Cady v. IMC Mortgage Co., Inc., C.A. 98-5400

Decision Date21 February 2002
Docket NumberC.A. 98-5400
PartiesWayne Cady v. IMC Mortgage Co., Inc., RMC Holdings Inc., RMC L Inc., Harry C. Struck
CourtSuperior Court of Rhode Island

Wayne Cady
v.
IMC Mortgage Co., Inc., RMC Holdings Inc., RMC L Inc., Harry C. Struck

C.A. No. 98-5400

Superior Court of Rhode Island

February 21, 2002


DECISION

CLIFTON, J.

Before the Court are various post-trial motions submitted by Plaintiff Wayne Cady, and Defendants, IMC Mortgage Co., RMC Holdings Inc., RMC L Inc., and Harry C. Struck, after jury verdicts for Plaintiff. The motions and arguments will be discussed individually.

Facts/Travel

On or about November 3, 1997, Wayne Cady ("Plaintiff") entered into an employment agreement with RMC Holdings, Inc. and/or IMC Mortgage Co. for a fixed period of five (5) years. The Plaintiff was paid in accordance with the terms of the agreement by IMC Mortgage Co., RMC Holdings Inc., and/or RMC L Inc. (hereinafter "Corporate Defendants"). According to the Amended Complaint, the Plaintiff was terminated by one or more of the Defendants on or about October 13, 1998. Shortly thereafter, the Plaintiff filed the present suit. The Amended Complaint contains ten Counts. Count I is against IMC Mortgage Co., RMC Holdings Inc., and/or RMC L Inc. and Counts II through X are against IMC Mortgage Co., RMC Holdings Inc., RMC L Inc. and Harry Struck ("Defendants"). The Counts include: I - Breach of Contract, II - Interference with Contractual Relations, III - Interference with Business Relations, IV - violation of the Federal Wiretapping Statute 18 U.S.C. Sec. 2510, et. seq., V - violation of the State Wiretapping Statute R.I.G.L. § 12-5.1-13, VI - Invasion of Privacy, in violation of R.I.G.L. § 9-1-28.1, VII - civil liability for crimes and offenses in violation of R.I.G.L. § 9-1-2, Violation of Statute, VIII - Defamation, IX - Intentional Infliction of Emotional Distress, X - Negligent Infliction of Emotional Distress.[1]

Defendants' Rule 50(b) Motion - Judgment as a Matter of Law

At the close of the Plaintiff's case-in-chief and again after the Defendants rested their own case-in-chief, the Defendants moved, pursuant to Rule 15(a) and (b), to amend their answer to raise the defense that, based upon the exclusivity of the Workers' Compensation Court, this Court lacked subject matter jurisdiction over the Plaintiff's tort claims. This Court reserved judgment. The jury then returned a verdict against the IMC/RMC Defendants regarding Count V (Federal Wiretapping) and Count VII (R.I.G.L. § 9-1-2). The Defendants now renew their Rule 50(b) motion and seek judgment as a matter of law in their favor. The Defendants argue that the Workers' Compensation Court has exclusive jurisdiction over an injury caused by a fellow employee or employer.

The Defendants argue that they should be allowed to conform their pleadings to the proof under Rule 15(b) based upon the fact that new evidence was adduced at trial. The Defendants, relying on Murray v. City of New York, 43 N.Y. 2d 400, 372 N.E.2d 560 (1977), also argue it was the Plaintiff's duty to plead and prove freedom from the exclusivity provisions of the Workers' Compensation Act, rather than the Defendants' duty to prove exclusivity. The Plaintiff argues that the Workers' Compensation Act's exclusivity provision must be raised as an affirmative defense and there is no justification for allowing it to be raised for the first time at trial. The Plaintiff counters that he would be substantially prejudiced if the Court granted Defendants' motion to amend and the tort claims were barred.

Rule 15(a) of the Superior Court Rules of Civil Procedure specifically states that leave to amend a pleading ". . . shall be freely given when justice so requires." The Rhode Island Supreme Court has noted that granting or denying a "leave to amend a pleading lies within the sound discretion of the trial justice." It also points out, however, that Rule 15(a) "liberally permits amendment absent a showing of extreme prejudice." Wachsberger v. Pepper, 583 A.2d 77, 78 (R.I. 1990) (quoting Babbs v. John Hancock Mutual Life Ins. Co., 507 A.2d 1347, 1349 (R.I. 1986)); Inleasing Corp. v. Jessup, 475 A.2d 989, 993 (R.I. 1984). "The burden rests on the party opposing the motion to show it would incur substantial prejudice if the motion to amend were granted." Wachsberger, 583 A.2d at 78-79.

