Chicago Freight Car Leasing Co. v. Martin Marietta Corp.

66 F.R.D. 400, 19 Fed. R. Serv. 2d 1475, 1975 U.S. Dist. LEXIS 13162
CourtDistrict Court, N.D. Illinois
DecidedMarch 26, 1975
DocketNo. 74 C 3109
StatusPublished
Cited by10 cases

This text of 66 F.R.D. 400 (Chicago Freight Car Leasing Co. v. Martin Marietta Corp.) is published on Counsel Stack Legal Research, covering District Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Chicago Freight Car Leasing Co. v. Martin Marietta Corp., 66 F.R.D. 400, 19 Fed. R. Serv. 2d 1475, 1975 U.S. Dist. LEXIS 13162 (N.D. Ill. 1975).

Opinion

MEMORANDUM OPINION

WILL, District Judge.

Plaintiff, Chicago Freight Car Leasing Company (Chicago Car) has brought suit against Martin Marietta Corporation (Marietta) for a declaratory judgment pursuant to 28 U.S.C. § 2201. Both the plaintiff and the defendant in this action are defendants in a personal injury action now before the United States District Court, Middle District of Georgia, Columbus Division, Judge Elliot presiding.

In the Georgia action, the plaintiff and defendant, along with other parties, are charged with joint and concurrent negligence in causing a train derailment and consequent bridge collapse which resulted in extensive and permanent injury to a truck driver, the plaintiff in that suit. The complaint in the Georgia action was filed January 10, 1974; thereafter, both Chicago Car and Marietta filed answers. On May 16, 1974, Marietta filed cross-claims against Chicago Car claiming its right to full indemnity from Chicago Car for any judgment which might be recovered against it. On June 5, 1974 Chicago Car filed its answer to Marietta’s cross-claim asserting as an affirmative defense a railroad car lease dated June 28, 1968, in which Chicago Car leased to Marietta the freight car whose allegedly defective structure caused the derailment in question.

On July 19, 1974, Chicago Car requested leave to file a cross-claim against Marietta based on the aforementioned lease. The request was denied by the Georgia District Court on the ground that Chicago Car failed to meet the Rule 13(f) requirement for permitting the filing of late counterclaims. Chicago Car did not appeal the order; rather, it filed the instant declaratory action on October 29, 1974, seeking a determination that the June 28, 1968 lease between Chicago Car and Marietta entitles Chicago Car to be indemnified by Marietta for any amounts it may be found liable to pay in the Georgia action.

Marietta has moved to dismiss the instant action on the following grounds:

1) Failure to file a compulsory counterclaim under Rule 13 waives the right to later assert such claim in a separate action.

2) An order refusing leave to file a compulsory counterclaim “operates as an adjudication upon the merits” under Rule 41, thus preventing the same claim from being asserted in a separate action.

3) Even if the claim was not waived under Rule 13 or barred under Rule 41, the complaint fails to state an “actual controversy” appropriate for declaratory relief.

4) A decision on the liability of Chicago Car is a necessary prerequisite to a determination of its indemnity rights under the lease agreement.

5) Some of the legal issues which Chicago Car seeks to have determined here will be decided in the Georgia action.

Chicago Car’s opposition to Marietta’s motion rests on the following contentions :

1) The claim which it attempted to file on July 19, 1974 was a cross-claim rather than a counterclaim.

2) The Georgia Court’s order denying leave to file a cross-claim neither purported to dispose of the merits of the claim nor cited Rule 41; hence, it should not be construed as an adjudication on the merits.

3) The controversy between Chicago Car and Marietta is an actual controversy inasmuch a Marietta denies any obligation to indemnify Chicago Car from its own negligence or to pay its costs of defense, and insofar as it asserts that a Georgia statute governing construction contracts make the agreement void.

[402]*4024) A determination of plaintiff’s right to indemnification is appropriate under the declaratory judgment provision even when liability is not yet definite.

5) The indemnity provision is broad enough and clear enough to permit a declaratory judgment without deciding the issues before the Middle District of Georgia.

Our jurisdiction over the instant subject matter is based on the diversity of citizenship provisions of the United States Code, 28 U.S.C. § 1332.

Cross-Claim or Counterclaim

Rule 13(a) of the Federal Rules of Civil Procedure states in part:

“(a) Compulsory Counterclaims. A pleading shall state as a counterclaim any claim which at the time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim . . . .” [emphasis added]

In Professor Moore’s introductory discussion of Rule 13, 3 Moore’s Fed.Proc. |[ 13.02 at 13-53 through 13-56, he points out that a counterclaim is any claim which one party has against an opposing party. Examples include claims held by the defendant against the plaintiff and those held by a third party defendant against a third party plaintiff. A cross-claim, on the other hand, is different insofar as it consists of a claim of one defendant against a co-defendant. These two claims are further distinguished by the compulsory nature of the counterclaim, which must be pleaded if it arises out of the same transaction or occurrence, and the permissive nature of the cross-claim—it is never compulsory.

A unique question posed by the instant case is the characterization of a claim which a defendant attempts to plead in opposition to a cross-claim pleaded by a co-defendant. The defendant in this case contends that such a claim must be treated as a counterclaim, because it is pleaded against an opposing party and arises out of the same transaction or occurrence. Chicago Car, on the other hand, asserts that because it is against a co-party, the claim must be characterized as a cross-claim. The United States District Court for the Middle District of Georgia denied the plaintiff’s request for leave to file a cross-claim holding that it had failed to meet any of the Rule 13(f) requisites for permitting the filing of late counterclaims; hence, that Court resolved the characterization question in favor of Marietta’s position.

Although there is no judicial authority specifically on point, Professor Moore takes the position that a party must plead as a counterclaim under section 13(a) a claim arising out of the same transaction or occurrence as a cross-claim pleaded against him by a co-defendant. This view is supported by the policy underlying Rule 13(a), which seeks to force litigants to bring all claims arising out of the same transaction in one court, thus preventing the filing of multiple suits regarding one subject-matter and achieving in a single lawsuit a resolution of all disputes arising out of common matters. See Southern Construction Co. v. Pickard, 371 U. S. 57, 83 S.Ct. 108, 9 L.Ed.2d 31 (1962).

The anomaly created by the present set of facts is that although the substance of Chicago Car’s claim against Marietta in the Georgia action required that it be treated as a counterclaim, it fails to qualify for compulsory treatment under Rule 13(a). That rule required the pleading of a claim which, at the time of serving, the pleader has against the opposing party.

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Bluebook (online)
66 F.R.D. 400, 19 Fed. R. Serv. 2d 1475, 1975 U.S. Dist. LEXIS 13162, Counsel Stack Legal Research, https://law.counselstack.com/opinion/chicago-freight-car-leasing-co-v-martin-marietta-corp-ilnd-1975.