Tom v Pohnpei Utilities Corporation [1999] FMSC 25; 9 FSM Intrm. 82 (App. 1999) (19 March 1999)

FEDERATED STATES OF MICRONESIA
SUPREME COURT APPELLATE DIVISION
Cite as Tom v. Pohnpei Utilities Corp.[1999] FMSC 25; , 9 FSM Intrm. 82 (App. 1999)

[1999] FMSC 25; [9 FSM Intrm. 82]

DELTRING AND CATHY TOM and JOY ENTERPRISES, INC.,
Appellants,

vs.

POHNPEI UTILITIES CORPORATION,
Appellee.

APPEAL CASE NO. P2-1998

BEFORE:

Hon. Richard H. Benson, Associate Justice, FSM Supreme Court
Hon. Martin G. Yinug, Associate Justice, FSM Supreme Court
Hon. Camillo Noket, Temporary Justice, FSM Supreme Court*

*Associate Justice, Chuuk State Supreme Court, Weno, Chuuk

OPINION

Argued: January 15, 1999
Decided: March 19, 1999

APPEARANCES:

For the Appellants:
Stephen V. Finnen, Esq.
Saimon & Associates
P.O. Box 1450
Kolonia, Pohnpei FM 96941

For the Appellee:
Fredrick L. Ramp, Esq.
P.O. Box 1480
Kolonia, Pohnpei FM 96941

* * * *

HEADNOTES

Civil Procedure - Parties
Actions are prosecuted in the name of the real party in interest. An assignment passes title to the assignee so that he is the owner of any claim arising from the chose and should be treated as the real party in interest. When all rights to a claim have been assigned, courts generally have held that the assignor no longer may sue. Tom v. Pohnpei Utilities Corp., [1999] FMSC 25; 9 FSM Intrm. 82, 86 n.1 (App. 1999).

Civil Procedure - Pleadings
Although a court should exercise its discretion liberally to allow amended pleadings, a motion to amend a complaint may be denied if it is futile. One reason a motion to amend would be futile is if

[9 FSM Intrm. 83]

the claims sought to be added are barred by the relevant statute of limitations. Tom v. Pohnpei Utilities Corp., [1999] FMSC 25; 9 FSM Intrm. 82, 87 (App. 1999).

Civil Procedure - Pleadings
An amended pleading in a personal injury suit filed after the two year statute of limitations ran out would be futile unless it can be related back to an earlier date. Tom v. Pohnpei Utilities Corp., [1999] FMSC 25; 9 FSM Intrm. 82, 87 (App. 1999).

Civil Procedure - Pleadings
A mistake of identity as used in Rule 15(c) applies to misnomers, incorrect names, and mistakes concerning which official body is the proper defendant, but a mistake of legal judgment concerning who is responsible for the tort, where the plaintiff was fully aware of the identities of the defendant and potential defendants, is not the type of mistake of identity which can be corrected under Rule 15(c), with the amended pleading to relate back. Tom v. Pohnpei Utilities Corp., [1999] FMSC 25; 9 FSM Intrm. 82, 87 (App. 1999).

Civil Procedure
When an FSM Rule of Civil Procedure is nearly identical to a U.S. Federal Rule of Civil Procedure, the FSM Supreme Court may look to the U.S. federal courts for guidance in interpreting the rule. Tom v. Pohnpei Utilities Corp., [1999] FMSC 25; 9 FSM Intrm. 82, 87 n.2 (App. 1999).

Civil Procedure - Pleadings
When the plaintiffs were fully aware of the identity of the third-party defendant at least since the third-party complaint was filed, but do not seek to amend their complaint to proceed against that party until after the statute of limitations has run, they made no mistake of identity correctable under Rule 15(c) and the motion to amend is properly denied because the amendment is futile. Tom v. Pohnpei Utilities Corp., [1999] FMSC 25; 9 FSM Intrm. 82, 87 (App. 1999).

Civil Procedure - Intervention
Both intervention of right and permissive intervention must be upon timely application. Tom v. Pohnpei Utilities Corp., [1999] FMSC 25; 9 FSM Intrm. 82, 88 (App. 1999).

Civil Procedure - Intervention
Timeliness must be determined from all the circumstances of the case. There are four factors to consider when determining whether a motion to intervene is timely: 1) how long the applicant knew or should have known of his interest before making the motion; 2) the prejudice to existing parties resulting from any delay; 3) the prejudice to the applicant if the motion is denied; and 4) any unusual circumstances militating for or against a finding of timeliness. Tom v. Pohnpei Utilities Corp., [1999] FMSC 25; 9 FSM Intrm. 82, 88 (App. 1999).

