Nina Martin, App./cross-resp. v. General Construction Company, Resp./cross-app. ( 2013 )

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
NINA L. MARTIN, individually and NO. 68132-0-1
as Personal Representative of the
ESTATE OF DONALD R. MARTIN, DIVISION ONE
RUSSELL L. MARTIN, THADDEUS J.
MARTIN, and JANE MARTIN,
Appellants,
v.
UNPUBLISHED OPINION
DEMATIC dba/fka RAPISTAN, INC.,
MANNESMANN DEMATIC, and
SIEMENS DEMATIC; GENERAL
CONSTRUCTION COMPANY,
WRIGHT SCHUCHART HARBOR
COMPANY, WRIGHT SCHUCHART,
INC.; FLETCHER GENERAL, INC.,
and FLETCHER CONSTRUCTION
COMPANY NORTH AMERICA and
FLETCHER BUILDING, LTD., CD
Respondents. FILED: October 14, 2013
Leach, C.J. — Donald Martin suffered a fatal injury while working at a
Kimberly Clark paper plant. His wife and children (collectively "the Martins")
appeal the trial court's summary dismissal of their claims against General
Construction Company (General Construction) and Fletcher Construction
Company North America (FCCNA). General Construction cross appeals,
challenging the trial court's denial of two summary judgment motions.
NO. 68132-0-1/2
Because General Construction did not assume liability for the Martins'
claims and the statute of limitations barred the claims against FCCNA, we affirm
the trial court's dismissal of Martins' claims against General Construction and
FCCNA. Because a trial court's decision denying a motion for summary
judgment does not constitute a final judgment, we do not address General
Construction's cross appeal.
FACTS
On August 13, 2004, a component of Tissue Machine No. 5 (TM5) at
Kimberly Clark's Everett paper plant fatally crushed Donald Martin. The TM5
was installed as part of a large construction project in 1981 when Scott Paper
owned the plant. Wright Schuchart Harbor Co. (WSH) erected the TM5.
The parties dispute WSH's identity and ownership history. General
Construction asserts the following history. At the time of the TM5 installation,
Wright Schuchart Inc. owned WSH. In 1987, Fletcher Construction Company
Ltd., a subsidiary of FCCNA, purchased Wright Schuchart Inc. At the time,
FCCNA was a subsidiary of Fletcher Challenge, a multinational corporation
involved in industrial construction. In 1993, Fletcher Challenge merged
numerous subsidiaries, including WSH, into a single company, Fletcher General
Inc. Fletcher General succeeded to WSH's preexisting liabilities.
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In 1996, senior management of Fletcher General formed GC Investment
Co. for the purpose of acquiring the majority of Fletcher General's assets. To
complete this acquisition, Fletcher General transferred these assets to a wholly
owned subsidiary, General Construction, and in exchange received all the
outstanding stock of General. Fletcher General sold this stock to GC Investment.
Their stock purchase agreement incorporated as exhibits a memorandum of
transfer of assets for capital contribution purposes and two memoranda of
assumption of liabilities executed by Fletcher General and General Construction
to accomplish the asset transfer to General Construction. Both the stock
purchase agreement and the memoranda of assumption of liabilities, in virtually
identical language, defined and allocated "assumed liabilities," which General
Construction acquired, and "excluded liabilities," which Fletcher General retained.
Fletcher General agreed to indemnify General Construction for excluded
liabilities.
In 2001, Fletcher General and Fletcher Construction Company Ltd.
merged into FCCNA. Following the merger, General Construction and FCCNA
agreed that FCCNA would continue to exist until at least 2006 and maintain a
minimum bond or level of assets to cover its potential liabilities. FCCNA filed a
certificate of dissolution on June 26, 2007.
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FCCNA asserts that "Wright Schuchart Harbor Joint Venture," a "separate
and distinct corporate legal entity" from Wright Schuchart Inc. or Wright
Schuchart Company, installed TM5.1 In interrogatories, Ronald Johnson,
FCCNA's records custodian, stated,
The entities which previously comprised of Wright Schuchart
Harbor Joint Venture had changed their names as necessary and
were transferred to Sprague Resources Corporation as dividends
by June 30, 1987 prior to the sale of Wright Schuchart, Inc. to
Fletcher. Thus, these entities were not included in the sale of
Wright Schuchart, Inc. to Fletcher in October 1987.
