Collins v. Freedman

70 F.R.D. 361
CourtDistrict Court, E.D. Pennsylvania
DecidedFebruary 12, 1976
DocketCiv. A. No. 75-1184
StatusPublished
Cited by2 cases

This text of 70 F.R.D. 361 (Collins v. Freedman) is published on Counsel Stack Legal Research, covering District Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Collins v. Freedman, 70 F.R.D. 361 (E.D. Pa. 1976).

Opinion

MEMORANDUM

GORBEY, District Judge.

This action in which jurisdiction is based on diversity of citizenship and the requisite amount in controversy has been brought by Donald M. Collins, Trustee of Albert & Maguire Securities Co., Inc. against Warren Freedman, an accountant, for negligence and professional malpractice in the course of rendering services as an accountant to the debtor. The defendant, Freedman, has filed a third-party complaint against three corporations and five (5) individuals, the latter including Joseph Albert, in which he alleges that these persons are liable to him for contribution or indemnity in the event that plaintiff obtained a judgment against him, because he reasonably relied on false bookkeeping entries made by the third-party defendants.

Third-party defendant Joseph Albert has filed a motion to dismiss plaintiff’s complaint and the complaint of the third-party plaintiff, Warren Freedman, basing the motion on the contention that the third-party defendant Joseph Albert is an indispensable party defendant, therefore is required to be joined as such pursuant to Federal Rule of Civil Procedure 19. Since plaintiff and third-party defendant are each citizens of Pennsylvania, such joinder would result in a lack of diversity of citizenship which would require the dismissal of Joseph Albert from this action.

[363]*363The fact that a third-party defendant is a citizen of the same state as the plaintiff does not defeat jurisdiction where there is a diversity of citizenship between plaintiff and defendant, since an independent basis of jurisdiction is not necessary to support a third-party proceeding under Rule 14 of the Federal Rules of Civil Procedure. Ross v. Smith, 315 F.Supp. 1064 (E.D.Ark.1970); Smith v. Whitmore, 270 F.2d 741 (3d Cir. 1959); Sheppard v. Atlantic States Gas Co. of Pa., 167 F.2d 841 (3d Cir. 1948); Stemler v. Burke, 344 F.2d 393 (6th Cir. 1965); Schwab v. Erie Lackawana R.R. Co., 438 F.2d 62 (3d Cir. 1971); Chestnut Run F.C.U. v. Employers M.L.I. of Wis., 392 F.Supp. 76 (D.Del.1975); 3 Moore’s Federal Practice, § 14.26. Since diversity jurisdiction of the district court is not destroyed by the lack of diversity between plaintiff and third-party defendant, the motion to dismiss must be denied unless Joseph Albert is an indispensable party defendant required to be joined as such pursuant to Rule 19 of the Federal Rules of Civil Procedure.

The inaccuracy of the statement made by counsel for movant that a third-party defendant cannot be impleaded under Rule 14(a) where the third-party defendant may be liable to the plaintiff, is conclusively established by simply reading the Rule. After providing that:

“At any time after the commencement of the action a defending party, as a third-party 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 him for all or part of the plaintiff’s claim against him,”

the Rule goes on to state that:

“The plaintiff may assert any claim against the third-party defendant arising out of the transaction or occurrence that is the subject matter of the plaintiff’s claim against the third-party plaintiff, and the third-party defendant thereupon shall assert his defenses as provided in Rule 12 . . ”

The case, Osthaus v. Button, 70 F.2d 392 (3d Cir. 1934) cited as authority in support of movant’s contention, was decided prior to the adoption of the Federal Rules. The reasons for the decision are consistent, however, with cases under the Rule which hold that a plaintiff in a diversity case can make a claim directly against the third-party defendant only if the necessary diversity of citizenship exists between the plaintiff and third-party defendant and the requisite jurisdictional amount is involved. Sheppard v. Atlantic States Gas Co., supra; Corbi v. United States, 298 F.Supp. 521 (W.D.Pa.1969).

Ayoub v. Helm’s Express, Inc., 300 F.Supp. 473 (W.D.Pa.1969) does not support movant’s contention. In that case there was diversity of citizenship between plaintiff and defendant. A third-party defendant was brought on the record by the original defendant. Plaintiff then moved to amend the complaint to include a cause of action against the third-party defendant. The motion was denied, the court saying:

“The great weight of authority requires that there be diversity of citizenship between such parties.” Id. at 473.

Plaintiff in the case sub judice has not attempted to assert a direct claim against moving third-party defendant. See also Mickelic v. United States Postal Service, 367 F.Supp. 1036 (W.D.Pa.1973).

Reference has been made by defendant that the third-party complaint filed by him against Joseph Albert, a citizen of Pennsylvania, does not include a specific allegation that he, the third-party plaintiff, is a citizen of the State of New Jersey, and therefore requests leave to amend the third-party complaint so as to indicate affirmatively diversity of citizenship. Amendment is unnecessary in view of the fact that diversity of citizenship between defendant, as third-party plaintiff and the third-party defendant is not required. Frankel v. Alan Wood Steel Co., 201 F.Supp. 203 (E.D.Pa.1962); 3 Moore’s Federal Practice, § 14.25, § 14.26.

The argument is made that Joseph Albert is an indispensable party de[364]*364fendant under Rule 19 of the Federal Rules of Civil Procedure, but if he is brought on the record by either plaintiff or defendant as an indispensable party defendant, the jurisdiction of the court by reason of diversity of citizenship would be destroyed, since both plaintiff and Joseph Albert are citizens of Pennsylvania. This contention requires an analysis of the plaintiff’s claim against defendant Freedman.

The claim of plaintiff against defendant, Warren Freedman, is for negligence and professional malpractice in the course of rendering services as an accountant to the debtor. Freedman’s claim against Joseph Albert rests upon the allegation that if Freedman is liable to the plaintiff, the third-party defendants, including Joseph Albert, are liable to him for contribution or indemnity.

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Cite This Page — Counsel Stack

Bluebook (online)
70 F.R.D. 361, Counsel Stack Legal Research, https://law.counselstack.com/opinion/collins-v-freedman-paed-1976.