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Goodman v. PraxAir, Inc. - 494 F.3d 458 (4th Cir. 2007)


An amendment relates back only when it changes a party or the naming of a party, Fed. R. Civ. P. 15(c)(3); when it arises out of the same transaction as that referred to in the original complaint, Fed. R. Civ. P. 15(c)(2), (3); when it causes no prejudice to the new defendant in maintaining his defense, Fed. R. Civ. P. 15(c)(3)(A); and when the new defendant should have known that it was the party that would have been sued but for a mistake, Fed. R. Civ. P. 15(c)(3)(B). Thus, reference to "mistake" in Rule 15(c)(3)(B), while alluding by implication to a circumstance where a plaintiff makes a mistake in failing to name a party, in naming the wrong party, or in misnaming the party in order to prosecute his claim as originally alleged, explicitly describes the type of notice or understanding that the new party had. This construction serves the policies of freely allowing amendment and at the same time preserving to new parties the protections afforded by statutes of limitations.


Goodman commenced an action in Maryland state court, naming Praxair, Inc., as defendant and alleging, in two counts, that Praxair, Inc., breached a contract with Goodman and in doing so also violated the Maryland Wage Payment and Collection Act. Goodman alleged that he entered into a written contract, with Tracer Research Corporation, a manufacturer of tracing chemicals (tracers) that detect fuel leaks in fuel tank, for Goodman to lobby on Tracer Research's behalf for exemptions of its tracers from regulation by the Clean Air Act and the EPA regulatory scheme under it. Goodman alleged that a research company became contractually obligated to pay fees to him when the EPA sent the research company notice that certain chemicals for detecting fuel leaks were exempt from environmental testing requirements. Subsequent to the alleged breach, Tracer Research was acquired by UCISCO, Inc., a wholly-owned subsidiary of Praxair, Inc., and UCISCO thereafter changed its name to Praxair Services, Inc. Goodman then named Praxair, Inc., as the defendant. Praxair removed the action to federal court based on diversity jurisdiction and then filed a motion to dismiss the complaint on the ground that Praxair Services, Inc., not Praxair, Inc., was the successor to Tracer Research's obligations under the contract with Goodman. In response, Goodman filed an amended complaint on April 5, 2004, in which he repeated the allegations contained in the original complaint but stated that Praxair Services, Inc., rather than Praxair, Inc., was liable under the contract. He also alleged that Praxair, Inc., should be liable on an alter ego theory, and amended the caption of the case to indicate that both Praxair, Inc., and Praxair Services, Inc., were defendants.

The district court dismissed plaintiff Goodman's amended complaint for breach of contract against Praxair, Inc., and its wholly-owned subsidiary, Praxair Services, Inc., under Federal Rule of Civil Procedure 12(b)(6) because (1) the face of the amended complaint, which added Praxair Services, Inc., as a defendant, showed that the claim was barred by Maryland's three-year statute of limitations, and (2) Federal Rule of Civil Procedure 15(c) (providing when an amended pleading relates back to the date of the original pleading) did not save the complaint.


Did the amended complaint set forth on its face the facts necessary to conclude that Goodman's claims are barred by the statute of limitations?




On appeal, the court held that the district court erred in dismissing the complaint under Fed. R. Civ. P. 12(b)(6) because the face of the complaint did not allege facts sufficient to support the conclusion that the claims were time-barred. The complaint did not allege when the contract was breached or when Goodman discovered the breach. His allegation that money was owed does not mean that the contract on which it was owed had been breached. The complaint did not even allege when Tracer Research received the letter or when it provided a copy to Goodman.

The district court likewise erred in refusing to apply the relation back afforded by Rule 15(c). Rule 15 implements the notions that a plaintiff may amend a pleading for whatever reason and that his amendment should be freely allowed. Consistent with this policy, Rule 15(c)(3) articulates an instance when an amendment relates back, referring simply to when an amendment "changes the party or the naming of the party" for whatever reason. The Rule does not concern itself with the amending party's particular state of mind except insofar as he made a mistake. The mandate remains that a plaintiff has the burden of locating and suing the proper defendant within the applicable limitations period. The Federal Rules do not demand a perfect effort at the outset, but they do demand that when an amendment seeks to correct an imperfect effort by changing parties, the new party must have received adequate notice within the limitations period and suffer no prejudice in its defense.

Praxair Services, Inc., asserted that it was not provided fair notice by the original complaint as required by Rule 15(c)(3)(A) and (B). Praxair Services' assertion of ignorance is simply implausible for several reasons. First, the complaint made conceptually clear that it was suing the corporate entity that was the successor of Tracer Research Corporation. Praxair, Inc., and Praxair Services, Inc., knew, better than anyone, which corporate entity that was, having acquired Tracer Research and participated in the structuring of the transaction in the first place. Second, the complaint described the nature of the contract and the original parties to it. Any corporation maintaining reasonable business records would be able rapidly to route the complaint to the appropriate subsidiary responsible for that contract. Third, Praxair, Inc., and Praxair Services, Inc., are parent and subsidiary, respectively, and have employed the same attorneys. Praxair Services, Inc., knew that it was the successor to Tracer Research Corporation's contractual liability and therefore it knew or should have known within the limitations period that it was the proper party to Goodman's suit. Since Praxair Services, Inc., has conceded that it has suffered no prejudice to its defense of Goodman's claim, the Court concluded that the requirements for relation-back under Rule 15(c)(3) have been met.

Judgment was reversed and remanded for further proceedings.

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