Civil Procedure - Intervention
An application to intervene is untimely when the would-be intervenors knew or should have known of their interest against the potential defendant, the prejudice to the potential defendant was that it could be liable for a large sum for a claim for which it would not otherwise be liable because the statute of limitations had run, the prejudice to the would-be intervenors was that they would receive no more compensation than the $105,311.27 they had already received in a settlement, and the unusual circumstances militating against a finding of timeliness was that the would-be intervenors were the original plaintiffs in the lawsuit and had filed their case and had notice of the potential defendant well before the statute of limitations had run. Tom v. Pohnpei Utilities Corp., [1999] FMSC 25; 9 FSM Intrm. 82, 88 (App. 1999).

[9 FSM Intrm. 84]

Torts - Contribution
By statute, a tort-feasor who enters into a settlement agreement is not entitled to recover contribution from another tort-feasor whose liability for the injury or wrongful death is not extinguished by the settlement. Tom v. Pohnpei Utilities Corp., [1999] FMSC 25; 9 FSM Intrm. 82, 88 (App. 1999).

Torts - Contribution
By statute, a tort-feasor, against whom there is no judgment, and who has agreed while the action was pending against him to discharge the common liability, may sue for contribution within one year of the agreement if he has paid the liability. Tom v. Pohnpei Utilities Corp., [1999] FMSC 25; 9 FSM Intrm. 82, 88 (App. 1999).

Torts - Contribution
6 F.S.M.C. 1202(4) bars a contribution claim when a settlement agreement does not extinguish another tort-feasor's liability because that liability had already been extinguished by the relevant statute of limitations. Tom v. Pohnpei Utilities Corp., [1999] FMSC 25; 9 FSM Intrm. 82, 89 (App. 1999).

Torts - Contribution
A defendant is barred from seeking contribution from a joint-tortfeasor when its settlement agreement with the plaintiffs recites that the release does not affect either the plaintiffs' or the defendant's claims against the joint tort-feasor. Tom v. Pohnpei Utilities Corp., [1999] FMSC 25; 9 FSM Intrm. 82, 89 (App. 1999).

* * * *

COURT'S OPINION

RICHARD H. BENSON, Associate Justice:

This appeal arises from the trial court's denial of the plaintiffs' motion to file a second amended complaint and from its grant of summary judgment for the third-party defendant against the third-party plaintiff's claim for contribution and indemnity. We affirm the trial court's denial of the motion and its grant of summary judgment. Our reasoning follows.

I. Background

On January 27, 1995, Deltring Tom was painting the front exterior of Joy Hotel with a long-handled aluminum roller brush while standing on the hotel roof. The brush handle came in contact with some high voltage wires a little over seven feet away from the front of the hotel. The resulting shock severely injured Tom, causing severe burns requiring skin grafts over much of his torso and the loss of his right arm and two fingers on his left hand.

On July 2, 1996, Deltring Tom and his wife Cathy filed suit against Yukio and Rituko Suzuki in the Pohnpei Supreme Court seeking compensation for Deltring Tom's injuries and his wife's loss of consortium. The case was timely removed to the FSM Supreme Court. The Suzukis' answer, filed September 4, 1996, included a third-party complaint for contribution and indemnity from Pohnpei Utilities Corporation ("PUC") and for costs to relocate PUC's high voltage wires. On January 13, 1997, the Toms filed a First Amended Complaint, substituting Joy Enterprises, Inc. ("Joy") as defendant in place of the Suzukis because it was Tom's actual employer.

[9 FSM Intrm. 85]

A. December 17, 1997 Denial

On September 25, 1997, the Toms and Joy executed a Settlement Agreement and Release in which the Toms agreed to release and discharge Joy from liability. On September 30, 1997, the Toms and Joy filed a Stipulation and Order for Dismissal with Prejudice for all claims pending by each of the two parties against the other and a Substitution of Counsel, substituting the Toms' counsel for Joy's counsel. On October 3, 1997, a trial court order noted that the stipulation of dismissal had not been served on PUC and directed that it be. On October 6, 1997, PUC filed a concurrence with and stipulation to the dismissal. PUC requested the clerk to enter the dismissal and noted that the dismissal would leave open Joy's claims against PUC. On October 14, 1997, the Toms filed Plaintiff's[sic] Motion for a Second Amended Complaint, which sought to add negligence claims directly against PUC. On October 21, 1997, the trial judge signed and entered the Toms' and Joy's stipulated order of dismissal.

