Hansen v. Shearson/American Express, Inc.

116 F.R.D. 246, 1987 U.S. Dist. LEXIS 3787
CourtDistrict Court, E.D. Pennsylvania
DecidedMay 8, 1987
DocketCiv. A. No. 82-4945
StatusPublished
Cited by5 cases

This text of 116 F.R.D. 246 (Hansen v. Shearson/American Express, Inc.) 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
Hansen v. Shearson/American Express, Inc., 116 F.R.D. 246, 1987 U.S. Dist. LEXIS 3787 (E.D. Pa. 1987).

Opinion

MEMORANDUM

LOUIS H. POLLAK, District Judge.

This case began as a suit by Elizabeth Hansen against the brokerage firm of Shearson/American Express (“Shearson”) and two of its brokers, C. Joseph Manfredo (“Manfredo”) and S. Paul Palmer. Plaintiff alleged that defendants had mishandled her securities account. Shearson filed a third-party complaint against Arthur L. Guptill (“Guptill”), alleging that Guptill, plaintiff’s brother-in-law, had ratified the allegedly improper transactions. Guptill then filed claims, which he captioned generally as “counterclaims and crossclaims,” against Shearson, Manfredo, and A.G. Edwards & Sons, Inc. (“Edwards”). Guptill’s claims, which concern the way in which Shearson, Manfredo, and Edwards handled Guptill’s accounts, arose, as did plaintiff’s claims, under federal and state law.

In 1984, plaintiff resolved her claims against Shearson, Manfredo, and Palmer; in 1985, Guptill resolved his claims against Shearson and Edwards. The only claim remaining in this case is Guptill’s claim against Manfredo.

Manfredo, who was for a time represented by counsel, entered a pro se appearance in February of 1984. Neither Manfredo nor his former counsel answered Guptill’s “claim.” In June of 1986, Guptill secured a clerk’s entry of default against Manfredo. Guptill then filed a motion for a default judgment, which Manfredo opposed. After briefing, Guptill withdrew his opposition to Manfredo’s request that the clerk’s entry of default be vacated. In January of 1987, this court vacated the clerk’s entry of default and denied Guptill’s motion for a default judgment.

Manfredo now moves to dismiss Guptill’s claim, or, in the alternative, to transfer what remains of this litigation to a different venue. Manfredo argues that Guptill’s claim was improper when brought. Thus, we shall view the pleadings without regard to the settlements that have, over the years, stripped this litigation of all claims but the one at issue in this Memorandum— although we shall not disregard the passage of time to the extent that it bears independent significance.

I.

Manfredo, who was one of the original defendants, did not bring Guptill into this litigation. Rather, it was Shearson, one of Manfredo’s co-defendants, who filed a third-party complaint against Guptill. Rule [248]*24814(a) of the Federal Rules of Civil Procedure “does not expressly provide for a cross-claim or a counterclaim by a third-party defendant against a co-defendant of the third-party plaintiff.” 6 Wright & Miller, Federal Practice and Procedure § 1456 at 304 (1971). The difficult question posed by Manfredo’s motion to dismiss is whether such a claim is proper.1

To address this question, we must first determine the nature of Guptill’s “claim.” At different times, this court has characterized Guptill’s claim against Manfredo as either a permissive counterclaim (Memorandum/Order of October 13, 1983) or as a cross-claim (Memorandum of October 29, 1986). Upon further reflection, neither characterization of Guptill’s claim is correct.

A.

Rule 13(g) of the Federal Rules of Civil Procedure provides that cross-claims are to be brought by a party “against a co-party.” Co-parties have been defined as “parties having like status.” Murray v. Haverford Hospital Corp., 278 F.Supp. 5, 6 (E.D.Pa.1968). The meaning of the term “co-party” is not self-evident, even with interpretive gloss placed on it by the court in Murray. The Third Circuit has suggested in dictum that “[c]ross-claims are litigated by parties on the same side of the main litigation.” Stahl v. Ohio River Co., 424 F.2d 52, 55 (3d Cir.1970). To the extent that Manfredo and Guptill both stood to lose if Hansen prevailed—Manfredo directly, Guptill indirectly (as Shearson’s indemnitor)—they might be viewed as “parties on the same side of the main litigation” and the conclusion might be reached that a claim by Guptill against Manfredo is a cross-claim. But the matter appears not to be as simple as the Stahl dictum would suggest.

In Schwab v. Erie Lackawanna Railroad Co., 438 F.2d 62, 66 (3d Cir.1971), the plaintiff, a railroad employee, was injured as a result of a collision between a train and a truck. The railroad brought a third-party complaint against several parties responsible for the truck, seeking contribution or indemnification in the event that plaintiff prevailed on his personal injury claim against the railroad. At the same time, the railroad brought a claim against the third-party defendants for property damage to the train. Faced with the question of whether the property claim was procedurally proper, the Third Circuit rejected the view that the claim could properly be characterized as a cross-claim. The court held that it would be “untenable” to view these parties as “co-parties” because their interests as third-party litigants were adverse. Id. at 66. Although the court made no reference to its definition of cross-claims in Stahl, it would appear at the very least that, after Schwab, the fact two parties are on the same side of the main litigation is not dispositive of the question of whether they are “co-parties” who may, other requirements being met, bring cross-claims against one another.

Most courts that have addressed the question have held that third-party defendants are not “co-parties” of the original defendants in the action for purposes of Rule 13(g).2 See Murray v. Haverford Hospital, 278 F.Supp 5 (E.D.Pa.1968); Paur v. Crookston Marine, Inc., 83 F.R.D. 466 (D.N.D.1979); Malaspina v. Farah [249]*249Mfg. Co., Inc., 21 Fed.R.Serv.2d 129 (S.D.N.Y.1975); see generally 6 Wright & Miller, Federal Practice and Procedure § 1431 at 165 (1971). Although the contrary result was reached in Fogel v. United Gas Improvement Co., 32 F.R.D. 202 (E.D.Pa.1963), the Third Circuit rejected the reason: ing of Fogel in its opinion in Schwab.

The view that a third-party defendant may not cross-claim against a co-defendant of the third-party plaintiff finds support in the amendment history of Rule 14(a) of the Federal Rules of Civil Procedure. As originally drafted, Rule 14(a) provided that the third-party defendant was to bring counterclaims and cross-claims against “the plaintiff, the third-party plaintiff, or any other party as provided in Rule 13.” As amended in 1946, the rule made special provisions for claims against the plaintiff, and provided for “counterclaims against the third-party plaintiff and cross-claims against other third-party defendants as provided in Rule 13” (emphasis added). The underscored change was not specifically explained by the Advisory Committee.

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266 F.R.D. 54 (S.D. New York, 2010)
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133 F.R.D. 472 (E.D. Pennsylvania, 1991)

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Bluebook (online)
116 F.R.D. 246, 1987 U.S. Dist. LEXIS 3787, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hansen-v-shearsonamerican-express-inc-paed-1987.