IN THE COURT OF APPEALS OF TENNESSEE
AT JACKSON
April 16, 2013 Session
BERLINDA LANE, AND EDWARD L. MONTEDONICO, AS CHAPTER 7
TRUSTEE FOR THE ESTATE OF BERLINDA LANE v.
JACOB L. DANIEL AND DANIEL J. LUND
Direct Appeal from the Circuit Court for Shelby County
No. CT-001742-09 Robert Samual Weiss, Judge
No. W2012-01684-COA-R3-CV - Filed May 29, 2013
This case involves the application of the statute of limitations to an intervening personal
injury complaint filed by a bankruptcy trustee after the defendants asserted that the original
plaintiff, the debtor in the bankruptcy proceeding, lacked standing to bring the claim. Once
the bankruptcy trustee became aware of the claim, he filed a motion for intervention, or in
the alternative, for substitution pursuant to Rule 17.01 of the Tennessee Rules of Civil
Procedure. The trial court granted the trustee’s motion and the trustee later filed an
intervening complaint. The trial court, however, later dismissed the case, reasoning that
because the first complaint was filed by a party without standing, the original complaint was
a nullity. Under this theory, the trial court concluded that the action was commenced upon
the filing of the trustee’s intervening complaint, which was undisputedly outside the
applicable statute of limitations. Having determined that the plaintiff’s original complaint
was not a nullity, we conclude that the trustee’s intervening complaint relates back to the
original complaint and, thus, was filed within the applicable statute of limitations.
Accordingly, we reverse and remand.
Tenn. R. App. P. 3. Appeal as of Right; Judgment of the Circuit Court Reversed and
Remanded
J. S TEVEN S TAFFORD, J., delivered the opinion of the Court, in which A LAN E. H IGHERS, P.J.,
W.S., and D AVID R. F ARMER, J., joined.
James E. Bailey, III and R. Campbell Hillyer, Memphis, Tennessee, for the appellants,
Edward L. Montedonico, as Chapter 7 Trustee for the Estate of Berlinda Lane.
Christopher L. Richardson, Nashville, Tennessee, for the appellee, Daniel J. Lund.
Dawn Davis Carson, Russell B. Jordan, and Hal S. Spragins, Jr., Memphis, Tennessee, for
the appellee, State Farm Mutual Automobile Insurance Company.
OPINION
I. Background
Plaintiff Berlinda Lane was injured in an automobile accident on April 20, 2008 and
subsequently filed a voluntary Chapter 7 bankruptcy petition in the United States Bankruptcy
Court for the Western District of Tennessee on September 29, 2008. Intervening
Plaintiff/Appellant Edward L. Montedonico was appointed as trustee (“Trustee”) of Ms.
Lane’s bankruptcy estate. Ms. Lane failed to disclose the existence of the claim against the
Defendants/Appellees Jacob L. Daniel1 and Daniel J. Lund (“Appellee Lund”) as an asset in
her bankruptcy case. On February 13, 2009, the Bankruptcy Court entered an order of
discharge, discharging Ms. Lane from the liabilities listed in her bankruptcy petition. On July
16, 2009, a final decree was entered and Ms. Lane’s bankruptcy case was closed.
On April 8, 2009, Ms. Lane filed her original complaint against Mr. Daniel,2 Appellee
Lund, and her own Uninsured Motorist Carrier, State Farm Mutual Automobile Insurance
Company (“State Farm,” and together with Appellee Lund, “Appellees”) arising from the
automobile accident in the Circuit Court of Shelby County. On January 12, 2010, Appellee
Lund filed a motion for summary judgment asserting that Lane had no standing to assert this
claim because it had not been disclosed as an asset in the bankruptcy case. On January 28,
2010, the Office of the United States Trustee filed a motion to reopen Ms. Lane’s bankruptcy
case. The bankruptcy case was reopened on February 16, 2010 and the Trustee was
reappointed. On February 25, 2010, the Trustee filed a Motion to Intervene in the tort case,
or in the alternative, for Substitution as the real party in interest. Although there is no
transcript of the proceedings in the record, the motion was allegedly heard and granted by the
trial court on June 4, 2010. The trial court subsequently entered an order allowing the
Trustee to Intervene on October 19, 2010. Nothing in the record suggests the reason for the
delay in entering the order.
On December 20, 2010, Appellee Lund filed a second motion for summary judgment,
1
From our review of the record, it appears that Mr. Daniel has not filed a brief in this matter or
otherwise participated in this appeal.
2
According to Ms. Lane’s complaint, Mr. Daniel was operating a vehicle owned by Appellee Lund
at the time of the alleged accident. Ms. Lane sought recovery from Appellee Lund on the basis of an
agent/principal relationship between Mr. Daniel and Appellee Lund, and/or the Family Purpose Doctrine.
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alleging that the Trustee lacked standing and that the lawsuit had not been commenced within
the applicable statute of limitations. On January 12, 2011, the Trustee filed his Intervening
Complaint, which adopted and incorporated the allegations in the original complaint
identically. The only substantive change to the original petition was to substitute the Trustee
as the real party in interest. On March 4, 2011, the Trustee filed a response to the second
motion for summary judgment, asserting that he was the correct party in interest, the claim
was the property of the bankruptcy estate, and that he commenced his action within the
applicable statute of limitations. The trial court heard oral argument on March 25, 2011 and
the Trustee orally announced that Ms. Lane would be voluntarily non-suited without
prejudice. An order to that effect was entered on April 8, 2011.