Johnson also testified that the joint venture "would be labeled Wright Schuchardt
[sic] Harbor, a joint venture, or sometimes it was labeled just Wright Schuchardt
[sic] Harbor. And that joint venture was owned by several different entities, which
did not include Wright Schuchardt, [sic] Incorporated."2
On June 29, 2007, the Martins filed this wrongful death and survival action
against defendants that the Martins alleged were responsible for Mr. Martin's
death, including "General Construction Company dba/fka Wright Schuchart
Harbor Company." The complaint did not name FCCNA as a defendant. On
October 19, 2007, General Construction answered the Martins' complaint and
asserted third party claims against Fletcher General and Fletcher Pacific
1 FCCNA did not raise this argument in its motion to dismiss, but the court
referred to it in granting the dismissal.
2The record does not contain the equipment erection contract. We do not
resolve the conflicting histories but use "WSH" to refer to whichever entity
installed the TM5.
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Construction Company Ltd. (Fletcher Pacific). On December 11, 2009, General
Construction moved for summary judgment, asserting that it was not liable as a
successor to WSH. The trial court denied the motion on March 16, 2010.
The Martins filed an amended complaint on January 22, 2010, joining
FCCNA as a defendant. In its answer to the amended complaint, FCCNA raised
the statute of limitations as an affirmative defense.
On April 8, 2010, the Martins moved for summary judgment to establish
General Construction's liability as a successor to WSH and Fletcher General.
The court denied this motion. On October 1, 2010, General Construction filed a
renewed motion for summary judgment based on the lack of successor liability.
The trial court granted this motion and denied the Martins' subsequent motion for
reconsideration.
On November 23, 2010, FCCNA moved to dismiss, arguing that "the
statute of limitations for plaintiffs' claims against this defunct corporation had
expired by January 2010 when FCCNA was added as a party to this lawsuit."
The court granted the motion on January 13, 2011, and denied the Martins'
subsequent motion for reconsideration. It concluded that the Martins' amended
complaint did not relate back to the date of the original complaint under CR 15(c).
The Martins appeal, and General Construction cross appeals.
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STANDARD OF REVIEW
We review summary judgment orders de novo, engaging in the same
inquiry as the trial court.3 Summary judgment is proper if, viewing the facts and
reasonable inferences in the light most favorable to the nonmoving party, no
genuine issues of material fact exist and the moving party is entitled to judgment
as a matter of law.4 A genuine issue of material fact exists if reasonable minds
could differ about the facts controlling the outcome of the litigation.5
In reviewing summary judgment orders, we consider supporting affidavits
and other admissible evidence based upon the affiant's personal knowledge.6 "A
party may not rely on mere allegations, denials, opinions, or conclusory
statements, but, rather must set forth specifics indicating material facts for trial."7
We review the denial of a motion for reconsideration for abuse of discretion.8
ANALYSIS
The Martins raise two sets of issues. First, the Martins assert that General
Construction assumed successor liability for WSH's torts under the stock
3 Michak v. Transnation Title Ins. Co., 148 Wash. 2d 788, 794, 64 P.3d 22
(2003).
4 CR 56(c); Michak, 148 Wash. 2d at 794-95.
5 Hulbert v. Port of Everett, 159 Wash. App. 389, 398, 245 P.3d 779, review
denied, 171 Wash. 2d 1024 (2011).
6 Int'l Ultimate. Inc. v. St. Paul Fire & Marine Ins. Co., 122 Wash. App. 736,
744, 87 P.3d 774 (2004).
7 Int'l Ultimate, Inc., 122 Wash. App. at 744.
8 Brinnon Grp. v. Jefferson County, 159 Wash. App. 446, 485, 245 P.3d 789
(2011) (citing Lilly v. Lynch, 88 Wash. App. 306, 321, 945 P.2d 727 (1997)).
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purchase agreement and memoranda of assumption of liabilities. Second, the
Martins assert that the statute of limitations does not bar their claims against
FCCNA because those claims did not accrue until the Martins discovered
FCCNA's identity as WSH's successor, that the filing and serving of the original
summons and complaint tolled the statute of limitations, and that the amended
complaint related back to the date of the original complaint for purposes of the
statute of limitations. We disagree.
