Connors v. Suburban CV-95-079-M 01/26/96 P UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Dianne J. Connors, Individually And as Administratrix of The Estate of John M. Lipsev, Plaintiff,

v. Civil No. 95-79-M

Suburban Propane Company, Defendant and Third-Party Plaintiff,

v.

Trianco-Heatmaker, Inc.; Davidson, Gourlev & Acker; and Georae "Tonv" Dube, Third-Party Defendants.

James W. Proctor, Administrator of The Estate of David Edwin Bowers, A Deceased Person, on Behalf of The Estate of The Decedent and of The Decedent's Mother, Janice Bowers Plaintiff,

v. Civil No. 94-403-M

Suburban Propane Company, Defendant.

O R D E R

This Order addresses motions pending in two related cases,

Connors v. Suburban Propane Co. ("Connors"), Civ. No. 95-79-M,

and Proctor v. Suburban Propane Co. ("Proctor"), Civ. No. 95-403-

M. The defendant in both cases. Suburban Propane, filed third- party complaints, pursuant to Fed. R. Civ. P. 14, against three

third-party defendants in Connors, and has moved for leave to

file third-party claims against four parties in Proctor. In

Connors, the plaintiff and two third-party defendants have filed

motions to dismiss Suburban Propane's third-party complaints; in

Proctor the plaintiff objects to Suburban Propane's motion for

leave to file third-party actions. Because the issues raised in

both cases are identical, this single order will address both the

motions to dismiss pending in Connors and Suburban Propane's

pending motion for leave to bring third-party actions in Proctor.

I. FACTUAL BACKGROUND

Both Connors and Proctor arise from the same tragic event.

On March 6, 1993, a water heater allegedly leaked carbon monoxide

gas into a condominium unit, killing David Bowers and John Lipsey

and injuring Lipsey's mother, Dianne Connors. A Suburban Propane

repairman apparently performed repairs on the heating unit

shortly before the incident.

Connors sued Suburban Propane in both her individual

capacity and as administrator of John Lipsey's estate. In a

separate suit, James Proctor sued Suburban Propane as

administrator of David Bowers' estate. Plaintiffs allege that

2 the lethal carbon monoxide leak was a direct result of Suburban

Propane's negligent work on the heating unit.

In Connors, Suburban Propane filed timely third-party

complaints under Fed. R. Civ. P. 14 , asserting causes of action

for contribution against three third-party defendants:

(1) Trianco Heatmaker, Inc. ("Trianco"), the successor in

interest to the designer and manufacturer of the heating unit;

(2) Davidson, Gourley & Acker, Inc. ("Davidson"), the management

company responsible for maintenance of the condominium unit

Connors occupied; and (3) George Dube, a handyman allegedly hired

by Davidson to repair the heating unit. Connors moves to dismiss

Suburban Propane's third-party complaints for failure to state

claims upon which relief can be granted. Fed. R. Civ. P.

12(b)(6); third-party defendants Davidson and Trianco join in

that motion.

In Proctor, Suburban Propane moves for leave to bring third-

party contribution actions against Trianco, Davidson, Dube, and

Hoover Sutton, the owner of the condominium occupied by Connors

when the leak occurred. Proctor objects.

All of Suburban Propane's pending and potential causes of

action for contribution are premised on New Hampshire's

3 statutorily created right of contribution. N.H. Rev. Stat. Ann.

("RSA") § 507:7-f & g (Supp. 1994).

II. DISCUSSION

A. RSA 507:7 and Fed. R. Civ. P. 14

Connors and Proctor argue that Suburban Propane may not

bring third-party actions for contribution in this diversity suit

because New Hampshire law applies, and under RSA 507:7-f & g, a

defendant may not, without the express consent of the plaintiff,

maintain a cause of action for contribution prior to resolution

of the plaintiff's principal action. Neither Connors nor Proctor

consents to the third-party actions.

