Jimmy P. DAVIS, аs Executor of the Estate of Dallas D. Hardy, Jr., Deceased, Appellant, v. PIPER AIRCRAFT CORPORATION, Appellee.
No. 77-2478
United States Court of Appeals, Fourth Circuit
Decided Jan. 2, 1980.
Argued Jan. 8, 1979.
Larry Leake, Asheville, N. C. (Harry DuMont, Uzzell & DuMont, Joel B. Stevenson, McLean, Leake, Talman & Stevenson, Asheville, N. C., on brief), for appellee.
Before WIDENER, HALL and PHILLIPS, Circuit Judges.
JAMES DICKSON PHILLIPS, Circuit Judge:
In this wrongful death diversity case plaintiff, as executor by Alabama appointment of an Alabama decedent‘s estate, timely filed a complaint in the United States District Court for the Western District of North Carolina, then sought leave to amend his complaint to allege his capacity as ancillary administrator by North Carolina appointment made after the statute of limitations had run. The district court denied leave to amend and, on defendant‘s motion, dismissed the action for plaintiff‘s lack of capacity under North Carolina law.1
I.
On October 13, 1974, Dallas D. Hardy, his wife Betty Hardy, and one Toni Sellars died in the crash of a Piper Aircraft on take-off from Ferguson Airport in Swain County, North Carolina. Thereafter personal representatives of the Sellars and Betty Hardy Estates instituted separate wrongful death actions against Dallas Hardy‘s estate and Piper Aircraft, as co-defendants, in the state courts of Alabama. A judgment was obtained against both defendants in the Sellars case, and the Betty Hardy case resulted in a settlement. Jimmy P. Davis, appointed executor of the Dallas Hardy estate by an Alabama probate court, commenсed this wrongful death action on October 7, 1976, five days prior to the running of the applicable North Carolina two-year statute of limitation,
Defendant‘s answer was not filed until some five months later, on March 7, 1977. In this answer defendant moved for dismissal, or, in the alternative, for summary judgment, on grounds that the plaintiff, not having qualified as ancillary administrator of the Hardy estate, lacked the legal capacity to prosecute this North Carolina claim in the federal district courts of North Carolina. Four months later, on July 7, 1977, plaintiff filed a motion to amend3 his complaint to reflect his capacity as ancillary administrator by virtue of his appointment by a North Carolina court on July 6, 1977.
Based upon consideration of the pleadings and the parties’ briefs and arguments, the district court denied plaintiff‘s motion to amend the complaint, and granted defendant‘s motion to dismiss.
In an accompanying memorandum the court held that under Hanna v. Plumer, 380 U.S. 460, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965),
II.
North Carolina law determines the capacity of a party to bring a diversity action for wrongful death under state law in the federal courts of North Carolina.
While the matter may not be entirely free of doubt, for purpose of this decision it may be considered that North Carolina law would prevent allowance of the amendment sought here. Building on the general principle developed under state code practice that amendments introducing “entirely new causes of action” should not be deemed to relate back, a line of North Carolina cases has considered amendments reflecting legal capacity acquired after filing of an original pleading to fall in that category, hence to preclude their allowance when this would defeat the limitations bar. See, e. g., Graves v. Welborn, 260 N.C. 688, 133 S.E.2d 761 (1963); Johnson v. Wachovia Bank & Trust Co., 22 N.C.App. 8, 205 S.E.2d 353 (1974).
On thе other hand, the longstanding weight of federal authority would give relation back effect to such an amendment. This federal view which developed prior to the advent of the Federal Rules of Civil
We thus come to the question whether the state or federal rule shall be applied in the face of their conflict. On this, defendant contends that the guide is to be found in the outcome determinative test of Guaranty Trust Co. v. York, 326 U.S. 99, 65 S.Ct. 1464, 89 L.Ed. 2079 (1945) as given specific application in Ragan v. Merchants Transfer & Warehouse Co., 337 U.S. 530, 69 S.Ct. 1233, 93 L.Ed. 1520 (1949),5 and that this compels application of the state rule. To the contrary, plaintiff urges, and the district court agreed, that the answer is definitively given by Hanna v. Plumer, 380 U.S. 460, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965),6 and that this decision compels application of the federal rule.