Successor Liability
The Martins claim that General Construction "expressly assumed liability
for tort claims such as those alleged by the Martin family under the terms of the
Stock Purchase Agreement and the two Memoranda of Assumption of Liabilities"
with Fletcher General, WSH's successor. In Washington, a corporation
purchasing another corporation's assets generally "does not, by reason of the
purchase of assets, become liable for the debts and liabilities of the selling
corporation."9 This rule does not apply if "the purchaser expressly or impliedly
agrees to assume liability."10 Martin claims that this exception applies here.
The stock purchase agreement stated that General Construction would, as
of the organization date, assume "all of the Assumed Liabilities to which Seller
9 Creech v. AGCO Corp.. 133 Wash. App. 681, 684, 138 P.3d 623 (2006)
(citing Hall v. Armstrong Cork, Inc., 103 Wash. 2d 258, 261, 692 P.2d 787 (1984)).
10 Creech, 133 Wash. App. at 684 (citing Hall, 103 Wash. 2d at 261-62).
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NO. 68132-0-1/8
was subject as of the Organization Date." (Emphasis added.) The agreement
also stated that, at closing, General Construction "shall assume from Seller all
additional Assumed Liabilities to which Seller becomes subject between the
Organization Date and the Closing Date." The organization date was October
10, 1996, and the closing date was October 17, 1996. The stock purchase
agreement required General Construction to deliver two separate "memorand[a]
of assumption of liabilities" at closing, one effective as of the organization date
and the other effective as of the closing date.
The stock purchase agreement defined "assumed liabilities":
"Assumed Liabilities" means the obligations, liabilities and
expenses of Seller or General included in clauses (i) through (ix)
below, except to the extent any such obligations, liabilities and
expenses are covered by insurance, held by Seller with respect to
events occurring prior to Closing, in which case they shall constitute
Excluded Liabilities:
(iii) All extraordinary liabilities of Seller or General incurred
outside the ordinary course of business of Seller or General
after July 1, 1996 and that are not accounted for as project
costs under any Pre 7/23 Bonded Jobs in accordance with
Seller's existing project accounting practices, including,
without limitation:
(A) all liabilities and obligations arising out of,
resulting from, or relating to claims, whether founded
upon negligence, strict liability in tort, and/or other
similar legal theory, seeking compensation or
recovery for or relating to injury to person or damage
to property with respect to the operation of the
Business;
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provided, that, the Assumed Liabilities shall not include any
extraordinary liabilities of Seller incurred by Seller after the
Closing with respect to the portion of the Business retained
by Seller, or any other activities of Seller unrelated to the
Business.
The agreement also defined "excluded liabilities," which included "[a]ll obligations
or liabilities of the Business, Seller or any of its Affiliates of any nature
whatsoever, arising with respect to any acts, actions, omissions, or events
occurring prior to July 1, 1996."
Both memoranda of assumption of liabilities defined "assumed" and
"excluded" liabilities similar to the stock purchase agreement. The memoranda
also stated,
General Construction Company . . . does hereby assume
and accept from Fletcher General, Inc., ... the liabilities and
obligations described on the attached Schedule A (the
"Assumption," the liabilities and obligations described on attached
Schedule A being the "Assumed Liabilities"). No assumption or
acceptance of the liabilities or obligations described on attached
Schedule B (the "Excluded Liabilities") is intended or is hereby
effected.
The Martins argue that the phrase "to which Seller was subject" in the
stock purchase agreement description of assumed liabilities includes "inchoate or
contingent future liabilities." They assert, "The Organization Date Memorandum
of Assumption of Liabilities . . . does not limit the assumption to only those
liabilities incurred between July 1, 1996, and the Organization or Closing Dates."
The Martins contend, "To harmonize these provisions of the agreement and give
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effect to all of them," the stock purchase agreement "should be understood as
applying to the organizational phase of the transaction rather than
closing, . . . and the meaning of the phrase 'subject to' should be understood as
including both existing and future liabilities."
General Construction claims that it assumed only "(1) liabilities to which
Fletcher General was subject as of October 10, 1996 (the Organization Date),
and (2) additional liabilities to which Fletcher General became subject between
October 10, 1996 (the Organization Date) and October 17, 1996 (the Closing
Date)." Because Mr. Martin died in 2004, General Construction did not assume
liability for his death.
