Riblet Tramway v. Marathon Electronics

 NOTICE:  This opinion is subject to motions for reargument under V.R.A.P.
 40 as well as formal revision before publication in the Vermont Reports.
 Readers are requested to notify the Reporter of Decisions, Vermont Supreme
 Court, 109 State Street, Montpelier, Vermont 05609-0801 of any errors in
 order that corrections may be made before this opinion goes to press.


                                 No. 91-239


 Riblet Tramway Company, Inc.                 Supreme Court

                                              On Appeal from
      v.                                      Lamoille Superior Court

 Marathon Electronics-Avtek                   November Term, 1992
 Drive Division


 Shireen Avis Fisher, J.

 Lisa Chalidze of Hull, Webber & Reis, Rutland, for plaintiff-appellant

 John S. Liccardi and Martha A. Wieler of Harlow Liccardi & Crawford, P.C.,
   Rutland, for defendant-appellee


 PRESENT:  Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.


      ALLEN, C.J.   Riblet Tramway Company appeals from an order in an
 indemnity action against Marathon Electronics-Avtek Division (Avtek) that
 dismissed the action on the ground that the claim had been previously
 adjudicated in a matter in which Riblet was the third-party plaintiff and
 Avtek had been the third-party defendant.  We affirm.
      In 1978 Riblet entered an agreement with the Mt. Mansfield Company to
 construct a chair lift, and in 1982 Mt. Mansfield sued Riblet in federal
 district court for alleged failure to conform to certain express and implied
 warranties with respect to the construction.  In 1983 Mt. Mansfield and
 Riblet entered a stipulation of settlement under which Riblet would perform
 all work necessary to allow the chair lift to carry 1,200 persons per hour.
 This work was completed in 1984.  In 1985, however, the chair lift failed to
 carry 1200 skiers per hour, and in 1986 Mt. Mansfield filed suit against
 Riblet in the Lamoille Superior Court ("1986 action") for breach of
 warranties and for breach of the settlement agreement reached in 1983.
 Riblet in turn filed a third-party complaint against Avtek pursuant to
 V.R.C.P. 14, alleging that Avtek had a duty to indemnify it, based on a
 warranty theory, in the event that judgment was entered in favor of Mt.
 Mansfield.
      Prior to trial, the court struck the breach of warranty claims against
 Riblet because the applicable statute of limitations had expired.  Avtek
 then moved to dismiss the third-party complaint because it was also based on
 warranty claims.  The court granted Avtek's motion, and subsequently entered
 judgment for Mt. Mansfield against Riblet for $186,960.
      Riblet appealed the judgment in favor of Mt. Mansfield, but the appeal
 was later dropped.  Riblet did not appeal dismissal of its claim against
 Avtek.  Instead, it brought the present action ("1990 action") against Avtek
 on a theory of indemnity, alleging that "[t]he reason the lift failed to
 carry 1200 skiers per hour was solely because of defects in the AVTEK  motor
 and control, and breaches of express and implied warranties made by AVTEK in
 connection with its provision of the components to Riblet."  The court
 granted Avtek's dismissal motion on res judicata grounds, and the present
 appeal followed.
      Riblet argues first that its claim against Avtek did not accrue in the
 1986 action because an action for indemnity does not accrue until the
 indemnitee (here, Riblet) has suffered an actual loss.  Riblet reasons that
 since it had not suffered an actual loss in the Mt. Mansfield action at the
 time its claim against Avtek was dismissed, the court's pre-judgment
 order dismissing Riblet's action against Avtek should not be given res
 judicata effect.  We disagree.
      The central purpose of Rule 14 is to permit "resolution in a single
 proceeding of common issues."  Reporters Notes to V.R.C.P. 14; see First
 National Bank of Strasburg v. Platte Valley State Bank, 107 F.R.D. 120, 123
 (D. Colo. 1985) (dispose of related claims in single suit; simplify and
 expedite litigation).  A defendant may bring in a third party under V.R.C.P.
 14(a) "who is or may be liable to such third-party plaintiff for all or
 part of the plaintiff's claim against the third-party plaintiff."  (emphasis
 supplied.)  If the third-party plaintiff prevails against the principal
 plaintiff and incurs no liability, the third-party defendant in turn incurs
 no liability to the third-party plaintiff.  See Beights v. W.R. Grace & Co.,
 67 F.R.D. 81, 84 (W.D. Okla. 1975) (defendant manufacturer was estopped to
 claim that a maker of an ingredient in its product was liable for any defect
 after jury found that product was not responsible for plaintiff's injuries).
      Joinder of all interested parties under Rule 14 binds each to the
 resulting judgments in the matter, even though an independent action in
 place of the third-party action might have been premature.  Jeub v. B/G
 Foods, Inc., 2 F.R.D. 238, 240 (D. Minn. 1942).  In Jeub, the defendant
 sought indemnity from the third-party defendant, who resisted impleader on
 grounds that, under state law, no indemnity right arose until after the
 defendant had suffered actual loss.  The court allowed impleader and stated:
         The fact that an independent action for money recovery
         could not be brought at this time does not militate
         against [third-party plaintiff's] right to invoke a
         procedure which will determine rights of the parties
         concurrently with that of the basic proceeding, and if
         and when any loss has been sustained as to which
         [third-party defendant] is liable over, the laws of this
         State in regard thereto may be made effective.

