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Bechtel v. Robinson

argued: July 11, 1989.

PAUL BECHTEL; WANDA ELAINE GREENE, CO-EXECUTORS OF ESTATE OF EDWARD G. GREENE, DECEASED, APPELLANTS
v.
JANUS R. ROBINSON, D/B/A KIRBY & HOLLOWAY FAMILY RESTAURANT JAMES GRAY, D/B/A KIRBY & HOLLOWAY FAMILY RESTAURANT



On Appeal from the United States District Court for the District of Delaware (D.C. Civil Action No. 88-00086), District Judge: Hon. Caleb M. Wright.

Author: Higginbotham

Opinion OF THE COURT

A. LEON HIGGINBOTHAM, JR., Circuit Judge.

This is an appeal in a diversity action from an order of the district court granting defendant's motion for summary judgment and denying plaintiffs' motion to file a second amended complaint. Because we find that the district court erred in not applying equitable estoppel against the statute of limitations defense, we will reverse the court's grant of summary judgment to the defendant. We will also reverse the court's denial of leave for plaintiffs to amend their complaint, and will remand this case for further proceedings consistent with this opinion.

I.

The following facts are based on the district court's findings and are undisputed. On March 9, 1986, Edward G. Greene ("Greene"), while dining at the Kirby & Holloway Family Restaurant (the "Restaurant") in Dover, Delaware, sustained back injuries when the chair he was sitting in collapsed. At the time of the incident, James E. Gray ("Gray") was working in the Restaurant, and recalled helping Greene after his fall. On October 15, 1986, Michael P. Creedon ("Creedon"), an attorney in Philadelphia, Pennsylvania, who was retained by Greene, wrote the Restaurant requesting that its insurance carrier contact him about Greene's accident. Creedon's letter did not mention the commencement of any lawsuit, and although there is no direct evidence that anyone at the Restaurant received the letter, it was never returned by the post office. On November 19, 1986, Greene died of causes unrelated to the accident at the Restaurant.

In January 1988, Greene's case was referred to Bayard J. Snyder ("Snyder"), an attorney in Wilmington, Delaware, who began an investigation on behalf of the plaintiffs Paul Bechtel and Wanda E. Greene, co-executors of Greene's estate, to determine the proper party upon which to bring a tort action for the injuries Greene suffered in the Restaurant.*fn1 This investigation included a search of public records and available directories. From the Prothonotary's office in Kent County, Delaware, Snyder learned that the Restaurant was listed as being owned in sole Proprietorship by Janus R. Robinson ("Robinson"). Moreover, an employee of Snyder's visited the Restaurant to determine actual ownership, but did not see any references to who owned the business except that of Kirby & Holloway, the Restaurant's trade name.

The plaintiffs filed a complaint in federal district court in Delaware*fn2 on February 17, 1988, naming as the defendant "Janus R. Robinson, d/b/a Kirby & Holloway Family Restaurant." On February 23, 1988, when the plaintiffs attempted service on Robinson at the restaurant, they were informed by an unidentified employee that Gray, rather than Robinson, was the owner of the Restaurant. Unbeknown to the plaintiffs at that time, Gray had purchased the Restaurant from Robinson on September 4, 1984 through a corporation called Creative Dining, Inc. was the actual owner of the Restaurant, and that Gray was the principal stockholder of that corporation.

Upon receiving information that Gray was the owner of the restaurant, plaintiffs filed an amended complaint as of right on March 14, 1988, after the statute of limitations period had expired,*fn3 adding as a defendant "James Gray, d/b/a Kirby & Holloway Family Restaurant." Gray was personally served on March 18, 1988. When Gray answered the complaint on May 2, 1988, the plaintiffs learned for the first time that Creative Dining, Inc.

Although Gray had not registered Creative Dining, Inc., as the new owner of the Restaurant prior to the filing of this suit, he did register "Creative Dining, d/b/a Kirby & Holloway Family Restaurant" in the Prothonotary's office on May 2, 1988. Before that date, the only public record that accurately reflected ownership was the state license of the Restaurant. That document was posted in Gray's office in the basement of the Restaurant, an area not open to the public.

