Ritchie v. Grand Canyon Scenic Rides

• Decision Date: 30 August 1990
• Docket Number: No. CV-89-0135-PR,CV-89-0135-PR
• Citation: Ritchie v. Grand Canyon Scenic Rides, 165 Ariz. 460, 799 P.2d 801 (Ariz. 1990)
• Parties: Ingrid RITCHIE, a single woman, Plaintiff/Appellant, v. GRAND CANYON SCENIC RIDES, a Utah corporation, Defendant/Appellee.
• Court: Arizona Supreme Court

Page 801

799 P.2d 801

165 Ariz. 460

Ingrid RITCHIE, a single woman, Plaintiff/Appellant, v. GRAND CANYON SCENIC RIDES, a Utah corporation, Defendant/Appellee.

No. CV-89-0135-PR.

Supreme Court of Arizona, In Banc.

Aug. 30, 1990.

Reconsideration Denied Nov. 14, 1990.

[165 Ariz. 461] Treon, Strick, Lucia & Aguirre by Arthur G. Newman, Jr., JoJene E. Mills, Phoenix, for plaintiff/appellant.

Jennings, Strouss & Salmon by William T. Birmingham and Michael J. O'Connor, Phoenix, for defendant/appellee.

OPINION

FELDMAN, Vice Chief Justice.

Ingrid Ritchie (Ritchie) petitions us to review a court of appeals decision holding that her amended complaint did not relate back to her original complaint pursuant to Rule 15(c), Ariz.R.Civ.P., 16 A.R.S. (hereafter Rule ----). See Ritchie v. Grand Canyon Scenic Rides, No. 1 CA-CV 88-080 (Ariz.Ct.App. Feb. 21, 1989) (memorandum decision). Ritchie claims this decision conflicts with McKinley v. Bethel, 147 Ariz. 72, 708 P.2d 753 (Ct.App.1985), which permitted relation back under circumstances similar to this case. We granted review to resolve the conflict in interpretation of Rule 15(c). See Rule 23, Ariz.R.Civ.App.P., 17B A.R.S. We have jurisdiction pursuant to Ariz. Const. art. 6, § 5(3), and A.R.S. § 12-120.24.

FACTS AND PROCEDURAL HISTORY

Grand Canyon Scenic Rides (GCSR) is a Utah corporation that conducted mule rides in the Grand Canyon from 1979 to 1983. The corporation was authorized to do business in Arizona from April 9, 1979 to July 10, 1982, when such authority was revoked. GCSR did not conduct business in Arizona after December 1983.

Ritchie was injured on July 25, 1983 when she participated in a GCSR mule ride. Settlement negotiations began in January 1984 when Ritchie's lawyer contacted GCSR's insurer, Centaur Insurance Company (Centaur). On January 20, 1984, Centaur sent the lawyer a copy of the Release and Hold Harmless Agreement Ritchie had signed for GCSR prior to the accident. Centaur further indicated that, under the agreement, it was obligated to pay only a maximum of $1,000.

On June 27, 1985, Ritchie contacted Centaur once again, stating that if settlement could not be reached she would file suit. Failing or unable to settle with Centaur, Ritchie filed the action on July 25, 1985, the last day of the two-year statute of limitations. She named Fred Harvey Transportation Co. (Harvey), an Arizona corporation, doing business as Grand Canyon Scenic Rides, and several fictitious entities as defendants. On July 26, 1985, service of the complaint was completed on Harvey's statutory agent. GCSR, however, was not affiliated with Harvey and therefore did not receive notice of the action.

On September 19, 1985, Ritchie filed an amended complaint dropping Harvey as a party defendant and correctly naming and adding GCSR as a party. GCSR was served on October 3, 1985, two years and two months after the accident. ¹ GCSR eventually moved for summary judgment, claiming the action was barred by the two-year statute of limitations or by the release and hold harmless agreement Ritchie signed before the accident.

The trial court held the statute of limitations barred the action and granted GCSR's motion for summary judgment on that basis. After a series of post-judgment procedures, including appellate proceedings not relevant to the issue before us, Ritchie appealed. Finding Ritchie was not diligent enough to invoke the protection of Rule 10(f) and relying on the "clear" language of Rule 15(c) as recently construed in Schiavone v. Fortune, 477 U.S. 21, 106 S.Ct. 2379, 91 L.Ed.2d 18 (1986), the court of appeals affirmed. Memo dec. at 16.

Ritchie petitioned for review, focusing only on Rule 15(c). We granted review to determine the circumstances under which an amendment to add a defendant may relate back under the rule.

DISCUSSION

A. The Rules

1. Federal Rule 15(c) And Its Interpretation

The Arizona rules are identical to the Federal Rules of Civil Procedure unless otherwise noted. Rule 1, Revisor's Note. They seek to secure the just, speedy, and inexpensive determination of every action. See Rule 1. The drafters of the federal rules sought to avoid the pitfalls created by the cumbersome technicalities of common law or code pleading. F. JAMES AND G. HAZARD, CIVIL PROCEDURE § 3.12 (3rd ed. 1985). The rules accordingly require that pleadings be construed to promote "substantial" justice. See Rule 8(g).

