Arizona Court of Appeals Division One Holds That Rule 17(a) Does Not Require Plaintiffs to Establish That the Proper Plaintiff Was Difficult to Determine or That They Made an Understandable Mistake Before Being Allowed to Join or Substitute the Proper Plaintiff.

William Everett Preston filed for bankruptcy protection in October 2005, and a trustee was appointed for the bankruptcy estate.  Mr. Preston later became ill and spent six months in Kindred Hospital before dying.

Mr. Preston’s sisters, the co-personal representatives of his estate, brought suit against Kindred Hospital for wrongful death, negligence, and elder abuse.  Kindred Hospital moved to dismiss the complaint, claiming that the bankruptcy trustee was the proper real party in interest and that the Prestons were not proper plaintiffs.  The Prestons admitted that the claims were assets of the bankruptcy estate, but, with the support of the trustee, argued that they should be given an opportunity to join or substitute the trustee under Arizona Rule of Civil Procedure 17(a), the real-party-in-interest rule.  The superior court granted Kindred Hospital’s motion to dismiss, concluding that, in this case, the real party in interest was not difficult to determine and that the Prestons had not made an understandable mistake in bringing the suit themselves, either of which would have allowed them to join or substitute the trustee as plaintiff.

The Court of Appeals reversed, concluding that the plain language of Rule 17(a) does not require a showing that the proper plaintiff was difficult to determine or that the plaintiffs made an understandable mistake by filing suit in their own names.  The Court also relied on its previous cases, cases from other jurisdictions, and the purposes of Rule 17(a), which focus on whether the defendant would be prejudiced by joinder or substitution, rather than on whether the proper plaintiff was difficult to identify or whether the plaintiff made an understandable mistake.  The Court rejected the reasoning of some federal courts which have concluded otherwise and noted that “several commentators believe [Rule 17(a)] has outlived its usefulness and should be abolished entirely.” 

The Court declined to consider whether Kindred Hospital would be prejudiced by joinder or substitution of the trustee as plaintiff because Kindred Hospital had not pressed that argument on appeal.  The Court did note, however, that joining or substituting the trustee would “merely change the potential beneficiaries of any recovery.”  The Court also left open the question of whether an overt abuse of the real-party-in-interest requirement would warrant dismissal without leave to cure the defect.

Judge Downey authored the court’s opinion; Judges Kessler and Swann concurred.