Mnzava v. Diverse Concepts, LLC (TV1)

Filing 54

MEMORANDUM OPINION AND ORDER granting 45 Motion to Amend/Correct. Plaintiff shall have fourteen (14) days from entry of this order to file the proposed amended complaint [Doc. 45-1] and serve it upon defendants. Signed by Chief District Judge Thomas A Varlan on 11/25/15. (JBR)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
AT KNOXVILLE
DAVID E. MNZAVA,
Plaintiff,
v.
DIVERSE CONCEPTS, LLC,
Defendant.

)
)
)
)
)
)
)
)
)

No.:

3:14-CV-386-TAV-CCS

MEMORANDUM OPINION AND ORDER
This civil action is before the Court on Plaintiff’s Motion for Leave to File
Amended Complaint and for Extension of Time for Service to Defendants [Doc. 45].
Defendant Diverse Concepts, LLC filed a response in opposition [Doc. 49]. Plaintiff did
not reply, and the time for doing so has passed. See E.D. Tenn. L.R. 7.1. For the reasons
set forth herein, the Court will grant plaintiff’s motion and allow amendment of the
complaint.
I.

Background
Plaintiff originally sued Diverse Concepts, LLC d/b/a Parkside Grill [Id. ¶ 2].

Plaintiff moved to amend the complaint to name Diverse Concepts, LLC and Parkside
Grill as separate defendants, asserting plaintiff had “believed that Defendant Parkside
Grill was an alias of Diverse Concepts, LLC, due to documents received from the
Tennessee Human Rights Commission concerning the administrative stage of this case”
[Doc. 9 p. 1]. Judge Shirley granted the motion to amend and afforded plaintiff an

extension of time to serve “the proper defendant” [Doc. 26]. In ruling on objections to
that order, the Court determined that plaintiff should not have been afforded leave to
amend the complaint to add Parkside Grill as a defendant because Parkside Grill is not a
legal entity [Doc. 48].
Before the Court ruled on the objection, plaintiff moved to amend the complaint to
omit Parkside Grill as a defendant and add NP Properties, LLC (“NP Properties”) as a
defendant [Doc. 45]. Plaintiff submits that the purpose of the motion is “to correct
Plaintiff’s error in identifying the Defendants by their proper legal names” [Id. ¶ 1].
More particularly, plaintiff submits that the legal name of Parkside Grill is NP Properties
and that NP Properties was plaintiff’s employer during the events giving rise to this
lawsuit [Id. ¶¶ 2–3, 9].
Defendant Diverse Concepts, LLC (“Diverse Concepts”) opposes the motion
[Doc. 49]. Defendant argues that the statute of limitations bars the proposed amendment
because it does not relate back and that the proposed amendment is therefore futile.
Defendant also argues that the deadlines for amending the complaint have passed.1
Finally, defendant asserts that the Court should deny the proposed amendment because of
undue delay, repeated failures to cure deficiencies, and undue prejudice to defendant.

1

After the filing of the response, the Court continued the trial in this matter upon the
motion of Diverse Concepts to amend the Scheduling Order [Doc. 52]. According to the
deadlines set forth in the Scheduling Order and the new trial date, the deadline for filing motions
to amend has not yet passed. The Court therefore finds this argument moot.
2

II.

Standard of Review
A party may amend its pleading once as a matter of course within twenty-one days

of serving it, or the earlier of twenty-one days of a defendant filing a responsive pleading
or serving a motion under Rule 12 (b), (e), or (f). Fed. R. Civ. P. 15(a)(1). “In all other
cases, a party may amend its pleading only with the opposing party’s written consent or
the court’s leave.” Fed. R. Civ. P. 15(a)(2). Here, leave of Court is required for any
amendment.
“The court should freely give leave when justice so requires.” Id. Leave is
appropriate “[i]n the absence of . . . undue delay, bad faith or dilatory motive on the part
of the movant, repeated failure to cure deficiencies by amendments previously allowed,
undue prejudice to the opposing party by virtue of allowance of the amendment, [or]
futility of the amendment.” Leary v. Daeschner, 349 F.3d 888, 905 (6th Cir. 2003)
(quoting Foman v. Davis, 371 U.S. 178, 182 (1962)); see also Courie v. Alcoa Wheel &
Forged Prods., 577 F.3d 625, 633 (6th Cir. 2009). “Amendment of a complaint is futile
when the proposed amendment would not permit the complaint to survive a motion to
dismiss.”