On April 12, 2011, Appellee Lund filed a Motion to Dismiss pursuant to Rule
12.02(6) of the Tennessee Rules of Civil Procedure,3 seeking to dismiss the intervening
complaint on the basis that the complaint was filed over two years after the accident and well
outside the statute of limitations. State Farm filed its joinder to the Motion to Dismiss on
May 3, 2011. Argument on the Motion to Dismiss was heard on July 8, 2011. The trial court
entered an order dismissing the case on April 11, 2012. The Trustee filed a motion to alter
or amend the judgment, which was denied by the trial court on June 28, 2012. After the
Trustee filed a timely notice of appeal, this Court directed the Trustee to obtain a final order
in the trial court that fully complied with Rule 58 of the Tennessee Rules of Civil Procedure.
Proper orders were entered on October 22, 2012.
II. Analysis
The sole issue in this case is whether the trial court erred in granting the Appellees’
Rule 12.02(6) Motion to Dismiss the Trustee’s Intervening Complaint based on the alleged
expiration of the statute of limitations. A motion filed under Rule 12.02(6) of the Tennessee
Rules of Civil Procedure “is an appropriate way to seek to invoke the statute of limitations
as grounds for dismissing a complaint.” Redwing v. Catholic Bishop for Diocese of
Memphis, 363 S.W.3d 436, 455–56 n.11 (Tenn. 2012) (citing Hawk v. Chattanooga
Orthopaedic Grp., P. C., 45 S.W.3d 24, 28 (Tenn. Ct. App. 2000); 1 Lawrence A. Pivnick,
Tennessee Circuit Court Practice § 11:3, at 857–58 (2011 ed.)). However, this type of motion
3
Rule 12.02 of the Tennessee Rules of Civil Procedure provides, in pertinent part:
Every defense, in law or fact, to a claim for relief in any pleading, whether
a claim, counterclaim, cross-claim, or third-party claim, shall be asserted
in the responsive pleading thereto if one is required, except that the
following defenses may at the option of the pleader be made by motion in
writing: . . . (6) failure to state a claim upon which relief can be granted .
...
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“tests only the legal sufficiency of the plaintiff's complaint,” not the strength of the plaintiff's
proof or evidence. Id. at 455 (citing Highwoods Props., Inc. v. City of Memphis, 297 S.W.3d
695, 700 (Tenn. 2009)). Thus, we resolve a motion to dismiss by an examination of the
pleadings alone. Webb v. Nashville Area Habitat for Humanity, Inc., 346 S.W.3d 422, 426
(Tenn. 2011). “A defendant who files a motion to dismiss ‘admits the truth of all of the
relevant and material allegations contained in the complaint, but . . . asserts that the
allegations fail to establish a cause of action.’” Id. (quoting Brown v. Tenn. Title Loans,
Inc., 328 S.W.3d 850, 854 (Tenn. 2010)). At this early stage of the proceedings, courts
“‘must construe the complaint liberally, presuming all factual allegations to be true and
giving the plaintiff the benefit of all reasonable inferences.’” Id. (quoting Tigg v. Pirelli Tire
Corp., 232 S.W.3d 28, 31–32 (Tenn. 2007)). The motion to dismiss should be granted “‘only
when it appears that the plaintiff can prove no set of facts in support of the claim that would
entitle the plaintiff to relief.’” Id. (quoting Crews v. Buckman Labs. Int'l, Inc., 78 S.W.3d
852, 857 (Tenn. 2002)). This is because we are “assessing the sufficiency of a single
document filed at the very beginning of a case,” and “[o]ur motion-to-dismiss jurisprudence
reflects the principle that this stage of the proceedings is particularly ill-suited for an
evaluation of the likelihood of success on the merits or of the weight of the facts pleaded.”
Id. at 437.
On appeal, a trial court’s legal conclusion regarding the adequacy of the complaint is
reviewed de novo. Webb, 346 S.W.3d at 426. Likewise, “[t]he determination of whether a
suit should be dismissed based on the statute of limitations presents a question of law which
we review de novo with no presumption of correctness.” Redwing, 363 S.W.3d at 456 (citing
Fahrner v. SW Mfg., Inc., 48 S.W.3d 141, 144 (Tenn. 2001)).
The Appellees in the case argue that the Trustee’s Intervening Complaint, filed on
January 12, 2011, was filed outside the statute of limitations for his claim, and therefore, that
the trial court properly dismissed this case as a matter of law. The Trustee does not contend
that his intervening complaint was filed within either the Tennessee one-year statute of
limitations for personal injury actions, Tennessee Code Annotated Section 28-3-104(a)(1),4
4
Tennessee Code Annotated Section 28-3-104 provides, in relevant part:
(a) The following actions shall be commenced within one (1) year after the
cause of action accrued:
(1) Actions for libel, for injuries to the person, false imprisonment,
malicious prosecution, breach of marriage promise; . . . .
(emphasis added).
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or the Federal two-year statute of limitations for bankruptcy trustees, 11 U.S.C. §108(a)(2).5
Instead, he argues that the claim was properly commenced when Ms. Lane filed her
complaint on April 8, 2009, well within both the Tennessee and Federal statutes of
limitations. The Appellees argue, however, that the Trustee’s intervening complaint does not
relate back to the filing of Ms. Lane’s complaint because the original complaint was a nullity.
It is undisputed that Ms. Lane filed her complaint within the applicable one-year
statute of limitations for personal injury suits under Tennessee law. See Tenn. Code Ann.
§28-3-104. A suit is commenced upon the filing of a complaint. See Tenn. R. Civ. P. 3 (“All
actions are commenced by filing a complaint with the clerk of the court. An action is
commenced within the meaning of any statute of limitations upon such filing . . . .”). Under
normal circumstances, the filing of a complaint operates to toll the statute of limitations. The
Appellees contend, however, that because Ms. Lane did not have standing to bring her
complaint because she had filed for bankruptcy, the complaint was a nullity and, therefore,
could not operate to toll the statute of limitations.
