Foley v. Otis Elevator Company

Filing 27

ORDER denying 14 Motion for Leave to File an Amended Complaint and granting 21 Motion for Partial Summary Judgment. Signed by US District Judge James C. Dever III on 5/26/2011. (Sawyer, D.)

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF NORTH CAROLINA

SOUTHERN DNISION

No. 7:10-CV-138-D

TERESAM. FOLEY,

)

)

Plaintiff,

)
)

v.

)

ORDER

)

OTIS ELEVATOR COMPANY,

)
)

Defendant.

)

On May 26,2010, plaintiff Teresa M. Foley ("Foley" or "plaintiff") filed suit in Columbus
County Superior Court against Otis Elevator Company ("Otis" or "defendant") alleging breach of
contract and negligence [D.E. 1-1]. Foley claims that she was injured in an elevator at Columbus
Regional Hospital ("hospital"). The injury occurred when Foley, a hospital employee, attempted to
stop the elevator doors from closing by activating the sensors in the doors with her left hand. Despite
her effort, the elevator doors closed on her left hand and wrist causing injury. On July 8, 2010, Otis
removed the action to this court [D.E. 1]. On February 10,2011, Foley moved for leave to file an
amended complaint [D.E. 14]. Foley seeks leave to add a claim for gross negligence. On March 16,
2011, Otis moved for partial summary judgment on Foley's breach ofcontract claim [D.E. 21]. Otis
argues that Foley's status as a hospital employee does not create privity ofcontract with Otis and that
Foley was not an intended direct third-party beneficiary ofthe contract between Otis and the hospital.
For the reasons explained below, the court denies Foley leave to file an amended complaint and grants
Otis's motion for partial summary judgment.

I.

In her motion for leave to file an amended complaint, Foley seeks to add a claim for gross
negligence in violation of North Carolina law. Foley argues that the court must grant her motion
because "counsel only recently became aware ofevidence ofother elevator accidents" and the Federal
Rule of Civil Procedure 15(a)(2)'s liberal standard requires the court grant leave. P1.'s Mot. Leave
Am. I. In opposition, Otis cites the deadline set by the court's scheduling order, claims it will be
prejudiced by the late amendment, and that the amendment is futile. Def.' s Resp. Opp 'n Mot. Am.
1-3.
Provided certain time requirements are met, a party may amend a pleading once as a matter
of course. Fed. R. Civ. P. 15(a)(I). Additional amendments are allowed only with the permission
ofthe opposing party or with leave of court, and such leave should be freely given "when justice so
requires." Fed. R. Civ. P. 15(a)(2). However, when a party files a motion to amend "after the
deadlines provided by a scheduling order have passed, [Rule 16(b)'s] good cause standard must be
satisfied to justifY leave to amend the pleadings." Nourison Rug COIl'. v. Parvizian, 535 F.3d 295,
298 (4th Cir. 2008). Here, the original scheduling order required that motions ''to amend pleadings
must be made promptly after the information giving rise to the motion becomes known to the party
or counsel. Any such motion filed after October 15, 2010, must meet the standards of Fed. R. Civ.
P. 15 and 16." [D.E. 6] at 2. Rule 16(b) provides that a schedule "may be modified only for good
cause and with the judge's consent." Fed. R. Civ. P. 16(b)(4).
"Rule 16(b)'s good cause standard focuses on the timeliness of the amendment and the
reasons for its tardy submission; the primary consideration is the diligence of the moving party."
Montgomery v. Anne Arundel County. 182 F. App'x 156, 162 (4th Cir. 2006) (per curiam)
(unpublished). Good cause exists when a party's exercise of reasonable diligence before the
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expiration of the amendment deadline would not have resulted in the discovery of the evidence
supporting a proposed amendment. United States v. Godwin, 247 F.RD. 503, 506-08 (E.D.N.C.
2007). The burden to demonstrate good cause is on the moving party. Id. Prejudice, futility, and
bad faith are "Rule 15(a) consideration[s]," and the court should not consider them unless the movant
meets its initial burden under Rule 16(b). Stonecrest Partners. LLC v. Bank ofHampton Roads, No.
7:1O-CV-63-FL, 2011 WL 923950, at *4 (E.D.N.C. Mar. 14,2011)(quotingNourisonRugCorp., 535
F.3d at 299).
Here, Foley has failed to demonstrate good cause for waiting until February 10, 2011, to seek
leave to file an amended complaint. Foley claims the evidence was recently discovered, but fails to
demonstrate that reasonable diligence would not have resulted in earlier discovery. Cf. Nourison Rug
Corp., 535 F.3d at 298-99; God~ 247 F.RD. at 507-08. Thus, Foley has failed to meet her burden
to show good cause. See God~ 247 F.RD. at 506. Therefore, plaintiff's motion for leave to file
an amended complaint is denied.
II.

As for Otis's motion for partial summary judgment, summary judgment is appropriate when,
after reviewing the record taken as a whole, there is no genuine dispute as to any material fact and the
moving party is entitled to judgment as a matter oflaw. Fed. R Civ. P. 56(a); Anderson v. Liberty
Lobby. Inc., 477 U.S. 242,247-48 (1986). The party seeking summary judgment bears the initial
burden ofdemonstrating the absence ofa genuine dispute as to any material fact. See Celotex Corp.
v. Catrett, 477 U.S. 317,323 (1986). Once the moving party has met its burden, the nonmoving party
may not rest on the allegations or denials in its pleading, Anderson, 477 U.S. at 248-49, but "must
come forward with specific facts showing tha:t there is a genuine issue for trial." Matsushita Elec.

