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Rule 17 May Save the Real Party-In-Interest’s Claims from Being Time-Barred

Where the real party-in-interest was added via an amended complaint after the running of the statute of limitations, the Court may permit the real party-in-interest’s claims to relate back to the original, timely filed complaint. Brakebush Brothers, Inc. v. Certain Underwriters at Lloyds of London, 2022 NCBC 23 (J. Davis).  As a result, the real party-in-interest was permitted to pursue the claims previously asserted by the wrong party.

Plaintiff Brakebush Brothers, Inc. (“Brakebush”) was in the process of purchasing the assets of House of Raeford Farms, Inc. (“Raeford”) when a fire broke out at Raeford’s chicken processing facility, causing extensive damage.  Brakebush completed the transaction with Raeford and, when the excess insurance carriers (“Excess Carriers”) refused to pay Brakebush on the fire claim, Brakebush (alone) filed suit for breach of contract, bad faith and unfair and deceptive trade practices against the Excess Carriers.  The Excess Carriers moved to dismiss, contending Brakebush lacked standing to pursue the bad faith and UDTP claims.  The Business Court granted the motion as to some of the Excess Carriers (“Unassigned Carriers”) and dismissed those claims without prejudice.  Brakebush thereafter filed an amended complaint, but now included Raeford as a party-plaintiff.  Raeford asserted a DJ claim and a breach of contract claim against the Unassigned Carriers.  However, by the time the amended complaint was filed, the statute of limitations had run on Raeford’s claims.  The Unassigned Carriers again moved to dismiss based on the running of the statute of limitations.  Citing to Rule 17, Brakebush and Raeford contended that the amended complaint related back to the original complaint since the Court previously determined that Raeford was the real party-in-interest.

The Business Court agreed.  Recognizing that “relation back” ordinarily applies to motions to amend pursuant to Rule 15, the Business Court further acknowledged that Rule 15 ordinarily applies only to “claims” and not to “parties.” (Opinion, ¶26).  And while Rule 17 allows a new party to be “substituted” for a prior party, the Business Court recognized the Rule does not address “adding” additional parties.  (Id., ¶29).  Nonetheless, the Business Court followed precedent from various federal courts, including the Second Circuit, and allowed the claims previously (but unsuccessfully) against the Unassigned Carriers by Brakebush to relate back to the original complaint. (Id., ¶35). However, Raeford’s new claim—unjust enrichment—did not relate back and so was time-barred

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