Carlson v. Hennepin County

• Decision Date: 10 January 1992
• Docket Number: No. C2-90-2060,C2-90-2060
• Citation: 479 N.W.2d 50
• Parties: Beverly CARLSON, Trustee for the heirs and next-of-kin of Patricia M. Jolliff, and Beverly Carlson, individually, Respondents, v. HENNEPIN COUNTY d/b/a Hennepin County Medical Center, Defendant, Scott Davies, et al., Respondents, Hennepin Faculty Associates, Petitioner, Appellant.
• Court: Minnesota Supreme Court

Page 50

479 N.W.2d 50

Beverly CARLSON, Trustee for the heirs and next-of-kin of

Patricia M. Jolliff, and Beverly Carlson, individually, Respondents, v. HENNEPIN COUNTY d/b/a Hennepin County Medical Center, Defendant, Scott Davies, et al., Respondents, Hennepin Faculty Associates, Petitioner, Appellant.

No. C2-90-2060.

Supreme Court of Minnesota.

Jan. 10, 1992.

Syllabus by the Court

(1) Under Minn.R.Civ.P. 15.03, "changing the party" is not limited to substituting one party for another.

(2) For purposes of Minn.R.Civ.P. 15.03, two entities have an identity of interest when they share such an intimacy in their business operations and organization that service on one imputes notice to the other, or when confusing facts or circumstances about the two entities might reasonably mislead a plaintiff to name the wrong defendant.

(3) When the actual and intended defendants share an identity of interest, valid service of process on one is effective service on both.

Raymond L. Tahnk-Johnson, Thomas L. Adams, and William M. Hart, Meagher & Geer, Minneapolis, for appellant.

Jeane H. Unger, Rider, Bennett, Egan & Arundel, Minneapolis, for Beverly Carlson.

Michael Miller, Hennepin County Attorney's Office, Minneapolis, for defendant.

Considered and decided by the court en banc without oral argument.

TOMLJANOVICH, Justice.

The issue presented by this appeal is the proper application of the term "identity of interest" in relation-back cases under Minn.R.Civ.P. 15.03. The court of appeals construed the term broadly in reversing the trial court's entry of summary judgment in favor of petitioner Hennepin Faculty Associates [hereinafter HFA]. Because we believe the court of appeals was correct in finding an identity of interest in this case, we affirm and remand to the trial court.

I.

The underlying claim in this action is for medical malpractice. On October 21, 1986, Patricia Jolliff, age 28, went to the emergency room at Hennepin County Medical Center [hereinafter HCMC] complaining of wheezing, coughing and chest pain. Jolliff was diagnosed as having asthma, but doctors also noted she suffered from obesity and hypertension and was a heavy smoker. She was admitted to the hospital, then discharged the next day with instructions to return in 10 days. She never returned and on December 5, 1986, she died of a heart attack.

On October 21, 1988, one day before the expiration of the two-year statute of limitations period for medical malpractice claims, respondent Carlson commenced this action. Pursuant to Minn.R.Civ.P. 3.01(c), she delivered to the Hennepin County Sheriff a summons and complaint to be served upon Hennepin County d/b/a HCMC. The summons and complaint were served on the Deputy County Auditor on October 24, 1988.

After that date, respondent Carlson learned that HCMC does not provide direct health-care services. Rather, HFA, a separate entity, has an exclusive contract to provide teaching, research and patient care services at the hospital. HFA is a Minnesota nonprofit corporation whose members are the physicians who treat patients at HCMC. Respondent Carlson had no reason to know of HFA's existence or its relationship with HCMC because HFA was not mentioned on the billing documents relating to Jolliff's treatment. On November 7, 1988, after the limitations period had expired, respondent Carlson caused HFA and Dr. Scott Davies to be personally served with amended summons and complaints which added them as defendants. That was the first time HFA and Davies had actual knowledge of any lawsuit relating to Jolliff's death.

The trial court granted summary judgment for HFA and Davies, holding that the amended complaints did not relate back under Minn.R.Civ.P. 15.03 ¹, so that the claims against them were barred by the two-year statute of limitations. Minn.Stat. § 541.07(1) (1990). The court of appeals affirmed as to Davies, but held that service on HFA related back under Minn.R.Civ.P. 15.03 on the grounds that HFA and HCMC shared an identity of interest. HFA appeals from that decision.

II.

"On appeal from a summary judgment the reviewing court determines whether there are any genuine issues of material fact and whether the trial court erred in its application of the law." Hubred v. Control Data Corp., 442 N.W.2d 308, 310 (Minn.1989). In this case there is no genuine issue of material fact regarding HFA's and HCMC's relationship. But whether that relationship amounts to an identity of interest, and whether respondent Carlson satisfied the requirements of Minn.R.Civ.P. 15.03 to have her amended complaint against HFA relate back are questions of law, subject to de novo review by this court. See Donovan v. Dixon, 261 Minn. 455, 460, 113 N.W.2d 432, 435 (1962).

