Cobb v. Mid-Continent Telephone Service Corp.

• Decision Date: 22 May 1979
• Docket Number: MID-CONTINENT,Docket No. 78-2360
• Citation: 90 Mich.App. 349,282 N.W.2d 317
• Parties: Roland COBB, Plaintiff-Appellant, v.TELEPHONE SERVICE CORPORATION, an Ohio Corp., Defendant-Appellee. 90 Mich.App. 349, 282 N.W.2d 317
• Court: Court of Appeal of Michigan — District of US

Page 317

282 N.W.2d 317

Roland COBB, Plaintiff-Appellant, v. MID-CONTINENT TELEPHONE SERVICE CORPORATION, an Ohio Corp. Defendant-Appellee.

Docket No. 78-2360.

90 Mich.App. 349, 282 N.W.2d 317

Court of Appeals of Michigan.

May 22, 1979.

Released for Publication Aug. 22, 1979.

[90 MICHAPP 351] Mitchell, Vilella & Houk by Thomas P. Mitchell, Lansing, for plaintiff-appellant.

John L. Collins, Lansing, for defendant-appellee.

Before CYNAR, P. J., and GILLIS and BAGULEY, ^* JJ.

CYNAR, Judge.

Plaintiff appeals as of right from an April 5, 1978, order denying plaintiff's motion to amend his complaint to add additional defendants and granting defendant's motion for summary judgment.

On August 26, 1975, plaintiff filed a complaint alleging that he had been wrongfully terminated by defendant. The complaint alleged that in March of 1958 he entered into an employment contract with the Rural Telephone Company and that he continued to work for this company until it was sold to defendant some time prior to June of 1969. According to plaintiff's complaint, defendant assumed all the contractual obligations of Rural Telephone Company, including the retention of all employees and their pension plan. Plaintiff further alleged that in September of 1972, two months prior to the vesting of a stock option plan, he was wrongfully terminated from employment with defendant. On August 29, 1975, the complaint was served upon Charles M. Stark, defendant's designated agent for service of process.

On October 10, 1975, defendant answered, denying[90 MICHAPP 352] all of plaintiff's allegations. Defendant claimed that plaintiff's contract with Rural Telephone Company was acquired by an entity other than defendant. For the next year-and-a-half, plaintiff unsuccessfully attempted to discover the relationship between Rural Telephone Company and various other entities. Although plaintiff testified at a February 17, 1976, deposition that he believed that Mid-Continent Telephone Corporation (hereinafter Mid-Continent) had actually been his employer and that this corporation's name appeared on his paychecks, no motion to amend the complaint to add Mid-Continent as a defendant was made at that time.

On May 5, 1977, plaintiff filed a motion for leave to amend his complaint. In the motion he alleged that, as a result of discovery, he had determined that Mid-Michigan Telephone Company (hereinafter Mid-Michigan) and Mid-Continent were actually the proper defendants in this case. Defendant chose to oppose this motion, even though plaintiff was also seeking to dismiss it as a party.

On June 27, 1977, plaintiff's motion to amend was denied. The court held that the statute of limitations had run as to the additional defendants. The court concluded that, in the absence of proof of a relationship between defendant and the proposed additional parties, service upon defendant was insufficient to toll the statute as to the other parties. A subsequent similar motion, supported by numerous corporate documents, was also denied. An order granting a defense motion for summary judgment was granted on June 7, 1978.

On appeal, plaintiff's sole contention is that the trial judge erred in denying his motion for leave to amend his complaint. Review of this issue involves consideration of the interplay between the rules [90 MICHAPP 353] governing the amendment of pleadings and those concerned with the statute of limitations.