We conclude that General Construction did not assume liability for the
Martins' claims. Because Mr. Martin's injuries occurred in 2004, Fletcher
General was not subject to these claims at any time before the closing of the
stock sale. Thus, the Martins' claims do not satisfy the definition of "assumed
liabilities." The Martins offer no authority to support their contrary interpretation.
Additionally, if we accept the Martins' construction of the phrase "to which
Seller was subject," their claims fall squarely within the definition of "excluded
liabilities." This definition included as "excluded liabilities" "[a]ll obligations or
liabilities of the Business, Seller or any of its Affiliates of any nature whatsoever,
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NO. 68132-0-1/11
arising with respect to any acts, actions, omissions or events occurring prior to
July 1, 1996."
The "act" that gave rise to the Martins' claims was the installation of a
defective component of the TM5, which occurred in 1981. From 1996 until 2008,
General Construction performed certain services "related to TM5 or in the area of
TM5 at the direction of Kimberly Clark." But the Martins offer no evidence
showing that WSH or General Construction performed any work on or after July
1, 1996, that contributed to Mr. Martin's death. Therefore, General Construction
did not assume the liability, and the trial court properly granted summary
judgmenton this claim and denied the Martins' motion for reconsideration.
Statute of Limitations
The Martins also challenge the dismissal of their claims against FCCNA
based upon the three-year statute of limitations for personal injury actions, RCW
4.16.080(2). Mr. Martin's injuries occurred on August 13, 2004. The Martins filed
their original complaint on June 29, 2007, within the three-year limitation period,
but did not file their amended complaint joining FCCNA as a defendant until
January 22, 2010, well outside the three-year limitation period.
The Martins challenge the court's dismissal on three grounds: (1) the
claims did not accrue against FCCNA until the Martins discovered that FCCNA
was WSH's successor, (2) filing the initial summons and complaint and serving
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the other defendants tolled the statute of limitations under RCW 4.16.170, and
(3) the amendment naming FCCNA relates back to the filing date of the original
complaint under CR 15(c) because the amendment merely corrected a misnomer
and FCCNA had actual notice of the complaint within the limitations period. We
affirm the dismissal and also the denial of the Martins' motion for reconsideration.
The Martins assert that their claims against FCCNA did not accrue until
they discovered FCCNA's identity as a successor to WSH. They allege that they
first learned FCCNA was a successor in December 2009 when General
Construction filed a motion for summary judgment stating that FCCNA "had
succeeded the liabilities of WSH." The Martins argue that FCCNA's identity as a
successor to WSH was "obscure" because of "a series of complex and non
public mergers and acquisitions over an extended period oftime."
The statute of limitations is an affirmative defense.11 The party asserting
the defense—here, FCCNA—bears the burden of proving facts that establish it.12
In Washington, when a delay occurs between the time of an injury and the
plaintiff's discovery of that injury, the court may apply the discovery rule.13 This
rule tolls the date of accrual "until the plaintiff knows or, through the exercise of
11 Brown v. ProWest Transp. Ltd., 76 Wash. App. 412, 419, 886 P.2d 223
(1994) (citing Haslund v. City of Seattle, 86 Wash. 2d 607, 620, 547 P.2d 1221
(1976)).
12 Brown, 76 Wash. App. at 419 (citing Haslund, 86 Wash. 2d at 620-21).
13 Giraud v. Quincv Farm & Chem., 102 Wash. App. 443, 449, 6 P.3d 104
(2000) (citing Crisman v. Crisman, 85 Wash. App. 15, 20, 931 P.2d 163 (1997)).
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due diligence, should have known all the facts necessary to establish a legal
claim."14 A plaintiff asserting this discovery rule must show that he or she could
not have discovered the relevant facts earlier.15 The jury determines whether the
plaintiff meets this burden, unless the facts are susceptible of only one
reasonable interpretation.16
The Martins cite Orear v. International Paint Co.17 to support their
argument. But Orear was a products liability case where the connection between
the plaintiff's latent injury and the allegedly defective product was "difficult to
trace."18 Here, the connection between the injury and its cause is clear.
In In re Estates of Hibbard,19 our Supreme Court held that the discovery
rule applies only to claims "in which the plaintiffs could not have immediately
known of their injuries due to professional malpractice, occupational diseases,
self-reporting or concealment of information by the defendant" and to "claims in
,.20
which plaintiffs could not immediately know of the cause of their injuries.