We must decide whether the trial court erred in holding that Minn.R.Civ.P. 15.03 did not permit respondent Carlson's amended complaint against HFA to relate back. As a preliminary matter, we reject petitioner's argument that the words "changing the party" in Rule 15.03 refer only to substituting a party. In Grothe v. Shaffer, 305 Minn. 17, 232 N.W.2d 227 (1975), we said Rule 15.03 would allow a complaint to be amended to add a plaintiff after the limitations period. While it is true that different concerns are raised by adding a defendant, we are loathe to create a situation in which "changing" means "adding" in one context and "substituting" in another. We believe the plain meaning of "changing" is broad enough to encompass adding or substituting.

Turning then to the application of Rule 15.03 to the facts of this case, we must decide whether the trial court erred in holding that the requirements of the rule were not satisfied, thus barring a relation back of respondent Carlson's lawsuit against HFA. "Statutes of limitation eliminate stale claims, grant repose to liability that otherwise would linger on indefinitely, and permit the judicial system to husband its limited resources." Johnson v. Soo Line R. Co., 463 N.W.2d 894, 896 (1990). "Even so, there are occasions when [pleading] mistakes will happen that in fairness deserve a relaxation of the time-bar." Id. The two-year limitations period for medical malpractice actions accrues upon termination of treatment. Grondahl v. Bulluck, 318 N.W.2d 240 (Minn.1982). In this case, it is undisputed that (1) the cause of action accrued on October 22, 1986; (2) service of process for defendant HCMC was delivered to the sheriff on October 21 1988, and served on HCMC on October 24, 1988; (3) service of an amended complaint on appellant HFA occurred on November 7, 1988; and (4) HFA did not have actual knowledge of the lawsuit until being served. Under these facts, the action against HFA is barred by the statute of limitations unless the amended complaint relates back to the date of delivery of papers to the sheriff for service on HCMC.

The rules on amending pleadings are "intended to be liberally construed so that cases are decided on the merits." Fore v. Crop Hail Management, 270 N.W.2d 13, 14 (Minn.1978) (citation omitted). In analyzing whether an amendment relates back, this court has broken Rule 15.03 into four components:

"Minn.R.Civ.P. 15.03 allows a relation-back amendment where (1) the claim against the intended defendant arises out of the conduct or occurrence alleged in the original pleading; (2) the party to be added has received such notice of the institution of the action that he will not be prejudiced; (3) the intended party knows or should have known the action against the wrong party was a mistake and that the action was meant to be brought against him; and (4) such notice and knowledge [were] received by the intended defendant within the period provided by law for commencing the action against him."

Soo Line, 463 N.W.2d at 896. Following is an application of that four-part test to the present case:

1. Same conduct or occurrence

There is no obstacle here to relation back. The conduct/occurrence at issue is identical in the original and amended pleadings.

2. Prejudice to later party

Obviously, HFA will be "prejudiced" if it has to defend this lawsuit, but the type of "prejudice" contemplated by the rule is more than inconvenience. For relation-back to occur, the added party must receive such notice that "the party will not be prejudiced in maintaining a defense on the merits." Minn.R.Civ.P. 15.03(1). In this case, the fact that HFA received notice of the lawsuit after the limitations period does not, by itself, prejudice its ability to defend the case on the merits. There is no indication that witnesses' memories faded or health-care records were discarded during the 16 days from October 22 to November 7, 1988. In sum, it does not appear that HFA would be prejudiced in its ability to present a defense on the merits.

3. Knowledge of plaintiff's mistake

Respondent Carlson's mistake here was failing to name HFA as a defendant. It is undisputed that HFA did not have actual knowledge of respondent Carlson's lawsuit until receiving service on November 7, 1988, 16 days after the limitations period had expired. If HFA had timely knowledge of respondent Carlson's mistake, it can only be because HFA and HCMC share an identity of interest, so that HFA is charged with constructive knowledge at the time of service upon HCMC.

We have stated that parent and subsidiary corporations can share an identity of interest. See Buysse v. Baumann-Furrie & Co., 448 N.W.2d 865 (Minn.1989), cited in Soo Line. But we never have said an identity of interest can exist only between related corporations. The form of the entities is not decisive; the nature of the relationship is. As we said last year, two entities have an identity of interest when they "share such an intimacy in their business operations and organization that service on one imputes notice to the other." Soo Line, 463 N.W.2d at 897. An identity of interest also can result from the "confusing facts or circumstances about the two corporate entities that might...