NEW ENGLAND INTERCONNECT SYSTEMS, INC v. AEES, INC, No. 2:2010cv00758 - Document 42 (W.D. Pa. 2011)
Court Description: ORDER granting 33 Motion for Leave to Join a Party Defendant, Substitute a Party Plaintiff, and File a Second Amended Complaint; BAY ASSOCIATES WIRE TECHNOLOGIES, INC. is hereby substituted as plaintiff in this action; Second Amended Complaint, for the sole purpose of adding AEES, L.P. as a party defendant shall be filed within 10 days of the date of this order; Upon the filing of this complaint, plaintiff shall serve a summons and second amended complaint on AEES, L.P., who shall have 10 days from the date of filing of the second amended complaint to answer the amended averments; Fact Discovery should be completed by 7/5/2011; Post-Discovery Status Conference to remain on 7/6/2011 at 4:30 PM. Signed by Chief Judge Gary L. Lancaster on 5/26/11. (map)
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NEW ENGLAND INTERCONNECT SYSTEMS, INC v. AEES, INC Doc. 42 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA NEW ENGLAND INTERCONNECT SYSTEMS, INC., Plaintiff, Civil Action No. 10-0758 v. AEES, INC., Defendant. MEMORANDUM Gary L. Lancaster, Chief Judge. This is an action in contract. ( "NEIS" ) Interconnect Systems, Inc. , contract demands recovery and Commercial Code, has filed a substitute 13 Pa. motion a 2011 May Cons. Stat. seeking party under leave plaintiff § to and Plaintiff New England alleges the breach pennsylvania 2101, et seq. join a file a of Uniform Plaintiff party defendant, a second amended complaint. For the reasons set forth below, plaintiff's motion will be granted. I. Background NEIS claims that an breached a contract with NEIS. against AFL Automotive's entity entitled AFL Automotive On June 3, 2010, NEIS filed suit alleged successor-in-interest, AEES, Dockets.Justia.com Inc. On August which was Inc. 9, 2010, denied by AEES, this Inc. court. filed a motion to di On December filed an Answer and Affirmative De AEES, Inc. denied that it was s 2011, AEES, NElS as clarifying rest, L.P., Inc. an that it to an was AEES, In the Answer, es. to AFL iled to join one or more affirmative responded 2010, the successor-in-interest Automotive, and offered that NElS had necessary part 28, ss defense. On interrogatory not the actual February propounded 16, by successor-in merely the general partner of an entity entitled AEES, which was the successor by name change to AFL Automotive. Documentary evidence supporting this fact was later produced, and on March 31, 2011, NElS filed this motion. Additionally, at the time NElS original contract at issue in this case, entered into NElS was a wholly-owned subsidiary of New England Wire Technology Corporation, In 2008, NEWT acquired another Technologies. Ef i ve subsidiary, December, 31, the ("NEWT"). Bay Associates Wire 2008, NEWT transferred the ownership of all of its NElS stock to Bay Associates. next day, NElS transferred from successors. Avonti, of its assets to Among these assets was the right to all claims Bay Associates. arising substantially all The NElS' NElS formerly contracts has with provided General AFL Automotive the sworn affidavit Manager 2 of NElS, and and of now its Harry the General Manager of Bay Associates, discover the transfer of the which states that he did not right to the contracts from NElS to Bay Associates until t of this lawsuit and after suit AFL Automotive discovery period had already been filed in the name of NElS. NElS now moves to add AEES, L.P. as a rty defendant and substitute Bay Associates as the real party in interest. II. Discussion NElS permit it asserts to amend that its it is proper complaint to s for add AEES, court L.P. to as a defendant and to substitute Bay Associates as the plaintiff in this matter. AEES, Inc. contends that this court should deny leave to join AEES, L.P. because the proposed amendments are barred by a one-year contractual limitation period. that even period set amendment if the by sought claim is statute under it Rule governed by is 15 still to AEES, the 4-year -barred t add Inc. a further argues that a substitution of pIa improper because NElS' limitations because defendant relate back to the date of the original complaint. continues does AEES, the not Inc. iff under Rule 17 is failure to bring this action in the name of Bay Associates is not understandable. 