McCarthy v.Fifer

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE
MICHAEL McCARTHY,
Plaintiff, : C.A. No. Sl7C-02-026 NEP
In and for Sussex County
v.
LAWRENCE FIFER, ESQ.,
TARA BLAKELY, ESQ., and
FIRST AMERICAN TITLE
INSURANCE COMPANY,
Defendants.
OPINION AND ORDER
Submitted: October 26, 2018
Decided: November 7, 2018
Before the Court is Defendant Larry Fifer’s (hereinafter “Fifer”) Motion to
Dismiss the Amended Complaint and Plaintiff Michael McCarthy (hereinafter
“McCarthy”), MJM Management Corp. (hereinafcer “MJM”), and Abba First,
LLC’s (hereinafter “Abba,” collectively With McCarthy and MJM, “Plaintiffs”)
Response. For the reasons set forth below, Fifer’s motion is DENIED.
A. Factual Background and Procedural History
The Court has addressed the background facts and procedural history in its
July 18, 2018 Opinion and Order on Defendants’ previously flled Motion for
Judgment on the Pleadings. The Court refers to that Opinion and Order for a more
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complete recitation of the facts of the case, and shall here only briefly recite the
allegations of`` the First Amended Complaint for context.1
Plaintiffs’ First Amended Complaint alleges that Fifer, Whom McCarthy had
used as his real estate attorney to purchase and title twenty-seven investment
properties, had incorrectly titled certain properties in McCarthy’s personal name and
under the entity Abba, rather than titling them to MJM. In January of 2015,
McCarthy, individually, filed for bankruptcy. Subsequently, in March of 2015, the
trustee for McCarthy’s bankruptcy estate (hereinafter the “Trustee”) discharged
certain of the properties, as they Were Worth less than the mortgages owed, and these
properties reverted to Plaintiff personally.2 The Trustee, however, discovered that
there Were problems With the collateral for one loan With County Bank, covering
twelve properties, due to Fifer’s error in titling the properties. The Trustee
considered the properties unsecured and did not abandon them, but rather began to
collect rent and attempt to market the properties for sale. In late 2016, County Bank
initiated an adversarial proceeding to protect its interest in the properties and
ultimately foreclosed on all of the properties instead of simply the mistitled
properties.
In his original complaint filed on March 7, 2017, McCarthy specifically
alleged that Fifer had committed breach of contract and malpractice by failing to
title the Properties to MJM, and that as a result, McCarthy had lost all of his
1 As Defendant Tara Blakely has not joined in Fifer’s Motion to Dismiss, the Court does not
address Plaintiffs’ separate claims against her, Which have been asserted in both the original and
the amended complaints.
2 See In re Lyn, 483 B.R. 440, 451 (Bankr. D. Del. 2012) (“The debtor holds abandoned property
as if no bankruptcy had been filed.”).
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properties when County Bank instituted its adversarial action and subsequently
foreclosed on the properties. On July 18, 2018, this Court granted Fifer’s motion for
judgment on the pleadings as to McCarthy’s claim for breach of contract and denied
it as to McCarthy’s claim for malpractice. Subsequently, on August 23, 2018, a First
Amended Complaint was filed adding claims of MJM and Abba for malpractice
against Fifer,
B. Arguments of Parties
Fifer moves to dismiss MJM and Abba’s claims, arguing that their claims are
untimely under the statute of limitations for legal malpractice3 According to Fifer,
an amendment setting up a new cause of action does not relate back to the date of
the original pleading, but rather is governed by its own date, and adding the new
plaintiffs adds new causes of action that are specific to those two entities.4 Thus,
Fifer argues that their claims cannot relate back to the date the original complaint
was filed and are therefore time-barred.
Plaintiffs’ respond that they added MJM and Abba as parties, but did not
change the allegations of legal malpractice McCarthy’s original pro se complaint
3 Pursuant to 10 Del. C. § 8106, the statute of limitations for legal malpractice is three years.
McCarthy’s discovery of Fifer’s alleged malpractice occurred more than three years before the
First Amended Complaint was filed.
While most of the authority cited in this opinion was decided in the context of motions to amend,
there is no procedural impediment to Fifer’s raising the limitations issue in the context of a motion
to dismiss. See Gadow v. Parker, 865 A.2d 515, 519 (Del. 2005) (Superior Court Civil Rules
expressly allow defendant to raise limitations defense in motion to dismiss or first responsive
pleading).
