Intown Prop Mgt. v. Transcontinental Ins. Co.

• Decision Date: 24 September 2001
• Docket Number: RITE-WAY,No. 00-2419,00-2419
• Parties: (4th Cir. 2001) INTOWN PROPERTIES MANAGEMENT, INCORPORATED, Plaintiff-Appellant, and TRANSCONTINENTAL INSURANCE COMPANY, as subrogee of Intown Properties Management, Incorporated, Plaintiff, v. WHEATON VAN LINES, INCORPORATED, Defendant-Appellee, andMOVING SERVICES, INCORPORATED; JOHN KOWATS; PACCAR LEASING CORPORATION; KENWORTH VID2XKADR9X, KENWORTH TRUCK 1995, VID#2XKADR9XXSM64507, Defendants. Argued:
• Court: U.S. Court of Appeals — Fourth Circuit

Page 164

271 F.3d 164 (4th Cir. 2001)

INTOWN PROPERTIES MANAGEMENT, INCORPORATED, Plaintiff-Appellant, and TRANSCONTINENTAL INSURANCE COMPANY, as subrogee of Intown Properties Management, Incorporated, Plaintiff, v. WHEATON VAN LINES, INCORPORATED, Defendant-Appellee, and RITE-WAY MOVING SERVICES, INCORPORATED; JOHN KOWATS; PACCAR LEASING CORPORATION; KENWORTH VID2XKADR9X, KENWORTH TRUCK 1995, VID#2XKADR9XXSM64507, Defendants.

No. 00-2419

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

Argued: September 24, 2001

Decided: October 31, 2001

Appeal from the United States District Court for the District of South Carolina, at Greenville. Margaret B. Seymour, District Judge.

(CA-99-2287-6, CA-99-327)

[Copyrighted Material Omitted] COUNSEL ARGUED: William Marvin Grant, Jr., GRANT & LEATHERWOOD, P.A., Greenville, South Carolina, for Appellant. Kurt Matthew Rozelsky, LEATHERWOOD, WALKER, TODD & MANN, P.C., Greenville, South Carolina, for Appellee. ON BRIEF: Paul C. Rathke, GRANT & LEATHERWOOD, P.A., Greenville, South Carolina, for Appellant. Joseph E. Major, LEATHERWOOD, WALKER, TODD & MANN, P.C., Greenville, South Carolina, for Appellee.

Before WIDENER, LUTTIG, and MOTZ, Circuit Judges.

Affirmed by published opinion. Judge Motz wrote the opinion, in which Judge Widener joined. Judge Luttig wrote a concurring opinion.

OPINION

DIANA GRIBBON MOTZ, Circuit Judge:

This appeal arises from two related cases that were consolidated in the district court. Intown Properties Management, Incorporated appeals the district court's grant of summary judgment against it in its action against Wheaton Van Lines, Incorporated. Intown also appeals the court's denial of Intown's motion to amend the complaint to add Intown as the real party in interest, in an action Intown's insurer filed against Wheaton. Limitations barred Intown's suit against Wheaton, making the grant of summary judgment to Wheaton in that action proper, and the district court clearly did not abuse its discretion in denying Intown's late-filed motion to amend in its insurer's suit. Accordingly, we affirm.

I.

On July 18, 1996, a driver employed by Wheaton lost control of his truck and hit a motel and restaurant that were owned by Intown and insured by Transcontinental Insurance Company. Pursuant to this insurance policy, Transcontinental paid Intown $302,700.85 for losses resulting from the accident. On February 5, 1999 Transcontinental filed suit against Wheaton ("the Transcontinental action"), seeking the amount it had paid Intown, plus interest, attorney's fees, and costs. Intown had notice of this law suit.

Although Intown was involved in other litigation against Wheaton in 1997, it did not file suit seeking recovery for damages incurred in the July 18, 1996 accident until July 9, 1999. On that date, Intown filed a complaint against Wheaton ("the Intown action"), seeking, inter alia, $212,217.96 representing lost revenues and loss of reputation and good will that the insurance payment had not covered. Intown failed to serve Wheaton with the complaint in this action until August 31, 1999.

On October 8, 1999, the parties agreed by consent order to consolidate these two cases against Wheaton. A few weeks later, on October 26, 1999, Wheaton moved for summary judgment in the Intown action on the ground that South Carolina's three-year statute of limitations barred it. On November 30, 1999, eleven days after responding to Wheaton's motion for summary judgment in the Intown action, Intown moved to amend the complaint in the Transcontinental action. The motion to amend, which Transcontinental joined, sought to add Intown as a plaintiff on the ground that it, not Transcontinental, was the real party in interest in the Transcontinental action. Days later, in early December 1999, Transcontinental and Wheaton settled the Transcontinental action and filed a stipulation of dismissal.

