Substitution Of Correct Defendant After Expiration Of Statute Of Limitations Denied

In Locklear v. Bergman & Beving AB, No. 04-2506, 2006 WL 2244532 (4th Cir. Aug. 7, 2006), a plaintiff sued a company it named “Hassleholms Mekanisk AB” in a products liability complaint filed shortly before the statute of limitations expired. Plaintiff claimed that company was the manufacturer of equipment responsible for his personal injuries.

Subsequently he learned that the manufacturers actually were entities called “Luna AB” and “Bergman & Beving AB.” After allowing him to amend the complaint to substitute those parties as defendants, the court dismissed the complaint as time-barred because the original complaint did not toll the statute of limitations against the new defendants under Fed. R. Civ. P. 15(c)(3).

In affirming, the Fourth Circuit noted that where the Rule speaks in terms of relation-back in the case of a “mistake concerning the identity of the proper party,” courts distinguish between “mistake due to a lack of knowledge and mistake due to a misnomer.” A complaint amended to correct a mere misnomer relates back to the original complaint for limitations purposes, but a correction such as the one in Locklear to add a new party that the plaintiff simply did not know about “drags a new defendant into the case” and does not relate back.

Defendant May Not Substitute Diverse Party Where Plaintiff Sued “Wrong” Entity

In Salazar v. Allstate Texas Lloyd’s, Inc., No. 04-41043 (5th Cir. July 10, 2006), plaintiff sued for breach of contract and bad faith the entity he believed was his insurer. That entity was a Texas resident, and plaintiff sued in state court. In fact, however, the issuer of the policy was Allstate Illinois, and if plaintiff had sued that company instead Allstate could have removed based on diversity.

Allstate Texas filed removal papers and then moved to add Allstate Illinois and dismiss Allstate Texas. The district court granted those motions and refused to remand the case.

The Fifth Circuit held that this type of substitution is improper. While Rules 17, 19 and 21 might apply in a typical misjoinder or fraudulent joinder case, here only one party had ever been named as a defendant. In that situation, the district court lacked jurisdiction at the outset and substitution could not be used to create federal jurisdiction.