PUC then filed its opposition to the Toms' motion to amend. It asserted that the Toms were no longer parties since their claims against Joy had been dismissed and that the two-year statute of limitations for Tom's personal injury claims had run. A copy of the Settlement Agreement between the Toms and Joy was attached to PUC's opposition as Exhibit D. Settlement Agreement Part 1.b provided for Joy's assignment to the Toms of Joy's "choses in action" in its third party complaint against PUC. Part 1.e recited that the release did not affect the Toms' or Joy's claims against PUC. The Toms' reply contended that the statute of limitations did not apply because under Rule 15(c) the amendment would relate back to the date the Toms originally filed the case, that PUC had not complied with Rule 41(a)(1) so there had been no dismissal until the October 21st court order, and that even if there had been the Toms had the right to intervene under Rule 24.

On December 17, 1997, a trial court order, noting that the Toms could have filed a claim against PUC earlier, determined that because the Toms had dismissed their claims against Joy they were no longer parties to the litigation, and denied their motion to amend on the ground that the rules do not permit a non-party to amend a complaint. Order at 7-9 (Dec. 17, 1997). The trial court also concluded that the relation-back doctrine did not assist the Toms because there was no mistake of identity and that this was not a proper case for a Rule 24 intervention. Id. at 10.

B. June 30, 1998 Summary Judgment

On May 1, 1998, PUC moved for summary judgment on the third-party claims. The trial court granted the motion. It concluded that the applicable FSM statutes barred the contribution claim because the Settlement Agreement, by its terms did not intend to extinguish PUC's liability, although it might have had that unintended effect. Joy Enterprises, Inc. v. Pohnpei Utilities Corp., [1998] FMSC 14; 8 FSM Intrm. 306, 310-11 & n.4 (Pon. 1998). The trial court denied the indemnity claim because there was no contractual relationship between Joy and PUC that created a right to indemnity and the court was not prepared to create a common law right to indemnity. Id. at 311. The trial court dismissed the action with prejudice. The Toms and Joy, who had shared the same counsel since their settlement, then filed a Joint Notice of Appeal.

II. Issues Raised on Appeal and Relief Requested

The appellants raise three issues on appeal: 1) whether the trial court erred when it denied the Toms' motion to amend their complaint on the ground that the Toms were no longer parties to the action; 2) whether (in the alternative) the trial court abused its discretion when it did not allow the Toms to intervene under Civil Procedure Rule 24 to file a complaint against PUC; and 3) whether the trial court erred when it ruled that the settlement agreement between the Toms and Joy did not allow

[9 FSM Intrm. 86]

Joy to seek contribution from PUC under the Contribution Among Joint-Tortfeasors Act.

The appellants request the following relief: reversal as a matter of law of the trial court decision (Dec. 17, 1997) that the Toms were not parties when the motion to amend was filed and that the matter be remanded for the trial court to rule on the motion, or, in the alternative, that we grant the motion to file a second amended complaint; or, if the first request is not granted, reversal of the trial court decision (Dec. 17, 1997) that the Toms had no right to intervene and that their motion to intervene be granted; or, if neither of the first two requests is granted, then reversal of the June 30, 1998 summary judgment and that a decision be rendered as a matter of law that 6 F.S.M.C. 1202(4) and 6 F.S.M.C. 1204(4) do not bar Joy's contribution claim against PUC.

The appellants do not appeal the trial court's ruling that Joy is not entitled to indemnification from PUC. They also appear to have abandoned Joy's claim for compensation to relocate the power lines, probably because discovery showed that PUC has moved the lines to a safer distance.

III. Analysis

A. Denial of Motion to Amend

The Toms contend that when they filed their motion to amend they were still parties because the requirements of Rule 41(a)(1) were not satisfied. That rule provides in pertinent part that "an action may be dismissed by the plaintiff without order of court . .;. (ii) by filing a stipultipulation of dismissal signed by all parties who have appeared in the action." FSM Civ. R. 41(a)(1). The Toms note that there never was, and they did not file, a stied dismissal signed by all all parties to the action. The stipulation was signed only by the Toms and Joy. PUC never signed it, but instead later filed a separately signed "Concurrence," with a request that the court enter the dismissal. The Toms assert that therefore a court order was necessary to dismiss their claims pursuant to Rule 41(a)(2), which was not done until October 21, 1997, and that they were therefore still parties when they filed the October 14, 1997 motion to amend. For support, they rely on Labra v. Makaya, [1995] FMSC 4; 7 FSM Intrm. 75 (Pon. 1995) where the trial court refused to permit a voluntary dismissal until all defendants had agreed. The Toms also note that Joy's assignment of its claims to them means they are still the real parties in interest in the action.

