Preston
PHOENIX (Legal Newsline) - The Arizona Supreme Court says a plaintiff is not required to show that an initial failure to name the real party in interest resulted from an understandable mistake or difficulty in identifying the proper party.
In an opinion released March 24, the Court was asked to consider the proper interpretation of Arizona Rule of Civil Procedure 17(a).
Rule 17(a) requires every action to be "prosecuted in the name of the real party in interest." An action cannot be dismissed for failure to name the proper party, however, "until a reasonable time has been allowed after objection" for the real party in interest to ratify, join or be substituted into the action.
The Court made its ruling in a lawsuit filed on behalf of the estate of William Everett "Billy" Preston.
The Grammy Award-winning soloist collaborated with a number of heavy hitters in the music industry, including The Beatles, The Rolling Stones, Nat King Cole, Little Richard, Ray Charles, Elton John, Eric Clapton, Bob Dylan, Sammy Davis, Jr., Aretha Franklin, The Jackson 5, Mick Jagger, Johnny Cash, the Red Hot Chili Peppers and Norah Jones.
In 2005, Preston was admitted to Kindred Hospitals in Scottsdale, Ariz. He died the next year.
The complaint against Kindred Hospitals West, LLC, and the other defendants alleges wrongful death, negligence and elder abuse under the state's Adult Protective Services Act.
Kindred moved to dismiss the complaint, arguing that the personal representatives lacked standing to sue.
Before entering the hospital, Preston had filed for bankruptcy under Chapter 11. After his death, the bankruptcy was converted to a Chapter 7 proceeding.
Kindred argued that the claim belonged to the bankruptcy estate and therefore the bankruptcy trustee was the real party in interest.
The personal representatives agreed but opposed the motion to dismiss, requesting an opportunity to join or substitute the trustee pursuant to Rule 17(a). The trustee also filed a declaration supporting the personal representatives' pursuit of the action.
A superior court granted Kindred's motion to dismiss, commenting that the purpose of Rule 17(a) is "to prevent the forfeiture of claims when the determination of the real party to bring suit is difficult to make or when an understandable mistake has been made."
Because the personal representatives knew of the bankruptcy, the superior court found that it was not difficult to determine the proper plaintiff and there was no understandable mistake.
An appeals court reversed, stating that "the unambiguous language of the Rule itself, and well-established tenets of statutory construction lead us to conclude that neither an understandable mistake nor difficulty in determining the proper party is necessary to allow ratification, joinder or substitution of the Bankruptcy Trustee under Rule 17(a)."
The state's high court upheld the appeals court's opinion and remanded the case to the superior court.
Justice W. Scott Bales, who authored the Court's nine-page opinion, called the matter "an issue of statewide importance."
"By its terms, Rule 17(a) does not require a plaintiff to prove an understandable mistake or difficulty in identifying the proper party in order to avoid dismissal. The accompanying notes, however, state that the rule is intended to 'prevent forfeiture when determination of the proper party to sue is difficult or when an understandable mistake has been made,'" the Court wrote.
Kindred argues that these notes limit the application of Rule 17(a). But, in describing the purpose of the rule, the Committee Notes do not purport to specify the only circumstances in which substitution of the real party is permitted.
"Moreover, the notes cannot alter the rule's clear text," it said.
From Legal Newsline: Reach Jessica Karmasek by e-mail at jessica@legalnewsline.com.