Federal Rule of Civil Procedure 14, on the other hand,

specifically allows impleader of third parties: "At any time

after commencement of the action a defending party, as a third-

party plaintiff, may cause a . . . complaint to be served upon a

person not a party to the action who is or may be liable to the

third-party plaintiff." Fed. R. Civ. P. 14(a). Rule 14 does

not operate to create causes of action, it merely prescribes a

method for bringing causes of action already recognized under

applicable statutory or common law. Toberman v. Copas,

(M.D. Pa. 1992).

4 Because these are diversity cases, the rules of decision of

the forum state. New Hampshire, govern potential liabilities

among joint tortfeasors. Erie R.R. v. Tompkins,

(1938). In 1986, the New Hampshire Legislature created the

statutory cause of action for contribution among joint

tortfeasors.

-f & g. Section 507:7-

f reads:

[A] right of contribution exists between or among 2 or more persons who are jointly and severally liable upon the same indivisible claim, or otherwise liable for the same injury, death or harm, whether or not judgment has been recovered against all or any of them. Except as provided in RSA 507:7-g, I and IV, the right of contribution may be enforced only by a separate action brought for that purpose.

-f(I) (emphasis added).

With two exceptions, then, a third-party contribution claim

must be brought in an action separate from the principal action.

If judgment has been rendered against a defendant in the

principal action, the cause of action for contribution arises and

"must be commenced [in a separate action] within one year after

the judgment becomes final."

-

g(III). If, on the other hand, judgment has not been recovered

in the principal action, one of two conditions must be fulfilled

before a contribution cause of action arises:

5 If no judgment has been rendered, the person bringing the action for contribution must have either (a) discharged by payment the common liability within the period of the statute of limitations applicable to the claimant's right of action against that person and commenced the action for contribution within one year after payment, or (b) agreed while the action was pending to discharge the common liability and, within one year after the agreement, have paid liability and commenced an action for contribution.

-g(III). In each circumstance

described, the defendant must bring the contribution cause of

action in a separate suit, the principal suit having been either

settled or never commenced by the potential plaintiff.

The single exception to the "separate action" rule of

section 507:7-f(I) applicable here is found in section 507:7-

g(IV) :

[Ilf and only if the plaintiff in the principal action agrees, a defendant seeking contribution may bring an action in contribution prior to the resolution of the plaintiff's principal action, and such action shall be consolidated for all purposes with the principal action.

-g(IV)(c) (emphasis added).

Simply stated. New Hampshire law prescribes four ways in

which a defendant may bring a contribution cause of action

against a third-party, but restricts a defendant's ability to

6 bring a contribution suit prior to resolution of the plaintiff's

principal case to those circumstances in which the plaintiff in

the principal action consents. Thus, there appears to be a

direct conflict between Rule 14 and RSA 507:7, since Rule 14

allows a defendant to implead third-parties without the consent

of the plaintiff in the principal action. Resolution of the

pending motions turns on the nature and effect of these competing

rules.

B. Analytical Framework

Any discussion of the law applicable in a diversity case

routinely begins with the rule of Erie R.R. v. Tompkins,

(1938): When sitting in diversity a federal court must apply

the "substantive" law of the forum state according to the Federal

Rules of Civil Procedure. Commercial Union Ins. Co. v. Walbrook

Ins. C o .,

(1st Cir. 1994). A corollary to

Erie's rule provides that when a procedural rule contained in a

state statute conflicts with a valid Federal Rule of Civil

Procedure, the Federal Rule will preempt the state procedural

reguirement. Hanna v. Plumer,

(1965);

Martinez v. Hospital Presbiteriano,

(1st Cir.

1986). Therefore, if the provisions of sections 507:7-f & g are

7 "procedural" in nature, the state's consent requirement is not

applicable in this diversity suit, and Suburban Propane may

implead third-party defendants under Rule 14 without plaintiff's

consent. If, on the other hand, the consent requirement found in

sections 507:7-f & q is "substantive" in nature, it does apply in

this diversity suit, and it directly conflicts with the plain

meaninq of Rule 14.

Where a direct conflict exists between an applicable Federal

Rule of Civil Procedure and a state rule of decision, the Rules

Enablinq Act,

, determines which rule qoverns.

