Indiana: What to Do When Discovering After the Statute of Limitations Expires That the Wrong Party Was Named?

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by: Colin E. Flora

     Today we turn our attention to Webb v. City of Carmel from the Court of Appeals of Indiana. Of the numerous aspects covered in the decision, the most notable is the problem of what to do when you discover the wrong party has been named as a defendant but the statute of limitations has expired? But we will also look to the specifics of Webb and address whether the court made a mistake by finding that the evidence of the non-movant at summary judgment was insufficient despite making no mention of any evidence by the moving parties. Before answering that question, we need to start with what happened in the case.

     On June 20, 2014, the plaintiff was injured on property in Carmel, Indiana. Two and a half weeks later, she filed a tort claim notice on the Mayor of Carmel. On May 25, 2016, she filed suit against the City of Carmel for her injuries. On June 16, 2016, four days before the expiration of the applicable two-year statute of limitations, counsel for the city told the plaintiff’s counsel that the city did not own or control the property at issue. On the second anniversary of her injury, the city provided documents to the plaintiff showing that the property was owned by the Carmel Clay Parks Building Corporation (the “Corporation”) and that the property was operated by the Carmel/Clay Board of Parks & Recreation (the “Park Board”). The same documents were later provided in discovery on September 13. The city then moved for summary judgment, on November 4, asserting that it neither owned nor controlled the property. In response, the plaintiff sought leave to file an amended complaint to add the Corporation and the Park Board on December 28. That motion was granted the next day and the complaint was filed on the penultimate day of 2016. After the trial court ruled the summary judgment was mooted by the amended complaint, the additional defendants and the city again moved for summary judgment arguing that the city still could not be liable and that the claims against the other defendants were barred by the statute of limitations as untimely. The trial court agreed and dismissed the case. An appeal ensued.

     There is no doubt that the claims against the Corporation and the Park Board were not brought within the two-year statute of limitations. So does that end the issue right then and there? No. So what then determines when a claim is too late? Well the answer is a two-step process. The first step is to determine whether a claim has been filed within the applicable statute of limitations. If it has not, then the matter is done. Now, mind you, there are various mechanisms for extending the statute of limitations, but if none apply and the case is not timely filed, then that is it. But, if as happened in Webb a claim is filed by not every defendant is named or the wrong defendant is named, then we turn to Trial Rule 15(C).

     Let us take a look at the text of Rule 15(C):

(C) Relation back of amendments. --  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 one hundred and twenty (120) days of commencement of the action, the party to be brought in by amendment:

(1) Has received such notice of the institution of the action that he will not be prejudiced in maintaining his 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 him.

The requirement of subsections (1) and (2) hereof with respect to a governmental organization to be brought into the action as defendant is satisfied:

(1) In the case of a state or governmental organization by delivery or mailing of process to the attorney general or to a governmental executive [Rule 4.6(A)(3)]; or

(2) In the case of a local governmental organization, by delivery or mailing of process to its attorney as provided by statute, to a governmental executive thereof [Rule 4.6(A)(4)], or to the officer holding the office if suit is against the officer or an office.

     The crucial key that proved determinative in this case is that the would-be defendant must have notice of the action and that it should have known it was a proper party to the case within one hundred twenty days of filing the case. Now, that does not mean a new party cannot be added more than one hundred twenty days after the case was filed. That can still be done. What it means, however, is that in order to add that new party and have that party deemed added as of the date the case was filed, the notice and knowledge must be had within one hundred twenty days. That is only a problem if the statute of limitations expires between the time the case was filed and the time the new party is added, which is exactly what happened in Webb.

     That brings us to how the court applied Rule 15(C) in Webb:

The Amended Complaint alleged that the incident in which Webb was injured occurred on June 20, 2014. In Indiana, a claim for personal injury must be commenced within two years after the cause of action accrues. Therefore, the statute of limitations expired on June 20, 2016. “The onus of bringing suit against the proper party within the statute of limitation is upon the claimant.”

Webb does not dispute that the Amended Complaint was filed after the statute of limitations expired as to her initial claim. Rather, she argues that the Amended Complaint relates back pursuant to Trial Rule 15(C). Generally, a new defendant to a claim must be added prior to the running of the statute of limitations; however, Trial Rule 15(C) provides an exception to that rule by allowing the amendment to relate back to the date of the original complaint under certain circumstances. . . .

