## Facts

- Carvel licensed individuals to operate ice cream stores under the Carvel name.
- Kenneth and Jacqueline Yelin entered a franchise agreement with Carvel to operate a Carvel store in Albuquerque.
- Carvel’s wholly owned subsidiary, Franchise Stores Realty Corp. (FSR), leased retail space from landlords George Doolittle and Jeanette Doolittle Ingram, then assigned the lease to the Yelins as franchise owners.
- The lease term was approximately nine years and ten months beginning February 1, 1987, requiring payment of rent, taxes, insurance, and other charges.
- The Yelins operated the store for about three and one-half years; the business lost money and eventually closed.
- The landlords sued the Yelins for breach of the lease, alleging failure to continue operating at the premises and failure to pay rent and related costs.
- The Yelins filed a third-party complaint against Carvel and FSR alleging negligent misrepresentation and breach of the franchise agreement (including inadequate advertising and untimely supplies), seeking to recover amounts they might owe the landlords.

## Issues

1. Whether impleader under New Mexico Rule of Civil Procedure 1-014(A) is available only when the third-party defendant’s potential liability to the defendant is derivative of the defendant’s potential liability to the original plaintiff.
2. Whether the Yelins’ franchise-based tort and contract claims against Carvel and FSR constituted liability “for all or part” of the landlords’ lease-breach claim against the Yelins within the meaning of Rule 1-014(A).

## Decision

- The Supreme Court of New Mexico affirmed dismissal of the third-party complaint.
- The court held Rule 1-014(A) permits impleader only when the third-party defendant’s potential liability is derivative of, or dependent on, the defendant’s liability to the original plaintiff (commonly indemnity or contribution).
- Carvel’s and FSR’s alleged liability for negligent misrepresentation and breach of the franchise agreement was independent of whether the Yelins breached the lease.
- Because the third-party claims did not transfer to Carvel or FSR any portion of the landlords’ lease claim as derivative liability, impleader was improper.

## Legal Principles

- Under Rule 1-014(A), a third-party complaint is proper only if the third-party defendant “is or may be liable” to the defendant for all or part of the plaintiff’s claim, meaning liability that is derivative of the defendant’s liability in the main action.
- Impleader is not a general device for joining related disputes; it does not permit adding parties who may be independently liable to the defendant on separate duties or contracts.
- A causal connection between the third party’s alleged wrongdoing and the defendant’s inability to satisfy the plaintiff’s claim does not establish derivative liability required for impleader.

## Conclusion

The court required a derivative-liability relationship for third-party practice under Rule 1-014(A) and held that franchise-based tort and contract claims against a franchisor and its affiliate could not be impleaded into a landlord’s lease-breach action against the tenant-franchisees.


Yelin v. Carvel Corp., 893 P.2d 450 (N.M. 1995)