Hanna,

; Walker v. Armco Steel Corp.,

, 750 n.9 (1980) (if state substantive law directly collides

with a Federal Rule of Civil Procedure, Hanna's Rules Enablinq

Act analysis applies). That is. Rule 14 will qovern third-party

impleader for contribution if its application comports with the

Rules Enablinq Act, which reads:

The Supreme Court shall have the power to prescribe qeneral rules of practice and procedure . . . for cases in the United States district courts . . . . Such rules shall not abridge, enlarge, or modify any substantive right.

(emphasis added). So, to the extent application

of Rule 14 would not abridqe, enlarqe, or modify any substantive

riqht enjoyed by the parties under the applicable state law. Suburban Propane may implead third-party contribution defendants

pursuant to Rule 14 and, in effect, "accelerate" its right to

contribution created by state statute. If, on the other hand,

application of Rule 14 would abridge, enlarge, or modify

substantive rights created by the New Hampshire contribution

statute. Suburban Propane may not rely on Rule 14 to implead the

third-party contribution defendants in derogation of state law.

C. Erie Analysis

The first step in determining whether state law precludes

Suburban Propane from impleading third parties pursuant to Fed.

R. Civ. P. 14 is to decide whether the consent provision of the

state contribution statute applies at all in this diversity

action. If the provision is "substantive" it applies; if it is

"procedural" it is displaced by Rule 14. Erie,

;

Commercial Union Ins.,

. Of course, the Erie

distinction between "substantive" rules of decision and

"procedural" rules is, necessarily, a somewhat artificial

bifurcation of the law. See Hanna,

. And,

although these labels still retain many of their talismanic

gualities, Erie's progeny have largely abandoned any attempt to

separate state laws into these two convenient categories. See Hanna,

; Guaranty Trust Co. v. York,

(1945).

Instead, "choices between state and federal law are to be

made not by the application of any automatic 'litmus p a p e r 1

criterion, but rather by reference to the [two] policies

underlying the Erie rule." Hanna,

(citation

omitted); Commercial Union Ins. Co . ,

. The Erie

rule is rooted in part in a policy that declares it unfair for

the character or result of the litigation materially to differ

solely because the suit was brought in federal rather than state

court. Hanna,

; Commercial Union Ins. Co . ,

. Erie was also in part a reaction against the

practice of forum shopping that had grown up in response to the

rule of Swift v. Tyson,

. Hanna,

;

Commercial Union Ins. Co.,

.

Viewed in light of the twin policies underlying Erie, the

court concludes that the consent reguirement of section 507:7-

g(IV)(c) is applicable in this diversity suit. Allowing a

defendant to implead third-party contribution defendants in the

principal action without restriction would materially alter the

character, and perhaps even the outcome, of the litigation, as

compared to the character and outcome were the same case

10 litigated in state court. If third-party defendants were

impleaded, the right to seek contribution would be accelerated,

effectively providing the defendant a present cause of action

that he would not possess in state court. Impleader via Rule 14

would also transform the suit from a relatively simple two-party

negligence action into a complex, expensive, and potentially

confusing multi-party case.

In addition, it is self-evident that allowing defendants to

immediately implead in federal court parties that could not be

impleaded in state court, and to immediately pursue a cause of

action under state law in federal court that could not be pursued

under state law in state court, would encourage forum shopping

through the mechanism of removal in diversity cases. Diverse

defendants with potential contribution claims under RSA 507:7

would be encouraged to remove those cases to federal court to

avoid the substantial limitations placed on such causes of action

by the very state statute creating the cause of action in the

first place. Thus, both policies motivating the Erie doctrine

strongly favor application of section 507:7-g(IV)(c) in this

diversity case.

The decision to apply section 507:7-g(IV)(c) in this case is

also consistent with prior rulings of this court. Richards v.