3 We disagree and will grant NElS' motion to amend as outlined below. With respect to NElS' defendant, request to add AEES, standard ei ther as a we look to Federal Rule of Civil Procedure 15 which governs amended and supplemental pleadings. the L. P. period the written court to amend. for amendment consent Fed. of R. Civ. the has It states that once passed, a party opposing party or P. 15(a) (2). needs leave Under this rule, court "should freely give leave when justice so requires." of the Id. When an amendment changes a defending party, it will relate back to the date of the original pleading if it asserts a claim or defense which arose from t transaction set out in the original complaint and if the party to be brought in by amendment knew or should have known within 120 days of the time that the complaint was filed that the action would have been brought against but for a mistake concerning the proper party's identity. it, Fed. R. Civ. P. 15 (c) (1) (C). Federal Rule of C and nonjoinder of parties. I Procedure 21 governs misjoinder It allows the court to add or drop a party at any time, "on just terms." Fed. R. Civ. P. 21. District courts may grant leave to amend under either Ru is 15 or 21 at their discretion, and should do so unless there evidence of undue delay, bad ith, 4 dilatory motive, or prejudice, or if the proposed amendment would be futile because would fail granted. to state a claim In re Burlington Coat upon which relief could be Factory Securities Litigation, 114 F.3d 1410, 1434 (3d Cir. 1997). First, proposed we will address AEES, amendment contractual is futile limitations Inc.' s argument that the because period. of an This expired court has I-year already determined that Pennsylvania's 4-year statute of limitations for contract actions applies to this supply-contract case, with the possible exception of a December 2008, when an AEES, year limitations window from February 2008 to Inc. purchase order may have introduced a 1 period as agreement for that period. a term [Doc. No. governing the parties' But that issue is 26]. not yet ripe for decision and has no bearing on this motion. Next, this court finds that the proposed addition of of the original complaint, which was filed within the applicable 4 r AEES, L.P. as a defendant statute of limitations. same, so the only ates back to the filing Here, the claims in the case remain the question is defending party to be brought in, whether AEES, L.P., as the had sufficient notice of this action so as not to be prejudiced, and knew or should have known that this action would have been brought NElS' mistake. 5 against it, absent The Supreme Court of the United States has recently issued a ruling on this very point of law, holding that the only relevant question defendant under reasonably Rule 15 should is have "what the prospective understood about the plaintiff's intent in filing the original complaint against the first defendant. 2496 (2010). company u Krupski v. Costa Crociere, 130 S. Ct. 2485, The Krupski case concerned a plaintiff who sued a called limitations Costa period had Cruise. expired, Several Costa months Cruise after filed an the answer asserting that it was merely the sales and marketing agent for Costa Croc The Court re, held which was that the proper defendant. the two companies entities and had very similar names. were Id. related at 2491. corporate Therefore, the Court found that Rule 15 was satisfied and allowed amendment and relation back to the time of the original filing because Costa Croci ere should have suspected a mistake when Costa Cruise was named in the complaint. Id. at 2498. The same analysis applies here. L.P. AEES, Inc. and AEES, are related corporate entities organized under the laws of the state of Delaware as general partners. Under Delaware law, each partner has equal rights in the management and conduct of the partnership business 401(f) (2011). and af In general, I irs. 6 DEL. CODE. ANN. § 1 partners are liable jointly and 6 severally for all obligations of the partnership. ANN. have § 15 30 6 ( a) (2 0 11) . names just as, entities in Krupski. What is more, AEES, if more DEL. and AEES, L.P. than the L.P. filed against AEES, corporate was on notice of Inc. such that it no prejudice in defending the case and that AEES, can fairly be expected to suspect that NElS named AEES, mistake. L.P. Therefore, we will as a party defendant, pleadings relates back grant NElS' and hold that to the date CODE. Inc. similar We find that AEES, this action when it was suf not 6 motion to L. P. Inc. by add AEES, is amendment to the of original filing for statute of limitations purposes. Turning to NElS' request to substitute Bay Associates as the proper plaintiff in this case, we look to Federal Rule of Civil Procedure 17 which the name of the real party requires actions interest. to be prosecuted Fed. R. The Advisory Committee Notes to Rule 17(a) Civ. P. 17(a). state that courts are inclined to be lenient when an "honest mistakeN has been made in choosing the party in whose name the action is filed. Fed. R. Civ. P. 17 Advisory Committee Notes, 1966 Amendments. The Notes also stress that the rule is intended to prevent forf ture when determination of the proper party is "difficult N or "when an understandable mistake has been made" in selecting the party in whose name an action should be brought. 