4 Mullen v. Alarmguard of Delmarva, Inc., 625 A.2d 258, 264 (Del. 1993).
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was replete with allegations that properties owned by McCarthy, MJM, and/or Abba
were lost due to the actions of Fifer, Plaintiffs therefore allege that Fifer was on
notice so as to not be prejudiced in maintaining a defense against their claims, and
that the claims on behalf of MJM and Abba relate back to the original complaint, as
they did not seek to add new facts or change the circumstances from which those
claims arose.
C. Discussion
On a motion to dismiss, the moving party bears the burden of demonstrating
that “under no set of facts which could be proven in support of its [complaint] would
the [plaintiff] be entitled to relief.”5 Upon this Court’s review of a motion to dismiss,
“(i) all well-pleaded factual allegations are accepted as true; (ii) even vague
allegations are well-pleaded if they give the opposing party notice of the claim; (iii)
the Court must draw all reasonable inferences in favor of the non-moving party; and
(iv) dismissal is inappropriate unless the plaintiff would not be entitled to recover
under any reasonably conceivable set of circumstances susceptible of proof.”6
Finally, “a pro sepleading is judged by a ‘less stringent standard’ than a pleading or
document filed by an attomey.”7
5 Daisy Constr. C0. v. W.B. Venables & Sons, Inc., 2000 WL 145818, at *1 (Del. Super. Jan. 14,
2000).
6 Savor, Inc. v. FMR Corp., 812 A.2d 894, 896-97 (Del. Super. 2002).
7 Johnson v. State, 442 A.2d 1362, 1364 (Del. 1982). Plaintiff filed his original complaint pro se
and later retained counsel.
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In order for an amendment adding a party after the running of the statute of
limitations to relate back to the filing date of the action, three conditions must be
metz
(l) the claim or defense asserted in the amended pleading arose out of the
same conduct, transaction or occurrence set forth or attempted to be set forth
in the original pleading;
(2) within the period provided by law for commencing the action against the
party (i.e., the statute of limitations), the party to be brought in by the
amendment received such notice of the institution of the action that the party
will not be prejudiced in maintaining a defense on the merits; and
(3) within the period provided by law for commencing the action against the
party, the party to be brought in by the amendment knew or should have
known that but for a mistake concerning the identity of the party the suit
would have been brought against the party.8
While the above language appears to reference additional defendants, an amendment
to add additional plaintiffs after the statute of limitations has run may also only be
granted if the amendment satisfies the “relation back” requirements under Rule
15(c).9 However, the cause of action concept within Rule 15(c) has been broadly
defined as simply requiring that fair notice be given regarding the general fact
situation out of which the claim arose.10 Consequently, where a party seeks to add a
plaintiff, and the causes of action are the same as those in the original complaint, the
party seeking to amend should be required to show only “that the defendant received
8 Mullen, 625 A.2d at 264 (citing super. ct. Civ. R. 15(0)).
9 Chila', Inc. v. Roa'gers, 377 A.2d 374, 377 (Del. Super. 1977), aff’a' in part and rev’a1 in part sub
nom. Pioneer Nat’l Title Ins. Co. v. Chila', Inc., 401 A.2d 68 (Del. 1979).
10 Mullen, 625 A.2d ar 264.
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sufficient notice of the claims of the proposed additional plaintiff so that the
defendant will not be prejudiced in defending the claims of the additional plaintiff.”11
Relation back under Rule 15(c) turns on whether the claim 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. ln determining whether to allow
relation back under Rule 15 for a complaint that adds a new plaintiff, some courts
strictly adhere to the requirements of Rule 15(c).12 However, the Delaware Supreme
Court has held that “[s]uch strict adherence is unnecessary when dealing with the
addition. . .of a new plaintiff and contravenes the remedial policy underlying Rule
l5(c).”13 To require a plaintiff to demonstrate that, but for a mistake, additional
plaintiffs would have been named in the original complaint “...serves no purpose
where a defendant was originally part of the action and thus on notice of the claims
before the expiration of the statute of limitations.”14
Fifer argues that MJM and Abba’s claims should be dismissed, as their claims
are beyond the three-year threshold and do not relate back to the time of the initial
complaint. In support of this argument, Fifer relies on this Court’s decision in Spaa'y
v. Keen,15 which involved an action for injuries sustained as a result of a vehicle
collision. In Spaa'y, the plaintiff brought the original action and subsequently
attempted to amend her complaint aHer the statute of limitations had run in order to
11 Chaplake Holdings, LTD. v. Chrjysler, 766 A.2d at *7-8 (Del. 2001) (citations omitted).
12 Chaplake, 766 A.2d at *7 (citing Nelson v. County ofAllegheny, 60 F.3d 1010, 1015 (3d Cir.
1995); Levy v. Unitea' States Gen. Accounting Ojj‘ice, 1998 WL 193191 (S.D.N.Y. 1998)).
