Andrews v. Lakeshore Rehabilitation Hosp.
| Decision Date | 15 May 1998 |
| Docket Number | No. 96-7080.,96-7080. |
| Citation | 140 F.3d 1405 |
| Parties | Janice ANDREWS, Plaintiff-Appellant, v. LAKESHORE REHABILITATION HOSPITAL, HealthSouth Corporation, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
James Alan Mendelsohn, Gordon, Silberman, Wiggins & Childs, Birmingham, AL, for Plaintiff-Appellant.
Daniel P. Leary, L. Traywick Duffie, Hunton & Williams, Atlanta, GA, for HealthSouth Corp. and Lakeshore Systems Services.
William K. Hancock, Johnston, Barton, Proctor & Powell, Birmingham, AL, for Lakeshore Rehabilitation Hospital.
Appeal from the United States District Court for the Northern District of Alabama.
Before EDMONDSON and HULL, Circuit Judges, and CLARK, Senior Circuit Judge.
Plaintiff Janice Andrews brought racial discrimination and retaliation claims against her employer under section 1981. Plaintiff appeals the district court's sua sponte dismissal of her retaliation claim as not cognizable under section 1981. Plaintiff also appeals the district court's subsequent order granting HealthSouth's 12(b)(6) Motion to Dismiss her racial discrimination claim against HealthSouth and denying Plaintiff's Motion to Join LSSI as a party. After review, we reverse.
Plaintiff worked at Lakeshore Rehabilitation Hospital ("the Hospital") from 1980 until her termination on February 14, 1994. During that time, Lakeshore Foundation ("the Foundation") owned and operated the Hospital. The Foundation contracted with Lakeshore Systems Service, Inc. ("LSSI") to provide administrative services to the Hospital.
After Plaintiff's termination, the Foundation leased the Hospital building and equipment to LSSI on October 1, 1994, and LSSI employed all Hospital employees. LSSI also operated the Hospital under the same name of "Lakeshore Rehabilitation Hospital." LSSI's parent company was ReLife, Inc. After LSSI began operating the Hospital, ReLife merged with HealthSouth Corporation ("HealthSouth"). Thus, HealthSouth became LSSI's parent company.
Plaintiff's Complaint names "Lakeshore Rehabilitation Hospital" as the sole Defendant. The Complaint was filed on December 21, 1995, and delivered by certified mail on January 4, 1996, to the Hospital's address at Lakeshore Rehabilitation Center, 3800 Ridgeway Drive, Homewood, Alabama.1 At this point, LSSI was leasing and operating the Defendant Hospital as LSSI's business.
The Defendant Hospital's Answer, however, states that it is filed by "Lakeshore Foundation, successor-in-interest to Jefferson Tuberculosis Sanatorium d/b/a Lakeshore Hospital." The record does not indicate how the Complaint got from the Defendant Hospital, operated by LSSI, to the Foundation, the prior operator. In any event, the Answer admits that the Defendant Hospital was Plaintiff's employer and is an entity subject to suit. Even though Plaintiff was requesting reinstatement at the Defendant Hospital, the Answer did not assert that Plaintiff had sued the wrong entity or failed to join an indispensable party.
As the first affirmative defense, the Defendant Hospital's April 26 Answer asserts that Plaintiff failed to state a claim upon which relief could be granted. No party as yet had filed a motion to dismiss. On May 6, however the district court sua sponte dismissed Plaintiff's retaliation claim as not cognizable under section 1981.2 The case proceeded on the racial discrimination claim alone.
The parties filed a "Report of Parties' Planning Meeting," in which the parties jointly agreed that "Plaintiff(s) should be allowed until October 1, 1996 to join additional parties and to amend the pleadings." Adopting that agreement, the district court's scheduling order states as follows:
Although Plaintiff's Complaint was filed timely against the Defendant Hospital on December 21, 1995, the statute of limitations expired on February 14, 1996. On August 23, 1996, Plaintiff filed a Motion to Amend the Complaint to add HealthSouth as a defendant, which the district court immediately granted on August 29 in light of the scheduling order allowing such joinder. Defendant HealthSouth filed a verified Answer and a separate Motion to Dismiss based on, inter alia, the statute of limitations and Plaintiff's failure to join an indispensable party, namely LSSI.
