What’s Your Contribution? A Cautionary Tale Surrounding Third-Party Complaints
November 16, 2023
As many practitioners know, it is common to dismiss a complaint for pleading defects that are readily apparent. However, another type of complaint has recently caused a significant amount of confusion in the Commercial Division – the third-party complaint. A recent decision from Bronx Commercial Division Justice Fidel E. Gomez confirms as much, dismissing a third-party complaint where the third-party plaintiffs failed to plead any claims against the third-party defendant that were “rooted in indemnity or contribution.”
Background
In Green Castle A. Mgmt Corp. v B&V Dev., LLC, Plaintiff, a general contractor engaged in building renovations, entered into a contract (the “Agreement”) with defendant B&V Development LLC (“B&V”), and its owner, Al Faella (“Faella”), to perform certain construction work at a project located in the Bronx. In connection with the Agreement, defendant MF Electrical Service Co, LLC (“MF Electrical”), which was owned by Faella, assumed the obligation to tender payment under the Agreement.
Despite Plaintiff performing his obligations under the Agreement, Defendants failed to pay Plaintiff’s final invoice. As a result, in or around June 2022, Plaintiff commenced a lawsuit against Defendants, alleging that Defendants breached their contractual obligations by failing to compensate Plaintiff under the Agreement. In response, in or around August 2022, B&V and Faella commenced a third-party action against Seamus Carey (“Carey”) the principal of Plaintiff. The third-party complaint consisted of various claims, including an accounting, unjust enrichment, attorneys’ fees, conversion, and diversion of trust funds.
During the course of the litigation, Carey brought a motion for summary judgment to dismiss the third-party complaint, arguing that he was never not a party to the Agreement and/or all acts he made were in his representative capacity as the principal of Plaintiff, not in his individual capacity. In opposition, B&V and Faella argued that summary judgment was premature because discovery had not yet been completed.
Analysis
In its decision, the Court granted Carey’s motion for summary judgment to dismiss B&V and Faella’s third-party complaint, “but not for the reasons [argued] by [Carey].” Specifically, the Court explained that CPLR § 1007 states that third-party practice is allowed and/or “a defendant may proceed against a person not a party who is or may be liable to that defendant for all or part of plaintiff’s claim against that defendant.” Further, the Court cited to a significant amount of cases standing for the propositions that (i) “when a third-party action does not plead causes of action conditioned or arising from the main action against the defendant/third-party plaintiff, a third-party action is inappropriate”; and (ii) “a third-party action is limited to actions where a defendant seeks to hold a third-party liable for all of plaintiff’s claims against said defendant, meaning liability rooted in indemnity or contribution.”
Based on this case law, Justice Gomez found that because “the third-party complaint [was] utterly bereft of any claims for contribution and/or indemnification against the third-party defendant,” it must be dismissed in its entirety.
Takeaway
The Green Castle decision serves as an important reminder that a third-party complaint is not a broad stage for airing out a laundry list of claims and/or grievances against a defendant, but rather a limited opportunity from which to identify other parties that may be responsible for some or all of the plaintiff’s damages.