The First District Court of Appeal recently issued its opinion in Graney & KTD Consulting Engineers, Inc. v. Caduceus Properties, LLC & Tallahassee Neurological Clinic, P.A., 37 Fla. L. Weekly D892a (Fla. 1st DCA Apr. 17, 2012), which confirmed the divide among jurisdictions in Florida and nationwide. Specifically, the opinion related to the issue of whether the relation-back doctrine applies when a plaintiff’s amendment adds a direct claim against an already-joined, third-party defendant after the statute of limitations has run.
In Graney, the court noted that, “where the purpose of the amendment is to bring a new party into the suit, the relation-back doctrine does not apply, and dismissal on time-barred grounds is proper.” The court further noted that the relation-back doctrine applies to an amendment adding a new party or new cause of action based on mistake, misnomer, or defect in the characterization of the party; it does not apply to an amendment that is deemed an entire change of parties. The court also noted that an amendment relates back where the originally named defendant misled the plaintiff into believing that the correct defendant was sued. The court found that none of these principles warranting relation-back applied to the facts at issue because the plaintiffs were fully aware of the identity of the third-party defendants and their potential liability, deliberately chose not to sue them, and the third-party defendants lacked notice that the plaintiffs intended to file a direct action against them. The court held that this was the type of harm that statutes of limitation is designed to prevent.
The court expressly certified conflict with the Fifth District Court of Appeals’ holding in Gatins v. Sebastian Inlet Tax Dist., 453 So. 2d 871 (Fla. 5th DCA 1984), which held that relation-back doctrine applied to a plaintiff’s amendment asserting a direct action against the third-party defendant after the statute of limitations expired. That court reasoned that such amendments “merely adjust the status of an existing party” and the third-party defendant, already a party to the action, was aware that it may be held liable for the plaintiff’s damages.
In declining to follow Gatins, the Graney court analyzed the nation-wide split of authority on this issue. Specifically, the court discussed opinions by courts favoring relation-back based on their reasoning that “the filing of a third-party complaint automatically informs the third-party defendant that the plaintiff may ultimately seek to bring a direct action against the defendant and, therefore, the defendant is not prejudiced by the plaintiff’s delay in filing the direct action.” However, the court juxtaposed that argument with other courts' finding the relation-back doctrine inapplicable because such courts “have concluded that an equally plausible inference is that the third-party defendant had no reason to know, before the filing of the motion for leave to amend the complaint, that the plaintiff would assert a direct claim against them.” In such situations, the court noted that the plaintiff’s failure to timely assert direct claims against a third-party defendant may be regarded as a tactical choice, rather than a mistake or error. Adopting this view, the Graney court held:
Relation back should only be permitted where there is a mistake or misnomer in identifying a party defendant, not a mistake in failing to add a party defendant. The fact that a defendant who is proposed to be added has participated in the lawsuit as a third-party defendant does not relieve the plaintiff of the burden of demonstrating mistake or misnomer. To hold otherwise would amount to interpreting rule 1.190(c) to mean that the filing of a third-party complaint tolls the running of the statute of limitations on a cause of action between the plaintiff and a third-party defendant. Nothing in the text of the rule compels such an expansive interpretation.
Therefore, a clear conflict exists on this issue at the state court appellate level. It should be noted, though, that Judge Van Nortwick’s dissenting opinion in Graney adopted the rationale of Gatins, as he believed the third-party complaint placed the third-party defendants on notice within the limitations period that they could be liable for damages. It will be interesting to see if, and how, the Florida Supreme Court resolves this issue.