* * * * *

. . . [I]n order for an amended complaint changing the party against whom the claim is brought to relate back it must meet the following requirements: (1) the claim in the amended complaint must have arisen out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original complaint; (2) within 120 days after the commencement of the action, the party to be brought into the action must have received notice of the institution of the action that it will not be prejudiced in maintaining a defense on the merits; and (3) within 120 days after commencement of the action, the party 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 to be brought in by the amendment. “The party who seeks the benefit of the relation back doctrine bears the burden of proving that the conditions of Trial Rule 15(C) are met.”

     The plaintiff’s first argument was that it did not matter whether Rule 15(C) was satisfied because of the text of the order granting leave to amend in December 2016 and that the city did not object. Regardless of what the text of the order said and that the city did not object, the simple fact is that the Corporation and the Park Board were not yet parties to the action, “and pursuant to Indiana Trial Rule 4, the trial court did not have jurisdiction over them because they had not yet been served with a summons or complaint and had not yet entered an appearance.” In relevant part, Trial Rule 4 states, “The court acquires jurisdiction over a party or person who under these rules commences or joins in the action, is served with summons or enters an appearance, or who is subjected to the power of the court under any other law.” As a result, the prior order and lack of objection could not foreclose the Corporation and the Park Board from contesting the decision to add them to the case.

     The court then turned its attention to applying the three-part analysis it laid out. As to the first part, no one contested that the claim arose from the same transaction or occurrence, so that part was satisfied. But the second part, that the would-be defendant had notice of the action, was very much contested, and it was a contest that the plaintiff did not win:

Here, the 120-day period from the date of the original complaint extended to September 22, 2016. Prior to that date, there was no evidence to suggest that the Corporation and the Park Board had any notice, actual or constructive, of Webb’s legal action filed against Carmel. Although Trial Rule 15(C) does not require service of process on the new defendant, “notice of the pending of the claim must be such that the added party received either actual or constructive notice of the legal action.” The defendant to be added must have received notice of the institution of the action that the defendant will not be prejudiced in maintaining a defense on the merits. It is not sufficient that the party is on notice that an injury has occurred or that the plaintiff has retained counsel. Here, there was no evidence that the Corporation and the Park Board received any actual or constructive notice of Webb’s original complaint against Carmel within the 120-day time period.

     There is an important point to be clarified here. I have little doubt that future defendants will try to argue that this case stands for the proposition that simply because the would-be defendant has the same insurer as an existing defendant is not enough. The reason they’d make that argument is because, after they were added to the case, each defendant was represented by the same attorney who is with Travelers Staff Counsel Indiana. Now it may absolutely be correct that each defendant had insurance through the same Travelers Insurance entity. But that evidence was not present in the case. Earlier in the decision, addressing a motion to strike part of the plaintiff’s affidavit, the court wrote:

Fourth, the trial court granted the Appellees’ motion to strike Webb’s statement “All remaining Defendants have the same insurance carrier, Travelers,” holding that this assertion was not supported by any properly designated evidence before the trial court. Webb contends that it “is disingenuous, misleading and a misrepresentation for defense counsel to even suggest that all remaining defendants do not have the same insurance carrier” because all of the defendants are represented by an attorney from Travelers Staff Counsel Indiana. There is nothing in the record to support Webb’s claim that parties represented by the same attorney must therefore also be represented by the same insurance carrier. Therefore, the trial court did not abuse its discretion when it granted the Appellees’ motion to strike.

Consequently, this case does not foreclose a finding that the same insurer having knowledge is sufficient. All the court actually found is that there was no evidence to establish that it was the same insurer.

     There is yet one additional wrinkle. If it would be sufficient for purposes of relation back that the defendants had the same insurer, then I think both the trial court and the court of appeals misapplied the summary judgment standard. What we are left with is no evidence as to who the insurer was for each party. That would be enough to meet the federal summary judgment standard because that standard allows a defendant to test the plaintiff’s basic claim. But, as we’ve discussed, that is not enough under the Indiana standard. The burden in Indiana is on the moving party to foreclose all reasonable inferences. The Indiana Supreme Court has said, “The movant must designate sufficient evidence to foreclose the nonmovant’s reasonable inferences and eliminate any genuine factual issues.” In the circumstance of the parties being represented by the same captive counsel, it is certainly reasonable to infer that they may each have the same insurer.