14
Giraud, 102 Wash. App. at 449 (citing Crisman, 85 Wash. App. at 20; Allen
v State, 118 Wash. 2d 753, 758, 826 P.2d 200 (1992)).
15 Giraud, 102 Wash. App. at 449-50 (citing G.W. Constr. Corp. v. Prof'l
Serv. Indus., Inc., 70 Wash. App. 360, 367, 853 P.2d 484 (1993)).
16 Giraud, 102 Wash. App. at 450 (citing Goodman v. Goodman, 128 Wash. 2d
366, 373, 907 P^2d 290 (1995)).
17 59 Wash. App. 249, 796 P.2d 759 (1990).
18 Orear, 59 Wash. App. at 256.
19 118 Wash. 2d 737, 749-50, 826 P.2d 690 (1992).
20 Schwindt v. Commonwealth Ins. Co.. 94 Wash. App. 504, 509 n.10, 972
P.2d 570 (1999), rev'd on other grounds by 140 Wash. 2d 348, 997 P.2d 353
(2000).
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Where Washington courts have applied the rule, the plaintiff has lacked the
means or ability to ascertain that a legal cause of action accrued.
FCCNA's identity as a successor was a matter of public record when the
Martins filed their initial complaint. Despite the Martins' allegation that "[n]one of
the records refer[s] to WSH, let alone connects] the dots between WSH and
FCCNA," an examination of the documents suggests otherwise. The record
contains the articles of incorporation of Wright Schuchart Inc., dated May 27,
1976; the articles of amendment changing name from Wright Schuchart Inc. to
Fletcher General Inc., dated March 1, 1993; and the articles of merger of Fletcher
General Inc. into Fletcher Construction Company North America, dated March
29, 2001. Additionally, an article published in The Seattle Times newspaper in
1993, as well as a page on General Construction's web site, describe WSH's
corporate history. Because the Martins were on inquiry notice that FCCNA was a
successor, we decline to apply the discovery rule and conclude that the Martins'
claim began to accrue from the time of Mr. Martin's accident.
The Martins also argue that filing their initial complaint and summons and
serving the other defendants tolled the statute of limitations under RCW
4.16.170. Accordingly, the Martins claim, their amended complaint naming
FCCNA was timely.
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RCW 4.16.170 states, "For the purpose of tolling any statute of limitations
an action shall be deemed commenced when the complaint is filed or summons
is served whichever occurs first." After filing the complaint, the plaintiff "shall
cause one or more of the defendants to be served personally, or commence
service by publication within ninety days."
The Martins cite Sidis v. Brodie/Dohrmann. Inc.,21 a case that involved
multiple defendants, to support their assertion. In Sidis, our Supreme Court held
that, under RCW 4.16.170, serving one named defendant tolls the statute of
limitations regarding any unserved named defendant.22 The Sidis court stated
that the case did not concern unnamed defendants.23 In dictum, it noted that "in
some cases, if identified with reasonable particularity, 'John Doe' defendants
may be appropriately 'named' for purposes of RCW 4.16.170."24 The Martins
argue that we should apply the dictum in Sidis as law, asserting that Iwai v.
State.25 a Division Three case, and Bresina v. Ace Paving Co.,26 a Division Two
decision, support this approach.
21 117Wn.2d325, 815P.2d781 (1991).
22 Sidis. 117Wn.2dat329.
23 Sidis, 117Wn.2dat331.
24 Sidis, 117Wn.2dat331.
25 76 Wash. App. 308, 884 P.2d 936 (1994).
26 89 Wash. App. 277, 948 P.2d 870 (1997).
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In Iwai, the court declined to extend the holding in Sidis to "unnamed 'John
Doe' defendants,"27 and it did not explicitly discuss or cite the dictum in its
opinion. The court explained, "'[E]ven in jurisdictions which permit a fictitious
name practice it is not universally held that the statute of limitations is tolled until
the true identity of the defendant is discovered.'"28 Nonetheless, Division Three
concluded in Jwai that a "broad designation of John Doe Defendants allegedly
'negligent or otherwise responsible'" did not identify the later-named defendant
sufficiently to justify tolling the statute of limitations.29
In Bresina, the plaintiff served at least one named defendant before the
statute of limitations expired but filed an amended complaint substituting Ace
Paving for unnamed defendant "ABC Corporation" after it expired.30 The court
stated that it was not clear whether jwai rejected the Sidis dictum or whether
Division Three "assumed the validity of the Sidis dictum while holding that its
requirements were not met by Iwai's description" of the unnamed defendant.31 In
Bresina, Division Two applied the latter approach and "assume[d] that a plaintiff
can toll the period for suing an unnamed defendant by timely filing and serving a