It is also undisputed that when Ms. Lane filed for bankruptcy on September 29, 2008,
she created a bankruptcy estate. The Bankruptcy Code provides that: “The trustee in a case
under [the Code] is the representative of the estate.” 11 U.S.C. §323(a). According to the
United States District Court for the Sixth Circuit:
Under 11 U.S.C. § 704(1), a Chapter 7 trustee “shall
collect and reduce to money the property of the estate. . . .”
Among the “legal and equitable interests of the debtor” included
within the “property of the estate” under section 541 are causes
5
The federal limitations statute at issue, 11 U.S.C. §108(a)(2), provides:
(a) If applicable nonbankruptcy law, an order entered in a nonbankruptcy
proceeding, or an agreement fixes a period within which the debtor may
commence an action, and such period has not expired before the date of the
filing of the petition, the trustee may commence such action only before the
later of--
(1) the end of such period, including any suspension of such period
occurring on or after the commencement of the case; or
(2) two years after the order for relief.
According to the United States Supreme Court, the filing of the bankruptcy petition “constitutes an order for
relief.” Tennessee Student Assistance Corp. v. Hood, 124 S.Ct. 1905, 1910, 541 U.S. 440, 447 (2004) (citing
11 U.S.C. § 301).
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of action belonging to the debtor. Spartan Tube & Steel, Inc. v.
Himmelspach (In re RCS Engineered Prods.), 102 F.3d 223,
225 (6th Cir. 1996) (citation omitted). Because causes of action
belong to the estate, section 704(1) grants the trustee the
exclusive right to assert the debtor's claims. Honigman v.
Comerica Bank ( In re Van Dresser Corp.), 128 F.3d 945, 947
(6th Cir. 1997) (citing Schertz-Cibolo-Universal City, Indep.
Sch. Dist. v. Wright (In re Educators Group Health Trust), 25
F.3d 1281, 1284 (5th Cir. 1994)).
In re Cannon, 277 F.3d 838, 853 (6th Cir. 2002). The claim for damages against Mr. Daniel
and Appellee Lund was based on an accident that occurred prior to the filing of the
bankruptcy petition. The cause of action, therefore, belonged to Ms. Lane prior to the filing
of her bankruptcy petition. Consequently, only the chapter 7 trustee is the real party in
interest to pursue pre-petition causes of action. See Saellam v. Norfolk Southern Corp., No.
06-123, 2007 WL 16537307, at *3 (W.D. Pa. June 6, 2007). According to the Appellees,
then, the debtor’s action in filing the complaint on April 8, 2009 was a nullity and could not
operate to toll the statute of limitations. Because the Trustee undisputedly did not file his
Intervening Complaint within the one-year Tennessee statute of limitations or the two-year
federal statute of limitations applicable to bankruptcy trustees, the Appellees argue that the
claim is time-barred.
The Trustee in this case, upon learning of Ms. Lane’s failure to disclose her tort claim
against the Appellees, filed a motion in the trial court for leave to intervene in the case, or
in the alternative, for substitution as the real party in interest. The trial court granted this
request but later dismissed the case as having been commenced after the expiration of the
statute of limitations. Substitution of a party plaintiff for the real party in interest is governed
by Rule 17.01 of the Tennessee Rules of Civil Procedure.6 Rule 17.01 provides:
6
We note that because this case involves a state action in state court, the parties were required to
follow all Tennessee procedural rules. See Tenn. Civ. P. R. 1 (“[T]he Rules of Civil Procedure shall govern
procedure in the circuit or chancery courts in all civil actions, whether at law or in equity, and in all other
courts while exercising the civil jurisdiction of the circuit or chancery courts.”). Appellees’ contention that
the Trustee was not required to seek substitution or intervention in the Shelby County Circuit Court pursuant
to Rules 24.01, 24.02, and 25.01 of the Tennessee Rules of Civil Procedure but instead could file a complaint
“with or without court approval” pursuant to Rule 6009 of the Federal Rules of Bankruptcy Procedure is,
consequently, without merit. While the Appellees cite Parnham v. Parnham, No. M1998-00915-COA-R3-
CV, 2001 WL 120734 (Tenn. Ct. App. Feb. 14, 2001), to support their argument, Parnham involved the
question of whether a federal statute, not a procedural rule applicable in bankruptcy court, “trump[ed]”
Tennessee’s procedural rules. Id. at *2 n.4. Indeed, Rule 1001 of the Federal Rules of Bankruptcy Procedure
(continued...)
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Every action shall be prosecuted in the name of the real party in
interest; but an executor, administrator, guardian, bailee, trustee
of an express trust, a party to whose rights another is subrogated,
a party with whom or in whose name a contract has been made
for the benefit of another, or a party authorized by statute may
sue in his or her own name without joining the party for whose
benefit the action is brought; and when a statute so provides an
action for the use or benefit of another shall be brought in the
name of this State. No action shall be dismissed on the ground
that it is not prosecuted in the name of the real party in interest
until a reasonable time has been allowed after objection for
ratification or commencement by, or joinder or substitution of,
the real party in interest; and such ratification, joinder, or
substitution shall have the same effect as if the action had been
commenced in the name of the real party in interest.
Thus, Rule 17.01 expressly contemplates that a complaint should not be dismissed on the
ground that it is not brought by the real party in interest unless a reasonable time has been
allowed for correction. Moreover, a correction of that error, either through ratification,
joinder, or substitution “shall have the same effect as if the action had been commenced in
the name of the real party in interest.” Tenn. R. Civ. P. 17.01; see also Duffer v. Keystops,
LLC, No. M2011-01484-COA-R3-CV, 2012 WL 3104903, at *7 (Tenn. Ct. App. 2012)
(“We acknowledge that Rule 17 of the Tennessee Rules of Civil Procedure allows for the
substitution of the real party in interest when a mistake has been made in naming the party
and that Rule 15 of the Tennessee Rules of Civil Procedure provides that the properly
accepted amended complaint will relate back to the date of the original pleading.”).
