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17. Is the court likely to allow the manufacturer to substitute the other entity as a defendant?
The other entity not only knew the bolts were faulty, but was also aware of the original lawsuit against the corporation. The other entity was hoping that the manufacturer would not realize its mistake.
The manufacturer learned of the faulty bolts on August 1, 2007, and realized it might have a contract claim. Two weeks after filing its lawsuit, the manufacturer realized it had mistaken the corporation for a different entity that was, in fact, responsible for producing the faulty bolts.
On July 29, 2012, a car manufacturer filed a lawsuit against a corporation in federal court. The manufacturer mistakenly believed that the corporation was the entity responsible for producing the bolts used to secure the car tires onto the car manufacturer's cars. The manufacturer was sued after some of the cars' tires became detached during transit due to faulty bolts. The manufacturer is seeking contractual indemnification for losses stemming from these lawsuits. State law provides a five-year statute of limitations for contract claims, which starts running when a plaintiff first learns of its contract claim.
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As such, it is not enough that the claim against the new party name arises out of the same events as in the original complaint. The defendant must have known (or should have known) that, but for the mistake, it would have been named in the lawsuit. In Krupski v. Costa Crociere S.p.A., 560 U.S. 538 (2010), the U.S. Supreme Court emphasized that the importance lies in the defendant's knowledge that it should have been named originally, but for the plaintiff's mistake as to its identity.
Here, the original lawsuit was filed within the statute of limitations, the manufacturer made an honest mistake, and the other entity knew it should have been named. As such, the court is likely to allow the manufacturer to substitute the other entity in as the defendant.
A is incorrect. Not only is there no such constitutional restriction on changing a party under 15(c)(1)(C), but the original lawsuit was filed within the applicable statute of limitations, as explained below. The changing of the party is proper because the manufacturer made an honest mistake and the other entity knew or should have known that it should have been named.
B is incorrect. Contract claims are subject to a five-year statute of limitations, which begins to run when the plaintiff learns of the claim. The original lawsuit was filed on July 29, 2012, just under five years after the manufacturer discovered that the bolts were faulty on August 1, 2007. Krupski holds that, as long as the original complaint was filed within the applicable statute of limitations, a party may be changed due to an honest mistake and with notice to the proper defendant, as explained above.
D is incorrect. This answer is incorrect because it falls short of the requirements for changing parties. The proper defendant (here, the other entity) must have known (or should have known) that it was mistakenly omitted as the defendant. It is not enough that the claims against the parties arose out of the same events. The manufacturer mistakenly named the corporation instead of the other entity, and the other entity knew it should have been named in the lawsuit. As such, the court is likely to allow the manufacturer to change the party under FRCP 15(c)(1)(C).