We think that Hanna generally commands application of
We think the same result would be indicated were it to be considered that Rule 15(c) is not sufficiently broad in scope completely to cover the ground occupied by the state rule. In that situation, faced with “the typical, relatively unguided Erie choice,” Hanna, 380 U.S. at 471, 85 S.Ct. at 1144, Hanna teaches that the choice between the two rules should not be made on a talismanic analysis of the outcome determination factor alone, but instead by consideration of the compatibility of the choice with Erie‘s twin aims: “discouragement of forum-shopping and avoidance of inequitable administration of the laws.” Id. at 468, 85 S.Ct. at 1142.
Here, application of the federal rule could not encоurage forum shopping, since at the time of forum choice the need for invocation of a relation back rule of pleading is simply not in the picture for a claimant. Similarly, a balancing of federal interests in uniformity of application of procedural rules and in the maintenance of a coherent approach to related procedural matters such as the standards for stating claims sufficiently outweighs any discernible state interest in effectively preventing curative appointment of a personal representative after the timely commencement of judicial proceedings. See Byrd v. Blue Ridge Rural Electric Cooperative, Inc., 356 U.S. 525, 78 S.Ct. 893, 2 L.Ed.2d 953 (1958); Levinson v. Deupree, 345 U.S. 648, 652, 73 S.Ct. 914, 97 L.Ed. 1319 (1953). As recognized by the North Carolina Supreme Court in Graves v. Welborn, 260 N.C. at 692, 133 S.E.2d at 764 the substantive law of North Carolina readily validates other types of action taken by persons prior to their official qualification when they are subsequently appointed as personal representatives. The interest therefore seems one confined solely to technical procedural concerns in the prosecution of litigation. The state‘s underlying interest, as reflected in statutes of limitations, in protecting persons against stale claims is adequately protected by the practical notice requirements built into Rule 15(c). The undoubted substantive interest of the state in subjecting representative parties to official oversight in their prosecution of litigation and the administration of any proceeds realized from it would seem completely subserved by their official qualification at early stages of litigation such as that involved here.
Were we facing an Erie choice not directly controlled by a specific rule‘s applicability, we would therefore consider that the federal policies above identified quite significantly outweigh any state interest served by the presumably conflicting state rule, including that of insuring uniformity of outcome in state and federal forums in the prosecution of this state claim. See Byrd v. Blue Ridge Rural Electric Cooperative, Inc., 356 U.S. at 538, 78 S.Ct. 893.
III.
Having rightly concluded that the federal rules relating to amendment rather than any conflicting state rule controlled decision on the motion to amend, the district court then considered the propriety of allowing the proffered amendment under
Discretion to deny leave to amend is limited by the principle, embodied in Rule 15(a) that “leave shall be freely given when justice so requires,” and by the general policy embodied in the Federal Rules favoring resolution of cases on their merits. See
Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230, 9 L.Ed.2d 222 (1962), sets forth the general standard to be employed by federal courts in making a Rule 15(a) determination:
If the underlying facts or circumstances relied upon by a plaintiff may be a proper subject of relief, he ought to be afforded an opportunity to test his claim on the merits. In the absence of any apparent or declared reason—such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance оf the amendment, futility of amendment, etc.—the leave sought should, as the rules require, be “freely given.”
Under this standard prejudice resulting to the opponent by a grant of leave to amend is reason sufficient to deny amendment. Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 91 S.Ct. 795, 28 L.Ed.2d 77 (1971). Conversely, absence of prejudice, though not alone determinative, will normally warrant granting leave to amend. See Wall v. Chesapeake & Ohio Railway, 339 F.2d 434 (4th Cir. 1964). Here, no finding of prejudice was made by the trial court, nor could it have been. Because defendant was from the outset made fully aware of the events giving rise to the action, an allowance of the amendment could not in any way prejudice the preparation оf defendant‘s case. In spite of the absence of any discernible prejudice, the district court, noting that the factors listed in Foman v. Davis are not exhaustive, found what it considered to be “other good and sufficient reason[s]” (set forth above) for denying amendment.
Only one of the reasons, the delay of four months, falls within the factors specifically mentioned in Foman. Delay alone however, without any specifically resulting prejudice, or any obvious design by dilatoriness to harass the opponent, should not suffice as reason for denial. See generally 6 Wright and Miller, Federal Practice & Procedure: Civil § 1488, at 438. We do not think the delay here suffices. In any event, considering the pace аlready set by the defendant‘s delay of some five months in filing answer to the original complaint and the necessity for plaintiff‘s qualification in North Carolina before amendment could be sought, the delay seems not undue aside from prejudice.
