Amica Mutual Insurance v. McRostieAmica Mutual Insurance v. McRostie
{1} Nеw Mexico has a savings statute which states that once a suit has been commenced, if it “fail[s] ... for any cause, except negligence in its prosecution,” a second suit can be brought within six months and the second suit will be considered a continuation of the first suit. NMSA 1978, § 37-1-14 (1880). This statute has the effect of preventing a statute of limitations from barring a suit where the original suit was brought in a timely fashion but the statute ran before the second suit was filed. See Gathman-Matоtan Architects & Planners, Inc. v. State Dep’t of Fin. & Admin.,
BACKGROUND
{3} Plaintiff Arnica Mutual Insurance Company, joining Diane Raleigh as an involuntary plaintiff, sued Defendant Gordon Peter McRostie in the Second Judicial District Court, in Bernalillo County, New Mexico, on a subrogation claim. The claim arose out of payments Plaintiff made to Raleigh after Raleigh’s vehicle accident in Florida and treatment by Defendant in New Mexico.
{4} More particularly, Plaintiff alleged that Defendant was professionally negligent in giving Raleigh a trigger point injection that caused Raleigh personal injuries. The alleged negligent injection occurred on September 5, 2000. Plaintiffs complaint was filed on September 5, 2003. For jurisdiсtion and/or venue purposes, Plaintiff alleged that it was authorized to do business in New Mexico, “with its principle [sic] place for claims handling in Bernalillo County [New Mexico], and all other parties to this action are residents of New Mexico or otherwise subject to the jurisdiction of this Court.” Plaintiff attached an affidavit of Sheryl Heiner, a regional sales executive for Plaintiff in New Mexico, who stated that Plaintiff had only one office in New Mexico and that the office was located at “P.O. Box 67620, Albuquerque, New Mexico 87193-7620.”
{5} Defendant filed a verified answer raising the defense that venue was improper. Defendant also filed a motion to dismiss Plaintiffs complaint for improper venue. Defendant denied that Plaintiffs principal place for claims handling was Bernalillo County, and denied that Raleigh was a resident of New Mexico. Defendant also defended on the ground that he was not a proper party because “the entity providing medical services [to Raleigh] was G.P. McRostie, D.O.M., N.D., P.A.[,]” which was a professional corporation (Corporation). See NMSA 1978, §§ 53-6-1 to -14 (1963, as amended through 2001) (authorizing the incorporation of an individual to render professional services).
{6} At the hearing on the motion to dismiss for lack of venue, Plaintiffs only witness was an employee of Stevenson & Associates, Inc., an independent insuranсe adjusting company. This witness testified that she had not worked on the claim in question and did not have personal knowledge of whether her firm handled the claim. She further testified that Plaintiff did not employ persons in New Mexico and did not have an office or physical address in the State. There was no testimony concerning the residence of Raleigh, and Defendant’s contention that Raleigh was not a resident of New Mexico remained uneontradicted. Verbally, on January 22, 2004, and in an order entered on March 18, 2004, the district court dismissed Plaintiffs Bernalillo County complaint without prejudice for lack of venue.
{7} Plaintiff filed a new complaint against Defendant on March 25, 2004, this time in the First Judicial District Court, in Santa Fe County, New Mexico. Defendant filed an answer on May 3, 2004, affirmatively stating that the medical services in question were provided by Corporation and that Defendant was not a proper рarty to the action because the medical services were provided by Corporation. Defendant then filed a verified motion to dismiss on July 20, 2004, asserting that (1) the statute of limitations in NMSA 1978, § 37-1-8 (1976) barred the action and Section 37-1-14 did not save Plaintiffs action because Plaintiff was negligent in the prosecution of its first action; and (2) Defendant was not a proper party and Corporation was a necessary and indispensable party.
{8} In one doсument filed on August 5, 2004, Plaintiff both responded to Defendant’s motion to dismiss and moved for leave to file an amended complaint to add Corporation as a party. Plaintiff took the position that its actions did not constitute negligent prosecution, asserting that, based on Heiner’s affidavit, it filed its Bernalillo County complaint
{9} Defendant countered on August 19, 2004, with a reply asserting that not only had Defendant alerted Plaintiff early on in Plaintiffs first action that it was Corporation and not Defendant that had provided the service, Plaintiff had in its possession an invoice showing “the McRostie corporate name.” Further, Defendant pointed out that Plaintiff made no attempt to refute Defendant’s allegation that Raleigh was not a resident of New Mexico and that the Heiner affidavit’s indication of a post office box for Plaintiff and nothing more was insuffiсient to trigger either jurisdiction or venue. As to Plaintiffs motion to amend, Defendant asserted, among other things, that Plaintiff violated First Judicial District Rule LR1-306(E) NMRA by filing a cross-motion which operated as both a response to Defendant’s motion to dismiss and a motion to amend.