Miller v. Calhoun Cnty., 408 F.3d 803, 817 (6th Cir. 2005) (citing

Neighborhood Dev. Corp. v. Advisory Council on Historic Pres., 632 F.2d 21, 23 (6th
Cir. 1980)).
When a proposed amendment would occur outside the applicable statute of
limitations, a plaintiff must demonstrate that the complaint “relates back” to the initial
complaint. Rule 15(c) governs when an amendment relates back:
3

(1) When an Amendment Relates Back. An amendment to a
pleading relates back to the date of the original pleading when:
(A) the law that provides the applicable statute of limitations allows
relation back;
(B) the amendment asserts a claim or defense that arose out of the
conduct, transaction, or occurrence set out--or attempted to be set
out--in the original pleading; or
(C) the amendment changes the party or the naming of the party
against whom a claim is asserted, if Rule 15(c)(1)(B) is satisfied and
if, within the period provided by Rule 4(m) for serving the summons
and complaint, the party to be brought in by amendment:
(i) received such notice of the action that it will not be prejudiced in
defending on the merits; and
(ii) knew or should have known that the action would have been
brought against it, but for a mistake concerning the proper party’s
identity.
Fed. R. Civ. P. 15(c)(1). Accordingly, for an amendment to relate back under Rule
15(c)(1)(C), a plaintiff must demonstrate that (1) the claim asserted in the amendment
arises out of the conduct, transaction, or occurrence set forth in the original complaint; (2)
the added party received notice of the suit in the 120 days following the filing of the
original complaint; (3) the notice was such that the added party will not be prejudiced in
maintaining a defense on the merits; and (4) the added party knew or should have known
that but for a mistake the identity of the proper party, the action would have been brought
against it. Black-Hosang v. Ohio Dep’t of Public Safety, 96 F. App’x 372, 374–75 (6th
Cir. 2004); Moore v. City of Harriman, 272 F.3d 769, 774 (6th Cir. 2001).

4

III.

Analysis
The Court begins with whether the proposed amendment relates back. The parties

do not dispute that the proposed amendment arises out of the conduct, transaction, or
occurrence set forth in the original complaint. Defendant, however, disputes that NP
Properties received timely notice of the action. Defendant also asserts that plaintiff is
attempting to add a new party after the statute of limitations period has run, which is
barred by Sixth Circuit case law. Finally, defendant asserts that plaintiff did not make a
“mistake.”
In order to relate back, NP Properties had to have had notice of the action “within
the time period provided by Rule 4(m) for serving the summons and complaint.” Fed. R.
Civ. P. 15(c)(1)(C).

“The notice required by Rule 15(c) can be either actual or

constructive.” Beverly v. MEVA Formwork Sys., Inc., 500 F. App’x 391, 394 (6th Cir.
2012) (citations omitted).

“[I]n determining whether a newly-named defendant had

constructive notice of a lawsuit” the Sixth Circuit has instructed district courts to consider
“the relationship of the new defendants to the defendant(s) originally named, whether the
same attorney represented both the original and new defendants, and whether the
defendants are officials of the original defendant.”

Beverly, 500 F. App’x at 394

(citations omitted).
The Court finds that NP Properties had constructive notice, if not actual notice, of
plaintiff’s lawsuit.

Plaintiff asserts there is a “close business relationship between

Diverse Concepts, LLC and NP Properties, LLC,” as evidenced by Parkside Grill’s
5

website [Doc. 45 p. 4]. In addition, plaintiff asserts the companies share an office suite.
The record also indicates that the same attorneys have represented both defendant and NP
Properties [Id. at 3].
While defendant asserts NP Properties was not on notice within the 120-day
timeframe of Rule 4(m), defendant fails to recognize, as the Court has previously noted,
the Sixth Circuit has incorporated “Rule 4(m)’s 120-day baseline” as well as “Rule
4(m)’s good-cause baseline exception” into Rule 15’s notice deadline.

Jackson v.

