Kent Holland Die Casting & Plating, Inc., In re

• Decision Date: 07 January 1991
• Docket Number: No. 90-1345,90-1345
• Citation: 928 F.2d 1448
• Parties: Bankr. L. Rep. P 73,866 In re KENT HOLLAND DIE CASTING & PLATING, INC.; Holland Die Casting, Inc., Debtors. Douglas L. LEITCH, Trustee, Plaintiff-Appellant, v. The LIEVENSE INSURANCE AGENCY, INC., Defendant, Aetna Casualty & Surety Company, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1448

928 F.2d 1448

Bankr. L. Rep. P 73,866

In re KENT HOLLAND DIE CASTING & PLATING, INC.; Holland Die

Casting, Inc., Debtors.

Douglas L. LEITCH, Trustee, Plaintiff-Appellant, v. The LIEVENSE INSURANCE AGENCY, INC., Defendant, Aetna Casualty & Surety Company, Defendant-Appellee.

No. 90-1345.

United States Court of Appeals, Sixth Circuit.

Argued Nov. 6, 1990.

Decided and Filed Jan. 7, 1991.

Jon R. Muth (argued), Kenneth G. Hofman, Miller, Johnson, Snell & Cumminskey, Grand Rapids, Mich., for plaintiff-appellant.

Robert A. Hendricks (argued), Scott A. Huizenga, Varnum, Riddering, Schmidt & Howlett, Grand Rapids, Mich., for defendant-appellee.

Before KRUPANSKY and MILBURN, Circuit Judges; and PECK, Senior Circuit Judge.

JOHN W. PECK, Senior Circuit Judge.

This appeal arises from the district court's affirmance of the bankruptcy court's dismissal of Aetna from a bankruptcy preference action. For the reasons stated below, we affirm the ruling of the district court.

FACTS

Prior to its bankruptcy, Kent Holland Die Casting & Plating, Inc. (KHI) obtained an unemployment insurance policy through Defendant Lievense Insurance Agency, Inc. Lievense, an independent insurance broker, procured the coverage through Appellee Aetna Casualty & Surety Company.

In December 1983, KHI filed a voluntary Chapter 11 bankruptcy petition. It was converted to a Chapter 7 proceeding in July 1986. A permanent trustee was appointed on September 3, 1986. Under 11 U.S.C. Sec. 546(a)(1), the trustee has two years from the date of the appointment in which to commence actions to recover property for the estate. In May 1988, Appellant Trustee Douglas Leitch, notified Lievense that certain insurance premium payments KHI made within ninety days before the filing of its bankruptcy petition were preferential transfers and demanded repayment of $165,590.66. When payment was not forthcoming, the Trustee filed suit against Lievense on June 30, 1988.

Lievense contacted Aetna about the demand letter and the subsequent suit. With the exception of Lievense's five per cent commission, Aetna was the recipient of KHI's premiums. Lievense's counsel and Aetna's counsel collaborated on Lievense's defense with Aetna's counsel taking on the "lion's share" of the research and drafting. Lievense was granted a thirty-day extension to file its answer and did so on September 2, 1988--just one day before the statute of limitations expired.

On June 5, 1989, the Trustee amended his complaint adding Aetna as a party defendant. On September 1, 1989, Aetna filed a motion for summary judgment on the grounds that the amended complaint was barred by the statute of limitations. The Trustee argued that the amended complaint should be allowed because it related back to the original suit under FRCP 15(c). ¹ The bankruptcy court ruled that the relation back provision of FRCP 15(c) did not apply where the amendment sought to add rather than substitute a party and dismissed Aetna from the suit. The district court affirmed the bankruptcy court and the Trustee appealed to this court.

FRCP 15(c)

The Trustee argues here, as in the bankruptcy court, that his amended complaint adding Aetna should be allowed because it relates back to the original complaint. However, the precedent of this circuit clearly holds that "an amendment which adds a new party creates a new cause of action and there is no relation back to the original filing for purposes of limitations." Marlowe v. Fisher Body, 489 F.2d 1057, 1064 (6th Cir.1973). This holding was reaffirmed in Smart v. Ellis Trucking Co., 580 F.2d 215, 218 (6th Cir.1978), cert. denied, 440 U.S. 958, 99 S.Ct. 1497, 59 L.Ed.2d 770 (1979).

The Trustee acknowledges the holdings in Marlowe and Smart and suggests that they are no longer good law because they are inconsistent with a more recent decision of this court, Ringrose v. Engelberg Huller Co., 692 F.2d 403 (6th Cir.1982). Ringrose is a personal injury case in which the plaintiff sued the manufacturer of a machine. However, the...