Remembering TCPaul, 2016-2019

fed civ pro question

Wonder if any litigators out there have run into something l onehell04/22/19
My quick search says courts disagree with you. Piercing the jorgedeclaro04/22/19
This. midlaw04/24/19
I'm with jorge on this. As an aside, it is interesting they jeffm04/22/19
Not necessarily. I suspect that from the fact pattern, it’ jorgedeclaro04/22/19
Course and scope. That's my recollection of all that's requ jeffm04/22/19
On the job does not necessarily equal course and scope. jorgedeclaro04/22/19
Yes, it does. Otherwise, it's not "on the job." The cases jeffm04/22/19
In my jurisdiction piercing the corporate veil is an indepen specv31304/22/19
onehell (Apr 22, 2019 - 6:30 pm)

Wonder if any litigators out there have run into something like this:

A files complaint against B. B is the employer of C. C committed a tort on the job and the theory against B is negligent retention.

B is an LLC. A also names the owners of B as defendants, but makes no allegations of any facts that would pierce the corporate veil, instead alleging that B's owners participated personally. In discovery it becomes apparent that B's owners did not have any participation in the day to day and were essentially just shareholders. Dispositive motion as to B's owners is filed, seeking only to remove B's owners as defendants and leave the LLC as the defendant such that the case continues just against the corporate entity.

In response, A concedes that there was no personal participation but now seeks to amend the complaint to add a theory of piercing the corporate veil. Thing is, the SOL on the underlying tort has now expired.

Normally, Rule 15(c) is quite liberal about "relation back," requiring only that whatever is being added to the complaint arises from the same "transaction or occurrence" that was originally alleged.

Certainly, the underlying tort hasn't changed, and there's clear caselaw that an amendment relates back where, for example, the theory is changing from contract to tort or from professional negligence to regular negligence or whatever.

But, adding a veil-piercing theory seems different. It would require all kinds of facts related to how the LLC was operated and run which would normally not have been relevant to the tort. Those facts, the kinds of facts needed to pierce the veil, don't seem to be part of the same "transaction or occurrence" that gave rise to the tort.

So, thoughts? Would an amendment to add a veil-piercing theory relate back, under rule 15c, to the original complaint for purposes of SOL?

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jorgedeclaro (Apr 22, 2019 - 7:17 pm)

My quick search says courts disagree with you. Piercing the corporate veil is not an independent cause of action, nor a separate claim” Reed v. Reid, 980 N.E.2d 277 (Ind. 2012). Instead, it is merely a remedy for imposing liability on the underlying cause of action. Strawbridge vs Sugar Mountain Resort, Inc., 243 F.Supp.2d (W.D.N.C. 2003). These courts say it relates back.

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midlaw (Apr 24, 2019 - 5:04 pm)

This.

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jeffm (Apr 22, 2019 - 8:03 pm)

I'm with jorge on this. As an aside, it is interesting they plead negligent retention. Respondeat superior should impose strict liability regardless of the employer's conduct.

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jorgedeclaro (Apr 22, 2019 - 8:10 pm)

Not necessarily. I suspect that from the fact pattern, it’s either intentional tort (molestation) or a discrimination. Some states have some surprisingly strict rules on respondeat superior.

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jeffm (Apr 22, 2019 - 8:13 pm)

Course and scope. That's my recollection of all that's required.

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jorgedeclaro (Apr 22, 2019 - 8:16 pm)

On the job does not necessarily equal course and scope.

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jeffm (Apr 22, 2019 - 8:17 pm)

Yes, it does. Otherwise, it's not "on the job." The cases not applying RS essentially hold it wasn't on the job - such as a diversion by the employee or not within the scope. But we are going far afield, so...

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specv313 (Apr 22, 2019 - 10:54 pm)

In my jurisdiction piercing the corporate veil is an independent cause of action that would not “relate back” for SOL purposes, although success on such a claim is dependent on the success of the underlying theory of liability against the corporate entity. I find it odd you say you could relate back professional to regular negligence claims, or breach of contract to tort claims, since these claims, at least facially, appear to be new theories of liability, and therefore brand new causes of action.

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