Federated Mutual Insurance Company v. Ever-Ready Oil Co., Inc., 1:09-cv-00857

Federated Mutual Insurance (Federated) seeks a declaratory judgment that its General Liability policy does not cover claims arising from two state court liquor liability lawsuits against Ever-Ready Oil Co. (ERO).
Giant Four Corners, Inc. (Giant) seeks indemnity and related relief against Western States/Desert States (Western States) for allegedly failing to procure proper insurance naming Giant as additional insured.
The Lease between Giant and ERO requires Lessee to obtain public liability insurance with Giant named as an additional insured; the lease also imposes indemnity obligations on Lessee.
Western States allegedly obtained a proof of insurance stating Giant was named as additional insured; Federated contends the policy may not provide coverage if Western States failed to secure it properly.
Giant asserts that Western States may be liable to it under Rule 14 if Federated’s declaratory judgment finds no coverage.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Rule 14 permits Giant to implead Western States in this declaratory action	Giant's claim is derivative of Federated's claim.	Western States should not be impleaded unless it may be liable to Giant.	Yes; third-party claim appropriate under liberal Rule 14 construction.
Whether Western States can be impleaded as a third-party defendant	Western States could be liable to Giant depending on coverage outcome.	Rule 14 does not permit impleader here unless liability over exists.	Yes; Western States may be liable as pass-through and the claim is proper.
Whether Giant’s claim is a pass-through claim under Rule 14	Western States is liable to Giant if no coverage exists.	Not a pass-through; unrelated to main coverage question.	Yes; Giant’s claim is a pass-through/directed to coverage outcome.
Whether liberal construction of Rule 14 supports allowing the third-party claim	Rule 14 should be liberally construed to promote judicial economy.	Strict approach prevents improper impleader in declaratory actions.	Yes; liberal construction favors allowing the third-party claim.
Whether existing Tenth Circuit precedent governs this scenario	Circuit authority supports permissive impleader in declaratory contexts.	Some cases do not directly apply; distinguish as needed.	Court finds persuasive, distinguishing as needed and denying the motion to dismiss.

United States Fid. & Guar. Co. v. Am. State Bank, 372 F.2d 449 (10th Cir. 1967) (Rule 14 liability must be derivative or dependent on main claim)
Hefley v. Textron, Inc., 713 F.2d 1487 (10th Cir. 1983) (indemnity/coverage claims not properly tied to main action barred)
King Fisher Marine Serv., Inc. v. 21st Phoenix Corp., 893 F.2d 1155 (10th Cir. 1990) (indemnity pass-through in Rule 14 context recognized when integrated with main claim)
United of Omaha Life Ins. Co. v. Reed, 649 F. Supp. 837 (D. Kan. 1986) (pass-through third-party claim proper when closely tied to main issue)
Old Republic Ins. Co. v. Concast, Inc., 99 F.R.D. 566 (S.D.N.Y. 1983) (caution against narrow Rule 14 reading; promote judicial economy)