While Foman‘s enumeration of factors cannot be thought exclusive, they do embody a principle which focuses on prejudice or futility or bad faith as the only legitimate concerns in denying leave to amend, since only these truly relate to protection of the judicial system or other litigants. See Howey v. United States, 481 F.2d 1187, 1190-91 (9th Cir. 1973). The other reasons for denial cited by the trial court do not fall within these concerns. The fact that relation back would not be permitted in state court is not a valid consideration. So to treat it would in effect undercut the basic choice of law decision already made in favor of federal law. The same is true of the stated reason that plaintiff‘s decedent has been found negligent in the courts of Alabama. Unless a proposed amendment may clearly be seen to be futile because of substantive or procedural considerations, see, e. g., DeLoach v. Woodley, 405 F.2d 496, 497 (5th Cir. 1968), conjecture about the merits of the litigation should not enter into the decision whether to allow amendment.10 The fact that plaintiff had
Finally we turn to the relation back question itself. If the district court could rightly have concluded that this amendment, if allowed, would not relate back under
For error in denying leave to amend and dismissing the action, the judgment is reversed and the action remanded for further proceedings. The proferred amendment is allowed, and as allowed relates back in legal effect to the date of commencement of the action.
REVERSED AND REMANDED.
K. K. HALL, Circuit Judge, dissenting:
I cannot agree with the majority‘s election to save this state cause of action which is barred in state court. Contrary to the majority‘s opinion, no technical federal pleading rule is at issue, nor is any federal court procedure at stake. Instead, we must decide which events under North Carolina law can toll its statute of limitations in wrongful death actions.
North Carolina courts have ruled that wrongful death actions brought by nonresident personal representatives are time-barred unless two events occur within two years of the alleged wrongful death: (i) qualification of the nonresident as an authorized North Carolina personal representative, and (ii) filing of a complaint to commence the wrongful death action.
The majority holds that, in federal court, only one event should occur within two years of the wrongful death. The majority‘s analysis presumеs that a pleading problem is presented and holds that filing of the complaint alone can toll the statute in federal court, so long as the plaintiff can become qualified to maintain it anytime during the litigation. It is reasoned that this result is mandated by the Federal Rules of Civil Procedure because they allow pleas of late qualification to relate back to the date the complaint is filed, albeit as a matter of discretion for the district court.
The North Carolina courts have refused to approach the limitations issue posed here by plaintiff‘s late qualification as a plead
In Graves v. Welborn, 260 N.C. 688, 133 S.E.2d 761, 767 (1963), North Carolina‘s highest court held that a wrongful death action was validly “commenced” to toll the statute on the filing date, when the plaintiff had made a bona fide attempt to qualify before she filed her action. Her complaint was filed within the limitations period, but hеr official qualification occurred beyond it. 133 S.E.2d at 763-64.
The North Carolina Supreme Court discussed at length the fact that plaintiff had substantially complied with the qualification requirement before the complaint was filed. Id. at 766. She had applied to the court and obtained an order naming her as the lawful representative. She had performed every act necessary for official appointment other than securing the signature of surety to a bond which, because the estate had no assets, would have been only nominal. The court emphasized that she believed her qualification was effective when suit was filed, and therefore was no “pretender.” Id. at 767. The рlea of her official qualification was allowed to relate back to the filing date because the qualification requirement had been met in substance before that time. This case was decided under the North Carolina common law rules of pleading.
Since Graves, North Carolina has adopted the liberal federal rules of pleading and practice, but the substantive qualification requirement has not changed. On facts posing the precise issue here, it has been held that attempts to qualify after the action is filed may be pleaded and allowed to relate back to the filing date, but the action, at that time, is a nullity since to be valid it can “commence” and tоll the statute only after qualification is effective. Sims v. Rea Construction Company, 25 N.C.App. 472, 213 S.E.2d 398 (1975); Johnson v. Wachovia Bank & Trust Co., 22 N.C.App. 8, 205 S.E.2d 353 (1974).
The decisions of these intermediate state courts of record are binding on federal courts sitting in diversity jurisdiction. West v. American Telephone & Telegraph Co., 311 U.S. 223, 236-37, 61 S.Ct. 179, 85 L.Ed. 139 (1940).
