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McCarthy v. Fifer

Superior Court of Delaware, Sussex

November 7, 2018

MICHAEL McCARTHY, Plaintiff,
v.
LAWRENCE FIFER, ESQ., TARA BLAKELY, ESQ., and FIRST AMERICAN TITLE INSURANCE COMPANY, Defendants.

          Submitted: October 26, 2018

          OPINION AND ORDER

          Noel Eason Primos, Judge.

         Before the Court is Defendant Larry Fifer's (hereinafter "Fifer") Motion to Dismiss the Amended Complaint and Plaintiff Michael McCarthy (hereinafter "McCarthy"), MJM Management Corp. (hereinafter "MJM"), and Abba First, LLC's (hereinafter "Abba," collectively with McCarthy and MJM, "Plaintiffs") Response. For the reasons set forth below, Fifer's motion is DENIED.

         A. Factual Background and Procedural History

         The Court has addressed the background facts and procedural history in its July 18, 2018 Opinion and Order on Defendants' previously filed Motion for Judgment on the Pleadings. The Court refers to that Opinion and Order for a more complete recitation of the facts of the case, and shall here only briefly recite the allegations of the First Amended Complaint for context.[1]

         Plaintiffs' First Amended Complaint alleges that Fifer, whom McCarthy had used as his real estate attorney to purchase and title twenty-seven investment properties, had incorrectly titled certain properties in McCarthy's personal name and under the entity Abba, rather than titling them to MJM. In January of 2015, McCarthy, individually, filed for bankruptcy. Subsequently, in March of 2015, the trustee for McCarthy's bankruptcy estate (hereinafter the "Trustee") discharged certain of the properties, as they were worth less than the mortgages owed, and these properties reverted to Plaintiff personally.[2] The Trustee, however, discovered that there were problems with the collateral for one loan with County Bank, covering twelve properties, due to Fifer's error in titling the properties. The Trustee considered the properties unsecured and did not abandon them, but rather began to collect rent and attempt to market the properties for sale. In late 2016, County Bank initiated an adversarial proceeding to protect its interest in the properties and ultimately foreclosed on all of the properties instead of simply the mistitled properties.

         In his original complaint filed on March 7, 2017, McCarthy specifically alleged that Fifer had committed breach of contract and malpractice by failing to title the Properties to MJM, and that as a result, McCarthy had lost all of his properties when County Bank instituted its adversarial action and subsequently foreclosed on the properties. On July 18, 2018, this Court granted Fifer's motion for judgment on the pleadings as to McCarthy's claim for breach of contract and denied it as to McCarthy's claim for malpractice. Subsequently, on August 23, 2018, a First Amended Complaint was filed adding claims of MJM and Abba for malpractice against Fifer.

         B. Arguments of Parties

         Fifer moves to dismiss MJM and Abba's claims, arguing that their claims are untimely under the statute of limitations for legal malpractice.[3] According to Fifer, an amendment setting up a new cause of action does not relate back to the date of the original pleading, but rather is governed by its own date, and adding the new plaintiffs adds new causes of action that are specific to those two entities.[4] Thus, Fifer argues that their claims cannot relate back to the date the original complaint was filed and are therefore time-barred.

         Plaintiffs' respond that they added MJM and Abba as parties, but did not change the allegations of legal malpractice. McCarthy's original pro se complaint was replete with allegations that properties owned by McCarthy, MJM, and/or Abba were lost due to the actions of Fifer. Plaintiffs therefore allege that Fifer was on notice so as to not be prejudiced in maintaining a defense against their claims, and that the claims on behalf of MJM and Abba relate back to the original complaint, as they did not seek to add new facts or change the circumstances from which those claims arose.

         C. Discussion

         On a motion to dismiss, the moving party bears the burden of demonstrating that "under no set of facts which could be proven in support of its [complaint] would the [plaintiff] be entitled to relief."[5] Upon this Court's review of a motion to dismiss, "(i) all well-pleaded factual allegations are accepted as true; (ii) even vague allegations are well-pleaded if they give the opposing party notice of the claim; (iii) the Court must draw all reasonable inferences in favor of the non-moving party; and (iv) dismissal is inappropriate unless the plaintiff would not be entitled to recover under any reasonably conceivable set of circumstances susceptible of proof."[6] Finally, "a pro se pleading is judged by a 'less stringent standard' than a pleading or document filed by an attorney."[7]

         In order for an amendment adding a party after the running of the statute of limitations to relate back to the filing date of the action, three conditions must be met:

(1) the claim or defense asserted in the amended pleading arose out of the same conduct, transaction or occurrence set forth or attempted to be set forth in the original pleading;
(2) within the period provided by law for commencing the action against the party (i.e., the statute of limitations), the party to be brought in by the amendment received such notice of the institution of the action that the party will not be prejudiced in maintaining a defense on the merits; and
(3) within the period provided by law for commencing the action against the party, the party to be brought in by the amendment knew or should have known that but for a mistake concerning the identity of the party the suit would have been brought against the party.[8]

         While the above language appears to reference additional defendants, an amendment to add additional plaintiffs after the statute of limitations has run may also only be granted if the amendment satisfies the "relation back" requirements under Rule 15(c).[9] However, the cause of action concept within Rule 15(c) has been broadly defined as simply requiring that fair notice be given regarding the general fact situation out of which the claim arose.[10] Consequently, where a party seeks to add a plaintiff, and the causes of action are the same as those in the original complaint, the party seeking to amend should be required to show only "that the defendant received sufficient notice of the claims of the proposed additional plaintiff so that the defendant will not be prejudiced in defending the claims of the additional plaintiff."[11]

         Relation back under Rule 15(c) turns on whether the claim asserted in the amended pleading arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading. In determining whether to allow relation back under Rule 15 for a complaint that adds a new plaintiff, some courts strictly adhere to the requirements of Rule 15(c).[12] However, the Delaware Supreme Court has held that "[s]uch strict adherence is unnecessary when dealing with the addition...of a new plaintiff and contravenes the remedial policy underlying Rule 15(c)."[13] To require a plaintiff to demonstrate that, but for a mistake, additional plaintiffs would have been named in the original complaint "...serves no purpose where a defendant was originally part of the action and thus on notice of the claims before the expiration of the statute of limitations."[14]

         Fifer argues that MJM and Abba's claims should be dismissed, as their claims are beyond the three-year threshold and do not relate back to the time of the initial complaint. In support of this argument, Fifer relies on this Court's decision in Spady v. Keen,[15] which involved an action for injuries sustained as a result of a vehicle collision. In Spady, the plaintiff brought the original action and subsequently attempted to amend her complaint after the statute of limitations had run in order to add her son, who was also in the car during the collision and suffered injuries. This Court held that the son's claims as to the nature and extent of his injuries, their impact on his lifestyle, and/or any pain and suffering, would be specific to him and would need to be ...


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