The Appellees argue, however, that despite the language of Rule 17.01, the Trustee’s
Intervening Complaint was not timely because the original complaint was a nullity.
Appellees cite to no Tennessee cases in which a complaint filed by a debtor, concerning a
cause of action that was the property of a bankruptcy estate, was considered a nullity and held
6
(...continued)
specifically provides that the Federal Rules of Bankruptcy Procedure “govern procedure in cases under title
11 of the United States Code.” Title 11 of the United States Code governs bankruptcy proceedings. However,
this is a common law tort action in state court that was not filed “under title 11 of the United States Code.”
Accordingly, the rule expressed in Parnham is inapposite to the issue in this case. Further, from our review
of Rule 6009, the Rule allows the trustee to commence or intervene in an action on behalf of the debtor
without the approval of the bankruptcy court, not the state court in which an action is pending. See Hunt v.
Up North Plastics, Inc., 177 F.R.D. 449, (D. Minn. Dec. 2, 1997) (noting that Rule 6009 allows the trustee
to intervene in a putative class action case “without Bankruptcy Court intervention”) (emphasis added).
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insufficient to toll the statute of limitations. It appears that this is a question of first
impression in Tennessee. The Appellees, however, cite several cases from other jurisdictions
in which courts have held that complaints filed by one without standing are a nullity that does
not operate to toll the statute of limitations. “Authorities outside Tennessee, such as . . .
caselaw from our sister states, are not binding but nevertheless may be instructive.” Vivien
v. Campbell, No. W2009-01602-COA-R3-JV, 2011 WL 1837777, at *10 (Tenn. Ct. App.
May 10, 2011). Many of the cases cited by the Appellees, however, are clearly
distinguishable from the case-at-bar. For example, in Garlock Sealing Technologies, LLC
v. Pittman, --- So.3d ----, 2010 WL 4009151 (Miss. 2010), the Mississippi Supreme Court
dismissed a case based on the statute of limitations, despite a motion to amend to substitute
the real party in interest, based on the fact that the original plaintiff was deceased at the time
of filing the complaint. Id. at *5–*6. The issue was not the standing of the plaintiff, but
whether the plaintiff was actually legally in existence at the time of filing the complaint. Id.
at *5. In another case, Blevins v. Hillwood Office Center Owners' Ass'n, 51 So.3d 317 (Ala.
2010), the Alabama Supreme Court likewise dismissed a case in which the original plaintiff
had no standing due to Alabama precedent that held that such a defect was jurisdictional and
could not be cured by an amendment to name the real party in interest. Id. at 322–23. Indeed,
Alabama’s version of Rule 15 specifically states that relation back based on amendment is
only allowed if the amendment “changes the party or the naming of the party against whom
a claim is asserted,” not the party who is asserting the claim. See Ala. R. Civ. P. 15(c)(3).
In contrast, our Rule 15.03 expressly allows relation back when the change is to the party
asserting the action, discussed in detail infra. See Tenn. R. Civ. P. 15.03. Other cases cited
by the Appellees concern a statutory right to bring an action wherein the statute conferring
the right specifically provides who may have standing to seek redress from the courts. See
Ortiz v. Gavenda, 590 N.W.2d 119 (Minn. 1999); Henderson v. Fields, 68 S.W.3d 455 (Mo.
Ct. App. 2001). Under these circumstances, the courts have held that the issue of standing
becomes an issue of subject matter jurisdiction. See Ortiz, 590 N.W.2d at 122 (noting that
strict compliance with the standing rules and statute of limitations for the statutorily created
action was jurisdictional); Henderson, 68 S.W.3d at 468 n.1 (noting that “the case law
provides that the issue of standing to bring suit relates to the subject matter jurisdiction of
the court”). Thus, under the rule expressed in Ortiz and Henderson, when one without
standing files the complaint, the court never gains subject matter jurisdiction over the action
within the applicable statute of limitations. The most common example of this type of action
is a wrongful death lawsuit in which the statute expressly states that only certain relatives of
the decedent, or his or her administrator, may bring the action. Indeed, the Tennessee
Supreme Court in In re Estate of Smallman, --- S.W.3d ----, 2013 WL 682810 (Tenn.
2013), specifically held that “the issue of standing is interwoven with that of subject matter
jurisdiction and becomes a jurisdictional prerequisite,” only “[w]hen a statute creates a cause
of action and designates who may bring an action.” Id. at *11 (quoting Osborn v. Marr, 127
S.W.3d 737, 740 (Tenn. 2004)). In this case, however, a personal injury lawsuit is a product
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of the common law and the right to bring such action is not conferred by statute. Indeed, even
the court in Ortiz, in dismissing the statutory action, noted that such rule would not apply to
a common law claim, stating: “In common law claims we have applied these rules to permit
untimely amendments to relate back to the date of the original complaint so long as the
defendants had adequate notice of the new claim and would not be unfairly prejudiced by the
amendment.” Ortiz, 590 N.W.2d at 122. Accordingly, based on the holding in Smallman, the
issue of standing in this case is not interwoven with subject matter jurisdiction and thus does
not result in the trial court being deprived of jurisdiction to consider the complaint by Ms.
Lane’s lack of standing.
