Caduceus Props., LLC v. Graney

137 So.3d 987

CADUCEUS PROPERTIES, LLC, et al., Petitioners,

v.William G. GRANEY, P.E., et al., Respondents.

No. SC12–1474.

Supreme Court of Florida.

Feb. 27, 2014.

Rehearing Denied April 21, 2014.

Major B. Harding, Robert N. Clarke, Jr., and Martin B. Sipple of Ausley & McMullen, P.A., Tallahassee, FL, for Petitioners.

Lilburn R. Railey, Patrick R. Delaney, and Rouselle A. Sutton, III of Railey, Harding, Allen & Delaney, P.A., Orlando, FL, for Respondents.

PARIENTE, J.

The certified conflict between the First District Court of Appeal in Graney v. Caduceus Properties, LLC, 91 So.3d 220 (Fla. 1st DCA 2012), and the Fifth District Court of Appeal in Gatins v. Sebastian Inlet Tax District, 453 So.2d 871 (Fla. 5th DCA 1984), involves the scope of Florida Rule of Civil Procedure 1.190(c) governing the relation back of an amendment to a pleading filed by a party during the course of litigation.¹ Specifically, the conflict issue is whether an amended complaint, naming a third-party defendant as a party defendant, relates back to the filing of the third-party complaint for statute of limitations purposes.

For the reasons that follow, we conclude that an amended complaint filed after the statute of limitations has expired, naming a party who had previously been made a third-party defendant as a party defendant, relates back under rule 1.190(c) to the filing of the third-party complaint. For the amended pleading to be timely in this situation, the third-party complaint must have been filed prior to the expiration of the statute of limitations and the plaintiff's claims in the amended complaint must arise from the same “conduct, transaction, or occurrence” set forth in the third-party complaint. Accordingly, we quash the First District's decision in Graney, which limited the scope of the relation-back doctrine in a manner inconsistent with the meaning and intent of the applicable Florida Rules of Civil Procedure, and we approve the Fifth District's decision in Gatins.

FACTS

This case arises from litigation concerning a malfunctioning heating, ventilation, and air conditioning (HVAC) system installed in a new ambulatory surgical center. The owner of the building is the plaintiff, Petitioner Caduceus Properties, LLC. Caduceus leases a portion of the building to co-Petitioner Tallahassee Neurological Clinic, P.A. (“TNC”). The building architect was Michael Lee Gordon, who subcontracted the design of the HVAC system to Respondents KTD Consulting Engineers, Inc., and its principal, William G. Graney.

In late 2005, the HVAC system designed by KTD began to fail. TNC contacted Gordon and KTD concerning the system failure, and the parties unsuccessfully attemptedto remedy the HVAC problems over the next ten months. In July 2006, Caduceus initiated this litigation by suing Gordon, with whom it was in privity. In March 2007, Gordon initiated a third-party action against KTD and Graney. Pursuant to Florida Rule of Civil Procedure 1.180, which governs third-party practice, Gordon alleged that KTD and Graney were liable for all or part of Caduceus' claims against Gordon. Ultimately, Gordon's third-party claims were dismissed, and he declared bankruptcy during trial. ²

In June 2010, after the statute of limitations governing Caduceus' original action had expired, Caduceus sought to amend its complaint to add TNC as a party plaintiff and to name third-party defendants, KTD and Graney, as party defendants to the action.³ The trial court granted this motion, pursuant to a joint stipulation in which all of the parties agreed to the addition of TNC as a party plaintiff and to naming KTD and Graney as party defendants, while reserving all defenses, so long as the trial was continued. The trial court continued the trial for seven months.

In their answer and affirmative defenses to the amended complaint, KTD and Graney raised the statute of limitations as an affirmative defense and moved for involuntary dismissal based on this defense after presenting their case during trial. The trial court denied the motion and proceeded with the trial, entering judgment in favor of Caduceus and TNC with respect to all of their claims against KTD and Graney, and awarding a total of $489,134.52 in damages.⁴ KTD and Graney appealed this decision to the First District.

On appeal, the First District addressed only the statute of limitations issue and reversed the trial court's judgment on that basis in a two-to-one split decision. Graney, 91 So.3d at 228. Specifically, the First District framed the issue as whether the amended complaint related back to the filing of the original complaint filed by Caduceus against Gordon.⁵Id. at 224. The First District held that the amended complaint did not relate back and was barred by the statute of limitations because “[r]elation back should only be permitted where there is a mistake or misnomer in identifying a party defendant, not a mistake in failing to add a party defendant.” Id. at 228.