named defendant—if, but only if, the plaintiff identifies the unnamed defendant
27 Iwai, 76 Wash. App. at 312.
28 Iwai, 76 Wash. App. at 312 (quoting Mergenthaler v. Asbestos Corp. of
Am., 500 A.2d 1357, 1363 n.11 (Del. Super. Ct. 1985)).
29 Iwai, 76 Wash. App. at 312.
30 Bresina, 89 Wash. App. at 279.
31 Bresina, 89 Wash. App. at 281-82.
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with 'reasonable particularity' before the period for filing suit expires."32 The court
determined that the plaintiff's description of the unnamed defendant did not
identify the defendant with "reasonable particularity."33 It reasoned that the
plaintiff could have obtained the name by proper investigation or by filing a
complaint and seeking discovery.34 The court explained that a major factor in
determining "reasonable particularity" is
the nature of the plaintiff's opportunity to identify and accurately
name the unnamed defendant; if a plaintiff identifies a party as
"John Doe" or "ABC Corporation," after having three years to
ascertain the party's true name, it will be difficult to say, at least in
the vast majority of cases, that the plaintiff's degree of particularity
was "reasonable."[35]
The plaintiff offered no reason for failing to obtain Ace Paving's true name during
the limitations period.36 No published Division One decision has addressed this
issue.
The Martins argue that RCW 23B.11.060(1) "confirm[s] the identity of
interest between the merged corporation and its successor, so that following
merger, naming the merged corporation in a lawsuit is equivalent to describing
the surviving corporation with reasonable particularity." They state that they "[do]
not seek to impose liability" under this statute but cite the law "to illustrate the
32 Bresina, 89 Wash. App. at 282.
33 Bresina. 89 Wash. App. at 282.
34 Bresina. 89 Wash. App. at 282.
35 Bresina, 89 Wash. App. at 282.
36 Bresina, 89 Wash. App. at 282.
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identity of interest between a predecessor and successor corporation and how
the reasonable particularity standard of Sidis has been satisfied."
Under RCW 23B.11.060(1 )(d), when a merger takes effect, "[a]
proceeding pending against any corporation party to the merger may be
continued as if the merger did not occur or the surviving corporation may be
substituted in the proceeding for the corporation whose existence ceased." This
statute allows a plaintiff's action against a defunct entity to continue if the lawsuit
was pending at the time of the merger. The Martins' action was not pending at
the time of any merger. The most recent merger occurred in 2001, three years
before Mr. Martin's death, when Fletcher General merged with FCCNA. The
Martins cite no authority demonstrating that identifying a defunct corporation well
after the statute of limitations expired, and long after a merger took place,
constitutes "reasonable particularity."
Because the Martins neither named FCCNA as a defendant in the original
complaint nor served the company, serving the named defendants did not toll the
statute of limitations as to FCCNA. No court in Washington has explicitly stated
that the Sidis dictum is law or recognized the statute of limitations as being tolled
as to a defendant who is neither named in the complaint nor served within the
limitations period. The filing of the initial complaint did not toll the three-year
statute of limitations.
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The Martins also claim that their amended complaint naming FCCNA was
timely because the amendment related back to the date of the original complaint
for purposes of the statute of limitations under CR 15(c). When reviewing a trial
court's determination of relation back, we look to whether the requirements of CR
15(c) have been met.37 "Some opinions do refer to abuse of discretion as the
standard for reviewing a decision under CR 15(c), probably because the issue
often arises in connection with a motion for leave to amend."38 This case does
not concern whether the court properly granted the Martins' motion for leave to
amend its complaint.
CR 15(c) states, "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." When an amended complaint adds or
substitutes a new party, the amended complaint relates back to the date of the
original complaint if the party seeking to amend proves that it has satisfied three
conditions:39 (1) the new party received notice of the institution of the action so
37 Perrin v. Stensland, 158 Wash. App. 185, 193, 240 P.3d 1189(2010).
38 Perrin, 158 Wash. App. at 192. The parties dispute the correct standard of
review.
