Perkins v. Stars and Stripes Realty, Inc.

          ORDER RE PENDING MOTIONS

          SHARON L. GLEASON UNITED STATES DISTRICT JUDGE.

         Plaintiff Charles J. Perkins initiated this action in Alaska state court seeking personal injury damages arising from an incident that occurred on February 24, 2014. The Complaint alleges that Mr. Perkins fell through an open crawl space access panel in a home that had been repossessed by the Veteran Affairs Administration.^[1]

         Now pending before the Court are two motions: (1) Stars and Stripes' Motion for Ruling of Law at Docket 16;^[2] and (2) Vendor Resource Management's (VRM) Motion to Dismiss or, in Alternative, for Partial Summary Judgment at Docket 36.^[3] Plaintiff filed oppositions to both motions (Docket 32 and Docket 44), to which the movants replied (Docket 41 and Docket 48). Oral argument was not requested and was not necessary to the Court's determination.

         I. VRM's Motion to Dismiss

         VRM seeks dismissal of Plaintiff's personal injury claims against it on the ground that Plaintiff failed to sue VRM before Alaska's two-year statute of limitations for tort claims expired.^[4]

         Plaintiff sustained his injury on February 24, 2014. The statute of limitations thus expired on February 24, 2016. Plaintiff's initial complaint was filed on January 30, 2015 and asserted claims against Stars & Stripes Realty, Inc. (“Stars and Stripes”), the listing realtor and selling agent of the property.^[5] On September 17, 2015-230 days later- Stars and Stripes filed a third-party complaint for allocation of fault against VRM, the entity retained by the Department of Veterans Affairs to conduct property preservation work in anticipation of the home's sale.^[6] But Stars and Stripes dismissed its third-party complaint on April 8, 2016, after determining that its agreement with VRM required Stars and Stripes to defend and indemnify VRM from claims arising out of the listing of the subject property.^[7]

         At the time of that dismissal, the statute of limitations had lapsed and Plaintiff had asserted no claims directly against VRM. But on July 29, 2016, Plaintiff moved to amend its complaint to add VRM as a defendant.^[8] The state court granted that order, ^[9] and on August 28, 2016, the First Amended Civil Complaint was filed.^[10] VRM then removed the case to the district court on the basis of 28 U.S.C. § 1442(a)(1) and 28 U.S.C. § 1331.^[11]

         It is undisputed that Plaintiff did not assert any direct claims against VRM until after the expiration of the two-year statute of limitations.^[12] Plaintiff and VRM both recognize that Plaintiff's claims against VRM can proceed only if they “relate back” to the filing of the initial complaint.^[13]

         Alaska Rule of Civil Procedure 15(c)^[14] provides:

Whenever the claim or defense asserted in the amended pleading arose out of the conduct, transaction or occurrence set forth or attempted to be set forth in the original pleading, the amendment relates back to the date of the original pleading. An amendment changing the party against whom a claim is asserted relates back if the foregoing provision is satisfied and, within the period provided by Rule 4(j) for service of the summons and complaint, that party (1) has received such notice of the institution of the action that the party will not be prejudiced in maintaining a defense on the merits, and (2) knew or should have known that, but for a mistake concerning the identity of the proper party, the action would have been brought against the party.

         This rule thus sets out a four-part test for whether the relation-back doctrine applies to an amended complaint changing or adding a new defendant.^[15] First, the amended complaint must have arisen from the same “conduct, transaction, or occurrence” as set forth in the initial complaint. This element is not contested. Second, the new party must have “received such notice of the institution of the action that the party will not be prejudiced.” Third, the new party must have known, or should have known that “but for a mistake concerning the identity of the proper party, the action would have been brought against the party.” Fourth, and most important for purposes of this motion, the second and third requirements must have been fulfilled “within the period provided by Rule 4(j) for service of the summons and complaint.” Here, VRM unquestionably was given notice of the action before expiration of the statute of limitations period when it was named as a third-party defendant. But the relevant inquiry is not whether VRM had notice within the period of limitations; Rule 15(c) provides that notice must be “within the period provided by Rule 4(j) for service of the summons of the complaint.” Alaska Civil Rule 4(j) provides that service must be made within 120 days of filing of the complaint or within another period established by the court for good cause shown.^[16]

         The state court did not extend the deadline for service; both of the then-named defendants were served within the 120-day period.^[17] VRM received notice of the action on or about September 21, 2015, when Stars and Stripes served it with the third-party complaint-230 days after Plaintiff filed his complaint.^[18] Because this notice was outside the period prescribed by Rule 15(c), under the terms of that rule Plaintiff cannot rely on the relation-back doctrine to resuscitate any claims against VRM.