Insofar as it is relevant to this case, Rule 15(c) is identical to the federal rule. Whenever feasible our courts have looked to the origin and interpretation of federal counterparts for guidance in construing the Arizona rules. See, e.g., Edwards v. Young, 107 Ariz. 283, 284, 486 P.2d 181, 182 (1971); Hedlund v. Ford Marketing Corp., 129 Ariz. 176, 178, 629 P.2d 1012, 1014 (Ct.App.1981). We thus turn to the evolution of the federal rule.

As originally promulgated, Federal Rule 15(c) consisted of only the first sentence of the present text, as follows:

Whenever the claim or defense asserted in the amended pleading arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading, the amendment relates back to the date of the original pleading.

Under that rule, courts generally permitted only amendments asserting a new theory or claim for relief and not to change parties. 6A C. WRIGHT, A. MILLER, AND M. KANE, FEDERAL PRACTICE AND PROCEDURE: CIVIL § 1498, at 105-06 (1990). A number of courts, however, balked at the harsh result of this literal application of the rule. Accordingly, they interpreted the original Rule 15(c) to permit relation back of amendments changing parties to the action. These courts found support for this interpretation by applying various theories. See, e.g., Jackson v. Duke, 259 F.2d 3 (5th Cir.1958) (misnomer); Meltzer v. Hotel Corp., 25 F.R.D. 62 (N.D.Ohio 1959) (on motion for leave to amend complaint, Jan. 26, 1960) (identity of interest); Zielinski v. Philadelphia Piers, Inc., 139 F.Supp. 408 (D.C.Pa.1956) (estoppel).

The 1966 amendment to Rule 15(c) added the second sentence of the present rule to the text. It reads as follows:

An amendment changing the party against whom a claim is asserted relates back if the foregoing provision is satisfied and, within the period provided by law for commencing the action against him, the party to be brought in by amendment (1) has received such notice of the institution of the action that he will not be prejudiced in maintaining his defense on the merits, and (2) knew or should have known that, but for a mistake concerning the identity of the proper party, the action would have been brought against him.

This addition was intended to clarify the rule and resolve the split of authority by stating "more clearly when an amendment of a pleading changing the party against whom a claim is asserted (including an amendment to correct a misnomer or misdescription of a defendant) shall 'relate back' to the date of the original pleading." Rule 15(c), Fed.R.Civ.P., Advisory Committee Note to 1966 Amendment. In Arizona, the amendment was intended to provide "for relation back of pleading amendments in cases in which a complainant makes a mistake in designating against whom his claim is asserted." Arizona Rule 15(c), State Bar Committee Note to 1966 Amendment.

In practice, the amendment created great confusion. Although its avowed purpose was to broaden the rule to aid those who had erred in identifying a defendant or counter-defendant, if read literally it appeared to apply strict standards that would in fact forbid relation back sometimes previously permitted under misnomer or identity of interest theories. Lewis, The Excessive History of Federal Rule 15(c) and Its Lessons For Civil Rules Revision, 85 MICH.L.REV. 1507, 1519 (1987). Moreover, courts had difficulty construing the phrase "within the period provided by law for commencing the action." See 6A C. WRIGHT § 1498, at 107. While some courts ruled that notice had to be received before the statute of limitations had run, others held that the rule was satisfied as long as the action was filed within the statutory period and notice was accomplished within the time for service of process. Id. at 107-13 and cases cited therein. Courts that required notice before the statute of limitations expired also differed as to exactly what type of notice was sufficient. Id. at 107. Some required notice of the occurrence, others notice of the actual institution of suit. Id. In short, the cases were in "hopeless conflict." F. JAMES AND G. HAZARD § 4.16 (citing Annotation, Change in Party After Statute of Limitations Has Run, 8 A.L.R.2d 6).

The United States Supreme Court resolved some of the conflict in Schiavone. The plaintiffs alleged they had been libeled in a story in Fortune magazine. They brought their action timely, but sued Fortune when they should have named Time, the parent company. Plaintiffs argued that the period within which the newly added defendant must receive notice under Rule 15(c) included the time allowed by the statute of limitations plus the time available for service of process. A majority of the Court held, however, that notice "within the period provided by law for commencing the action against [defendant]" meant notice within the actual period of limitations. Thus the action was barred. 477 U.S. at 30-31, 106 S.Ct. at 2385. The majority also limited "notice" to knowledge of institution of the action, rather than knowledge of the claim. The Court's majority thus held that the amendment adding a party could relate back under Rule 15(c) only if the defendant had notice that an action had been filed and received that notice within the limitations period. Id. Schiavone has been sharply criticized on the latter point. See, e.g., Bauer, Schiavone: An Un-Fortune-ate Illustration of the Supreme Court's Role as Interpreter of the Federal Rules of Civil Procedure, 63 NOTRE DAME L.REV. 720 (1988); Brussack,...