Union Service & Maintenance Co., Inc. v. Powell

• Decision Date: 16 December 1980
• Docket Number: No. 66470,66470
• Citation: 393 So.2d 94
• Court: Louisiana Supreme Court
• Parties: UNION SERVICE & MAINTENANCE CO., INC. v. E. Reid POWELL.

Page 94

393 So.2d 94

UNION SERVICE & MAINTENANCE CO., INC. v. E. Reid POWELL.

No. 66470.

Supreme Court of Louisiana.

Dec. 16, 1980.

Gary M. Zwain, Johnston & Duplass, New Orleans, for plaintiff-applicant.

Ralpy D. Dwyer, Jr., Many, LoCoco & Dwyer, John C. Saunders, Jr., Guste, Barnett & Shushan, Peter Frank Liberto, New Orleans, for defendant-respondent.

DIXON, Chief Justice. ^*

Plaintiff corporation filed suit against defendant, who was formerly an officer and director of the corporation, alleging that defendant had failed to satisfy an indebtedness to the corporation in connection with various transactions. Defendant then filed an answer and a third party demand against Raymond S. Walters, at that time the sole or principal shareholder of plaintiff corporation, alleging breach of contract. Plaintiff later amended its petition, charging defendant with fraud. In a subsequent answer and third party demand, defendant denied any wrongdoing and asserted an action sounding in defamation against Walters, the third party defendant. Defendant sued for $100,000, claiming that Walters was responsible for the defamatory allegations in plaintiff's amended petition.

Third party defendant Walters excepted to the demand, contending that it failed to state a cause of action against him personally, and later arguing that a party cannot bring an action for defamation on the basis of allegedly libelous pleadings in a suit which is still pending.

The district court overruled the exceptions, and the Fourth Circuit denied writs. This court granted a writ of review in order to resolve an apparent conflict among the circuits on the question of whether a party who is defamed by the pleadings in a lawsuit must await the termination of that suit before suing for defamation.

We must initially note, however, that the case is presented in an awkward procedural posture. The parties to this litigation have consistently assumed that defendant's demand is a reconventional one, asserted against the plaintiff. C.C.P. 1061. This is not the case. Defendant has failed to reconvene against the plaintiff corporation, alleging instead that Walters, the third party defendant, is solely responsible for the corporation's actions. The defamation action is brought, not through a reconventional demand, but by the procedural vehicle of a third party demand. Such a demand cannot be asserted in this context.

C.C.P. 1111 states in part:

"The defendant in a principal action by petition may bring in any person, including a codefendant, who is his warrantor, or who is or may be liable to him for all or part of the principal demand."

The jurisprudence interpreting this provision has consistently observed that the third party demand is a device principally used for making claims of contribution or indemnity in the event that defendant is cast in judgment on the principal demand. Avegno v. Byrd, 377 So.2d 268, 273 (La.1979). Under the circumstances of this case, it is clear that defendant's third party defamation action does not seek to hold Walters responsible for all or part of the principal demand. The third party demand therefore fails to state a cause of action. Karam v. St. Paul Fire & Marine Insurance Co., 281 So.2d 728 (La.1973) fully discussed the problem and its history; its holding is adverse to relator.

Perhaps in recognition of the defective nature of the pleading, counsel for defendant implies that the third party demand can be treated as a reconventional demand for the purposes of this litigation. This court has long followed the rule that technical rules of pleading should not prevent the just disposition of a case:

"The characterization of a pleading by the litigant is not controlling. Pleadings are taken for what they really are, and not for what their authors designate them. A court should not eject a justiciable cause merely because it is dressed in the wrong coat." Succession of Smith, 247 La. 921, 928, 175 So.2d 269, 271 (1965).

It appears from the record that defendant's charge of defamation was originally filed as a "reconventional demand." Nevertheless, the allegations forwarded by defendant make clear defendant's contention that Walters was "personally responsible" for the allegedly defamatory allegations contained in plaintiff's amended petition; defendant plainly sought to hold Walters personally liable and not the plaintiff corporation.