7 Id. Rule 17 prevents this court from dismissing an action failure interest to prosecute unless there in has the name been of both the an real party objection and in a reasonable time has been allowed for the real party in interest to ratify, P. j n or be substituted into the action. 17(a)(3). proceeds as interest. Once if Id. it the had party been has been commenced In other words, j by Fed. R. Civ. ned, the the real action party just as with Rule 15, in Rule 17 includes a relation-back provision. This subsequent Green v. But the add the the rule action serves by the Daimler Benz, real party in added party to protect party AG, rule also serves to actually 157 F.R.D. 340, plaintiffs by interest survive an defendants entitled 343 to (E.D. statute a recover. Pa 1994). requiring the to the action, expired from court to which may allow of limitations. Id. The Court of Appeals that the substitution of a for real the Third Circuit has noted party the statute of limitations has run, in interest, even after is not significant when change is merely formal and does not alter the facts and issues on which the claim is based. F.3d 1010, Nat. Bank 1015 & n. Trust 8 Nelson v. (3d Cir. Co., 529 60 Count 1995) (citing Staren v. F.2d 1257, 8 1263 (7th Cir. American 1976)). However, is the court of appeals stressed that the goal of Rule 17 to prevent for i ture when the determination of the proper party to sue is "difficult," or "when an understandable mistake has been made." This Id. court finds that requested in this case is a facts or issues that remains, NElS to interest, determine substitution of plaintiffs formali ty that does not alter the raised against then, the defendants. The only question is whether it would have been difficult for that Bay Associates was the or if that mistake was understandable. NElS is not an unsophisticated plaintiff, real party in On one hand, so it does not appear that it would have been unduly difficult r NElS to determine that it had transferred the rights to its contract claim against On the other hand, defendants before it initiated suit. is no indication of dishonesty here. It is clear there that the general management of NElS understood that Bay Associates became the owner of all of NElS' stock, but that it overlooked the fact that a subsequent asset transfer to Bay Associates included the claims at bar. Therefore, the court finds that this mistake, which does not appear to prejudice defendants in any manner, was not careless or misleading, but was an understandable excusable mistake. See Mel Worldcom Network Services, Graphnet, 00-5255, Inc., No. 2005 WL 1116163 at * 7 9 Inc. and v. (D.N.J. May 11, 2005) (finding that a lure to name the real party in interest until after a second amended complaint had been filed was an mergers honest and and name understandable changes). We mistake thus due grant to a NElS' series of motion to substitute Bay Associates as the real party in interest in this action. III. Conclusion For L.P. as a the forgoing defendant and reasons, NElS' substitute motion Bay to add AEES, Associates as the Bay Associates may file an plaintiff in this action is granted. amended pleading making these limited changes. An appropriate order follows. 10 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA NEW ENGLAND INTERCONNECT SYSTEMS, INC., Plaintiff, Civil Action No. 10-0758 v. AEES, INC., Defendant. ORDER AND ORDERED that Defendant, Amended NOW, this ~ plaintiff's Substitute Compla a [Doc. day Motion Party No. of for PI 33] May, Leave ntiff is this Inc. action. is Bay hereby substituted Associates shall IT to and file IS Join File GRANTED. hereby added as a defendant to this action. Technologies, 2011, HEREBY a a AEES, Party Second L.P. is Bay Associates Wire as the a plaintiff second complaint for the sole purpose of adding AEES, L.P. in amendment as a party defendant and substituting Bay Associates Wireless Technologies, Inc. as the party plaintiff within ten this order. serve AEES, a days of the date of Upon the filing of this complaint, summons L.P. (10) and second shall have ten (10) amended complaint plaintiff shall on AEES, L.P. days from the date of filing of the second amended complaint to answer the amended averments. The part conference rema s are ORDERED that the post-discovery status set for July 6, 2011 at 4:30 p.m. all fact discovery should be completed by July 5, 2011. BY THE COURT: cc: All Counsel of Record and that
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