Royal Insurance v. Zygo Corp.

212 F.R.D. 444, 2003 U.S. Dist. LEXIS 2700, 2003 WL 554513
CourtDistrict Court, D. Connecticut
DecidedFebruary 22, 2003
DocketNo. 3:01CV1317 (GLG)
StatusPublished
Cited by2 cases

This text of 212 F.R.D. 444 (Royal Insurance v. Zygo Corp.) is published on Counsel Stack Legal Research, covering District Court, D. Connecticut primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Royal Insurance v. Zygo Corp., 212 F.R.D. 444, 2003 U.S. Dist. LEXIS 2700, 2003 WL 554513 (D. Conn. 2003).

Opinion

MEMORANDUM DECISION

GOETTEL, District Judge.

Pending before this Court is the Second Renewed Motion of Third-Party Defendant, Nan Ya Technology Corporation, for Clarification 1 or, in the Alternative, Partial Reconsideration and Alteration of the Court’s Order of September 11, 2002, granting Nan Ya’s Motion for Summary Judgment [Doc. # 93]. This Court granted Nan Ya’s Motion for Summary Judgment “absent objection from the Third Party Plaintiff.” This Court’s Order further provided that “[t]his is not a ruling on the merits and will have no collateral estoppel effect in this litigation.”

Apparently, the Court’s Order pleased no one. Nan Ya immediately moved for clarification and reconsideration. We denied that motion without prejudice in light of the absence of Nan Ya’s counsel at an intervening status conference held by the Court. Nan Ya then renewed its motion for clarification and reconsideration, which the Court again denied, this time because notices of appeal had been filed by Third-Party Plaintiff, Royal Insurance Company of America, and by Nan Ya.2 Undeterred, Nan Ya once again seeks reconsideration, clarification, and/or alteration of the Court’s summary judgment order in order to remove any doubt that the judgment is final at least as to the parties to this lawsuit. Additionally, Nan Ya represents to the Court that, absent clarification, additional litigation against Nan Ya is virtually certain. In essence, Nan Ya wants the Court to clarify that its Order was intended to preclude any further litigation by Royal and/or Zygo against Nan Ya, arising out of this controversy.

Royal and defendant, Zygo Corporation, have filed responses in partial opposition to this renewed motion. Despite the fact that Royal did not oppose the motion for summary judgment, Royal now urges this Court to rule on the merits, based upon opposition filed by Zygo so that all inter-related disputes between the parties can be resolved in this one action. Zygo likewise supports partial reconsideration in order to ensure that its ability to later pursue Nan Ya is preserved.

For the reasons set forth below, Nan Ya’s motion will be denied.

Background

The underlying dispute giving rise to this litigation involves two atomic force microscopes, valued at close to $1.4 million, which Nan Ya purchased from Zygo, and which were damaged during shipment to Nan Ya. The cause of the damage is immaterial to this lawsuit. Following Nan Ya’s refusal to pay for the damaged microscopes, Zygo and Nan Ya entered into “settlement” discussions. [446]*446The parties now dispute whether a settlement was reached. Eventually, however, Nan Ya paid Zygo for one of the damaged microscopes, and Zygo submitted a claim for loss on the other to Royal pursuant to its unpaid vendor’s insurance coverage provided in its Marine Open Cargo Policy issued by Royal. After investigation, Royal denied coverage on several grounds.

Royal ultimately filed this declaratory judgment action against Zygo, pursuant to 28 U.S.C. § 2201, contending that its contingent subrogation rights against Nan Ya had been impaired or waived by Zygo as a result of these “settlement” discussions to which it was not a party, thereby violating a condition of insurance coverage. Zygo counterclaimed against Royal, denying any waiver or impairment, and seeking recovery for the unpaid purchase price. In response, Royal brought a third-party complaint against Nan Ya, asserting a contingent subrogation claim so that, if Royal were found liable to Zygo, Royal could recover from Nan Ya.

Nan Ya then filed a motion for summary judgment, seeking dismissal of Royal’s claims on the ground, inter alia, that, pursuant to an alleged settlement between Zygo and Nan Ya, Zygo had released Nan Ya from any payment obligation on the second microscope. Nan Ya took the position that this settlement and release were binding on Royal, which stepped into the shoes of its insured.

Royal did not oppose the motion. According to its counsel, it made a conscious decision not to do so because it had not been a party to the settlement discussions and would have not firsthand knowledge of what transpired. Royal’s counsel even suggests that he might have been in violation of Rule 11, Fed.R.Civ.P., had he opposed the motion. As to the merits of Nan Ya’s motion, Royal argues that this is an admiralty case and, by filing a third-party complaint pursuant to Rule 14(c), Fed.R.Civ.P.,3 it had “tendered” Nan Ya over to Zygo. In other words, Royal maintains that the real adverse party is Zygo, not Royal, and that this Court should rule on the merits of the summary judgment motion based on Zygo’s opposition.4

Zygo, on the other hand, which had no claim pending against Nan Ya, filed opposition to the summary judgment motion, apparently attempting to bolster its position that it did nothing to prejudice its rights under its insurance policy with Royal and to preserve its rights against Nan Ya should Royal prevail. Its counsel now states that he believed that Royal would also be opposing the motion as part of its prosecution of its third-party complaint. He now wants to make sure that this Court’s ruling will not preclude Zygo from later suing Nan Ya to recover amounts due on the second microscope.

Discussion

I. The Absence of Opposition

This Court granted Nan Ya’s motion for summary judgment in the absence of opposition from Royal, the only party that had asserted a claim against Nan Ya. No claim whatsoever has been asserted by Zygo against Nan Ya in this litigation.

Royal asserts that it “tendered” Nan Ya to Zygo under Rule 14(c), Fed.R.Civ.P., and, having done so, this action proceeded as if Zygo had sued Nan Ya directly. Thus, it maintains that it was not necessary for it to oppose the motion for summary judgment and that this Court should have considered Zygo’s opposition. The impleader provisions of Rule 14(c), however, apply only to cases in which the plaintiff has asserted an admiralty or maritime claim within the meaning of Rule 9(h). Rule 14(c), Fed.R.Civ.P. The Second Circuit has held that admiralty is not a proper basis for jurisdiction in this case. See Note 1, supra (citing Atlantic Mutual Ins. Co. v. Balfour Maclaine Int’l Ltd., 968 F.2d 196, 199 (2d Cir.1992)). Accordingly, Royal cannot base its impleader complaint on Rule [447]*44714(c). Thus, its argument that its third-party complaint should be treated as if Zygo had sued Nan Ya directly, thereby excusing its failure to file opposition papers, must fail.

Alternatively, Royal asserts that its third-party complaint should be treated like a claim for contribution and/or indemnity filed under Rule 14(a), Fed.R.Civ.P. Royal argues that Zygo, as a party adverse to Nan Ya, would still have standing to oppose the motion for summary judgment under Rule 56. Thus, it maintains that the motion should not have been granted absent opposition because there was opposition. We do not disagree that Zygo, as a party to the litigation, had a right to file responsive papers to the motion for summary judgment, whether in opposition or in support or otherwise.

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Bluebook (online)
212 F.R.D. 444, 2003 U.S. Dist. LEXIS 2700, 2003 WL 554513, Counsel Stack Legal Research, https://law.counselstack.com/opinion/royal-insurance-v-zygo-corp-ctd-2003.