Significant Burden on Plaintiff When Adding Defendants After Statute of Limitations Has Run

The statute of limitations is a deadline on the filing of lawsuits, including personal injury and wrongful death claims. For personal injury/wrongful death claims against a private entity, the statute of limitations is 3 years. Seems simple enough.

Not so fast. There are often complications that can make meeting the deadline somewhat tricky. This was the case in the recent New Mexico Court of Appeals case of Snow v. Warren Power and Machinery.

In that case, the injured plaintiff filed a lawsuit against one party. As it turned out, there were other parties that perhaps shared responsibility for the injuries. The claims against these parties were not made within the applicable 3 years statute of limitations. Again, it is more complicated than that.

In this case, the plaintiff filed a motion to amend the original complaint to add the additional defendants on the last day within the statute of limitations. However, the amended complaint was not filed within the statute of limitations. To make matters worse, there was an additional, though short, delay in filing the amended complaint after the motion to amend had been granted.

The case raised a host of very interesting issues and fact patterns related to the running of the statute of limitations. Likewise, the case raised the issue of when and how the statute of limitations might be tolled (extended).

The district court dismissed the case against the added defendants on summary judgment. The plaintiff appealed arguing: 1) that because the new defendants had notice of the accident, the amended complaint should be related back to the original filing, and 2) filing the motion to amend tolled the statute of limitations.

Relation Back of the Amended Complaint Requires Notice and Knowledge of the Added Defendants

Here, we will limit the discussion to the relation of back issues with regard to the addition of parties after the statute of limitations has run. Equitable tolling is a topic deserving of its own separate discussion.

The Plaintiff invoked the New Mexico rule of civil procedure §1-015(C) for the relation back argument. Rule 1-015 (C) states that an amendment of the complaint to add additional parties will relate back when two conditions are met. For relation back it must be shown that the added party:

“(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 court noted that both conditions must be met in order for the amended complaint to relate back to the date of the original complaint.

Both Conditions, Notice and Knowledge, Must be Met

Thus, the court stated that the newly added party must have had “adequate notice of the institution of the action” and the defendant “knew, or should have known that, but for the mistake, the action would have been brought against it.” If both requirements are met, then the amended complaint does relate back to the date of original filing.

The Court stated that the rationale behind this rule was:

“to preclude use of the statute of limitations mechanically to prevent adjudication of a claim where the real parties in interest were sufficiently alerted to the proceedings or were involved in them unofficially from an early stage.”

In this case, there was no evidence that the added defendants met both prongs of the standard. In the case of one defendant, there was no notice of the lawsuit or knowledge that it would be sued. There was knowledge of the accident, but this is clearly insufficient for notice under New Mexico Law.

Knowledge of the Accident Is NOT Knowledge of the Lawsuit

In the case of the other defendant, subpoenas were actually served on it. As such, it had notice of the lawsuit but lacked knowledge under the law that it would be made a party.

As a result, the Court upheld the dismissal of both defendants added under the amended complaint. There was no relation back since the conditions were not met. As such, the statute of limitations was blown.

The Court suggested that sending the Motion to Amend to add the additional parties to those parties prior to the statute of limitations could have averted the problem. Likewise, it might have been sufficient to meet the conditions to send the proposed amended complaint.

This issue will come up more frequently than one might think. This case involved multiple, potentially liable, defendants. However, it is equally or perhaps more likely, that the failure to amend the correct party is due to confusing corporate identities, such as the use of dba’s, trade names, or multiple related entities. These might be innocent or they may be deliberately confusing to escape lawsuits and potential liability.

The Court did not actually directly address these situations. However, it seems that the same criteria for relating back would apply. The Court stated, that the critical question will be in all these cases of mistaken identity whether the plaintiff exercised due diligence in identifying the proper party. In this case, the parties and their potential liability were in the Court’s estimation easily discoverable and the failure to do so was no fault of the defendants.

It remains to be seen how this standard will be applied in other fact situations where the defendant have deliberately obfuscated its identity. It seems based upon the language and the criteria for relation back set forth by the Court that the presumptions would then be in favor of the plaintiffs.