     And that problem is not confined to the question of the same insurer. It appears throughout the opinion that the court was not addressing the case from the posture of the defendants, as movants, bearing the evidentiary burden. Instead, as you see in the excerpt above—“Prior to that date, there was no evidence to suggest that the Corporation and the Park Board had any notice, actual or constructive, of Webb’s legal action filed against Carmel.”—the court did not answer whether there was evidence to show that the Corporation and the Park Board did not have notice. The same is true in the remaining portion of the opinion:

Moreover, there was no showing of a basis to impute knowledge of the filing of Webb’s original complaint to the Corporation and the Park Board. “Notice of the lawsuit may be actual notice or constructive notice, which may be inferred based on either the identity of interest between the old and new parties or the fact that they share attorneys.” “An identity of interest may permit notice to be imputed to the added party when the original and added party are so closely related in business or other activities that it is fair to presume that the added part[y] learned of the institution of the action shortly after it was commenced.” No evidence was presented to show that Carmel and the Corporation and the Park Board were so closely related in business or other activities that it would be fair to presume that the Corporation and the Park Board learned of the action against Carmel in the 120-day time period.

Notice may also be imputed based on shared legal counsel if it is reasonable to infer that the attorney for the initial party will have communicated to the added party that it may be joined in the action. Webb argues that the Corporation and the Park Board received sufficient notice of the institution of the action against Carmel because they shared counsel with Carmel, and therefore, notice may be imputed because it is reasonable to infer that Carmel’s attorney would have communicated to the Corporation and the Park Board that they may be joined in Webb’s action against Carmel. However, there was no designated evidence presented that supported Webb’s contention that parties shared legal counsel prior to the end of the 120-day period. The evidence most favorable to Webb reveals that counsel for Carmel entered an appearance on June 13, 2016. Webb designated evidence that an appearance was filed on behalf of the Corporation and the Park Board on January 17, 2017 by the same attorney representing Carmel. Although this evidence indicates that the parties were represented by the same attorney on January 17, 2017, it does not establish that they shared the same counsel at any time prior, specifically during the 120-day period after the original complaint was filed. No evidence was presented that the parties shared counsel prior to the filing of the Amended Complaint or during the 120-day period such that the Corporation and the Park Board can be said to have received such notice of the institution of the action against Carmel that the added parties will not be prejudiced in maintaining a defense on the merits. Therefore, there was no basis to impute knowledge of the filing of Webb’s original complaint to the Corporation and the Park Board.

     Again, the focus of the court was whether the plaintiff had provided evidence to show that Trial Rule 15(C) applies. But the challenge was on summary-judgment grounds under Trial Rule 56. And simply finding that the non-movant hasn’t provided sufficient evidence is not the proper analysis in Indiana state courts.

     I had the privilege of attending a panel discussion attended by the full now-retired panel of the Indiana Supreme Court that was in place in 2003. That group was together for just shy of eleven years. As they discussed, easily one of the most contentious cases that came before the court was Reeder v. Harper. It split the court 3-2 over the issue of whether a case could progress past summary judgment where the only evidence submitted on behalf of the plaintiff was an affidavit that could never be admitted at trial. As Justice Boehm characterized it repeatedly in the discussion and wrote in his dissent, it was a case where “there will be literally no evidence to support a verdict [at trial] for the plaintiff and a directed verdict will be required.” Yet, Indiana’s summary judgment procedure dictated that the plaintiff got his day in court because the defendants did not sufficiently foreclose the inferences in the plaintiffs’ favor.

     More recently, the unanimous Indiana Supreme Court handed down Hughley v. State, wherein it wrote:

Even though Indiana Trial Rule 56 is nearly identical to Federal Rule of Civil Procedure 56, we have long recognized that “Indiana’s summary judgment procedure . . . diverges from federal summary judgment practice.” In particular, while federal practice permits the moving party to merely show that the party carrying the burden of proof lacks evidence on a necessary element, we impose a more onerous burden: to affirmatively “negate an opponent’s claim.” Our choice to heighten the summary judgment burden has been criticized because it may let summary judgment be precluded by as little as a non-movant’s “mere designation of a self-serving affidavit.”

That observation is accurate, but using it as the basis for criticism overlooks the policy behind that heightened standard.Summary judgment “is a desirable tool to allow the trial court to dispose of cases where only legal issues exist.” But it is also a “blunt . . . instrument,” by which “the non-prevailing party is prevented from having his day in court,” We have therefore cautioned that summary judgment “is not a summary trial,”; and the Court of Appeals has often rightly observed that it “is not appropriate merely because the non-movant appears unlikely to prevail at trial.” In essence, Indiana consciously errs on the side of letting marginal cases proceed to trial on the merits, rather than risk short-circuiting meritorious claims. And with that relatively high bar in mind, we turn to the Court of Appeals decision.