PUC contends that the Toms were dismissed as parties by operation of Rule 41(a)(1), either when they filed the dismissal in September or when PUC filed its concurrence on October 6, 1997. Therefore, according to PUC, the Toms were not parties when they later filed their motion to amend.

We do not have to decide whether, in this situation, the Toms' claims were dismissed September 30, October 6, or October 21, 1997. Nor do we need to decide whether the Toms were valid assignees of Joy's third-party claims and thus were real parties in interest and still parties to the action.^[1] This is because the trial court gave an alternate ground for its denial. The trial court ruled that relation back would not help the Toms because it was "clearly not a situation in which 'but for a mistake concerning the identity of the proper party the action would have been brought against the party [against whom claims are now sought to be brought].'" Order at 9-10 (Dec. 17, 1997) (emphasis in original) (quoting FSM Civ. R. 15(c) (alteration in original)). The trial court concluded that "[n]o

[9 FSM Intrm. 87]

mistake of identity was made." Id. at 10.

Although a court should exercise its discretion liberally to allow amended pleadings, a motion to amend a complaint may be denied if it is futile. Mitsui Foods, Inc. v. United States, [1989] USCAFED 143; 867 F.2d 1401, 1403-04 (Fed. Cir. 1989). One reason a motion to amend a complaint would be futile is if the claims sought to be added are barred by the relevant statute of limitations. Northbrook Nat'l Ins. Co. v. J & R Vending Corp., 167 F.R.D. 643, 647 (E.D.N.Y. 1996).

The relevant statute of limitations for personal injuries is two years. Pon. S.L. No. 3L-99-95, § 7-6(4); 6 F.S.M.C.4). The sThe statute ran out January 27, 1997. The Toms' proposed October 14, 1997 amendment would thus be futile unless it can lated back to an earlier date. Rule 15(c) allows the relation back of amended pleadings. Its. It reads as follows:

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 law for commencing the action against the party to be brought in by amendment, that party (1) has received such notice of the institution of the action that the party 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 the party.

FSM Civ. R. 15(c). A mistake of identity as used in Rule 15(c) applies to misnomers, incorrect names, and mistakes concerning which official body is the proper defendant, but a mistake of legal judgment concerning who is responsible for the tort, where the plaintiff was fully aware of the identities of the defendant and potential defendants, is not the type of mistake of identity which can be corrected under Rule 15(c), with the amended pleading to relate back. Rendall-Speranza v. Nassim, [1997] USCADC 86; 107 F.3d 913, 917-19 (D.C. Cir. 1997) (interpreting a similar U.S. Rule 15(c)^[2]).

The Toms sought to amend their complaint to change the party against whom the negligence claim was made. They were fully aware of the identity of PUC at least since the third-party complaint was filed. They made no mistake of identity correctable under Rule 15(c). Thus, even if the trial court's conclusion that the Toms were not parties is an error of law, which we do not decide, the trial court did not abuse its discretion in denying the motion to amend because it correctly ruled that the amended pleading could not be related back. The amendment was thus futile. We therefore affirm the trial court's denial of the motion to amend on this ground.

B. Motion to Intervene under Rule 24

The Toms contend that, if the trial court's finding that they were not parties when they sought to amend their complaint is correct, then they should be allowed to intervene under Rule 24. The trial court ruled that this was not "a suitable case for intervention" because the Toms could point "to no interest of theirs that might be impaired or impeded through resolution of the pending claims for contribution and indemnity between Joy Enterprises and PUC." Order at 10 (Dec. 17, 1997). The

[9 FSM Intrm. 88]

Toms contend that they have an interest - seeking additional compensation from another liable party - that is not adequately represented by Joy. PUC contends that the Toms do not have a right to intervene because their request was untimely and because the Toms failed to follow the procedure outlined in Rule 24(c) for a motion to intervene.

Both intervention of right, FSM Civ. R. 24(a), and permissive intervention, FSM Civ. R. 24(b), must be "[u]pon timely application." Assuming, which we do not decide, that the Toms were not parties, it cannot be said that the Toms' application was timely when it came after the statute of limitations had expired for the claims they sought to pursue, and was in a lawsuit which they, the would-be intervenors, had originally initiated over a year earlier.