         Plaintiff asks the Court to consider the unique facts of this case to avoid this consequence.^[19] Plaintiff stresses that VRM had actual notice of the action when it was named as a third-party defendant within the limitations period. Thus, Plaintiff maintains, it would be unfair to rely on the technicality of the service period so as to preclude the relation back to Plaintiff's initial complaint. Rather, Plaintiff asserts that Rule 15(c) should be interpreted expansively so as to permit his claim against VRM to proceed.

         But the equities in this case cut both ways. As Wright & Miller explains in its discussion of the related federal rule, whether the relation-back doctrine should apply turns on “what the prospective defendant reasonably should have understood about the plaintiff's intent in filing the original complaint against the first defendant.” A court should also consider how “the plaintiff's postfiling conduct informs the prospective defendant's understanding of whether the plaintiff initially made a mistake concerning the proper party's identity.”^[20] Although VRM had notice of Plaintiff's action within the period of limitations, VRM did not have notice during that time that Plaintiff intended to seek recovery from VRM, but for some mistake. Instead, Plaintiff did not seek to add VRM as a direct defendant until almost a year after VRM had been added as a third-party defendant. This long period of inaction would reasonably communicate to VRM that Plaintiff did not intend to pursue any claims against VRM directly.

         In Boerger v. Commerce Insurance, a case raising analogous issues under the federal rules, the plaintiff sued his insurance agents following a fire. He contended that the agents had been negligent in failing to procure adequate insurance and sought the difference between the full loss and the insured loss. The agents brought a third-party action against the insurer within the two-year statute of limitations for commercial liability, but outside the period for service of the original complaint. Plaintiff then, and outside the period of limitations, sought to add the insurer as a direct defendant.^[21] The district court denied leave to amend, concluding that the insurer “was not on notice of its potential involvement as a direct defendant within the 120-day time period.”^[22]

         In this case, just as in Boerger, Plaintiff was well aware of the third-party defendant's identity and role in underlying events within the statute of limitations, yet failed to bring any direct claims against VRM during that period. Plaintiff was aware of VRM's potential liability since at least September 14, 2015, the date Stars and Stripes joined VRM as a third-party defendant for the purpose of allocation of fault.^[23] Even if Plaintiff did not learn of VRM's identity until that time, he had from September 14, 2015 until February 23, 2016 to add VRM as a direct defendant.^[24] And, at the same time, Plaintiff cannot show that on or before either May 30, 2015 (when the 120-day service period lapsed), or February 23, 2016 (when the statute of limitations lapsed), VRM “knew or should have known that, but for a mistake concerning the identity of the proper party, the action would have been brought against [VRM].” Therefore, the claims Plaintiff seeks to bring against VRM do not relate back to the date of his initial complaint, even if Rule 15(c) is read as expansively as proposed by Plaintiff.^[25]

         Plaintiff also argues that there is an identity of interests between Stars and Stripes and VRM such that the timely assertions of claims against Stars and Stripes should be imputed to VRM. But Plaintiff fails to show that there was a sufficient nexus between VRM and Stars and Stripes, two separate entities who contracted for the provision of licensed services, to establish the required “identity of interest.”^[26] And even assuming notice to Stars and Stripes could be imputed to VRM, Plaintiff has not shown that the failure to initially identify VRM as a defendant was due to a mistake.^[27] Plaintiff contends he did not initially name VRM as a defendant because “it was unclear who actually owned” the property.^[28] But Plaintiff was put on notice of the VA's purported ownership of the property no later than the filing of the third-party complaint in September 2015, ^[29] and if there was any question as to ownership, Plaintiff could also have examined the relevant land records.

         But more importantly, Plaintiff never sued any other party as an owner: in his initial complaint, Plaintiff recognized Stars and Stripes as “the Alaskan Listing Realtor, ” not as the owner.^[30] Ms. Allen, the other named defendant, was identified in the initial complaint as “the girlfriend of Mr. Leslie Price, who had contracted . . . to purchase” the property.^[31]If anything, in the initial complaint Plaintiff ascribed ownership either to Mr. Price (who had the house under contract) or the Department of Veterans Affairs.^[32] But Plaintiff, for whatever reason, named neither Mr. Price nor the VA as a defendant in the initial complaint. Plaintiff cannot claim a mistake as to the identity of the proper owner of the property when Plaintiff never sought-until the late amendment-to sue any potential owner. A tactical decision to omit a possible class of defendant “bars the application of the relation-back doctrine.”^[33] Plaintiff has not demonstrated that he made a mistake as to the true owner of the property; Plaintiff never sought to sue the owner of the property until after the statute of limitations had expired.

         Because Plaintiff did not bring his direct claims against VRM within the applicable two-year statute of limitations period, and because Plaintiff cannot rely on the relation-back doctrine, Plaintiff's claims against VRM must be dismissed as time-barred.

         II. Notice of ...