint charged merely that the injuries were "* * * caused by the negligence of the Housing Authority of New Orleans through their agents or employees, in failing to maintain the aforesaid pole in safe condition, which maintenance was the responsibility of the said Housing Authority."

In its answer HANO, the defendant, after the usual denial, alleged that the injuries were caused by the contributory negligence of Schomaker, the plaintiff, in exposing himself to risks, failing to take precautions for his safety or to ascertain the condition of the wood pole before he climbed it. It also charged separately that Schomaker assumed the risk of using a pole which he knew to be unsound. As a further separate Sixth Defense, HANO alleged that it had contracted with Busy Electric to do repairs to its electrical distribution system and that the work being performed was under the sole control of Busy Electric. Consequently, it asserted, the injuries to Schomaker were "caused solely by the negligence of Busy Electric Company, its agents and employees * * *" for various reasons.³

Thereafter the Court, on motion of HANO, permitted the filing (and amendment) of the third party complaint by HANO impleading Busy Electric. In the words of F.R.Civ.P. 14, it alleged that Busy Electric is "or may be liable to third party plaintiff." Continuing, it re-alleged substantially the same matters set forth in its Sixth Defense concerning the contract with Busy Electric and the performance of the work under its sole control and supervision. After denying that there was any "negligence whatsoever on the part of the Housing Authority * * *," it then specifically claimed that if the "accident alleged in the complaint of Schomaker against HANO was caused by negligence, then the sole proximate cause * * * was the negligence of "Busy Electric in the four particulars specified, see note 3, supra. It further alleged that under § 28(a) of the contract with Busy Electric dated July 11, 1958, Busy Electric agreed to hold HANO harmless for any personal injury that occurred resulting from fault or negligence of Busy Electric.⁴ The complaint concluded with a general assertion that HANO was "free of any negligence whatsoever and the proximate cause of the accident * * * was the negligence of the third party" Busy Electric. The prayer was the usual one that "in the event of any judgment in favor of plaintiff and against" HANO, "there be judgment over and against" Busy Electric "jointly, severally and in solido * * *."

To all of this Busy Electric, third party defendant, filed without supporting affidavits, depositions or facts of any kind a motion for "summary judgment * * on the ground that Third-Party Complainant HANO * * * has no basis in law or in fact for its Third-Party Complaint against * * * Busy Electric * * *." With no more illumination the Court, without stated reason, memorandum, or opinion, granted the motion for summary judgment and thereafter entered a formal decree "that judgment * * * is hereby entered * * * in favor of Busy Electric * * * dismissing the third party complaint * *." Simultaneously the Court made an express finding that there "is no just reason for delay and directs the entry of judgment as to the 3rd party defendants, Busy Electric * * *" as permitted under F.R.Civ.P. 54(b).

At the outset we must determine the question raised by the Court as to our jurisdiction to hear the appeal. Considering the nature of this decree as one on summary judgment with an order of dismissal which carries with it (in the absence of the language negativing such purpose) the idea that it is with prejudice, F.R.Civ.P. 41(b), we think that with the § 54(b) certificate, the judgment became final and appealable as such.

First, it fits the words of the Rule since the total pleadings present "more than one claim for relief * * * whether as a claim, counter-claim, cross claim, or third party claim * * *." F.R.Civ.P. 54(b). It should be emphasized that this is not the mere refusal of the trial court in the exercise of its discretion to permit the filing of a third party complaint.⁵ The filing was allowed and then on its merits the Court determined that the third party defendant, Busy Electric, should prevail. Until set aside, this is res judicata — a position which counsel for Busy Electric on the argument asserted with propriety would be taken in the event of affirmance by us. As to this situation, Professor Moore declares quite positively "* * * if the district court finally disposes of a third-or-fourth-party claim and executes a certificate under 54(b), this adjudication is final, although the main claim remains pending." 6 Moore, Federal Practice § 54.36 at 252. See also 3 Moore, Federal Practice § 14.-19 at 449. Pabellon v. Grace Line, Inc., 2 Cir., 1951, 191 F.2d 169; Capital Transit Co. v. District of Columbia, 1955, 96 U.S.App.D.C. 199, 225 F.2d 38; Henry Fuel Co., Inc. v. Whitebread, 1956, 99 U.S.App.D.C. 9, 236 F.2d 742. Nothing in Meadows v. Greyhound Corp., 5 Cir., 1956, 235 F.2d 233; Nettles v. General Accident Fire & Life Assurance Corp., 5 Cir., 1956, 234 F.2d 243; or Howze v. Arrow Transportation Co., 5 Cir., 1960, 280 F.2d 403, is to the contrary.

On the merits we are equally clear that the dismissal was erroneous. Much of the difficulty comes from a failure to reckon with the basic nature of a complaint under the Rules. Busy Electric apparently persuaded the Court to read the pleadings as though that was all there was to the case. Of course, as we have so many times pointed out, this is not the test. Millet v. Godchaux Sugars, 5 Cir., 1957, 241 F.2d 264, at page 265, see n. 1; Colman v. Alcock, 5 Cir., 1959, 272 F.2d 618, at page 622. Phrased and rephrased it is reiterated in Conley v. Gibson, 1957, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80. "In appraising the sufficiency of the complaint we follow, of course, the accepted rule that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." 355 U.S. 41, at pages 45-46, 78 S.Ct. 99, at page 102. In the light of this, it is a risky course to stand on the pleadings and that is all that the summary judgment in this case amounted to. Demandre v. Liberty Mutual Ins. Co., 5 Cir., 1959, 264 F.2d 70, at pages 72, 74.

This approach is most spectacular in its application and consequences when we assay the theory which Busy Electric asserts here, and presumably did below, why the claim on the written indemnity agreement was insufficient to permit relief. Here is an express contract, note 4, supra, by which Busy Electric indemnifies HANO against personal injury claims asserted by third persons against HANO. Schomaker's suit is such a claim. By an adroit use of precise words and phrases out of HANO's Sixth Defense and third party complaint, Busy Electric erects a logical structure proving that under no circumstances could it be liable. First, it asserts, if HANO is not negligent, it will have no liability to Schomaker, and the indemnity will be unneeded and inconsequential. Next, if Schomaker was contributorily negligent, as HANO expressly alleges, there can be no liability, and indemnity is again useless. Third, if Busy Electric is solely at fault, HANO cannot be cast. Finally, if HANO is negligent along with Busy Electric, then it can have no indemnity since Busy Electric undertakes to indemnify only against its own negligence, and not that of HANO, or the joint negligence of both.

But this is too fine and too fast. Whether this contract is broad enough, or too broad, or specific enough or too specific to encompass within the promise of indemnity...