Plaintiff, in arguing he would be prejudiced if the motion were granted, argues that a significant amount of time, money and effort went into the preparation of trial prior to the Defendants' motion to add the defense of exclusivity. While that fact cannot be disputed, the Rhode Island Supreme Court has repeatedly stated that "mere delay is an insufficient reason to deny an amendment." Wachsberger, 583 A.2d at 79 (quoting Inleasing Corp. v. Jessup, 475 A.2d 989, 992 (1984)). Amendments have been allowed "after a trial justice granted a motion to dismiss, Local 850, International Assoc. of Firefighters v. Pakey, 107 R.I. 124, 265 A.2d 730 (1970), one day prior to the date upon which a case had been noticed or scheduled for trial, Mikaelian v. Drug Abuse Unit, 501 A.2d 721 (R.I. 1985), and even at the completion of trial, Wilkinson v. Vesey, 110 R.I. 606, 295 A.2d 676 (1972)." Wachsberger, 583 A.2d at 79. Therefore, although the Plaintiff points out that countless hours have been logged in preparation for the trial, that in itself does not constitute substantial prejudice and is not enough to deny a motion to amend pleadings. The analysis does not end there however.

While analyzing cases regarding Rule 15, the Rhode Island Supreme Court has pointed out Rule 15's apparent conflict with Rule 8 and Rule 12 of the Rhode Island Civil Procedure. The court has stated that failure to raise an affirmative defense in a timely manner constitutes a waiver of that defense in order to protect the complaining party from unfair surprise at trial. See World-Wide Computer Resources v. Arthur Kaufman Sales Co., 615 A.2d 122, 124 (R.I. 1992). However, as previously ruled by another justice of the Superior Court, "[w]hile the general rule requires that affirmative defenses are waived when not plead in a party's answer, failure to raise a defense does not forever preclude a party from raising it;" and, "[t]he proper remedy for a party who fails to raise an affirmative defense is a motion for leave to amend under Rule 15." Osborn v. State, 1992 WL 813634, at 1 (R.I. Super 1992) (quoting 5 Wright, Federal Practice and Procedure 1278 (1982)). Therefore, in order to resolve the conflict between the rules, courts must "take into account such elements as the extent of prejudice, as well as the question of a defendant's knowledge of circumstances that should have alerted him or her to the existence of such a defense." World-Wide Computer Resources, Inc., 615 A.2d at 124.

In the present case, the Defendants first raised the issue of amending their answer to include the defense of the exclusivity provision of the Workers' Compensation Act at the end of the Plaintiff's case in chief. Before reaching the issues the Defendants raised, it should be noted that it is well recognized that the Superior Court of Rhode Island is a court of general jurisdiction. Rhode Island General Law § 8-2-14 states that:

"The superior court shall have original jurisdiction of all actions at law where title to real estate or some right or interest therein is in issue, except actions for possession of tenements let or held at will or by sufferance and shall have exclusive original jurisdiction of all other actions at law in which the amount in controversy shall exceed the sum of ten thousand dollars ($10,000) ."

Therefore, this Court clearly has subject-matter jurisdiction to hear Plaintiff's claims such as interference with contractual relations, invasion of privacy, defamation, and negligent and intentional infliction of emotional distress. Our Supreme Court has said that "[j]urisdiction over the subject-matter is invested by law in the judge, or in the court which he [or she] holds, [however], the manner and extent in which the jurisdiction shall be exercised are . . . questions for his [or her] determination . . . although upon correctness of his [or her] determination in these particulars the validity of his [or her] judgment may depend." Rock Ridge Ltd. v. Assessor of Taxes, 667 A.2d 778, 780 (R.I. 1995) (quoting Hartt v. Hartt, 397 A.2d 518, 522 (1979)). Furthermore, the court in Murray, while noting that although the defense of workers' compensation as an exclusive remedy may be waived, stated that the issue "is not the kind of subject-matter jurisdiction deficiency which ousts a court of competence to decide the case." Murray v. City of New York, 43 N.Y. 2d 400, 407 (1977). The determining question is whether the Plaintiff will be substantially prejudiced if the Defendants' motion to amend their answer is granted.

As previously noted, the Defendants rely upon Murray v. City of New York, 43 N.Y. 2d 400, 407 (1977) in support of their argument. In Murray, the defendants filed a motion after trial had started to conform the pleadings to the proof and dismiss the case based on workers' compensation as a total bar to suit against the city. The trial court justice decided to dismiss as to the city; however, both parties decided to take the case to fulfillment in the trial court. After the verdict against the city, the motion was granted and the case was dismissed as to the city. The court of appeals upheld the trial justice's decision to grant the motion to conform the pleadings to the proof since under the specific circumstances of the case, the "plaintiff was not permitted to claim surprise or prejudice." Murray, 43 N.Y. 2d at 406. In doing so, the court also stated that the matter of workmen's compensation came as no surprise to plaintiff since her complaint stated the decedent was employed by the city. Id. Furthermore, the court stated that "the plaintiff's counsel [did not] indicate that a claim had not been timely filed for workmen's compensation benefits" and was "hardly a full...

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