Accordingly, the First District certified that its decision conflicted with the Fifth District's decision in Gatins, 453 So.2d at 875, which held that an amended complaint naming the third-party defendant as a party defendant to the original action was not barred by the statute of limitations, provided that the third-party defendant was impleaded prior to the expiration of the statute of limitations and “the plaintiff's claim concerns the same issues as are raised in the third party complaint.” Judge Van Nortwick dissented from the First District's decision in Graney, stating that he would adopt the rationale of Gatins and affirm the trial court's ruling because the third-party complaint filed by Gordon against KTD and Graney put KTD and Graney on notice “within the limitations period that they were being sued for defects in the HVAC system and that they could be liable for damages.” Graney, 91 So.3d at 229 (Van Nortwick, J., dissenting).

ANALYSIS

The conflict issue is whether an amended complaint, naming a third-party defendant as a party defendant, relates back to the filing of the third-party complaint for statute of limitations purposes. This question is one of law, and our standard of review is de novo. Pino v. Bank of N.Y., 121 So.3d 23, 31 (Fla.2013).

Pursuant to Florida Rule of Civil Procedure 1.180, which governs third-party practice, a defendant may bring a third party into the suit “who is or may be liable to the defendant for all or part of the plaintiff's claim against the defendant.” Fla. R. Civ. P. 1.180(a). Once the original defendant has impleaded a third party, “[t]he plaintiff may assert any claim against the third-party defendant arising out of the transaction or occurrence that is the subject matter of the plaintiff's claim against the [original] defendant.” Id. However, the plaintiff's claims against the third-party defendant are still subject to any available affirmative defenses, including the statute of limitations. See id.

Therefore, in order for a plaintiff's amended complaint filed after the expiration of the statute of limitations to be considered timely as to a party defendant who was previously a third-party defendant, the court must determine whether the relation-back doctrine of Florida Rule of Civil Procedure 1.190(c) applies. That rule provides that an amendment relates back to the date of the original pleading “[w]hen 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.” Fla. R. Civ. P. 1.190(c).

In Gatins, the Fifth District held that an amended complaint naming the third-party defendant as a party defendant to the original action was not barred by the statute of limitations, as long as the third-party defendant had been brought into the lawsuit within the limitations period, and “the plaintiff's claim concerns the same issues as are raised in the third party complaint.” 453 So.2d at 873, 875. In so holding, the Fifth District reasoned that this was “consistent with the principles governing limitations of actions in our state and with the philosophy behind our rules of civil procedure.” Id. at 875. We agree with the Fifth District and Judge Van Nortwick's dissent in Graney, which adopted the Fifth District's rationale in Gatins.⁶

Generally, Florida has a judicial policy of freely permitting amendments to the pleadings so that cases may be resolved on the merits, as long as the amendments do not prejudice or disadvantage the opposing party. Permitting the relation back of pleadings under rule 1.190(c) when the claims “arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth” in the third-party complaint is consistent with this judicial policy. Fla. R. Civ. P. 1.190(c). As rule 1.190(a) sets forth, “[l]eave of court [to amend] shall be given freely when justice so requires.” Fla. R. Civ. P. 1.190(a). Further, subsection (e), governing “Amendments Generally,” provides that “[a]t any time in furtherance of justice, upon such terms as may be just, the court may permit” an amended pleading. Fla. R. Civ. P. 1.190(e).

Permitting relation back in this context is also consistent with Florida case law holding that rule 1.190(c) is to be liberally construed and applied. See, e.g., Fabbiano v. Demings, 91 So.3d 893, 894–95 (Fla. 5th DCA 2012) (explaining that the relation-back rule is to be liberally interpreted and acknowledging that the underlying “rationale for this rule is grounded in the notion of fair notice”); Flores v. Riscomp Indus., Inc., 35 So.3d 146, 148 (Fla. 3d DCA 2010) (explaining that the relation-back doctrine is to be liberally applied and articulating “the test to be whether ‘the original pleading gives fair notice of the general fact situation out of which the claim or defense arises' ” (quoting Kiehl v. Brown, 546 So.2d 18, 19 (Fla. 3d DCA 1989))); Bill Williams Air Conditioning & Heating, Inc. v. Haymarket Coop. Bank, ...