Moreover, the Appellees, in citing only cases from other jurisdictions, fail to take into
account the Tennessee Supreme Court’s “avowed liberality in permitting substitution of a
proper party plaintiff for an improper party plaintiff, even after the statute of limitations has
passed.” Foster v. St. Joseph Hosp., 158 S.W.3d 418, 424 (Tenn. Ct. App. 2004) (citing
Chapman v. King, 572 S.W.2d 925, 927–29 (Tenn. 1978)). This is true even in cases where
the right to bring an action is conferred by statute, such as in a wrongful death action. This
Court recently considered whether a lack of standing to bring a wrongful death suit results
in the original filing of the complaint being void for purposes of the statute of limitations in
Foster v. St. Joseph Hospital. Foster involved a suit filed by a decedent’s husband’s
nephew, after the decedent’s husband gave his power of attorney to the nephew. After the
defendants objected on the basis that nephew was not the real party in interest and, therefore,
the claim was not filed within the applicable statute of limitations, the nephew sought leave
to amend his complaint to add the husband as the real party in interest. Foster, 158 S.W.3d
at 423. The trial court ruled that the original filing was a nullity because the nephew was not
the real party in interest and, therefore, concluded that no proper complaint was filed within
the applicable statute of limitations. Nephew and husband appealed. Id. In concluding that
a filing by one without standing was not a nullity for purposes of the statute of limitations,
the Foster Court discussed the Tennessee Supreme Court case of Chapman v. King:
In Chapman v. King, 572 S.W.2d 925 (Tenn. 1978), the
plaintiff parents brought a wrongful death suit against a motorist
who allegedly ran over and killed their adult daughter. Id. at
926. Though the suit was filed within the statute of limitations,
. . . the Chapman plaintiffs did not have standing to bring the
suit. Id. In Chapman, the decedent's husband was the proper
party to file the claim. Id. After the statute of limitations had
expired, the defendants filed a motion to dismiss, asserting that
the parents were not the proper parties to file suit. The
decedent's husband attempted to cure the defect by moving to be
substituted as plaintiff in place of the parents. Id. The trial court
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denied the motion, apparently because it was filed after the
expiration of the statute of limitations. Id. at 927.
On appeal, the Tennessee Supreme Court noted its
“liberality” in permitting a proper party plaintiff to be added or
substituted for an improper party plaintiff under Rules 15.03 and
17.01 of the Tennessee Rules of Civil Procedure, even when the
expiration of the statute of limitations would prevent a new
lawsuit from being filed. Id. at 927–29. The court noted this
predilection toward leniency to be especially evident in
wrongful death actions due to the “considerable difficulty in
determining the proper party to file and prosecute the action.”
Id. at 928 & n.2. The Chapman court observed:
No doubt the reason for this liberal policy in
wrongful death cases has been the fact that the
cause of action is not changed by the substitution
of the proper party plaintiff for the improper
plaintiff and that such a substitution does not
prejudice the defendant who has had notice from
the beginning of the suit, of the nature of the
cause of action and that it was being pressed
against him.
Id. at 928 (internal citations omitted). Thus, although the statute
of limitations had expired when the Chapman plaintiffs filed
their motion to substitute the proper party plaintiff, the supreme
court permitted the amendment under Rule 17.01 because the
substitution of the parties did not change the cause of action or
prejudice the defendants. See id. at 928–29. Thus, the view of
the Tennessee Supreme Court in Chapman stands in contrast to
the somewhat harsh reasoning employed by [other courts outside
our jurisdiction].
Foster, 158 S.W.3d at 423–24.
Thus, the Foster court held that it was error for the trial court to declare that the
original filing of the lawsuit was void; instead, the complaint was merely voidable and could
be corrected through proper application of Rule 17.01. Consequently, the Appellees’ reliance
on the Arkansas Supreme Court case of Bibbs v. Community Bank of Benton, 375 Ark. 150,
289 S.W.3d 393 (Ark. 2008), is misplaced. The issue in Bibbs was much the same as in this
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case: the plaintiff debtor filed his complaint and later amended the complaint to add that the
bankruptcy trustee had ratified the debtor’s action. Id. at 397–98. The Arkansas Supreme
Court noted that nothing in federal law allowed the bankruptcy trustee to ratify the action of
the debtor; federal law provides that the bankruptcy trustee has the exclusive right to bring
the action. Id. at 398 (citing 11 U.S.C. § 554). In addition, the court relied on its previous
holding that “a complaint filed by a party without standing in a wrongful-death action is a
nullity.” Bibbs, 289 S.W.3d at 398 (quoting Hubbard v. Nat'l Healthcare of Pocahontas,
Inc., 371 Ark. 444, 267 S.W.3d 573 (Ark. 2007)). Because the original complaint was a
nullity, there was no valid pleading that the plaintiff could amend or that the amended
complaint could relate back to for purposes of the statute of limitations. Bibbs, 289 S.W.3d
at 400–01. Thus, Bibbs is distinguishable for two reasons. First, the Trustee in this case
sought to be named as the real party in interest and the debtor plaintiff was later voluntarily
non-suited. Accordingly, the issue of mere ratification of the debtor’s action in bringing the
suit is not at issue. Second, unlike in Arkansas, the Tennessee Supreme Court has expressly
allowed a complaint filed by a party without standing in a wrongful death action to be
amended after the expiration of the statute of limitations. See Chapman, 572 S.W.2d at
927–29. Thus, in Tennessee, the original complaint in that situation is not a nullity and may
be amended to add the real party in interest. See also Foster, 158 S.W.3d at 423–24 (holding
that a complaint in a wrongful death action filed by the wrong plaintiff is not a nullity).
Applying the reasoning in Foster and Chapman to the facts of this case, we must
likewise conclude that the original complaint in this case was merely voidable, not void, and
could be corrected through proper application of Rule 17.01. Although both Foster and
Chapman discuss the policy behind allowing substitution particularly with regard to
wrongful death cases, we believe that a policy of “liberality” in substitution of plaintiffs is
equally appropriate in this case. First, the court in Chapman stressed that the policy of
liberality is based on “the fact that the cause of action is not changed by the substitution of
the proper party plaintiff . . . and that such a substitution does not prejudice the defendant.”