{10} Following a hearing in the Santa Fe County district court on Defendant’s motion to dismiss, the court entered an order granting the motion and dismissing Plaintiffs action with prejudice. As to the statute of limitations, the court determined that under Barbeau v. Hoppenrath,
{11} Plaintiff appeals asserting the court erred (1) in determining that its prosecution of the Bernalillo County action was negligent under Section 37-1-14, (2) by not allowing its motion to amend for violation of LR1-306(E), and (3) by denying its motion to amend to include Corporation as a defendant. We discuss each of these points and determine that the district court misapplied Barbean and should not have disallowed or denied Plaintiffs motion to amend.
INITIAL CONSIDERATION AND PRESERVATION
{12} Defendant asserts that Plaintiff failed to preserve relation back and continuation arguments. We disagree. These arguments were preserved through Plaintiffs proposed amended complaint that expressly sought to overcome the bar of the statute of limitations because “[pjursuant to [Section] 37-1-14, suit is proper,” and when Plaintiff argued at the hearing on Defendant’s motion to dismiss that its proffered amendment would rеlate back and allow the cause of action to go forward. Also at that hearing, Plaintiff stated that refiling in Santa Fe County was “contemplated by all of the parties” and requested that the matter be allowed to continue before the court. Further, the district court was fully aware of Section 37-1-14, and even discussed at the hearing a case questioning whether a second action “was a continuation” of the first under that statute. Although thе court did not specifically rule in regard to the application of Rule 1-015(C) or Section 37-1-14’s language that a second suit is “deemed a continuation of the first,” it is apparent that the court was aware of Plaintiffs relation back contention in light of the issues brought before it by the motion to amend to add Corporation and by Plaintiffs proposed amended complaint alleging that Section 37-1-14 allowed it to proceed in spite оf the statute of limitations.
DISCUSSION
A. Section 37-1-14 and Negligent Prosecution
{13} No facts are in dispute. We will treat the court’s dismissal as a summary judgment under Rule 1-056 NMRA based on undisputed facts. Where no material facts are “in dispute, and only a legal interpretation of the facts remains,” the standard of review is whether the moving party is entitied
{14} Section 37-1-14 reads: “If, after the commencement of an action, the plaintiff fail[s] therein for any cause, except negligence in its prosecution, and a new suit be commenced within six months thereafter, the second suit shall, for the purposes herein contemplated, be deemed a continuation of the first.” The question is whether Plaintiffs prosecution of the Bernalillo County action was negligent, thereby erasing the otherwise saving grace of Section 37-1-14.
{15} Defendant argues that our holding in Barbeau governs this case. In Barbeau, based on a traffic accident occurring in New Mexico, аnd two days before the expiration of the applicable New Mexico statute of limitations, the plaintiffs filed their original action against the alleged tortfeasor and an insurer in federal court in Oregon.
{16} The reasoning of Barbeau does not automatically transfer tо the facts in the present ease. While we cannot say that Plaintiff was free of carelessness in its lack of basis for venue in the Bernalillo County action, we are not prepared to extend Barbeau and conclude that the circumstances in the present case constitute negligent prosecution thereby eliminating the savings statute as a safe harbour for Plaintiff. There is a valid distinction to be made between filing a complaint that on its face defeats subject matter jurisdiction, and filing an action without a thorough investigation as to whether venue is proper.
{17} Subject matter jurisdiction gives a court power and authority to act. Without it, the court has no power or authority to act. Venue, required for convenience of parties, can be waived. Once venue is waived, the court can act. Section 37-1-14 applies to a dismissal for lack of vеnue. Were it not for the foot in the door given Defendant by Barbeau, a ease in which it was evident from the complaint itself that the Oregon federal court lacked jurisdiction, we tend to doubt the present case would have reached the appellate level on this issue. We are not persuaded that we should extend the jurisdiction error in Barbeau to the venue mistake here. When balancing the policy favoring access to judicial resolution of disputes, including that embodied in Section 37-1-14, against the venue mistake in this case, we think it appropriate to hold, and we do hold, that the circumstances do not constitute negligent prosecution. Under Section 37-1-14, the Santa Fe County action is deemed a continuation of the Bernalillo County action. The action, therefore, is not barred under Section 37-1-8.