We are not unaware that, because C.C.P. 1111 offers only a rather limited cross claim between defendants, otherwise impermissible third party actions have been allowed by characterizing them as interventions. See, e. g., Travelers Insurance Co. v. Sonnier, 344 So.2d 73 (La.App.4th Cir. 1977); Gehr v. Department of Highways, 337 So.2d 691 (La.App.4th Cir. 1976); Gallin v. Travelers Insurance Co., 323 So.2d 908 (La.App.4th Cir. 1975); Bellow v. New York Fire & Marine Underwriters, Inc., 215 So.2d 350 (La.App.3d Cir. 1968); "Work of Appellate Courts: Civil Procedure," 38 La.L.Rev. 503, 507-509 (1978) and 37 La.L.Rev. 528, 529-530 (1977). These cases represent laudatory efforts in the courts of appeal to do justice and decide the whole case. Here, however, the code is clear, and relator has a right to rely on its provisions. The defendant has not been constricted in pursuing his claims by the rules of procedure; he has instead ignored an available procedural vehicle that would have allowed him to bring his claim before the court, preferring to pursue his claim against Walters personally, and in the same suit.

One procedure available to the defendant was to reconvene against the plaintiff corporation, alleging the action in defamation. If defendant had grounds to assert that Walters' presence as a defendant in the reconventional demand was necessary for complete relief, Walters could have been made a defendant in reconvention under C.C.P. 1064:

"When the presence of parties other than those to the principal action is required for the granting of complete relief in the determination of a reconventional demand, the court shall order the plaintiff in reconvention to make such parties defendants in reconvention, if jurisdiction of them can be obtained."

Comment (a) under that article states in part:

"... The reconventional demand was broadened so as to permit the defendant to assert whatever action he may have against the plaintiff, even though this reconventional demand may require the presence of third persons indispensable to the action, if jurisdiction over the latter can be obtained."

C.C.P. 1064 is comparable to F.R.C.P. 13(h), which permits indispensable or necessary parties to be joined in lawsuits. Considering defendant's allegation that Walters is the sole shareholder of plaintiff corporation, and that he used the corporate identity as a device for defaming defendant, Walters might certainly qualify as a necessary party to the suit under C.C.P. 642. Cf. State of Louisiana, Through Dept. of Highways v. Lamar Advertising Co., 279 So.2d 671 (La.1973).

Nevertheless, the issue of whether a party can sue for defamation during the pendency of a lawsuit because of allegedly defamatory pleadings is not properly before us. Taking the pleadings as they "really are," we find that defendant attempted to assert a third party action against Walters on grounds not authorized by C.C.P. 1111, and not within the scope of C.C.P. 1061 or 1064.

For the foregoing reasons, this court cannot reach the issue for which the writ was originally granted. Defendant's demand does not set forth a cause of action cognizable within the procedural rules of third party practice. The exception is valid, and the judgment of the district court is reversed, at relator's cost.

CALOGERO, J., concurs and assigns reasons.

LANDRY, J. ad hoc, concurs for reasons assigned by CALOGERO, J.

WATSON, J., concurs and assigns reasons.

CALOGERO, Justice, concurring.

I concur in the result reached by the majority, that the issue of whether the defamation suit may be brought during the pendency of the suit in which the defamatory allegations arose is not properly before the Court, but not for the reasons assigned by the majority. Rather, I believe that Powell's third party demand against Walters for defamation, because of allegations made by Union in Union's petition, does not state a cause of action against Walters.

If it did state a cause of action, I do not believe that Powell's defamation suit against Walters should be barred simply because there is pending the corporation's suit charging Powell with fraud. A defendant to a lawsuit is not barred from suing a person not party to the litigation for libel or slander simply because in asserting and proving his damages he alleges that the defamatory statements caused a lawsuit to be filed against him.

On the other hand, if we were to assume that Powell's third party demand against Walters for defamation properly states a cause of action against him, as was concluded by the majority, then I disagree with the majority treatment of the matter. What the majority says is not incorrect, except upon considering a fact that is not mentioned in the opinion.

That relevant fact was this. Powell initially brought an incidental action against Walters that was styled "Third Party Demand" and did comply with the requirements for a third party demand provided in C.Civ.P. art. 1111, because it sought reimbursement of such amount as Powell might owe Union in the original suit (for reasons unrelated to defamation). It was only after this that plaintiff Union amended its petition and charged Powell with making fraudulent transactions. This prompted Powell to amend his third party petition against Walters and add a defamation claim to his demand.

While this later supplemental third party claim for defamation does not, as stated by the majority, simply pray for reimbursement as authorized by C.Civ.P. art. 1111, its cumulation with the other third party claim is nevertheless authorized by C.Civ.P....