11 Pizza Time Partners, No. C87-208-L, slip op. at 10 (D.N.H. Oct.

21, 1987) (Loughlin, J.) (holding that "this limitation placed

upon a party's right to seek contribution is no less substantive

than the provision allowing for contribution"); Grant v. Thomsen

Equip. C o ., No. C89-478-L, slip op. at 4 (D.N.H. Nov. 30, 1990)

(Loughlin, S.J.) (applying consent reguirement of section 507:7-

g(IV)(c) in diversity case). In addition, it is consistent with

the decisions of numerous other federal courts applying similar

limits found in other state contribution statutes. See, e.g.,

Andrulonis v. United States,

(2d Cir. 1994);

Ragusa v. Streator,

(N.D. 111. 1982); Pinzer

v. Wood,

(E.D. Tenn. 1979); Brooks v. Brown,

(E.D. V a . 1969).

The minority of decisions holding otherwise can be

distinguished by their reliance on the labels of "substance" and

"procedure," rather than on an analysis of the twin policies of

Er i e . See Lambert v. Inrvco, Inc.,

(W.D.

Okla. 1980) (stating simply that "the method of enforcing that

right [to contribution] is procedural"); Riordan v. W.J. Bremer,

Inc.,

(S.D. G a . 1979) (stating simply that

the rule against impleader in state contribution action "is

procedural and not substantive").

12 That the consent provision of section 507:7-g is applicable

in this case is also supported by comparing section 507:7-

g(IV)(c) with analogous state statutes of limitations, which have

long been held to apply in diversity suits. Guaranty Trust,

; Ragan v. Merchants Transfer & Warehouse Co . ,

(1949); Gluck v. Unisys Corp.,

(3d

Cir. 1992); Vincent v. A.C. & S., Inc.,

(5th

Cir. 1987); D'Onofrio Constr. Co. v. Recon Co . ,

(1st Cir. 1958). Statutes of limitations, of course, define when

a cause of action dies. After the limitations period runs, a

plaintiff can no longer bring suit. In an analogous manner, the

consent provision of section 507:7-g(IV)(c) defines when a cause

of action for contribution is born; until its conditions are

satisfied, a third-party plaintiff cannot bring suit. This court

"cannot give [a cause of action] longer life in federal court

than it would have had in the state court . . . consistently with

Erie R. Co. v. Tompkins." Ragan,

. Like a

state statute of limitations, section 507:7-g(IV)(c) defines the

lifetime of a cause of action and, for that reason as well, is

applicable in this diversity action.

13 D. Rules Enabling Act Analysis

The determination that section 507:7-g(IV)(c) applies does

not end the inquiry into the applicability of Fed. R. Civ. P. 14

to this action. The Erie doctrine cannot operate to invalidate

or render inapplicable a Federal Rule of Civil Procedure. Hanna,

. Rather, the Erie inquiry merely determines to

which "substantive" law the Federal Rules of Civil Procedure will

apply. If, as here, the applicable state law directly conflicts

with the applicable Rule, the validity of the Rule turns on

whether its application is consistent with the Rules Enabling

Act. As noted, that Act provides that the Federal Rules of Civil

Procedure "shall not abridge, enlarge, or modify any substantive

right."

; Hanna,

; Stewart

Orq. v. Ricoh Corp.,

, 27 n.5 (1988) (Rules of Civil

Procedure that conflict with substantive law must be measured

against the Rules Enabling Act requirements).

Finding that section 507:7-g(IV)(c) is "substantive" for

Erie purposes does not render the Rules Enabling Act analysis

superfluous. "The line between 'substance' and 'procedure'

shifts as the legal context changes," Hanna,

,

and neither term "represents the same invariants." Guaranty

Trust,

. Thus, whether a "substantive" right

14 would be affected by application of the Rules of Civil Procedure

is a very different question than whether a state law right is

"substantive" or "procedural." When, as here, the "situation is

covered by one of the Federal Rules, the question facing the

court is a far cry from the typical, relatively unguided Erie

choice." Hanna,

. In fact, the court has before

it a well-developed body of case law to guide its Rules Enabling

Act decision.

