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Spencer v. Cannon Equipment Co.

June 29, 2009


The opinion of the court was delivered by: Simandle, District Judge



This matter is before the Court on Defendant Honda Motor Company, Inc.'s ("Honda") appeal of the Magistrate Judge's October 17, 2008 Order denying Defendant's unopposed motion for leave to file a third-party complaint [Docket Item 61].

Defendant asks the Court to set aside the Magistrate Judge's Order, because it is both clearly erroneous and contrary to law, pursuant to Rule 72(a), Fed. R. Civ. P. The principal issue is whether it is erroneous to deny a motion to join third parties under Rule 14(a), Fed. R. Civ. P., where the motion is made before the end of fact discovery, no deadline had been set for motions to join new parties under Rule 14(a), and no party is claiming prejudice due to delay. The Court finds that the Magistrate Judge's October 17, 2008 Order is clearly erroneous and the motion for leave to file a third-party complaint will be granted.


This suit was brought by Plaintiff Bruce Spencer, who claims that he was injured during the course of his employment due to a defective cart in which automobile parts were contained. On April 12, 2007, he filed his complaint in the Superior Court of New Jersey against Cannon Equipment Corporation, the manufacturer of the cart, and Defendant Honda, who purchased the cart from Cannon. On May 24, 2007, Defendant Honda removed the matter to this Court. After five enlargements of time, fact discovery was scheduled to be completed by September 30, 2008. No scheduling order contained a deadline for motions to amend or to join new parties pursuant to the requirements of Rule 16(b)(3)(A), Fed. R. Civ. P. On September 12, 2008, two weeks before the end of discovery, Defendant filed the instant motion for leave to file a third-party complaint [Docket Item 50]. Defendant seeks to join TNT Logistics North America, Inc. ("TNT Logistics"), CEVA Logistics U.S., Inc. ("CEVA Logistics"), and American Home Assurance Co. ("American Home"), ABC Companies 1-10, and XYZ Companies 1-10, as third-party defendants.

As a basis for this motion, Defendant Honda argues that pursuant to a December 2004 contract ("Master Agreement") between Defendant and TNT Logistics, TNT Logistics and CEVA Logistics, as TNT Logistics' successor, are obligated to defend and indemnify Defendant against this suit. Further, according to Defendant, TNT Logistics was obligated to provide insurance coverage through its policies with American Home. Plaintiff did not oppose Defendant's motion before the Magistrate Judge and has not responded upon this appeal.

Defendant Honda argued that it was diligent in developing a basis for its proposed third-party complaint through discovery. Honda was concededly aware of its own 2004 contract with TNT Logistics and the possibility of indemnification, insurance coverage and waiver of workers' compensation lien for Plaintiff's injuries. Honda argues it was unaware of the precise manner of the happening of the accident, including TNT Logistics/CEVA's role in loading the subject cart upon its trucks at Honda's parts center in Mount Laurel, New Jersey. Honda's counsel sought depositions in April, 2008 of the TNT/CEVA employees who were first identified in Plaintiff's answers to interrogatories in March, 2008. The depositions were promptly noticed by Honda but adjourned three times by other counsel (Plaintiff, Cannon, or TNT/CEVA). The first CEVA witness (Pedro Murillo) was finally deposed on June 27, 2008, and thereafter, in September, 2008, Honda had to seek court intervention to compel the remaining CEVA depositions in October, 2008.

Meanwhile, Honda tendered its claim to CEVA under the terms of the Master Agreement on July 14, 2008, and to American Home Assurance on July 25, 2008, both within a month after the Murillo deposition. Over the next two months, neither CEVA nor American Home Assurance accepted or rejected Honda's tender. Honda's motion was filed reasonably promptly thereafter on September 12, 2008.

On September 29, 2008, the Magistrate Judge entered an Order requiring Defendant to submit a supplemental brief demonstrating "good cause" to grant its motion. In this brief, Defendant explained that the delay in filing its motion was due to factual investigation and waiting for a response to its tender to TNT Logistics and CEVA Logistics. At oral argument on October 17, 2008, Defendant elaborated that it had difficulty scheduling a deposition of any CEVA Logistics employees. (Tr. at 4-7.) The Magistrate Judge heard argument from Defendant and proposed third-party defendants, but Plaintiff's attorney did not appear. Then the Magistrate Judge, ruling from the bench, denied Defendant's motion for leave to file a third-party complaint on grounds of undue delay and prejudice. (Tr. at 11-18.) Defendant's appeal followed.


In considering an appeal of a nondispositive order by a Magistrate Judge, the Court must "modify or set aside any part of the order that is clearly erroneous or is contrary to law." Fed. R. Civ. P. 72(a); L. Civ. R. 72.1(c).

A magistrate judge's finding is clearly erroneous when, although there may be some evidence to support it, the reviewing court, after considering the entirety of the evidence, is "left with the definite and firm conviction that a mistake has been committed." Dome Petroleum Ltd. v. Employers Mut. Liab. Ins. Co., 131 F.R.D. 63, 65 (D.N.J. 1990) (quoting United States v. U.S. Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 92 L.Ed. 746 (1948)). A ruling is contrary to law if the magistrate judge has misinterpreted or misapplied applicable law. [Gunter v. Ridgewood Energy Corp., 32 F. Supp. 2d 162, 164 (D.N.J. 1998)]. The burden of showing that a ruling is "clearly erroneous or contrary to law rests with the party filing the appeal." Marks v. Struble, 347 F. Supp. 2d 136, 149 (D.N.J. 2004). However, "[w]here a magistrate judge is ...

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