39 Segaline v. Dep't of Labor & Indus., 169 Wash. 2d 467, 476-77, 238 P.3d
1107 (2010) (citing Foothills Dev. Co. v. Clark County Bd. of County Comm'rs, 46
Wash. App. 369, 375, 730 P.2d 1369 (1986)).
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that he or she will not be prejudiced in making a defense on the merits;40 (2) the
new party knew or should have known that but for a mistake concerning the
proper party's identity, the plaintiff would have brought the action against him or
her;41 and (3) the plaintiffs delay in adding the new party was not due to
"inexcusable neglect."42 "'[Inexcusable neglect exists when no reason for the
initial failure to name the party appears in the record.'"43 It includes delay due to
"'a conscious decision, strategic or tactic.'"44 Whether the party seeking to
amend its complaint satisfies these conditions is an issue of fact.45
"CR 15(c) is to be liberally construed on the side of allowance of relation
back of an amendment that adds or substitutes a new party after the statute of
limitations has run, particularly where the opposing party will be put to no
disadvantage."46 But when applying CR 15(c), the court must protect the new
40 Segaline, 169 Wash. 2d at 476-77 (citing CR 15(c)).
41 Segaline. 169 Wash. 2d at 477 (citing CR 15(c)).
42 Segaline, 169 Wash. 2d at 477 (citing Stansfield v. Douglas County, 146
Wash. 2d 116, 122, 43 P.3d 498 (2002)). "Adding a new party requires a showing
that it was not due to 'inexcusable neglect' because amendment of a complaint is
not intended to serve as a mechanism to circumvent or extend a statute of
limitations." Segaline, 169 Wash. 2d at 477 n.9.
43 Segaline. 169 Wash. 2d at 477 (alteration in original) (internal quotation
marks omitted) (quoting Stansfield. 146 Wash. 2d at 122).
44 Segaline. 169 Wash. 2d at 477 (quoting Stansfield, 146 Wash. 2d at 121).
45 Segaline. 169 Wash. 2d at 477.
46 Perrin. 158 Wash. App. at 194.
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defendant's due process rights—"an opportunity to be heard at a meaningful time
and in a meaningful manner."47
Here, the parties do not dispute that the claims the Martins asserted in the
amended complaint arose out of the same conduct, transaction, or occurrence
set forth in the original pleading. The Martins cite Bailey v. Innovative
Management & Investment. Inc.48 and Mitchell v. CFC Financial LLC.49 cases
outside this jurisdiction, to argue that their amended complaint related back
because the amendment did not add a new party but merely corrected a
misnomer.
The Martins filed the amended complaint approximately three years after
the statute of limitations expired. The trial court assumed the Martins could
establish that FCCNA received notice of the lawsuit on July 25, 2007, when
General Construction purportedly tendered defenses to Fletcher General.
General Construction tendered the defenses under the 1996 stock purchase
agreement, in which Fletcher General agreed to "defend, indemnify and hold
General harmless" from claims regarding excluded liabilities. The court noted,
47 Pub. Util. Dist. No. 1 of Klickitat County v. Walbrook Ins. Co., 115 Wash. 2d
339, 349, 797 P.2d 504 (1990) (citing Wilson v. Bd. of Governors. Wash. State
BarAss'n. 90 Wash. 2d 649, 656, 585 P.2d 136 (1978)).
48 890 S.W.2d 648 (Mo. 1994).
49 230 F.R.D. 548 (E.D. Wis. 2005).
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however, that "the exhibit provided by Plaintiff in this regard was not properly
authenticated."
The Martins provide no evidence to support the second condition—that
FCCNA knew or should have known that but for a mistake, it would have been
named in the original complaint. They contend that FCCNA "had at least
constructive knowledge that it was mistakenly omitted from the original
complaint" "based on naming ... its predecessor WSH as a defendant in the
original complaint, the tender of defense by General Construction, and FCCNA's
forwarding the tender letter to its insurer." But, as the trial court explained,
FCCNA argues that Wright Schuchart Harbor Joint Venture, an entity whose
assets and liabilities never merged with any Fletcher entity, performed the work
at issue. The Martins provide no evidence to rebut this assertion. Additionally,
FCCNA filed a certificate of dissolution in 2007. Therefore, FCCNA would have
no reason to know that it should have been named in the original complaint or
that it might be liable to the Martins for any damages.