Whether Rule 1 4 's charge that a defendant may implead any

party "who is or may be liable to the third-party plaintiff for

all or part of the plaintiff's claim against the third-party

plaintiff," Fed. R. Civ. P. 14(a), does violence to substantive

rights created by Section 507:7-f & g depends, of course, on the

nature of the rights created by the state statute. Courts

considering the validity of Rule 14 as applied to state statutes

creating contribution causes of action have faced two distinct

types of statutes. Some state contribution statutes do not

provide a defendant with a cause of action against a joint

tortfeasor until that defendant has first discharged his pro rata

share of common liability to the plaintiff. See discussion infra

part II.D.l. Other statutes allow a defendant to bring an action

for contribution against a joint tortfeasor only upon a i oint

15 judgment in favor of the plaintiff against the tortfeasors. See

discussion infra part II.D.2. Rule 14 has consistently been held

to have different effects on substantive rights depending on

which of these two types of contribution statutes is being

applied.

1. Contribution Conditioned Upon Discharge of Common Liability

When a state contribution cause of action is conditioned

only upon the original defendant discharging common liability to

the original plaintiff. Rule 14 has been held to permit impleader

of third-party defendants. Used in this manner. Rule 14

"accelerates" the defendant's contribution cause of action

against third-party defendants consistently with the Rules

Enabling Act. See 6 Charles A. Wright & Arthur R. Miller,

Federal Practice and Procedure § 1451 (1990); 3 James W. Moore et

al., Moore's Federal Practice 5 14.08 (2d ed. 1995); Jack H.

Friedenthal et al.. Civil Procedure § 6.9 (1985); Andrulonis v.

United States,

(2d Cir. 1994); Williams v.

Ford Motor Credit Co.,

(8th Cir. 1980); United

States Surgical Corp. v. John K. Pulsifer & Co . ,

(D. Md. 1988); Holzhauser v. Container Corp. of A m . ,

(W.D. Ark. 1982); Lambert v. Inrvco, Inc.,

Supp. 908, 914 (W.D. Okla. 1980); Jeub v. B/G Foods, Inc.,

(D. Minn. 1942).

A contribution cause of action conditioned upon discharge of

common liability grants the third-party defendant the right not

to be held liable for the loss of another defendant until that

loss has actually been incurred. In apparent derogation of that

right. Rule 14, by its terms, would allow a defendant to implead

a party "who is or may be liable," clearly contemplating the

present enforcement of conditional or even inchoate rights.

Wright & Miller, supra, at § 1451.

Yet, if impleader is allowed via Rule 14, thereby

"accelerating" contribution actions under such state laws, any

prejudicial effect on a third-party defendant's state-created

right to be free from liability until the third-party plaintiff

has first satisfied the common liability to the plaintiff can be

entirely mitigated through procedural devices available to the

trial judge. "In the event that liability is determined to be

against the third-party defendant, the Court may either grant a

conditional judgment against the third-party defendant that does

not become enforceable until third-party plaintiff satisfies the

original judgment or may permit judgment to be entered but stay

execution until the third-party plaintiff can demonstrate that it

17 paid." Holzhauser,

; see also Andrulonis,

. Through such devices, then, federal courts can

promote the basic purpose of Rule 14 — to determine in a single

proceeding all rights dependent on a common set of facts —

without abridging, enlarging, or modifying the substantive rights

granted by the state contribution statute.

Thus, under state contribution statutes that condition the

cause of action upon discharge of common liability to plaintiff.

Rule 14 can be used to accelerate the defendant's cause of action

for contribution without abridging, enlarging or modifying

substantive rights in violation of the Rules Enabling Act. See

Wright & Miller, supra, at § 1451; Moore, supra, at 5 14.08;

Andrulonis,

; Williams,

. The

third-party defendant's "status will not be affected." Moore,

supra. Rather, the time when the defendant's claim is presented

will simply be accelerated. I d . (citing cases).

2. Contribution Conditioned Upon Joint Judgment

In contrast to statutes that condition the contribution

cause of action on a defendant's discharge of common liability to

the plaintiff, statutes that allow contribution claims between

joint tortfeasors only upon a joint judgment against those

18 tortfeasors cannot be "accelerated" without necessarily modifying

substantive rights of the parties in violation of the Rules

Enabling Act. See Wright & Miller, supra, at § 1448 (collecting

cases); Moore, supra, at 5 14.11 (collecting cases); D 'Onofrio

Constr. Co. v. Recon Co.,

(1st Cir. 1958);

Travelers Ins. Co. v. Busy Elec. Co . ,

(5th

Cir. 1961); McPherson v. Hoffman,

(6th Cir.