This appeal is controlled by Ragan v. Merchants Transfer & Warehouse Co., 337 U.S. 530, 69 S.Ct. 1233, 93 L.Ed. 1520 (1949), where the Supreme Court construed tolling events for state limitations periods to pose substantive law issues. A Kansas statute of limitations was tolled in state court when the complaint was served rather than when it was filed. Rules 3 and 4(a) of the Federal Rules of Civil Procedure seemed to conflict because they provided that filing, not service, of the complaint in federal court commenced the action, and thereby tolled statutes of limitations. The Court reasoned that state law created the cause of action, and,
We cannot give it a longer life in the federal court than it would have had in the state court without adding something to the cause of action. We may not do that consistently with Erie R.R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938).
337 U.S. at 533-34, 69 S.Ct. at 1235.
As in Ragan, any conflict here with North Carolina law arises from what constitutes a tolling event. The majority assumes that filing is a tolling event if qualification becomes effective any time during the action. A consistent line of state court decisions are contrary. They hold that filing can be a final tolling event only when qualification is effective before filing. Where the action is filed without qualifying, the act of qualificаtion becomes the final tolling event.
The majority finds that the rule of Hanna v. Plumer, 380 U.S. 460, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965), controls. There, however,
Hanna made no attempt to overrule Ragan because entirely different interests were at stake. Ragan stated the general rule that state law definitions of tolling events are binding on federal courts. Hanna stated an exception where those definitions dictate a change in the performance of some “housekeeping” function prescribed by Congress in the federal rules. Hanna v. Plumer, 380 U.S. at 473, 85 S.Ct. at 1136.
Here, the majority identifies no consequence to federal procedures which may flow from a decision to follow North Carolina‘s substantive law. On the other hand, the consequence of refusing to accept its definition of tolling events is singular: it changes the outcome of the case, giving life to an action barred in state court.
To meet what it perceives as the broad Hanna rule, the majority cites
Rule 15(c) speaks to the amendment of complaints where defendants are misnamed but otherwise have notice of the action within a limitations period. As the majority notes, Rule 15(d) is more on point because the fact of qualification has occurred after suit was filed. Rule 15(d) is silent on whether the relation back provisions of Rule 15(c) should apply to supplemental pleadings. Becаuse supplemental pleadings have an impact on statutes of limitations, state and federal, which is very different from the amendments considered in Rule 15(c), that silence was intentional. 3 Moore‘s Federal Practice ¶ 15.01[7]. I think the majority‘s leap to rely on Rule 15(c) is, unfortunately, too grand.
The federal rules instruct on our problem, if at all, in Rule 17(b). This rule reveals that whether a party has the capacity or qualification to sue or be sued poses absolutely no consequence to federal court procedures. It points us to state law, because what is at issue in such matters is substantive policy, not technical pleading requirements. It shows that in federal court, statе laws should generally control these matters because they are designed to protect rights and impose responsibilities upon persons whom the states deem capable and responsible to vindicate and bear them.
Like statutes of limitations generally, the North Carolina rule requiring qualification to sue is tied to the purpose of the state‘s cause of action. Unless, to give it effect, federal courts must change how they proceed to hear the state‘s action, we must follow state law.
Finally, I am surprised that, in its effort to save this cause of action, the majority holds in Part III of the opinion that the district court abused its discretion by refusing to allow the amеndment to relate back to the date of filing. Again, I think the majority is wrong.
In Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962), the Supreme Court listed reasons for which the district court could refuse to allow the amendment of a complaint: undue delay, bad faith or dilatory motive of movant, repeated failure to amend previously, undue prejudice to the opposing party, futility of amendment, “etc.”
Here, the district court found plaintiff waited to amend his complaint four months after being informed of the qualification
In short, I think the majority‘s disregard of state law is striking. The action is time-barred as a matter of substantive law. No federal court procedure is fairly at stake. The Federal Rules of Civil Procedure are noticeably silent on our issue. The problem before us is a bare legal issue posing a classic Erie “outcome-determinative” choice. As such, federal precedent mandates we follow state law. Finally, I think in no event should we find the district court abused its discretion in refusing to allow plaintiff to save this cause of action by supplemental pleading. Accordingly, I would affirm the judgment of the district court.
Therefore, I respectfully dissent.