In general, the grant or denial of a motion to amend pleadings will not be disturbed absent an abuse of discretion. Grove v. Story Oldsmobile, Inc., 31 Mich.App. 613, 617, 187 N.W.2d 923 (1971). In ruling on a motion to amend, a trial judge should exercise his discretion liberally and should deny amendment only when justice would not be served thereby. Ben P. Fyke & Sons v. Gunter Co., 390 Mich. 649, 658, 213 N.W.2d 134 (1973). Denial of a motion to amend pleadings is properly ordered where the moving party has exhibited undue delay, bad faith or a dilatory motive, or when such an amendment would be futile. Ben P. Fyke & Sons v. Gunter Co., supra, at 659, 213 N.W.2d 134.

In the present case the trial judge determined that the statute of limitations had run against the additional prospective defendants and that amendment would therefore be futile. Plaintiff contends that the trial judge erred both in applying a 3-year statute of limitations and in concluding that the statute was not tolled as to the prospective defendants by virtue of the service of the complaint upon defendant.

We agree with the trial judge's determination that the 3-year, rather than 6-year, statute of limitations applies to plaintiff's claim. ¹ Although plaintiff's cause of action is grounded upon a theory of breach of contract, the damages sought are for mental distress, damage to reputation and embarrassment. Under these circumstances, plaintiff is alleging "injuries to persons and property", [90 MICHAPP 354] M.C.L. § 600.5805(7); M.S.A. § 27A.5805(7), and the 3-year statute of limitations was correctly applied. Stringer v. Bd. of Trustees of Edward W. Sparrow Hospital, 62 Mich.App. 696, 701-702, 233 N.W.2d 698 (1975).

The question of whether the statute of limitations was tolled as to the prospective defendants is not as easily disposed of. In Wells v. Detroit News, Inc., 360 Mich. 634, 639, 104 N.W.2d 767 (1960), the Court focused upon several factors in determining whether service of process upon one corporate defendant is sufficient to toll the statute of limitations as to another prospective corporate defendant. These include: (1) whether service was had upon one who was a proper representative of both corporations; (2) whether the corporations share the same legal address; (3) whether the corporations are in the same general business; (4) whether the corporations have most of the same officers; (5) whether the corporations are represented by the same law firm; and (6) whether the officers of the corporations which plaintiff is seeking to add were clearly informed of facts which would indicate which entity plaintiff intended to sue. Furthermore, courts generally have also considered the extent of plaintiff's fault in bringing an action against the wrong entity. See Anno: Change in Party After Statute of Limitations Has Run, 8 A.L.R.2d 6, § 72, pp. 144-148, and Amer v. Clarence A. Durbin Associates, 87 Mich.App. 62, 67, 273 N.W.2d 588 (1978).

In cases decided subsequent to Wells, supra, these factors have been applied with varying results. Compare Bensinger v. Reid, 17 Mich.App. 219, 169 N.W.2d 361 (1969), and Arnold v. Schecter, 58 Mich.App. 680, 228 N.W.2d 517 (1975) (statute of limitations bars suit), with Apple v. Solomon, [90 MICHAPP 355] 12 Mich.App. 393, 163 N.W.2d 20 (1968), and Forest v. Parmalee (On Rehearing), 60 Mich.App. 401, 231 N.W.2d 378 (1975), Aff'd 402 Mich. 348, 262 N.W.2d 653 (1978) (statute of limitations does not bar suit). The resolution of the issue thus turns on the particular circumstances of each case. Charpentier v. Young, 83 Mich.App. 145, 149-150, 268 N.W.2d 322 (1978), Amer v. Clarence A. Durbin Associates, supra, 87 Mich.App. 67, 273 N.W.2d 588.

Prior to applying the factors noted in Wells, supra, to the present case, it is necessary to describe the corporate web in which plaintiff had become intertwined. ²

On May 30, 1974, Rural Telephone Company, plaintiff's previous employer, and six other telephone companies filed a merger agreement with the Michigan Department of Commerce. This agreement was signed by Charles M. Stark, as president of each of the seven companies, and by Lawrence B. Lindemer as secretary of the seven companies. Each of the seven companies was a subsidiary of Mid-Continent. Pursuant to the merger agreement, the seven companies were merged into the New Lawrence Telephone Company, which name was then changed to the Mid-Michigan Telephone Company.

Mid-Continent...