1960) .

Statutes that condition the contribution cause of action on

a joint judgment bestow upon the plaintiff in the principal

action the substantive right to control which parties become part

of the action. D 'Onofrio,

("Rule 14 cannot be

used when the injured party has chosen to sue only one of the

tortfeasors severally."); Moore, supra. "[T]he law is said to

allow plaintiff to choose defendants and give plaintiff the right

to sue less than all of the tortfeasors against whom he might

have a valid claim." Wright & Miller, supra. Applying Rule 14

to allow a single defendant to implead other third-party

contribution defendants would abridge the plaintiff's substantive

right to exclude parties he or she does not wish to sue, and that

practice would, concomitantly, "enhance the substantive rights of

the original defendant over what is given by state law."

19 D 'Onofrio,

. When the contribution cause of

action is conditioned upon joint judgment, then, application of

Rule 14 to permit impleader would violate the Rules Enabling Act.

3. New Hampshire Law of Contribution

New Hampshire's statute creating contribution causes of

action does not fall sguarely within either category of

contribution statute previously considered by the courts.

Rather, it is something of a hybrid of the two types of

contribution statutes commonly enacted. Section 507:7-(f), for

example, allows a defendant to bring a contribution cause of

action whether or not judgment has been rendered against that

defendant. But, when, as is the case here, no judgment has been

rendered in the principal action, a defendant may bring a

contribution action against a third-party only if common

liability to the plaintiff has first been discharged through

settlement or some other agreement. § 507:7-(g)(III). If this

were the only condition to bringing a contribution cause of

action. Rule 14 could be invoked, consistently with the Rules

Enabling Act, to "accelerate" the defendant's state-created right

to contribution.

20 New Hampshire's contribution statute does, however, contain

another explicit condition. A defendant may bring an action for

contribution prior to the resolution of the principal action, and

have the third-party action consolidated with the principal

action, "if and only if the plaintiff in the principal action

agrees."

-g(IV)(c). Section 507:7-

g(IV)(c) makes explicit the right that is usually implicit in

contribution statutes reguiring joint judgment: The plaintiff

has the substantive right to control which parties may

participate in the litigation. To allow Suburban Propane to

implead third-party defendants under Rule 14 in this case would

necessarily abridge Connors' and Proctor's substantive rights to

exclude third-party defendants, rights they have asserted by

suing only Suburban Propane and by expressly objecting to the

joinder of additional parties.1

Because its use to implead third-party contribution

defendants would violate the Rules Enabling Act (by limiting

1 It is important to note that the state statutory framework also disallows defendants from circumventing the consent reguirement by bringing a simultaneous but separate suit for contribution in state court, removing both suits to federal court, and consolidating the actions once there. As stated above, section 507:7-g(IV)(c) is the only mechanism through which a defendant may bring a contribution action simultaneously with the principal action. Therefore, the plaintiff's consent is always reguired if the actions are to be joined.

21 plaintiffs' and enlarging defendant's substantive rights under

applicable state law). Fed. R. Civ. P. 14 cannot be invoked,

without plaintiffs' consent, to bring a contribution action

premised on

-f & g against a third-

party defendant in this diversity action.

III. CONCLUSION

For the reasons stated above. Suburban Propane may not

implead third-party defendants in contribution actions pursuant

to Fed. R. Civ. P. 14. Accordingly, Connors' motion to dismiss

(document no. 19) is granted, Davidson's motion to dismiss

(document no. 23) is granted, Trianco's motion to dismiss

(document no. 25) is granted, and Suburban Propane's motion for

leave to file third-party actions (document no. 11) is denied.

SO ORDERED.

Steven J. McAuliffe United States District Judge

January 26, 1996

22 cc: Philip R. Waystack, Jr., Esq. Paul F. Kenney, Esq. Joseph M. McDonouqh, III, Esq. James E. Owers, Esq. Robert J. Meaqher, Esq. Georqe A. Dube Claude T. Buttrey, Esq. James H. Gray, Jr., Esq.

23