It seems obvious that a named plaintiff must be the correct plaintiff in order for it to have standing to move forward with a lawsuit. But figuring out the identity of the correct plaintiff is not always as easy as it should be, and the implications for timely doing so can mean the difference between a valid claim and a dismissal. In an opinion issued on 5 September 2023, the Court of Appeals addressed “the dearth of binding precedent” concerning whether a plaintiff may benefit from the relation back doctrine when an action initiated under the name of an incorrect, out-of-state entity with no interest in the subject matter is dismissed, and a second, related, complaint is later amended to name the correct party plaintiff.
In Gantt d/b/a Gantt Construction v. City of Hickory, the Court of Appeals reheard its affirmance of a trial court’s grant of summary judgment in favor of the defendant. The issue before the Court of Appeals, both in the original appeal and the rehearing, was whether an amendment to a second complaint related back to the filed date of the first complaint when (1) the first complaint identified an incorrect (but similarly named) party plaintiff, (2) the first complaint was dismissed without prejudice, (3) the second complaint was filed within the one-year extension to the statute of limitations under Civil Procedure Rule 41, and (4) the second complaint, prior to the amendment, also identified the incorrect (but similarly named) party plaintiff. As it did originally, the Court of Appeals answered in the negative.
The facts of the case make clear the complications that can arise in a federalist system where fifty different states not only create entities but also only concern themselves with replicated names of entities organized or registered in their own state. Here, a complaint was filed in North Carolina state court identifying “Gantt Construction Co.,” a Texas corporation, as the plaintiff. The complaint was filed on 11 January 2019, within the three-year statute of limitations, which commenced on 14 November 2016. The complaint was voluntarily dismissed on 18 February 2020 and timely refiled, within a year, on 28 April 2020.
Discovery, however, revealed that the company with the claim against the defendant was actually a North Carolina sole proprietorship owned by Cary Gantt and was unrelated to the Texas corporation named Gantt Construction Co. On 11 December 2020, a motion was filed, and on 13 January 2021 granted, to amend the new complaint to substitute the name of the plaintiff to “Gary Gantt d/b/a Gantt Construction” and remove the Texas entity Gantt Construction Co. In its order granting summary judgment to the defendant, which the Court of Appeals affirmed, the trial court held that, as a result of the newly substituted plaintiff, the amended complaint did not relate back to the date the first complaint was originally filed, putting the amendment outside the statute of limitations. The plaintiff asked the Court of Appeals for a rehearing, which the Court of Appeals granted.
The rehearing, however, did not change the ultimate decision of the Court of Appeals. Instead, the second opinion was issued to provide “a more robust explanation of [its] reasoning.” The plaintiff argued that a line of cases provided that the effective date of the amended complaint related back to the date of its original filing because (1) the original complaint gave the defendant notice of the “transactions and occurrences” upon which the suit rested, and (2) the amended complaint merely changed the capacity in which the plaintiff sued. The Court of Appeals rejected the plaintiff’s approach, noting that those cases amended the complaint only to alter a party’s capacity to sue, while this case instead involved a voluntary dismissal. The Court of Appeals also rejected the plaintiff’s argument that a defendant’s notice of the claims at issue impacted the application of the relation back doctrine.
Instead, the Court noted that the key to the case was that it involved two separate and distinct legal entities as party plaintiffs, one of which lacked standing to bring the initial suit. Thus, while Rule 41 (addressing voluntary dismissals and refiled complaints) generally allows a second complaint to relate back to the date of filing of a first complaint dismissed without prejudice, Rule 41 only applies if the second lawsuit involves the same parties as the first lawsuit. When the second lawsuit does not involve the same parties, the plaintiff cannot benefit from the one-year extension of the statute of limitations.
Accordingly, the Court of Appeals held that when an initial complaint involves a plaintiff who lacked standing to bring suit, the initial complaint is a nullity, and thus, there is no valid initial complaint to which an amended second complaint may relate back; this is all the more the case when the second case also involves a plaintiff who lacked standing to bring suit and is only later amended to include the correct party. (In dicta, the Court indicated that if the party plaintiff had filed the second complaint within the statutory three-year limitations period, then application of the relation back doctrine, under those circumstances, would be appropriate.)
The takeaway here is straightforward: before filing a complaint, make sure you have the correct name of your plaintiff. This is not always as easy as it sounds – purchase orders, fill-in contracts, and telephone and internet orders do not always include the correct legal names of parties, much less their state of origination. Spending a few hours up front making sure your party plaintiff is actually the party in interest is well worth the time to avoid the potential for disarray that can result if the name is incorrect.
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