Some months later, the district court held a hearing on Wheaton's motion for summary judgment in the Intown action and Intown's motion to amend the complaint in the Transcontinental action. The court granted summary judgment to Wheaton in the Intown action, reasoning that state law governed when an action "commenced" for purposes of the statute of limitations, and that under South Carolina law, Intown's failure to serve Wheaton until weeks after the threeyear statute of limitations had run barred its action. See S.C. Code Ann. S 15-3-530 (5) (Law. Co-op. Supp. 2000).

The district court also denied Intown's motion to amend the complaint in the Transcontinental action. Applying South Carolina law, which forbids the division of a claim between insurer and insured, the court determined that Transcontinental was not the real party in interest in its action against Wheaton. See Calvert Fire Ins. Co. v. James, 114 S.E.2d 832, 835 (S.C. 1960). Nevertheless, the court ruled that Intown had waived any claim to assert its real party in interest status by failing to file a timely motion to amend Transcontinental's complaint. The court further held that even if Intown had not waived its claim, Rule 17 did not support Intown's belated motion to amend the complaint in the Transcontinental action. This appeal followed.

II.

If the district court improperly granted summary judgment in the Intown action, we need not consider its ruling in the Transcontinental action. Accordingly, we first examine the grant of summary judgment to Wheaton in the Intown action.

Although Intown asks us to reverse the district court's grant of summary judgment to Wheaton, it barely mentions the issue in its appellate brief. Indeed, Intown's only apparent challenge to the summary-judgment ruling is its contention that the Intown and Transcontinental actions, under South Carolina law, were two parts of an "indivisible" action, and so the district court erred in separating them, by granting summary judgment in the Intown action. No case, statute, or rule requires this result.

Intown suggests, however, that the consolidation of the two cases somehow effectively barred the grant of judgment against it in its own action. Intown misunderstands the role and scope of consolidation. Although consolidation "is permitted as a matter of convenience and economy in administration, [it] . . . does not merge the suits into a single cause, or change the rights of the parties, or make those who are parties in one suit parties in another." Johnson v. Manhattan Ry. Co., 289 U.S. 479, 496-97 (1933).

Other than its "indivisibility" argument, Intown makes no contention -and there is none to make -that the district court erred in granting summary judgment against it. Under South Carolina's service of process requirements, Intown failed to commence the Intown action within the statutory three-year period. See S.C. R. Civ. P. 3(a). Accordingly, the district court properly granted summary judgment to Wheaton on the ground that the applicable South Carolina statute of limitations barred the Intown action.

We therefore turn to the ruling denying Intown's motion to amend.

III.

In the Transcontinental action, Intown moved under Federal Rules of Civil Procedure 15 and 17 to amend the complaint to add itself as the plaintiff, arguing that it was the real party in interest. The district court denied the motion.

Wheaton offers four independent reasons why the district court did not err in doing so.¹ First, as a non-party in the Transcontinental action, Intown assertedly lacks standing to appeal from the denial of the motion without Transcontinental's participation in the appeal. Second, Intown was not the real party in interest in the Transcontinental action. Third, Intown waived its claim to participate in the Transcontinental action. Fourth, in any event, the district court properly denied Intown's late-filed motion to amend the complaint.

We need only address the last argument, and we review the district court's ruling denying the motion to amend for abuse of discretion. See HCMF Corp. v. Allen, 238 F.3d 273, 276-77 (4th Cir. 2001). Thus, assuming that Intown is the real party in interest in the Transcontinental action, with standing and claims that have not been waived, we consider whether the district court abused its discretion in refusing to permit Intown to join its insurer's suit as a party plaintiff, not by intervening under Rule 24, but by a combination of Rules 15 and 17.

Ordinarily a would-be plaintiff seeking to join a case must timely move to intervene in accordance with Rule 24. Fed. R. Civ. P. 24 (a & b) ("Upon timely application anyone [1] shall be permitted to intervene in an action . . . when the applicant claims an interest relating to the property or transaction which is the subject of the action . .. [or 2] may be permitted to intervene in an action . . . when an applicant's claim or defense and the main action have a question of law or fact in common."). If a motion to intervene is untimely, it "must be denied." See NAACP v. New York, 413 U.S. 345, 366 (1973). This seems only fair because, if permitted, intervention may expose a defendant to additional liability. (Indeed, in this case, if the court had permitted Intown to participate in the Transcontinental action, Wheaton's possible liability would have increased.) Perhaps for these reasons, Intown itself concedes that it would have been preferable if it had moved to intervene in the Transcontinental action. But Intown did not seek to intervene. It filed its own (albeit untimely) suit, and maintained that suit for several months although it knew that Transcontinental had already sued Wheaton separately.

Then, reversing course, Intown attempted to finesse Rule 24's timeliness requirement to join the timely Transcontinental action as a plaintiff. It did so by invoking Rule 15, which permits liberal amendment by a party when justice requires, and Rule 17, which ordinarily provides a shield for defendants. Intown argues that, in combination, those two rules may form a...