Herrington, 393 F. App’x 348, 353 (6th Cir. 2010). The Court afforded plaintiff an
extension of time to effect service and the record demonstrates that NP Properties was on
notice within this timeframe.
Moreover, the Court finds that notice was such that NP Properties will not be
prejudiced in maintaining a defense on the merits. This action is in the infancy stages of
litigation. As defendant points out, there has been no written discovery or depositions.
That leaves the Court with determining whether NP Properties knew or should
have known that the action would have been brought against it, but for a mistake
concerning its identity. Defendant argues that plaintiff made no mistake and that Sixth
Circuit case law precludes relation back where the amendment adds a new party.
According to the Supreme Court, “[a] mistake is ‘[a]n error, misconception, or
misunderstanding; an erroneous belief.’” Krupski v. Costa Crociere S. p. A., 560 U.S.
538, 548 (2010) (second alteration in original and citation omitted). A district court “may
infer the absence of mistake only if the complaint and a plaintiff’s conduct together
6

demonstrate that a plaintiff sought some strategic advantage in naming the wrong
defendant in the original complaint.” Waite, Schneider, Bayless & Chesley Co., LPA v.
Davis, No. 1:11CV851, 2013 WL 4080712, at *4 (S.D. Ohio Aug. 13, 2013) (citing
Krupski, 560 U.S. at 552). Here, the Court finds plaintiff’s conduct cannot be considered
strategic. Put another way, there is no indication that plaintiff intentionally sued Parkside
Grill to gain advantage in this action. If anything, by suing Parkside Grill, defendant has
“disadvantaged himself.” See id. (finding the counter-plaintiff “disadvantaged himself”
in a malpractice lawsuit by suing the law firm when state law required that he sue the
individual attorneys responsible for his injuries). Moreover, the record indicates that
plaintiff wanted to sue his employer, he was just mistaken as to his employer’s identity.
And the Court notes, “[t]he reasonableness of the mistake is not itself at issue.” Krupski,
560 U.S. at 549.
Defendant is correct that Sixth Circuit precedent “holds that ‘an amendment which
adds a new party creates a new cause of action and there is no relation back to the
original filing for purposes of limitations,’” In re Kent Holland Die Casting & Plating,
Inc., 928 F.2d 1448, 1449 (6th Cir. 1991) (citation omitted), see also Asher v. Unarco
Material Handling, Inc., 596 F.3d 313, 318 (6th Cir. 2010), but that line of cases is
inapposite here. Plaintiff is attempting to substitute a party, specifically NP Properties
for Parkside Grill, which the Court previously dismissed because it is not a legal entity.
Allowing the amendment to substitute comports with “the purpose of relation back: to

7

balance the interests of the defendant protected by the statute of limitations with the
preference expressed in the Federal Rules of Civil Procedure in general, and Rule 15 in
particular, for resolving disputes on their merits.” Krupski, 560 U.S. at 550.
Accordingly, for these reasons, the Court finds the proposed amendment relates
back to the original complaint. That conclusion does not end the inquiry, however,
because defendant argues that the proposed amendment should be denied due to
plaintiff’s undue delay, repeated failures to cure deficiencies, and undue prejudice to
defendant. While the Court finds plaintiff delayed to some degree in amending the
complaint to name NP Properties as a defendant, the Sixth Circuit has instructed that to
deny leave to amend, the Court “must find both undue delay by the party seeking the
amendment and a substantial prejudice to the non-movant if leave is granted.” Dura
Operating Corp. v. Magna Int’l, No. 2:10-cv-11566, 2011 WL 1296990, at *4 (E.D.
Mich. Apr. 5, 2011) (citing Moore v. City of Paucah, 790 F.2d 557, 559–62 (6th Cir.
1986)). The Court does not find that the delay here has caused any undue prejudice to
defendant. As noted already, this action in in the infancy stages of litigation, and there
seems to be no issues regarding any loss of evidence or other hardship caused as a result
of plaintiff’s delay.
IV.

Conclusion
For the reasons set forth herein, the Court hereby GRANTS Plaintiff’s Motion for

Leave to File Amended Complaint and for Extension of Time for Service to Defendants

8

[Doc. 45]. Plaintiff shall have fourteen (14) days from entry of this order to file the
proposed amended complaint [Doc. 45-1] and serve it upon defendants.
IT IS SO ORDERED.

s/ Thomas A. Varlan
CHIEF UNITED STATES DISTRICT JUDGE

9