Chapman, 572 S.W.2d at 928. In this case, the cause of action is clearly and undisputedly
not changed by substitution of the Trustee for Ms. Lane. Indeed, the Intervening Complaint
filed by the Trustee adopts and incorporates the identical allegations in the pleading
originally filed by Ms. Lane. Further, Ms. Lane’s lack of standing to bring this suit does not
implicate the trial court’s subject matter jurisdiction, unlike in wrongful death actions. See
Smallman, 2013 WL 682810, at *11. Thus, the policy of liberality applies with even more
force to the situation presented in this case. Finally, not allowing the Trustee to intervene in
a case in which a debtor failed to disclose a tort action as an asset in a bankruptcy proceeding
would result in an injustice to the debtor’s creditors, rather than merely prejudicing the
debtor. Accordingly, we must conclude that the filing of an original complaint by a debtor
for an action that is the property of a bankruptcy estate is not a nullity, but is merely voidable.
Thus, substitution of the real party in interest and relation back to the original
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commencement of the action are allowed in Tennessee when a Trustee seeks to be substituted
for a debtor in a tort action, so long as all the requirements of Rules 17.01 and 15.03 are
satisfied.
The question in this case, therefore, is whether the substitution of the Trustee and his
intervening complaint relate back to the original filing by Ms. Lane for purposes of the
statute of limitations. The Tennessee Supreme Court has suggested that for substitution of
the plaintiff for the real party in interest after the expiration of the statute of limitations, the
party seeking to be substituted must show a bona fide mistake in the original naming of the
plaintiff. Robert Banks, Jr. & June F. Entman, Tennessee Civil Procedure §6-1.(h) (2d ed.
2004) (citing Chapman v. King, 572 S.W.2d 925, 927–29 (Tenn. 1978) (noting that in cases
where substitution after the expiration of the statute of limitations has been allowed, “in each
instance, the mistake of the original improper plaintiff, as here, was a bona fide one”)); see
also Matthews v. Mitchell, 705 S.W.2d 657 (Tenn. Ct. App. 1985) (stating that Chapman
“noted” that a bona fide mistake is required to substitute a party plaintiff). The Trustee in this
case filed a Motion seeking intervention, or in the alternative, substitution, on the ground that
he had no notice of the claim because Ms. Lane did not disclose it in her bankruptcy
proceeding. Although this question has not been addressed by Tennessee courts, courts in
other jurisdictions have generally held that a bankruptcy trustee’s failure to bring a claim as
trustee is a bona fide mistake when the debtor failed to disclose the existence of the claim in
his or her bankruptcy proceeding. See, e.g., Reed v. City of Arlington, 650 F.3d 571 (5th Cir.
2011) (‘[A]bsent unusual circumstances, an innocent trustee can pursue for the benefit of
creditors a judgment or cause of action that the debtor fails to disclose in bankruptcy.”);
Kane v. National Union Fire Insurance Co., 535 F.3d 380 (5th Cir. 2008) (declining to
estop chapter 7 trustee from pursuing undisclosed personal injury claim); Parker v. Wendy's
Int'l, Inc., 365 F.3d 1268 (11th Cir. 2004) (allowing trustee to pursue undisclosed claims as
real party in interest); Saellam v. Norfolk Southern Corp., No. 06–123, 2007 WL 1653737
at *4 (W.D. Pa. June 6, 2007) (allowing chapter 7 trustee opportunity to move to substitute
as real party in interest); Stramiello-Yednak v. Perl, No. 05–517, 2006 WL 1158123 at *1
(W.D. Pa. Apr. 28, 2006) (granting chapter 7 trustee's motion to intervene); Rousseau v.
Diemer, 24 F.Supp.2d 137 (D. Mass.1998) (finding no prejudice to defendants resulting from
substitution because “nothing will change as a result of substituting the trustee as plaintiff
in this action, except that this action will now be maintained for the benefit of Plaintiff's
creditors and not for the Plaintiff himself.”); Preston v. Kindred Hospitals West, L.L.C., 226
Ariz. 391, 249 P.3d 771 (Ariz. 2011); but see Feist v. Consolidated Freightways Corp., 100
F.Supp.2d 273, 280 (E.D. Pa. 1999) (denying motion to substitute due to plaintiff's bad faith
in filing case in his own name); Griffin v. EFW, Inc., No. 4:03-CV-1337-A, 2004 WL
906393 (N.D. Tex. March 4, 2004) (declining to allow a debtor to move to substitute the
bankruptcy trustee when the trustee had taken no action to reopen estate and merely
acquiesced in debtor’s suit); Bibbs, 289 S.W.3d at 398 (noting that the federal law was clear
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that the bankruptcy trustee had the exclusive right to bring the action and that, consequently,
there was no “understandable mistake” as to the real party in interest to bring the suit).
The Federal District Court, in Killmeyer v. Oglebay Norton Co., 817 F.Supp.2d 681
(W.D. Pa. 2011), recently examined this issue, in relation to the federal counterpart to Rule
17.01, Rule 17(a)(3) of the Federal Rules of Civil Procedure:7
The scope of [Federal] Rule of [Civil Procedure] 17(a)(3)
is not unlimited; its application is “intended to insure against
forfeiture and injustice.” Fed. R. Civ. P. 17, 1966 Amendment,
advisory committee's note. Substitution is only available where
the determination of the proper party is “difficult” or the
plaintiff's misidentification of the party was the result of “an
understandable mistake.” Id.; Nelson v. County of Allegheny,
60 F.3d 1010, 1015 n.8 (3d Cir.1995). In some instances, courts
have used the “understandable mistake” limitation to bar
substitution by a trustee where the plaintiff did not disclose his
or her claims in bankruptcy in bad faith. See, e.g., Feist v.
Consolidated Freightways Corp., 100 F.Supp.2d 273, 280 (E.D.
Pa. 1999) (denying motion to substitute due to plaintiff's bad
faith in filing case in his own name). However, courts using Fed.
R. Civ. P. 17(a) to fashion equitable relief, as in cases of judicial
estoppel, also may consider less drastic alternatives than
dismissal to prevent injustice, including injustice to creditors in
bankruptcy. Weiburg v. GTE Southwest, Inc., 272 F.3d 302,
309 (5th Cir. 2001).
