NEW ENGLAND INTERCONNECT SYSTEMS, INC v. AEES, INC
Filing
42
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)
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,
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
I-year
has
already
court
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
Nelson v.
8
(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
a
AEES,
L.P.
(10)
days of the date of
Upon the filing of this complaint,
summons
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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