Timeliness must be determined from all the circumstances of the case. There are four factors to consider when determining whether a motion to intervene is timely: 1) how long the applicant knew or should have known of his interest before making the motion; 2) the prejudice to existing parties resulting from any delay; 3) the prejudice to the applicant if the motion is denied; and 4) any unusual circumstances militating for or against a finding of timeliness. United States v. Pitney Bowes, Inc., [1994] USCA2 103; 25 F.3d 66, 70 (2d Cir. 1994); United States v. New York, [1987] USCA2 528; 820 F.2d 554, 557 (2d Cir. 1987); Deveraux v. Geary, [1985] USCA1 258; 765 F.2d 268, 270 (1st Cir. 1985). In the present case, the Toms knew or should have known of their interest against PUC at least since September 4, 1996, when the third-party complaint was filed. The prejudice to PUC is that it could be liable for a large sum for a claim for which it would not otherwise be liable because the statute of limitations has run. The prejudice to the Toms is that they would receive no more compensation than the $105,311.27 they received in the settlement agreement with Joy. The unusual circumstances militating against a finding of timeliness is that the Toms were the original plaintiffs in this lawsuit and filed their case and had notice of PUC well before the statute of limitations had run. No unusual circumstances militate in favor of timeliness. Considering all the circumstances, the application was untimely.

If the Toms were still parties, then intervention was improper because they were already parties. Either way, the trial court did not abuse its discretion in denying the Toms' application to intervene. It was not a suitable case for intervention. Because we affirm the trial court on the ground it gave, we do not reach PUC's claim that the issue was not properly before the trial court.

C. Joy Enterprises, Inc.'s Contribution Claim

Finally, Joy and the Toms concede that if the Toms prevail on either of the first two issues raised on appeal then Joy's contribution claim would be barred by 6 F.S.M.C. 1202(4) and 6 F.S.M.C. 1204(4) because then the common liability of Joy and PUC would not have been extinguished. But since the Toms did not prevail, they, as real parties in interest, and Joy contend that the trial court's summary judgment on Joy's contribution claim should then be reversed as an error of law.

The applicable statutes provide that "[a] tort-feasor who enters into a settlement agreement is not entitled to recover contribution from another tort-feasor whose liability for the injury or wrongful death is not extinguished by the settlement," 6 F.S.M.C. 1202(4), and that:

If there is no judgment for the injury or wrongful death against the tort-feasor seeking contribution, his right of contribution is barred unless he has either . .&# or (b) agreed while thee the action was pending against him to discharge the common liability and has within one year after the agreement paid the liability and commenced the action for contribution.

6 F.S.M.C. 1204(4). Both these provisions apply because there was a settlement agreement and there

[1999] FMKSC 4; [9 FSM Intrm. 89]

was no judgment for the injury. Each of these statutes bars Joy's contribution claim. Section 1202(4) bars the third-party claim because the settlement agreement between Joy and the Toms did not extinguish PUC's liability to the Toms. That liability had already been extinguished by the relevant statute of limitations. Section 1204(4)(b) bars the third-party claim because Joy did not agree to discharge Joy's and PUC's common liability. Part 1.e of the Settlement Agreement recited that the release did not affect either the Toms' or Joy's claims against PUC. The Settlement Agreement thus could not discharge Joy's and PUC's common liability, even if it could be said that a common liability still existed after the statute of limitations had expired on PUC's potential liability to the Toms. The trial court's summary judgment is therefore affirmed.

IV. Conclusion

Accordingly, the trial court's denial of the Toms' motion to amend their complaint is affirmed on the ground that the amendment was futile because its claims were barred by the relevant statute of limitations and could not be related back to an earlier date under Rule 15(c). The trial court's denial of the Toms' application to intervene and its grant of summary judgment for PUC are also affirmed.

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^[1] "Every action shall be prosecuted in the name of the real party in interest." FSM Civ. R. 17(a). "[A]n assignment passes title to the assignee so that he is the owner of any claim arising from the chose and should be treated as the real party in interest." 6A Charles Alan Wright et al., Federal Practice and Procedure § 1545, at 346 (1990).n all rall rights to a claim have been assigned, courts generally have held that the assignor no longer may sue." Id. at 351.

^[2] Wn FSM Rule of Civil Proceduocedure is nearly identical to a U.S. Federal Rule of Civil Procedure, the FSM Supreme Court may look to the U.S. federal courts for guidance in interpreting the rule. Senda v. Mid-Pacific Constr. Co., [1994] FMSC 20; 6 FSM Intrm. 440, 444 (App. 1994).