13 Chaplake, 766 A.2d at *7.
14 Ia'.
15 2006 WL 2559853 (Del. Super. Aug. 25, 2006).
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add her son, who was also in the car during the collision and suffered injuries. This
Court held that the son’s claims as to the nature and extent of his injuries, their
impact on his lifestyle, and/or any pain and suffering, would be specific to him and
would need to be defended against separately from the plaintiff s claims.16 Similarly,
Fifer argues that the amendment adding MJM and Abba and their claims would
require defense of an entirely different case on every element.
Relation back is improper when the new claim presents a new and independent
theory of liability or cause of action based upon independent facts that were not set
forth in the original complaint.17 However, the claims by MJM and Abba do not
present a new theory of liability or a new cause of action based upon independent
facts, and Fifer misses the very purpose underlying the relation back doctrine.
“Interpretation of Rule 15(c) should preserve the balance between the statute of
limitations and the relation-back doctrine-encouraging the disposition of cases on
their merits while ensuring defendants receive adequate notice of the claims so that
they are not unduly prejudiced in defense of the action.”18 In this case, Fifer had
notice through the original complaint of the allegation that he had erroneously titled
properties in the names of McCarthy and Abba, rather than MJM, leading to the loss
of all of the properties. lt is difficult, therefore, to understand the prejudice that Fifer
would experience in defending against these claims.
161d. at *2, *3.
17 Mullen, 625 A.2d at 264; Moore ex rel. Moore v. Emeigh, 935 A.2d 256 (Del. 2007) (TABLE);
see also Thompson v. Brana'ywine Sch. Dist., 478 F. App’x 718, 720 (3d Cir. 2012).
18 Chaplake, 766 A.2d at *7; see Hill v. Shelana'er, 924 F.2d 1370, 1377 (7th Cir. 1991) (“the very
purpose underlying the relation back doctrine is to permit amendments to pleadings when the
limitations period has expired, so long as the opposing party is not unduly surprised or
prejudiced.”).
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Moreover, there are important distinctions between this case and Spaa’y. Here,
McCarthy filed his original complaint pro se. After the three-year limitations period
had expired regarding McCarthy’s claims against Fifer, McCarthy retained counsel
who, after this Court denied Fifer’s motion for judgment on the pleadings,
immediately sought to amend to add MJM and Abba as plaintiffs. In Spaa'y, by
contrast, the plaintiff, who was represented by counsel throughout, sought to add her
son as an additional plaintiff at the pretrial conference, three and a half years after
the accident and over six months after the Court had indicated to the plaintiff that
the statute of limitations likely precluded the son’s claim but had also given the
plaintiff leave to renew the request for the amendment_something the plaintiff did
not do, again, until the pretrial conference,
In Lona'on v. Alpine Contractors,19 the plaintiff filed a pro se personal
injury/property damage complaint the day the statute of limitations expired naming
only herself as a plaintiff Approximately six months later, after retaining counsel,
she sought to amend, inter alia, to add her husband as a plaintiff and herself as next
friend for six of her children. In allowing the amendment, this Court noted that: (l)
all of the claims in the amended complaint arose from the incident giving rise to the
original complaint_the installation of a sewer lateral resulting in a sewage backup
in the plaintiffs home; (2) the original complaint noted that children were affected
by the backup, putting the defendant on notice of their claims; and (3) the plaintiff s
husband was a party to the contract with the defendant and a co-owner of the
19 2010 WL 1138818 (Del. Super. Feb. 5, 2010).
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property.20 Similarly, all of McCarthy’s claims in his First Amended Complaint arise
from the incidents described in the original complaint, and Fifer was on notice from
the inception of the lawsuit that MJM and Abba, along with McCarthy, had been
affected by his alleged malpractice and the resulting loss of the properties.
