BANKRUPTCY TRUSTEE SHOULD HAVE BEEN SUBSITUTED AS PLAINTIFF UPON FILING OF BANKRUPTCY PETITION. ATTORNEY ERROR UNEXCUSED.
by John O’Brien Legal Newsline
LANSING, Mich. – The state’s statute of limitations expired before a plaintiff’s attorney could correct naming the wrong plaintiff, the Michigan Supreme Court recently said in affirming a motion dismissing the case.
In a 4-3 decision, the Supreme Court became the third court to side with the defendants despite a dissent from Justice Marilyn Kelly calling the basis for the decision “a contrived legal technicality” and the outcome “sad.”
Jason Liss, of Rockind and Liss in Farmington Hills, listed client Buddy Miller II as the plaintiff on an automobile accident lawsuit against four defendants filed in 2002.
However, Miller, who blamed the defendants for his injuries from a 2000 automobile accident, had declared bankruptcy before then, and Liss did not list the trustee of his bankruptcy estate, Wendy Turner Lewis, as the plaintiff. By the time Liss tried to correct his mistake, the statute of limitations had run out. Defendants Chapman Contracting, Sweepmaster, Inc., Ramzy Kizy Jr. and Kevin Paperd moved to have the case dismissed, arguing that the trustee was the proper plaintiff.
Both the trial court and Court of Appeals agreed with the defendants. The trial court would not allow leave to amend the pleadings, stating “Under MCR 2.118(A)(2), leave to amend pleadings should be freely given when justice so requires. Leave to amend should be denied only for particularized reasons, such as undue delay, bad faith or dilatory motive on the movant’s part, repeated failure to cure deficiencies by amendment previously allowed, undue prejudice to the opposing party, or where amendment would be futile.”
On Wednesday, the Supreme Court agreed.
“Moreover, this Court adds that MCR 2.118(D) specifies that an amendment relates back to the date of the original pleading only if it ‘adds a claim or a defense’; it does not specify that an amendment to add a new party also relates back to the date of the original pleading,” the per curiam opinion says.
“Consequently, the Court of Appeals correctly affirmed the judgment of the trial court that the amendment to substitute plaintiff’s bankruptcy trustee as plaintiff after the expiration of the period of limitations would be futile.”
Chief Justice Clifford Taylor and justices Maura Corrigan, Robert Young and Stephen Markman made up the majority.
Justice Elizabeth Weaver dissented, claiming the bankruptcy trustee is not a new party, but she would be “another party.”
Justice Kelly’s dissent, in which Justice Michael Cavanaugh joined, was much more scathing.
“A majority of the Court has affirmed the dismissal of this suit on the basis of a contrived legal technicality. It has misread MCR 2.118,” Kelly wrote. “In extinguishing the valid claim, it has allowed gamesmanship to take precedence over the orderly disposition of an injured party’s cause of action.
“The result is sad.”
Kelly continued, “Thus, the issue that controls the resolution of this case is whether relation back applies to an amendment that substitutes a party plaintiff. A majority of this Court has decided that it does not.
“This is an erroneous decision, one that allows a miscarriage of justice to go uncorrected. As Justice Hugo Black of the United States Supreme Court has observed, the ‘principal function of procedural rules should be to serve as useful guides to help, not hinder, persons who have a legal right to bring their problems before the courts.’”
The majority responded to Kelly’s comments in its opinion.
“Justice Kelly contends that, because MCR 2.118(D) does not specifically forbid an amendment to add a new party to relate back, this Court may rely on the ‘purpose’ and ‘basic policy’ of the relation-back rule and the statute of limitations. This overlooks, however, that the ‘purpose’ and ‘basic policy’ of a court rule, as with other expressions of the law, are normally communicated by their language,” the opinion says.
“In particular, it has been long understood that the expression of specific exceptions to the application of a law, as here, implies that there are no other exceptions.
“Moreover, Justice Kelly’s assertion that this Court is ‘allow[ing] gamesmanship to take precedence over the orderly disposition of an injured party’s cause of action’… simply ignores that defendants in their answer to plaintiff’s complaint provided plaintiff with notice of the defect that the wrong plaintiff had been named 12 days before the period of limitations expired.”
The Kentucky Rule re: Amendments is:
CR 15.01 AMENDMENTS
A party may amend his pleading once as a matter of course at any time before a responsive pleading is served or, if the pleading is one to which no responsive pleading is permitted and the action has not been placed upon the trial calendar, he may so amend it at any time within 20 days after it is served. Otherwise a party may amend his pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires. A party shall plead in response to an amended pleading within the time remaining for response to the original pleading or within 10 days after service of the amended pleading, whichever period may be longer, unless the court otherwise orders.
[Adopted eff. 7-1-53]