granting motion to strike affirmative defense of estoppel in case involving claims under the False Claims Act and common law claimsSummary of this case from U.S. v. Manhattan-Westchester Medical Services, P.C.
CIVIL ACTION No. 3:01-CV-2342-G.
July 12, 2002
Before the court is the motion of third-party defendant Bank of America, N.A., ("Bank of America") for leave to file a third-party complaint against Ralph W. Ebert ("Ebert"). The motion is denied as moot. Nonetheless, for the reasons discussed below, the court vacates the erroneous unfiling of Bank of America's third-party complaint on March 15, 2002, which it could file as a matter of right.
The United States filed this action on November 20, 2001 against Cushman Wakefield, Inc., Cushman Wakefield of Michigan, Inc., (collectively, "CW"), Interior Systems, Inc. ("ISI") and William F. Marcellino ("Marellino"). Complaint at 1-2. The United States asserts violations of the False Claims Act, 31 U.S.C. § 3729-3733, ("FCA"), and common law causes of action for fraud and unjust enrichment. Id. at 1. According to the complaint, from 1997 until 2001, CW managed and operated a mail-presort business that sorted mail for customers in the Dallas area and then presented that mail to the United States Postal Service (the "Postal Service") for mailing (the "Presort Operation"). Id. at 3. From July 1998 until about January 2000, the defendants were allegedly involved in a scheme to defraud the Postal Service by avoiding payment of $6.2 million in postage in connection with the Presort Operation. Id. Specifically, the United States alleges that the defendants submitted, or caused to be submitted, postage statements to the Postal Service that knowingly under-reported the amount of mail they presented to the Postal Service for mailing and, as a result, avoided paying postage due on that mail. See generally Complaint. Ebert was the manager of the Presort Operation and he and Macrellino each received over $1 million from two accounts maintained by the Postal Service in the name of CW or CW's joint venture with ISI. Id. at 6-7, 12.
From August 1999 until October 2000, CW ran the Presort Operation through a joint venture with ISI and CW's wholly owned subsidiary. Complaint at 3.
On January 7, 2002, CW filed a third-party complaint, asserting claims for negligence and conversion, against Bank of American and Mellon Financial Group for improperly honoring a series of checks that were payable to CW. Third-Party Complaint of Cushman Wakefield, Inc. and Cushman Wakefield of Michigan, Inc. Against Third-Party Defendants Bank of America and Mellon Financial Corporation ("CW's Third-Party Complaint") at 1-4. The checks were allegedly wrongfully taken and converted by Ebert. Id. at 3. According to CW, Bank of America improperly honored the checks. Id.
On March 11, 2002, Bank of America answered CW's third-party complaint. Bank of America, N.A.'s Answer to Third-Party Complaint of Cushman Wakefield, Inc. and Cushman Wakefield of Michigan, Inc. ("Answer") at 1; see also Bank of America, N.A.'s Motion for Leave to File Third-Party Complaint Against Ralph W. Ebert ("Bank of America's Motion") at 2. On March 15, 2002, Bank of America filed its third-party complaint against Ebert. Bank of America's Motion at 2. Bank of America's third-party complaint, however, was unfiled that day by the court, on the recommendation of the clerk, with the explanation, "need leave of court to file 3rd party complaint." See Order Striking/Unfiling Pleading, filed March 15, 2002 (docket entry 33). On March 22, 2002, Bank of America filed the instant motion. See Bank of America's Motion at 1. The motion was unopposed by all the parties with the exception of CW. Id. at 2 n. 1 ("Plaintiff United States of America, and Defendants Interior Systems, Inc. and William F. Marcellino have assented to this Motion. Defendants/Third-Party Plaintiffs Cushman Wakefield and CWMI do not consent to the relief requested herein."); see also The Cushman Wakefield Parties' Response and Brief in Opposition to Bank of America's Motion for Leave to File Third Party Complaint ("Response") at 1.
FED. R. CIV. P. 14(a) provides, in part:
At any time after commencement of the action a defending party, as a third-party plaintiff, may cause a summons and complaint to be served upon a person not a party to the action 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. The third-party plaintiff need not obtain leave to make the service if the third-party plaintiff files the third-party complaint not later than 10 days after serving the original answer. Otherwise the third-party plaintiff must obtain leave on motion upon notice to all parties to the action.
The policy underlying Rule 14 is to promote judicial economy by eliminating circuity of action. See, e.g., Powell, Inc. v. Abney, 83 F.R.D. 482, 485 (S.D. Tex. 1979); Crude Crew v. McGinnis Associates, Inc. 572 F. Supp. 103, 109 (E.D. Wis. 1983) ("The general purpose of Rule 14 is to avoid circuity of actions and to expedite the resolution of secondary actions arising out of or in consequence of the action originally instituted."). As a result of the 1963 amendment to Rule 14, a "defendant is allowed to implead a third party without leave of the court within ten days after service of the answer." 6 C. Wright A. Miller, Federal Practice Procedure § 1454 at 422 (1990). As Wright Miller observe,
The reason for this change was to eliminate the unnecessary motion practice that was associated with impleader prior to 1963. In most instances there is no valid reason for objecting to impleader when it is sought early in the proceeding. By eliminating the need for ruling on motions for leave to implead made prior to or within ten days after service of the answer, the current version of Rule 14(a) avoids burdening the court with preliminary rulings on the propriety of ex parte applications for leave to implead.Id.
Unfortunately, this laudable goal of reducing motion practice was not achieved in this case because Bank of America's third-party complaint against Ebert was unfiled in error. As the record indicates, Bank of America originally filed the third-party complaint against Ebert four days after it answered CW's third-party complaint. See Docket Sheet (docket entries 25 and 32). Thus, Bank of America filed its third-party complaint well within the time allowed by Rule 14(a). FED. R. CIV. P. 14(a) ("The third-party plaintiff need not obtain leave to make the service if the third-party plaintiff files the third-party complaint not later than 10 days after serving the original answer."). In light of this timely filing, the court vacates the earlier order unfiling Bank of America's third-party complaint (docket entry 32). Since Bank of America had a right under Rule 14(a) to file its third-party complaint on March 15, its motion for leave to make such a filing (docket entry 35) is denied as moot.
For the reasons stated above, Bank of America's motion for leave to file a third-party complaint is DENIED as moot. Bank of America's third-party complaint against Ebert, unfiled on March 15, 2002, is ordered re-filed as of that date. Nothing in this order, however, precludes any party in this action from moving to strike or vacate Bank of America's complaint against Ebert. See FED. R. CIV. P. 14(a) ("Any party may move to strike the third-party claim, or for its severance or separate trial.").