Killmeyer, 817 F.Supp.2d at 690. Thus, the court allowed the trustee to be substituted for the
debtor plaintiff. In addition, the court held that the trustee was not estopped from asserting
the claim, despite the debtor’s failure to disclose the claim during the pendency of the
bankruptcy proceedings, explaining that: “The trustee and plaintiff's creditors should not be
denied the benefit of a cause of action, and potential recovery, due to plaintiff's failure to
7
Rule 17(a)(3) of the Federal Rules of Civil Procedure provides:
Joinder of the Real Party in Interest. The court may not dismiss an action
for failure to prosecute in the name of the real party in interest until, after
an objection, a reasonable time has been allowed for the real party in
interest to ratify, join, or be substituted into the action. After ratification,
joinder, or substitution, the action proceeds as if it had been originally
commenced by the real party in interest.
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disclose.” Id. at 691. In this case, the trial court granted the Trustee’s motion to intervene or
in the alternative, for substitution, and neither of the Appellees have assigned the trial court’s
action in allowing the Trustee to intervene/be substituted as error on appeal. Thus, any issue
regarding whether there was a bona fide mistake as a condition precedent to allowing
substitution/intervention is not before this Court. See Tenn. R. App. P. 13(b) (“Review will
generally only extend to those issues presented for review.”). In addition, neither Appellee
argues that the Trustee is judicially estopped from asserting this claim due to Ms. Lane’s
failure to disclose the claim in the bankruptcy proceedings. Thus, the only remaining question
is whether some other law operates to bar the Trustee’s Intervening Complaint from relating
back to Ms. Lane’s original complaint “as if the action had been commenced in the name of
the real party in interest” initially. Tenn. R. Civ. P. 17.01.
In addition to the requirements of Rule 17.01, a party must also satisfy the
requirements of Rule 15.03 of the Tennessee Rules of Civil Procedure, which governs
relation back of amendments. See Duffer, 2012 WL 3104903, at *7 (noting the interplay
between Rule 17.01 and Rule 15.03). Rule 15.03 states:
Whenever the claim or defense asserted in amended pleadings
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 or the naming of the party by or against
whom a claim is asserted relates back if the foregoing provision
is satisfied and if, within the period provided by law for
commencing an action or within 120 days after commencement
of the action, the party to be brought in by amendment (1) has
received such notice of the institution of the action that the party
will not be prejudiced in maintaining a 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.
This Court in Osborne Enterprises, Inc. v. City of Chattanooga, 561 S.W.2d 160 (Tenn. Ct.
App. 1977), discussed the application of Rule 15.03 specifically with regard to a change in
the party asserting the claim:
The three primary considerations . . . in determining
whether an amendment seeking to add or substitute a new party
plaintiff would be allowed to relate back . . . to the date of the
original pleading so as to avoid the statute of limitations, have
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been (1) whether the defendant received adequate notice of the
claim against him; (2) whether the relation back of such an
amendment would unfairly prejudice the defendant; and (3)
whether there is an “identity of interest” between the original
party plaintiff and the new party plaintiff. . . . “In determining
whether the adversary has had fair notice, the usual emphasis of
‘conduct, transaction or occurrence’ is on the operational facts
which give rise to a claim by a particular party based on any one
or all of the theories conjured up, whether timely or belatedly.
But when it comes to a late effort to introduce a new party,
something else is added. Not only must the adversary have
notice about the operational facts, but it must have had fair
notice that a legal claim existed in, and was in effect being
asserted by, the party belatedly brought in. This becomes of
special importance in situations in which a common set of
operational facts gives rise to distinct claims (or defenses)
among distinct claimants (or defendants).”
* * *
Once the defendant has fair notice from the original
pleadings that the new party's claim is also involved, then the
defendant has suffered no prejudice.
Id. at 164 (citing Williams v. United States, 405 F.2d 234, 236–38 (5th Cir. 1968)). Based
on these considerations, the Court in Osborne concluded that an amendment to name the real
party in interest as the plaintiff could relate back to the original commencement of the action
for purposes of the statute of limitations. Osborne, 561 S.W.2d at 164. The Court explained:
Here, the plaintiffs’ original complaint sufficiently identifies the
property allegedly damaged by defendants so as to prevent any
unfair prejudice to the defendants in bringing in the new
plaintiff who had record title to the land. The theories of
recovery, the type and extent of damage occurring and the type
of recovery sought are clearly apparent from the complaint.
There is a definite identity of interest between the original
plaintiff and the new plaintiff in that East Ridge is pled to be a
wholly owned subsidiary of Osborne. Consequently, the three
primary considerations in determining whether the amended
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complaint relates back to the original complaint have been
sufficiently satisfied to allow the amendment. Although the
defendant must now defend a claim which was thought the mere
passage of time had barred, statutes of limitations do not afford
such an automatic insulation from suit by such a mechanical
procedure.
Id. In a more recent case applying the same principle, Biscan v. Brown, No.
M2001-02766-COA-R3-CV, 2003 WL 22955933 (Tenn. Ct. App. Dec. 15, 2003), aff’d, 160
S.W.3d 462 (Tenn. 2005),8 this Court stated that:
The essential requirement is that the defendant not only have
notice about the operational facts but also “must have had fair
notice that a legal claim existed in, and was in effect being
asserted by” the plaintiff belatedly brought in. Braswell [v.
Carothers], 863 S.W.2d [722,] 726 [(Tenn. Ct. App. 1993)].
The existence of fair notice from the original complaint that the
newly-added plaintiff's claim is involved ensures that the
defendants suffer no prejudice from the amendment. Id. at 727.
Prejudice is the key consideration.
Biscan, 2003 WL 22955933, at *4.