In Hunt v. Brana'ywine Narsing ana' Rehabilitation Center, Inc.,21 this Court
held that the relation back doctrine “does not prohibit relation back for every new
and separate claim.”22 ln that case, the administrator of the decedent’s estate and his
unnamed “next of kin” (collectively, the “plaintiff’) brought an action against a
doctor and a nursing home alleging various negligence claims, including that the
defendants’ negligence had proximately caused a fatal hemorrhage in the decedent’s
upper gastro-intestinal area, that the nursing home had failed to provide adequate
medical assistance, and that the defendant doctor had failed to monitor the
decedent’s condition.23 The plaintiff subsequently obtained new counsel and sought
to amend the complaint after the statute of limitations had run by adding the next of
kin as named plaintiffs, by adding a wrongful death claim, and by expanding the
complaint’s negligence claims.24
This Court, in finding that the amended complaint related back, held that the
wrongful death and expanded negligence claims arose out of the conduct,
transaction, or occurrence set forth or attempted to be set forth in the original
20 Ia'. at *2.
21 2000 WL 1211558 (Del. Super. Aug. 18, 2000).
22 Ia'. at *3.
23 Ia'. at *1-2.
24 Id.Mchael McCarthy v. Lawrence Fifer, Esq. et al
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pleading.25 Moreover, the defendants were on notice of the general fact situation out
of which the claim arose.26 “While the amended complaint raises a new and distinct
theory of liability, wrongful death, it involves the originally pleaded conduct and
common core of operative facts.”27 Thus, the Court found that the defendants were
likely not surprised by the new wrongful death claim and would not be prejudiced
by adding these new and separate causes of action. In this case, of course, the
amended complaint did not raise a new theory of liability, and the original complaint
certainly put Fifer on notice of the alleged conduct, the identity of MJM and Abba,
and the harm allegedly suffered by them.
At oral argument, Fifer cited two prior decisions of this Court, Debenea'ictis
v. Delaware Authorilyfor Regional Transit,28 and Mills v. J.E.M Enterprises, Inc. ,29
neither of which was cited in Fifer’s written motion, as supporting his assertion that
MJM’s and Abba’s claims are barred by the applicable statute of limitations. In
Debenea’ictz‘s, the Court denied a motion to amend seeking to add a wrongful death
claim on behalf of the decedent’s four children as additional plaintiffs. The Court
noted as integral to its decision the fact that the plaintiff had never disclosed the
existence of the four additional plaintiffs during the extensive 16-month discovery
period.30 The Court also noted that the motion was “inexcusably untimely,” as it was
filed more than one year after the scheduling order’s deadline to add or amend
25 Id. at *2.
26 Id.
22 Id.
28 2014 wL 1365946(De1. super. Apr. 7, 2014).
29 2014 wL 6674722 (Del. super. Nov. 17, 2014).
30 Debenea'ictis, 2014 WL 1365946, at *3. l
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pleadings and would have resulted in a substantial delay of the trial date.31 Here, of
course, Fifer was aware of the existence of MJ M and Abba well before the expiration
of the limitations period, and there is no issue of trial delay.
ln Mills, this Court actually permitted the plaintiff to assert a direct claim
against a third-party defendant after the expiration of the limitations period where
the third-party defendant was on notice as to the identity of the plaintiff and of his
claims within the limitations period. Fifer was also aware of MJM and Abba and
their alleged losses during the limitations period.
The Court finds that Fifer has not met his stringent burden under Rule
l2(b)(6). This Court must give Plaintiffs “the benefit of all reasonable inferences
that can be drawn from [their] pleading.’732 The Court must accept all well-pleaded
factual allegations as true, including vague allegations if they give the opposing
party notice of the claim.33 McCarthy’s original complaint contained numerous
allegations that properties owned by McCarthy, MJM, and/or Abba were lost as a
direct or indirect result of Fifer’s negligent actions or omissions. The Court finds,
upon reading the original complaint in light of McCarthy’s pro se status, that he pled '
sufficient facts so as to put Fifer on notice regarding the identity of the new plaintiffs
and their claims. Moreover, the Court finds that adding MJM and Abba as plaintiffs
will not prejudice Fifer in defending the claims on the merits, as the addition of these
31 Id.32 Solomon v. Pathe Commc ’ns Corp., 672 A.2d 35, 38 (Del. 1996) (quoting USA Cafes, L.P. Litig.,
600 A.2d 43, 47 (Del. Ch. 1991)).
33 Savor Inc., 812 A.2d at 896-97.
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plaintiffs does not alter the theory or general fact situation out of which the legal
malpractice claims arose.
WHEREFORE, for the foregoing reasons, Fifer’s Motion to Dismiss is
DENIED.
IT IS SO ORDERED.
/s/Noel Eason Primos
Judge
NEP/sz
Via File & ServeXpress
oc: Prothonotary
xc: All Counsel of Record
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