In his answer to the plaintiff's complaint, Gray had raised the statute of limitations as an affirmative defense, and on July 7, 1988, he moved for summary judgment on that ground. On August 10, 1988, plaintiffs moved to file a second amended complaint correcting Robinson's name*fn4 and adding "Creative Dining, Inc., d/b/a Kirby & Holloway Family Restaurant" as a defendant. The district court, after determining that the plaintiffs had failed to meet the requirements under Fed.R.Civ.P. 15(c) for relating their amended complaint back to the time of the filing of the original action, and that Gray's failure to register his company as the owner of the Restaurant and to post its license publicly did not provide plaintiffs with any form of equitable relief from the statute of limitations defense, granted Gray's motion for summary judgment and denied plaintiffs' motion to file a second amended complaint. Judgment was entered on December 15, 1988, and this appeal followed.

II.

A.

As an initial matter, we must determine what is our appropriate scope of review in this case. On this summary judgment record, we view the facts as they are set forth on the affidavits, in the light most favorable to the non-moving party, in order to determine whether there are material issues of disputed fact. In that determination, our review is plenary. Erie v. Telecommunications, Inc. v. City of Erie, 853 F.2d 1084, 1093 (3d Cir. 1988). We also exercise plenary review over the district court's statutory construction, see Chrysler Credit Corp. v. First Nat'l Bank & Trust Co., 746 F.2d 200, 202 (3d Cir. 1984), and interpretation of legal precepts. Dent v. Cunningham, 786 F.2d 173, 175 (3d Cir. 1986).

Moreover, when a trial court makes an equitable assessment after the operative facts are established, we review that assessment for abuse of discretion. See Callowhill v. Allen-Sherman-Hoff Co., Inc., 832 F.2d 269, 271 n. 4 (3d Cir. 1987), cert. denied, 485 U.S. 962, 108 S. Ct. 1228, 99 L. Ed. 2d 428 (1988); E.E.O.C. v. Great Atlantic & Pacific Tea Co., 735 F.2d 69, 81 (3d Cir.), cert. dismissed, 469 U.S. 925, 105 S. Ct. 307, 83 L. Ed. 2d 241 (1984). In that regard, we must decide whether the district court "located 'a just result' in light of the circumstances peculiar to the case . . . ." Albemarle Paper Co. v. Moody, 422 U.S. 405, 424, 45 L. Ed. 2d 280, 95 S. Ct. 2362 (1975). Finally, we review a trial court's denial of leave to amend a complaint for abuse of discretion. Kiser v. General Electric Corp., 831 F.2d 423, 426 (3d Cir. 1987), cert. denied, 485 U.S. 906, 108 S. Ct. 1078, 99 L. Ed. 2d (1988).

B.

We first address the appellants' contention that the district court should have applied equitable estoppel to bar Gray from asserting the statute of limitations as a defense since his lack of compliance with Delaware law had caused them to sue the wrong party. Specifically, the appellants argue that Gray violated Del.Code Ann. tit. 6, § 3101 (1975) ("§ 3101"),*fn5 which requires businesses operating under fictitious trade names to register their actual owner's name at the Prothonotary's office, and Del.Code Ann. tit. 30, § 2109 (1985) ("§ 2109"),*fn6 which requires a business to post its license in a conspicuous manner in either its principal office or place of business.

With respect to appellants' contention that he violated § 3101, Gray rejoins that he was not required to disclose that Creative Dining, Inc., was the owner of the Restaurant on grounds that Del.Code Ann. tit. 6, § 3107 (1975) ("§ 3107")*fn7 expressly exempts legally incorporated companies from § 3101's application. Nevertheless, the appellants assert that the purpose behind § 3101 "is to allow the public ease and consistency in discovering the names of people transacting business in particular counties." Brief for Appellants at 24. Therefore, to avoid vitiating § 3101's purpose, the appellants claim that § 3107 ...


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