As soon as HealthSouth's September 16 verified Answer revealed that LSSI was operating the Defendant Hospital, Plaintiff filed a September 30 Motion to Join LSSI as a defendant. Because this Motion also was filed before the court's deadline for adding parties, the district court's order found that the Motion to Add LSSI was "timely filed." Regarding LSSI, the district court's order states, "[a]s an initial matter this court must determine whether the applicable statute of limitations has expired, because if the statute has not expired then the motions to add additional defendants were timely filed."
Since HealthSouth was a party already and the court found that Plaintiff's Motion to Add LSSI was "timely filed," the district court's order treated both HealthSouth and LSSI as added Defendants and proceeded to examine the sole issue of whether Plaintiff's claims against them were barred by the statute of limitations. Thus, we review whether Plaintiff's claims against HealthSouth and LSSI are barred by the statute of limitations.
Plaintiff asserts that the statute of limitations does not apply because her amendments against HealthSouth and LSSI fall under Rule 25, which allows substitution of parties when a transfer in interest has occurred. Fed.R.Civ.P. 25(c). However, as the district court explained, Rule 25(c) applies only to transfers of interest occurring during the pendency of litigation and not to those occurring before the litigation begins. See National Ind. Theatre Exhibitors, Inc. v. Buena Vista Distrib. Co., 748 F.2d 602, 610 (11th Cir.1984); Mizukami v. Buras, 419 F.2d 1319, 1320 (5th Cir.1969). In this case, Rule 25(c) does not apply because any transfer of interest in the Defendant Hospital to LSSI and HealthSouth occurred before the litigation began. Plaintiff cites two cases, but neither involves a transfer of interest prior to litigation. See Virgo v. Riviera Beach Assocs., Ltd., 30 F.3d 1350, 1357 (11th Cir.1994) (); In re National Airlines, Inc., 700 F.2d 695, 696 (11th Cir.1983) (). The district court correctly concluded that Rule 25(c) does not save Plaintiff's amendments from the statute of limitations.
Plaintiff also argues that she avoids the statute of limitations because joining HealthSouth and LSSI was appropriate under Rule 19, which calls for joinder of parties needed for just adjudication, or under Rule 21, which allows the district court to order joinder "on such terms as are just." Fed. R.Civ.P. 19, 21. We agree with the district court that these arguments also fail because the provisions for joinder of parties under Rules 19 and 21 are not immune from statutes of limitations. See 7 Wright, Miller & Kane, Federal Practice and Procedure § 1688; McLellan v. Mississippi Power & Light Co., 526 F.2d 870, 872 (5th Cir.1976), vacated on other grounds, 545 F.2d 919 (5th Cir.1977).
Even if the statute of limitations applies, Plaintiff contends her claims against HealthSouth and LSSI are not barred because they relate back under Rule 15(c) to the timely filing of her initial Complaint. See Fed.R.Civ.P. 15(c).3 In holding that Plaintiff's claims did not relate back under Rule 15(c), the district court made these findings of fact in its order:
It is clearly evident that HealthSouth and LSSI did not receive notice of this lawsuit until after the April 19, 1996 deadline had come and gone.
... Andrews could have easily discovered the true identity of HealthSouth and LSSI before expiration of the limitations provision.
... HealthSouth and LSSI could have reasonably assumed that because they were not sued for successor liability in the original pleading, Andrews made a conscious strategic decision to proceed solely against the legal entity, Lakeshore, which actually terminated her.... There is nothing to suggest that HealthSouth and LSSI knew or should have known that but for a mistake in identity an action would have been brought against them.
This case was decided on a Rule 12(b)(6) Motion to Dismiss. While rulings on motions to dismiss generally are based on the pleadings, the district court here went well beyond the pleadings and found facts not supported by any evidence in the record as the basis for granting the Motion to Dismiss. Except for HealthSouth's verified Answer, the sparse record contained only unverified pleadings and a mail receipt regarding service.4 There were no admissions in the pleadings to support these facts.
For example, there is no evidence in the record to support the court's finding of fact that LSSI and HealthSouth never received notice of this lawsuit prior to April 9, 1996. HealthSouth and LSSI did not file any affidavits or evidence. If anything, the limited record showed that LSSI may have had notice because at the time the Complaint was delivered by certified mail on January 4 to the Defendant Hospital, LSSI operated the Defendant Hospital and employed all of its employees.5
Likewise, the court found that the "true identity of HealthSouth and LSSI was easily discoverable," but...
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