 Id. at 240 (emphasis supplied); accord Holzhauser v. Container Corp. of
 America, 93 F.R.D. 837, 839 (W.D. Ark. 1982).  We hold that the third-party
 plaintiff's claim against the third-party defendant arises or accrues when
 the plaintiff files the complaint in the original action because under Rule
 14, the third-party complaint may then be filed.  See Patten v. Knutzen, 646 F. Supp. 427, 429-30 (D. Colo. 1986)(holding that claim for contribution
 arises prior to final judgment in principal action); Deutsche Credit Corp.
 v. National Bank & Trust Co., 114 F.R.D. 4, 7 (N.D. Ind. 1986)(Rule 14
 allows impleader although finding of liability against defendant in original
 action does not automatically establish third-party defendant's liability).
      In the present case, Mt. Mansfield's complaint against Riblet was based
 on two theories, breach of warranties and breach of a settlement agreement.
 Riblet's third-party complaint against Avtek was limited to theories of
 express and implied warranties.  When Riblet moved to dismiss Mt.
 Mansfield's warranty-based claims on the ground that the statute of
 limitations had expired, Avtek moved to dismiss the third-party complaint.
 The court dismissed Mt. Mansfield's warranty claims and the third-party
 complaint.  If Riblet believed that dismissal of its third-party complaint
 against Avtek was not warranted, (FN1) it should have opposed dismissal and, if
 unsuccessful, appealed to this Court.  Riblet did not appeal, but rather
 raised a virtually identical claim in its 1990 action for indemnity.  The
 dismissal of Riblet's third-party complaint in the 1986 action was a final
 adjudication of the same warranty claims now raised again in a separate
 indemnity action.  See Beaudoin v. Town Oil Co., 542 A.2d 1124, 1130 (Conn.
 1988) ("All of the issues raised in this appeal of the trial court's ruling
 were raised in the previous third party complaint that was stricken by the
 trial court and already preserved for appeal."). (FN2)
      In short, Riblet allowed its claim to be adjudicated, allowed the
 adjudication to go unappealed, and then hoped for resuscitation of its
 claim in a subsequent action.  Elementary principles of res judicata bar
 that course of action.  There was no error.
      Affirmed.

                                         FOR THE COURT:




                                         Chief Justice



FN1.    We express no views as to whether dismissal of the warranty claims
 between Mt. Mansfield and Riblet mandated dismissal of Riblet's third-party
 warranty claims against Avtek.  Riblet did not appeal the court's dismissal
 of its claim against Avtek, and hence that dismissal became a final
 adjudication of the claim.


FN2.     The court in Beaudoin relied on the "prior pending action" doctrine,
 rather than res judicata, because although the separate suit for
 indemnification was filed after dismissal of the third-party complaint, the
 appeal of that dismissal was not yet decided.  Hence, there were two actions
 relating to the same parties and subject matter in esse at the same time.
        In the present case, though appellee recites the prior-pending-
 action doctrine, the proper principle is res judicata.  Although Riblet's
 appeal in the 1986 action had not been terminated when the present action
 was filed, the court had dismissed Riblet's third-party complaint and that
 dismissal was not appealed.  It is the finality of that unappealed judgment
 that represents a prior adjudication -- a res judicata.