Even if the Martins meet the first two conditions for relation back, they fail
to demonstrate excusable neglect. They compare this case to Perrin v.
Stensland,50 where the plaintiff named the deceased driver rather than the
driver's estate because he was unaware of the driver's death. Perrin concerned
50158Wn.App. 185, 189, 194, 240 P.3d 1189(2010).
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a claim of lack of due diligence in amending the complaint after learning the
correct party.51 The plaintiff served the driver's widow, who provided notice to
the insurer under the same policy as the driver.52 The court determined that the
estate was not prejudiced because it should have known that the plaintiff would
have named the estate but for the mistaken belief that the driver was still alive.53
No evidence showed that Perrin "made a strategic choice to avoid naming the
estate."54
The Martins provide no evidence of actions that they took to determine the
correct parties before the statute of limitations expired or what information any
investigation revealed. As discussed above, the articles of amendment changing
the name of WSH to Fletcher General Inc., as well as the articles of merger of
Fletcher General Inc. into FCCNA, were public records available at the time that
the Martins filed their original pleading. FCCNA also points to a newspaper
article and a page on General Construction's web site discussing the corporate
history of WSH. And, again, FCCNA dissolved in 2007. Our Supreme Court has
found inexcusable neglect when the party seeking to amend did not know the
additional party's identity but could have discovered it from public records.55
51 Perrin, 158 Wash. App. at 188.
52 Perrin, 158 Wash. App. at 188-89.
53 Perrin, 158 Wash. App. at 202.
54 Perrin, 158 Wash. App. at 202.
55 See Haberman v. Wash. Pub. Power Supply Svs., 109Wn.2d 107, 174-
75 744 P2d 1032, 750 P.2d 254 (1987) (no excuse where omitted parties'
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Even if, as the Martins allege, there were a "series of complex and non
public mergers and acquisitions over an extended period of time," General
Construction filed its answer and third party complaint in October 2007, asserting
claims against third party defendants Fletcher General and Fletcher Pacific as
the correct successors in interest. General Construction's third party claims
should have provided notice to the Martins of potential liability as to at least the
Fletcher entities that General Construction named. Instead, the Martins did not
file their first amended complaint until January 2010. Because the Martins do not
offer a persuasive reason for this delay, they fail to demonstrate excusable
neglect. Thus, the amendment does not relate back to the original pleading, and
the statute of limitations bars the Martins' claims against FCCNA.
General Construction's Cross Appeals
General Construction raises three issues in its cross appeal. First, it
claims that the trial court erred in denying its first motion for summary judgment
contending that the Martins' claims constituted an "excluded liability" under the
1996 stock purchase agreement. Second, it asserts that the trial court erred in
denying its motion for summary judgment arguing that the statute of repose
barred the Martins' claims. Third, it challenges the trial court's denial of its
identity available from a variety of public sources); Tellinghuisen v. King County
Council, 103 Wash. 2d 221, 224, 691 P.2d 575 (1984) (no excuse where omitted
parties' identity was matter of public record); S. Hollywood Hills Citizens Ass'n v.
King County, 101 Wash. 2d 68, 77-78, 677 P.2d 114 (1984) (same).
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motion for summary judgment contending that WSH was not liable under
Washington's product liability act, chapter 7.72 RCW.
A party can appeal only a final judgment.56 The denial of a summary
judgment "has no preclusive effect on further proceedings. ... It does not end
proceedings, but rather permits them to proceed. The denial of a summary
judgment motion is not a final order that can be appealed."57 Therefore, we
decline to address the issues that General Construction raises in its cross
appeal.
CONCLUSION
Because the Martins fail to show that General Construction assumed
liability for their claims and fail to show that the trial court erred in its application
of the statute of limitations, we affirm.
WE CONCUR:
^Oti"SY r*-y± \
56 RAP 2.2(a).
57 In re Estate of Jones, 170 Wash. App. 594, 605, 287 P.3d 610 (2012)
(citing Zimnv v. Lovric. 59 Wash. App. 737, 739, 801 P.2d 259 (1990); Roth v. Bell.
24 Wash. App. 92, 104, 600 P.2d 602 (1979)).
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