B. Disallowance and Denial of Motion to Amend
{18} The district court order stated: “Pursuant to LR1-306(E), [the motion to аmend the complaint] was not properly before the Court[.] Notwithstanding, and even if this Court had granted such motion, Plaintiffs could not have maintained an action against the corporation pursuant to NMSA 37-1-8 (1978).” The court appears to have both (1) disallowed the motion to amend, by determining that the motion “was not properly
1. Disallowance Based on LR1-306(E)
{19} LR1-306(E) states: “The practice of filing cross-motions to operate as both a motion and as a response to the original motion is prohibited.” It is arguable whether Plaintiff violated the rule. Nevertheless for the purpose of deciding the issue at hand, we will assume that the district court’s interpretation of the rule to include a motion to amend within the meaning of “cross-motion” was not erroneous. However, although we normally would prefer not to argue with a district court’s enforcement of its local rule, we cannot defer to the court’s enforcement here.
{20} Disаllowance, resulting in dismissal of Plaintiffs action, effectively disengages the saving power of Rule 1-015. Rule 1-015(A) requires amendments to be freely given, absent prejudice. See Crumpacker v. DeNaples,
2. Denial Based on Futility; Relation Back
{21} Our determination that LR1306(E) should not result in disallowance of Plaintiffs motion does not, however, end the matter. The court determined that even if it had granted the motion to amend, adding Corporation would have been futile because the action would be barred under Section 37-1-8. The circumstances raise the specific questions of whether the claims against Corporation would relate back under Rule 1-015(C) in a way that would escape the bar of Section 37-1-8 by way of Section 37-1-14.
{22} Any discussion of these statutory rules and their application, of course, requires us to assume that Corporation is a necessary and indispensable party such that, without joinder, the complaint was subject to dismissal with prejudice. On appeal, Plaintiff has not attacked the district court’s determination that Corporation is a necessary and indispensable party. Therefore, for the purposes of resolution of the issues in this appeal, Plaintiff has waived any error in regard to the district court’s determination that Corporation is an indispensable party. We therefore do not address and leave for another day the propriety of the district court’s ruling in this regard.
{23} Rule 1-015(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. An amendment changing the party against whom a claim is asserted relates back if the foregoing provision is satisfied and, within the period provided by lаw for commencing the action against him, the party to be brought in by amendment:
(1) has received such notice of the institution of the action that he will not be prejudiced in maintaining his defense on the merits; and
(2) knew or should have known that, but for a mistake concerning the identity of the proper party, the action would have been brought against him.
{24} The case of Romero v. Bachicha,
{25} Here, we have held that Plaintiffs Santa Fe County action survived the statute of limitations bar under the application of the savings statute and is therefore a continuation of the Bernalillo County action. We have also held that under Rule 1-015(A) Plaintiff should have been permitted to amend unless, of course, amendment would be futile. The district сourt’s determination of futility rested solely on the application of Section 37-1-8, without regard to the application of the factors in Rule 1-015(0(1) and (2). This was an abuse of discretion. See Stinson v. Berry,
{26} The first Rule 1-015(C) factor, stated in subpart (C)(1), would be whether Corporation was on notice from the Bernalillo County action of the institution of the action against Defendant such that Corporation would not be prejudiced in the joinder and in having to maintain a defense on the merits of Plaintiffs claim. This notice issue obviously would involve factual analyses of whether Defendant was the principal professional in the professional corporation “G.P. McRostie, D.O.M., N.D., P.A.,” and whether, based on Defendant’s position in Corporation, Corporation had received such notiсe of the institution of the Bernalillo County action that Corporation would not be prejudiced in maintaining its defense on the merits. See Rivera v. King,
CONCLUSION
{28} We reverse the district court’s dismissal with prejudice of Plaintiffs action and remand for further proceedings consistent with this opinion.
{29} IT IS SO ORDERED.
Notes
. It is not clear in the New Mexico law cited to us by thе parties that a medical provider who commits negligence in the performance of professional duties, resulting in personal injury to a patient, cannot be sued individually for damages without joining the provider’s professional corporation. See Sanders, Bruin, Coll & Worley, P.A. v. McKay Oil Corp.,