     I don’t know what the evidence was in Webb beyond what the court of appeals wrote in the opinion. Perhaps there was sufficient evidence put forth to support summary judgment for the defendants. All it would have taken was an affidavit by someone with knowledge saying that the Corporation and the Park Board were not insured by the same insurer as the city and that the Corporation and the Park Board did not have the same attorney as the city before September 22, 2016. That would have been enough if there was no contrary evidence or evidence calling that testimony into question. On the off chance that there was reason to call that testimony into question, then the Blinn/McCullough Rule may apply, which dictates that “[w]hen the facts are peculiarly in the knowledge of the movant's witnesses, there should be an opportunity to impeach them at trial, and their demeanor may be the most effective impeachment.”

     To be clear, I don’t think there was any such evidence put forward by the Corporation and the Park Board. I come to the conclusion based on the court stating, “The evidence most favorable to Webb reveals that counsel for Carmel entered an appearance on June 13, 2016. Webb designated evidence that an appearance was filed on behalf of the Corporation and the Park Board on January 17, 2017 by the same attorney representing Carmel. Although this evidence indicates that the parties were represented by the same attorney on January 17, 2017[.]” First, there’s no mention of what evidence the Corporation and Park Board designated. And, second, it is unlikely that the attorney became counsel for the Corporation and Park Board on the exact same day she filed an appearance on their behalves. That suggests that no evidence of the actual date on which she became their attorney was put forward. And if I am correct, then that, my friends, is an utter absence of evidence on a crucial issue the outcome of which would be determinative to this case. Because the Corporation and the Park Board appear not to have advanced any evidence, they did not carry their burden. Without carrying their burden, “the burden [never] shift[ed] to the non-movant to ‘come forward with contrary evidence showing an issue for the trier of fact.’”

     Once September 23, 2016 came around, this was always going to be an uphill battle for the plaintiff to add new defendants. Still, I think the Indiana Court of Appeals and, from what I can tell, the trial court got this one wrong based on misapplying the summary judgment standard. Even though I think the court of appeals got this one wrong, I do not think the Indiana Supreme Court will grant transfer. As a court of last resort, the Indiana Supreme Court, as it says, is not an error-correction court. That is, just because the court of appeals made an error is not sufficient grounds for the Indiana Supreme Court to hear the case. I think that’s probably how this case will end. Nevertheless, I encourage the plaintiff to request and the Indiana Supreme Court to grant transfer in this case and clean up the application of the summary judgment standard.

     Now, for those of you thinking that application of the summary judgment standard in this context is too harsh, there may have been an easier path: a motion to reconsider or to correct error instead of a motion for summary judgment. The problem here is that the case came as one in the posture of summary judgment, on which the weighty burden rests on the movant. But a motion to reconsider either under the inherent power of the court or Trial Rule 60(B)(8). [For an explanation of procedures for motions to reconsider, see Mitchell v. 10th & The Bypass, LLC and Celadon Trucking Servs., Inc. v. United Equip. Leasing, LLC (the latter was my case)]. While the burden will be on the party requesting reconsideration, the burden is much less than that on summary judgment: the party need only show that relief is necessary and just and that the request was brought in a reasonable time. Showing that the plaintiff had failed to provide sufficient grounds for leave to amend under Trial Rule 15(C) would be a much easier burden. Or, alternatively, the defendants could come forward with evidence to affirmatively show what happened instead of attempting to rely purely on the insufficiency of the plaintiff’s evidence. If the reality is that the Corporation and Park Board should win on this issue, then they should certainly have the evidence to show it. When balancing the injustices of depriving a justified party its day in court or requiring a party entitled to relief to be let out early from the case, the Indiana Supreme Court has said the balance favors trial.

     Join us again next time for further discussion of developments in the law.

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*Disclaimer: The author is licensed to practice in the state of Indiana. The information contained above is provided for informational purposes only and should not be construed as legal advice on any subject matter. Laws vary by state and region. Furthermore, the law is constantly changing. Thus, the information above may no longer be accurate at this time. No reader of this content, clients or otherwise, should act or refrain from acting on the basis of any content included herein without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue.