Norton v. International Harvester Co., s. 79-2424

• Citation: 627 F.2d 18
• Decision Date: 03 July 1980
• Docket Number: Nos. 79-2424,79-2492,s. 79-2424
• Parties: Virginia NORTON, surviving widow of and the personal representative of James Norton, deceased, Plaintiff-Appellant and Cross-Appellee, v. INTERNATIONAL HARVESTER COMPANY and Royal Globe Insurance Company, Defendants, and Ross Gear Division of TRW, Inc. and The Travelers Indemnity Company, Defendants-Appellees and Cross-Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 18

627 F.2d 18

Virginia NORTON, surviving widow of and the personal representative of James Norton, deceased Plaintiff-Appellant and Cross-Appellee, v. INTERNATIONAL HARVESTER COMPANY and Royal Globe Insurance Company, Defendants and Ross Gear Division of TRW, Inc. and The Travelers Indemnity Company, Defendants-Appellees and Cross-Appellants.

Nos. 79-2424, 79-2492.

United States Court of Appeals Seventh Circuit.

Argued April 15, 1980.

Decided July 3, 1980.

Wm. A. Denny and James J. Kriva, Denny & Yanisch, Milwaukee, Wis., for plaintiff-appellant and cross-appellee.

Donald H. Carlson, Milwaukee, Wis., Robert Frey, TRW, Inc., Cleveland, Ohio, for defendants-appellee and cross-appellants.

Before SWYGERT, BAUER and WOOD, Circuit Judges.

SWYGERT, Circuit Judge.

The determinative issue is whether the district court erred in its interpretation of Rule 15(c) of the Federal Rules of Civil Procedure by permitting plaintiff to amend her complaint to include additional defendants. We decide the court did err. We therefore reverse and dismiss plaintiff's appeal.

Appeals have been taken by both parties. Plaintiff Virginia Norton appeals from a judgment entered following a jury verdict in favor of defendants Ross Gear Division of TRW, Inc. and its insurer Travelers Indemnity Company (hereafter "TRW"). Her appeal is based on several evidentiary rulings made by the district court during the course of the trial which Norton contends were prejudicial to her case. TRW appeals from a pre-trial order granting Norton's motion to file an amended complaint which added TRW as a defendant in the case. Because the district court, in granting the motion to file an amended complaint, misinterpreted and thereby misapplied Rule 15(c) of the Federal Rules of Civil Procedure, we need not reach the issues raised by plaintiff in her appeal.

I

Because of our disposition, the facts may be summarily stated. Plaintiff is the widow of James Norton, a truck driver who was fatally injured when, on June 5, 1973, his tractor-trailer, manufactured by International Harvester Company, collided with a Pinto automobile on Interstate I-80 near the Nevada-California state line. The collision forced both cars off the highway and down an embankment. As a result, the driver of the Pinto was killed; Norton died a few days later. No other persons were witnesses to the accident. In the course of investigating the incident, it was discovered that the levershaft of the truck's steering gear mechanism, which TRW manufactured, was severed.

On December 6, 1975 plaintiff commenced this action in a Wisconsin state court against International Harvester and its insurer Royal Globe Insurance Company, alleging that the levershaft was defective and that the defect was the cause of the accident. Subsequently, the suit was removed to federal court, and plaintiff's first amended complaint was filed in the district court on March 31, 1976. The applicable statute of limitations ran on June 5, 1976. Approximately twenty-one months later, on March 21, 1978, TRW was brought in the case as a third-party defendant by International Harvester. On September 25, 1978 the district court granted Norton's motion for leave to amend the complaint, naming TRW and its insurer as direct defendants. ¹ TRW had objected to the motion on the basis of the expiration of the three-year statute of limitations. On October 5, 1978 plaintiff filed her second amended complaint, naming International Harvester and TRW as defendants and alleging separate claims against each defendant. Shortly thereafter, Norton settled her claim against International Harvester; it, however, has remained a nominal defendant in the case.

Following a two-week trial, the jury returned a special verdict in favor of TRW. In reaching that verdict, the jury found that the steering gear mechanism was not defective and that the injuries and death of plaintiff's husband were caused by his negligence. Norton contends on appeal, as she did in post-trial proceedings, that the trial court committed prejudicial error by admitting into evidence a section of the police report disclosing the opinions and conclusions of the officers who investigated the accident and also the laboratory test specimens of several levershafts made by TRW experts. TRW cross-appeals from the district court order permitting it to become a direct-party defendant.

II

Rule 15(c) of the Federal Rules of Civil Procedure governs the relation back of amended pleadings involving new parties. ² The rule includes three prerequisites which must be satisfied before an amendment changing the party against whom a claim is asserted relates back to the date when the original complaint was filed:

(1) the claim alleged in the amended complaint must arise out of the same occurrence set forth in the original pleadings;

(2) within the period provided by law for commencing the action against him, the party to be substituted by amendment has received such "notice of the institution of the action that he will not be prejudiced in maintaining his defense on the merits"; and

(3) within the period provided by law for commencing the action against him, the party to be substituted by amendment knew or should have known that, but for a "mistake" concerning the identity of the proper party, the suit would have been brought against him.

Simmons v. Fenton, 480 F.2d 133, 136 (7th Cir. 1973).

A. TRW concedes that plaintiff has met the first prerequisite of Rule 15(c); both the original complaint and the second amended complaint set forth claims arising from the same "occurrence" the June 5, 1973 accident. It contends, however, that neither the second requirement relating to prejudice nor the third requirement relating to mistake has been satisfied in this case.

B. As to the second prerequisite, set forth in subsection (c)(1) of Rule 15, this court has held that prejudice within the meaning of the rule is prima facially established where a party named as an additional defendant in the amended complaint is deprived of the defense of the statute of limitations. Simmons v. Fenton, supra. Such prejudice may not come into existence, however, if the added defendant has had sufficient notice of the institution of the action, whether formal or informal, within the limitations period or if a sufficient identity of interest exists between the new defendant and the original one so that relation back would not be prejudicial. Wood v. Worachek, 618 F.2d 1225, at 1230 (7th Cir. 1980).

Having examined the record before us, we find that neither of these factors is present in this case and, accordingly, hold that the amendment of the complaint resulted in prejudice to TRW. It was not until July 6, 1976, one month and a day after the limitations statute had run, that TRW received actual notice of the suit by letter from International Harvester. Plaintiff, however, contends that TRW had sufficient notice of the commencement of her action because it conducted a visual inspection of the steering mechanism involved in this case in October 1974, approximately twenty months prior to the expiration of the applicable statute of limitations. In support of this position, plaintiff relies on a November 4, 1974 report, written by TRW and given to International Harvester, which discusses the results of the visual inspection. That report, however, contains no facts from which a conclusion could be drawn that TRW had actual notice of plaintiff's lawsuit against International Harvester, which was instituted one year later. The district court did not rely on the November 4, 1974 report as evidence of adequate notice under Rule 15 but instead found that as a result of conducting the inspection itself, TRW "had notice of a possible problem with (the) . . . steering gear." We agree with the district court insofar as the inspection may well have put TRW on notice of the incident. That type of notice, however, falls short of satisfying Rule 15(c)(1). See, e. g., Craig v. United States, 413 F.2d 854, 857-58 (9th Cir.), cert. denied, 396 U.S. 987, 90 S.Ct. 483, 24 L.Ed.2d 451 (1969). "The purpose of (Rule 15(c) (1)) is accomplished if the initial complaint gives the defendant fair notice that litigation is arising out of a specific factual situation." Longbottom v. Swaby, 397 F.2d 45, 48 (5th Cir. 1968). TRW concedes that it was aware of the original complaint and the first amended complaint before the statute of limitations had run, but argues that the claims in those first two pleadings were unique to International Harvester and thus, the complaints did not satisfy the notice requirement of Rule 15(c)(1). We agree. A reading of the record shows that the initial complaints concern International Harvester's failure to use due care in the manufacturing of the truck, failure to test and inspect the steering mechanism, and failure to determine the "durability and functional ability" of the steering mechanism for its...