Applying the above principles to the case-at-bar, we must conclude that the trial court
erred in concluding that the Trustee’s Intervening Complaint could not relate back to the
original filing of Ms. Lane’s complaint. First, the operative facts in the Trustee’s complaint
are identical to the operative facts in Ms. Lane’s complaint. Indeed, the Trustee’s complaint
merely adopts and incorporates the allegations contained in Ms. Lane’s original complaint.
The question is thus whether having notice of the claim asserted by Ms. Lane also put the
Appellees on notice of the claim asserted by the Trustee. See Osborne, 561 S.W.2d at 164
(requiring that the defendant have “fair notice that a legal claim existed in, and was in effect
8
Biscan v. Brown was accepted by the Tennessee Supreme Court for certiorari on May 10, 2004.
The Tennessee Supreme Court, however, limited its review to issues regarding the trial that occurred after
the trial court allowed the substitution of the proper party plaintiff. See Biscan v. Brown, 160 S.W.3d 462,
466 (Tenn. 2005) (affirming the decision of the Court of Appeals on other grounds). Specifically, the
Tennessee Supreme Court considered “whether an adult who hosts a party for minors and knows in advance
that alcohol will be consumed has or may voluntarily assume a duty of care towards the minor guests.” Id.
Thus, the Tennessee Supreme Court did not disturb the Court of Appeals’ holding on the threshold issue of
whether substitution of the real party in interest as the plaintiff was appropriate, despite the expiration of the
statute of limitations. Consequently, the Biscan Court of Appeals opinion remains good law on this issue.
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being asserted by, the party belatedly brought in.”). The situation in this case is similar to the
situation in Braswell v. Carothers, 863 S.W.2d 722 (Tenn. App. 1993). The Braswell Court
focused on the question of whether the defendants had “fair notice from the original
pleadings that the new parties’ claim is also involved.” Id. at 727 (emphasis added). The
Court noted the fact that the “operational facts in the original complaint are identical to those
in the amended complaint.” Id. Because the claim was identical in both the original
complaint and the amended complaint, the Braswell Court held that the defendants were on
notice of the new claim and that “defendants suffer[ed] no prejudice” from the substitution.
Id. Likewise, in this case, the claim asserted by the Trustee is identical to the claim asserted
by Ms. Lane; accordingly, the Appellees had fair notice of the claim being asserted at the
time Ms. Lane filed and served her complaint.
Second, there is no indication that the Appellees in this case would in any way be
prejudiced for having to defend an action prosecuted in the name of the Trustee, as opposed
to Ms. Lane herself. In Biscan v. Brown, the Court of Appeals likewise upheld a
substitution, noting that the defendants failed to allege any prejudice that resulted from the
substitution of the father in his individual capacity as the plaintiff in the case. Biscan, 2003
WL 22955933, at *4. The Appellees in this case likewise failed to assert any specific
prejudice in the substitution and intervention of the Trustee in this case. Regardless of who
the real party in interest is in this case, the Appellees had notice, within the one-year personal
injury statute of limitations, of a tort claim involving the alleged car accident that occurred
on April 20, 2008. This is exactly the claim they will be required to defend if the Trustee is
allowed to be substituted/intervene. Accordingly, there is no prejudice in allowing the case
to proceed in the name of the Trustee.
Finally, we conclude that there is a sufficient “identity of interest” between Ms. Lane
and the Trustee to allow substitution in this case. “[A]n identity of interest exists when the
plaintiff sought to be added is so closely identified with the original plaintiff that permitting
the new party to enter will not be prejudicial to the defendant.” 61B Am. Jur. 2d Pleading §
831. In this case, the Trustee is the bankruptcy representative for Ms. Lane and nothing in
the record suggests that permitting the Trustee to bring Ms. Lane’s claim as the real party in
interest will have any prejudicial effect on the Appellees. Other courts have held that the
trustee, as the representative of the bankruptcy estate, has a sufficient identity of interest with
his or her debtor that substitution should be allowed in a tort case. For example, in In re
Engelbrecht, 368 B.R. 898 (Bkrtcy. M.D. Fla. 2007), the Bankruptcy Court of the Middle
District of Florida allowed the trustee to be substituted for the debtor in a personal injury
action because “there is an exact identity of interests between the estate [which is represented
by the trustee] and Debtor’s pre-petition interests.” Id. at 903; see also Wilson v. Zemba, 896
A.2d 862, 865 (Conn. Super. Ct. 2004) (citing New York Evening Post Co. v. Chaloner, 265
F. 204, 213 (2d Cir.), cert. dismissed, 252 U.S. 591, 40 S.Ct. 396, 64 L.Ed. 731 (1920)).
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Accordingly, this criterion is also met.
Having determined that the Trustee and Ms. Lane have a sufficient identity of interest,
the Appellees had fair notice of the claim asserted by the Trustee, and that the Appellees have
asserted no prejudice resulting from the substitution of the Trustee as the real party in
interest, we conclude that the trial court erred in concluding that the Trustee’s Intervening
Complaint should be dismissed as being filed outside the applicable statute of limitations.
Instead, the Intervening Complaint filed by the Trustee, which substitutes the Trustee as the
real party in interest, relates back to the date of filing of the original complaint in this case,
i.e., April 8, 2009. Thus, this case was properly commenced within the applicable statute of
limitations. Based on the foregoing, the judgment of the Circuit Court of Shelby Court is
reversed and this cause is remanded to the trial court for all further proceedings as may be
necessary and are consistent with this opinion. Costs of this appeal are assessed to Appellees
Daniel J. Lund and State Farm Mutual Insurance Company, for which execution may issue
if necessary.
_________________________________
J. STEVEN STAFFORD, JUDGE
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Berlinda Lane, and Edward L. Montedonico, as Chapter 7 Trustee for the Estate of Berlinda Lane v. Jacob L. Daniel and Daniel J. Lund
Combined Opinion