The plaintiff served a copy of the original complaint and the summons on Evergreen Shipping, c/o the Corporation Service Company. Just under two years after the petition date, the plaintiff commenced an adversary proceeding by filing a complaint against Evergreen Shipping Agency to avoid and recover the transfers as preferential pursuant to sections 547 and 550 of the Bankruptcy Code. In In re Berkline/Benchcraft Holdings, LLC, the court found that the relation back standard was met.ĭuring the ninety days before the petition date ( i.e., the period during which preferential payments may be avoided in bankruptcy), the debtors made payments to or for the benefit of Evergreen Line. It therefore focuses on whether the newly added defendant has been provided the notice intended by the statutes of limitations. The relation back doctrine is designed to balance a defendant’s interest in the protection afforded by the statute of limitations with a judicial interest in resolving disputes on their merits. Thus, after the statute of limitations has expired, an amendment will not be permitted unless it relates back to the date of the initial complaint or an exception to the statute of limitations, such as equitable tolling, applies.Īn amendment relates back to the date of the original pleading when: (A) the law that provides the applicable statute of limitations allows relation back, (B) the amendment asserts a claim or defense that arose out of the conduct, transaction, or occurrence set out-or attempted to be set out-in the original pleading, or (C) the amendment changes name of the party against whom a claim is asserted, if the claim arises out of the same conduct as that set forth in the original pleading and if, within the period provided for serving the summons and complaint, the party to be brought in by amendment: (i) received such notice of the action that it will not be prejudiced in defending on the merits, and (ii) knew or should have known that the action would have been brought against it, but for a mistake concerning the proper party’s identity. In general, if an amendment would be barred by the applicable statute of limitations, it is considered futile. In the Third Circuit, although leave to amend is generally granted liberally, a court will not grant leave if the amendment would be “futile” because it fails to state a claim upon which relief can be granted. After a pleading has already been amended, or 21 days has passed from the filing of a responsive pleading, a party can only amend its pleading with the consent of the other party or with leave of the court. A party is permitted to amend its pleading once as a matter of course within 21 days of service of the complaint or any responsive pleading. In one case, she found that the amended complaint “related back” to the original complaint, while in the other case, although the relation back standard was not satisfied, she found cause to “equitably toll” the statute of limitations.īoth cases interpret Rule 7015 of the Federal Rules of Bankruptcy Procedure, which applies Rule 15 of the Federal Rules of Civil Procedure to adversary proceedings and sets the standards for when a complaint can be amended. She issued decisions in two different cases on the same day allowing plaintiffs in avoidance actions to amend their complaints after the expiration of the statute of limitations to add different defendants, albeit based on different grounds. Are you Simply Out of Luck? Thankfully (for you), not necessarily, as Judge Mary Walrath of the United States Bankruptcy Court for the District of Delaware recently confirmed. Imagine you are in the middle of representing a plaintiff in an adversary proceeding when you suddenly discover – after the statute of limitations has expired – that you failed to include a defendant.
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