Bechtel v. Robinson
| Decision Date | 03 October 1989 |
| Docket Number | No. 89-3120,89-3120 |
| Citation | 886 F.2d 644 |
| Parties | 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. |
| Court | U.S. Court of Appeals — Third Circuit |
Bayard J. Snyder (argued), Phillips & Snyder, P.A., Wilmington, Del., for appellants.
Craig A. Karsnitz (argued), Young, Conaway, Stargatt and Taylor, Georgetown, Del., for Robinson, Gray, d/b/a Kirby & Holloway Family Restaurant.
Before HIGGINBOTHAM, BECKER and NYGAARD, Circuit Judges.
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.
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. 1 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 2 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.
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, 3 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., was the actual owner of the Restaurant, and that Gray was the principal stockholder of that corporation.
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 4 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 123 F.R.D. 484, and this appeal followed.
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, --- U.S. ----, 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, 95 S.Ct. 2362, 2362, 45 L.Ed.2d 280 (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, --- U.S. ----, 108 S.Ct. 1078, 99 L.Ed.2d 238 (1988).
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, Sec. 3101 (1975) ("Sec. 3101"), 5 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, Sec. 2109 (1985) ("Sec. 2109"), 6 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 Sec. 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, Sec. 3107 (1975) ("Sec. 3107") 7 expressly exempts legally incorporated companies from Sec. 3101's application. Nevertheless, the appellants assert that the purpose behind Sec. 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 Sec. 3101's purpose, the appellants claim that Sec. 3107 should be read as only exempting corporations doing business under their corporate names, and not corporations doing business under fictitious trade names. Id.
We find the appellant's understanding of the import of Sec. 3101 to be supported by Delaware case law. As noted in 35 Virginia v. Tuttle, Civ. No. 1253, slip. op. (Del. Ch. June 26, 1987), aff'd, 536 A.2d 615 (Del.Supr.1987):
The purpose of a so called "common name statute" such as Sec. 3101 is "to protect the residents of the State [of Delaware] from the activities of unidentifiable associations engaged in business under assumed or common names." Silliman v. Dupont, 302 A.2d 327, 333 (Del.Super.1972), aff'd sub nom., F.I. Dupont, Glore Forgan & Co v. Silliman, 310 A.2d 128 (Del.Supr.1973).
Moreover, we find that the principles of statutory construction under Delaware law corroborate the appellants' reading of Sec. 3107. As stated by the Delaware Supreme Court:
The object of statutory construction is to give a sensible and practical meaning to the statute as a whole in order that it may be applied in future cases without difficulty, ... and if a literal interpretation leaves a result inconsistent with the general statutory intention, such interpretation must give way to the general intent. This is particularly true where such literal interpretation would lead to unjust and mischievous consequences.
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