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Indus. Co. v. Zenith Radio Com., 475 U.S. 574, 587 (1986) (emphasis removed) (quotation omitted).
A trial court reviewing a motion for summary judgment should determine whether a genuine issue
ofmaterial fact exists for trial. AndersoD, 477 U.S. at 249. In making this determination, the court
must view the evidence and draw reasonable inferences in the light most favorable to the nonmoving
party. Scott v. Harris, 550 U.S. 372, 378 (2007).
The court has jurisdiction based on diversity, and North Carolina law governs Foley's breach
of contract claim. As such, this court must determine how the Supreme Court of North Carolina
would rule. See Twin City Fire Ins. Co. v. Ben Arnold-Sunbelt Beverage Co., 433 F.3d 365, 369 (4th
Cir. 2005). "Ifthe Supreme Court of [North] Carolina has spoken neither directly nor indirectly on
the particular issue before us, we are called upon to predict how that court would rule if presented
with the issue." ld. (quotation omitted). In making that prediction, the court may consider lower
court opinions in North Carolina, treatises, and the practices of other states. See id.
On June 6, 2000, Otis entered into a maintenance contract with the hospital to perform
maintenance on the hospital elevators. The contract states that Otis would inspect and repair the
elevators and that the maintenance service was "intended to protect [the hospital's] investment,
extend equipment life, and provide a high level of performance and reliability." See Def.'s Mem.
Supp. Mot. Partial Summ. J., Ex. A at 1.
Foley contends that as a hospital employee, she was in privity of contract with Otis and is
thereby entitled to receive contractual performance by Otis in servicing the elevator. See Compl. ~
18. Under North Carolina law, an employee is not in privity of contract with a party who contracted
only with the employer. See,~, Brendle v. Gen. Tire & Rubber Co., 505 F .2d 243, 245-46 (4th Cir.
1974) (applying North Carolina law); Wyatt v. N.C. Equip. Co., 253 N.C. 355, 359-60,117 S.E.2d

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21,24-25 (1960). Accordingly, as a stranger to the contract between Otis and the hospital, Foley
cannot recover for breach of contract.
Alternatively, Foley contends that she was an intended direct third-party beneficiary of the
contract between Otis and the hospital; therefore, Foley claims she should be able to recover damages
for breach of contract. Under North Carolina law, despite a lack of privity, a third party who
demonstrates that a contract is intended for her direct benefit may sue on the contract for performance
ordamages. See,~, Vogel v.Reed Supply Co., 277N.C. 119, 127-28, 177 S.E.2d273, 278 (1970).
"The test, then, in third-party beneficiary cases, is whether the parties to the contract intended to
confer a benefit directly upon the person so claiming, or whether the benefit to the claimant was
merely incidental." Alva v. Cloninger, 51 N.C. App. 602, 607, 277 S.E.2d 535, 539 (1981). "When
a party seeks enforcement of a contract as a third-party beneficiary, the contract must be construed
strictly against the party seeking enforcement." Michael v. Huffinan Oil Co., 190 N.C. App. 256,
269,661 S.E.2d 1, 10 (2008).
Here, Foley was merely an incidental beneficiary ofthe contract. The contract states that its
purpose was ''to protect [the hospital's] investment, extend equipment life, and provide a high level
ofperformance and reliability." Def.'s Mem. Supp. Mot. Partial Summ. J., Ex. A at 1. Moreover,
no evidence suggests that Otis or the hospital provided the contract to Foley. Furthermore, the
contract does not state that the parties entered the contract to directly benefit third parties, and nothing
in the contract or the circumstances surrounding the transaction suggests such an intent. As such,
Otis is entitled to summary judgment. See, ~ G.E.B .. Inc. v. QVC. Inc., 129 F. Supp. 2d 856, 860
(M.D.N.C. 2000) (applying North Carolina law); Spaulding v. Honeywell Int'I. Inc., 184 N.C. App.
317,324-26,646 S.E.2d 645,650-52 (2007); Hoisington v. ZT-Winston-Salem Assocs., 133 N.C.
App,485,490-94,516S.E.2d 176, 180-83 (1999);Alv~ 51 N.C. App. at 608-09, 277 S.E.2dat539.

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Finally, the court rejects Foley's argument that the testimony and report of Stephen Carr,
Ph.D., creates a genuine issue ofmaterial fact with respect to Foley's breach ofcontract claim. Even
assuming that Carr's testimony and report are admissible concerning the legal conclusion that Foley
was an intended third-party beneficiary, Carr's testimony does not create a genuine issue ofmaterial
fact.

Cf.,~,

Wagoner v. Elkin City Schools' Bd. ofEduc., 113 N.C. App. 579, 583-88, 440 S.E.2d

119, 122-25 (1 994}. Likewise, Potter v. Carolina Water Co., 253 N.C. 112, 116 S.E.2d 374 (1 960},
provides no comfort to Foley given that this case (unlike Potter) does not involve a contract between
a public service corporation and a municipality. Moreover, nothing suggest that the North Carolina
Supreme Court would extend Potter to this case. Cf. Twin City Fire Ins. Co., 433 F.3d at 369.

m.
In sum, the court DENIES plaintiff's motion for leave to file an amended complaint [D.E. 14],

GRANTS defendant's motion for partial summary judgment [D.E. 21], and DISMISSES plaintiff's
breach of contract claim.
SO ORDERED. This JJ" day of May 2011.

~A''''~Vo.A

JSC,DEVERm
United States District Judge

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