IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF OHIO

EASTERN DIVISION

Zachary Lester, et al., :

 Plaintiffs, :

 v. : Case No. 2:11-cv-850

Wow Car Company Ltd., et al., : JUDGE EDMUND A. SARGUS, JR. 

 Magistrate Judge Kemp

Defendants. :

OPINION AND ORDER

I.

As more fully set forth in this Court’s Opinion and Order

filed on May 16, 2012, the plaintiffs in this case, Zachary and

Brandi Lester, bought a used car which did not live up to their

expectations. In fact, they returned it to the seller twice

within the first week they owned it, and the engine blew six days

after the purchase. Understandably upset, they sought relief

both from the seller (and there is some dispute about who that

was), a finance company, and a company from which they had

purchased a warranty. That latter party, Coast to Coast Dealer

Services, was dismissed in the May 16, 2012 order, and the

finance company, Columbus Finance, was subsequently dismissed by

stipulation. Currently, the only remaining defendants are Wow

Car Company, Ltd. and Amy Hartzler dba Wow Car Company, whom the

Court will refer to as the “Wow defendants.” 

The Lesters have now moved for leave to file a second

amended complaint. They propose to add four new defendants - Max

R. Erwin, Sr. dba Wow Car Company, Mid-Ohio Motor Funding Group,

the Hartzler-Erwin Group LLC, and Marmax Enterprises LLC - all of

whom, the Lesters assert, are associated in some way with either

Amy Hartzler or Wow Car Company, and to assert six different

causes of action against those defendants. The Wow Defendants

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oppose the motion, arguing that the proposed TILA claim against

the new defendants (and against defendant Hartzler, although that

is not a new claim) would be futile because it is time-barred,

that any claim against the new defendants under the Ohio Consumer

Sales Practices Act would also be untimely. They do not appear

to oppose the filing of the balance of the second amended

complaint. For the following reasons, the Court will grant the 

motion in part and deny it in part. 

 II.

The following procedural facts are both relevant and

undisputed. The original state court complaint, filed in Knox

County on August 18, 2011, named Wow Car Company Ltd. as the

seller of the automobile. It also named the two other defendants

referred to above, but neither was alleged to be the party who

sold the car to the Lesters. 

The First Amended Complaint was filed in this Court on July

31, 2012. It added Amy Hartzler dba Wow Car Company as a

defendant and alleged that she and Wow jointly operated the

dealership which sold the car to the Lesters. The complaint

alleged claims under the Ohio Odometer Rollback and Disclosure

Act, O.R.C. §4549.46; the federal Motor Vehicle Information and

Cost Savings Act; for breach of express warranty; for breach of

the implied warranty of merchantability; for breach of the

implied warranty of fitness for a particular purpose; for fraud;

for deceptive trade practices; for violation of the Truth in

Lending Act and Regulation Z; and for violation of the Ohio

Consumer Sales Practices Act. Columbus Finance, then still a

defendant, moved to dismiss the complaint for failure to join an

indispensable party (Coast to Coast) and also requested dismissal

of certain claims on other grounds. The Wow defendants joined

that motion, and their motion to dismiss is still pending.

During the pendency of that motion to dismiss, the Lesters

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moved to amend again. The proposed second amended complaint

reduces the number of causes of action from eight to six. They

are, in order (and based on the Court’s interpretation of each

count), breach of express warranty against Wow Car Company; (2)

breach of the implied warranty of merchantability against Wow Car

Company; (3) breach of the implied warranty of fitness for a

particular purpose against Wow Car Company; (4) a state law

deceptive trade practices against Ms. Hartzler, Mr. Erwin, and

Wow Car Company; (5) a TILA claim against “Defendants”; and (6)

an Ohio Consumer Sales Practices Act claim against “Defendants.” 

Doc. 68, Attachment 1. As noted, the Wow defendants’ opposition

to this proposed amended complaint focuses on the latter two

claims, and, in particular, whether it would be futile to allow

them to be asserted against the new defendants given that the

statute of limitations on each of them has run. 

III.

The question of whether a claim asserted against a newlyjoined party “relates back” to the filing of the original

complaint - an inquiry that is often determinative of the statute

of limitations question - is governed by Fed.R.Civ.P. 15(c). In

particular, Rule 15(c)(1) provides:

(c) Relation Back of Amendments.

(1) When an Amendment Relates Back. An amendment to a

pleading 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 the party or the naming of

the party against whom a claim is asserted, if Rule

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15(c)(1)(B) is satisfied and if, within the period

provided by Rule 4(m) 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. 

Defendants appear to make two distinct arguments as to why

Rule 15(c) does not permit relation back here. First, citing to

In re Kent Holland Die Casting & Plating, Inc., 928 F.2d 1448

(6th Cir. 1991), they contend that an amendment which adds a new

party (rather than simply substituting one party for another) can

never relate back because, according to that decision, “the

precedent of this circuit clearly holds that ‘an amendment which

adds a new party creates a new cause of action and there is no

relation back to the original filing for purposes of

limitations.’” Id. at 1449, quoting Marlowe v. Fisher Body, 489

F.2d 1057, 1064 (6th Cir. 1973). Second, they argue that Rule

15(c) applies only to mistakes made in the choice of which party

to sue, and not to situations where the plaintiff was wholly

unaware of the existence of the proposed new party at the time

the original complaint was filed. In support of this contention,

they cite to Baskin v. City of Des Plaines, 138 F.3d 701 (7th

Cir. 1998), which held that the knowledge of the proposed new

party about the suit is irrelevant in the absence of a mistake

made by the plaintiff as to the identity of that party. That

court further held that a plaintiff who is simply unaware of the

identity of a potential defendant cannot have made the type of

mistake which would justify the application of Rule 15(c).

 The Lesters argue that the issue of relation back is

controlled by the recent Supreme Court decision in Krupski v.

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Costa Crociere S.p.A., 130 S.Ct. 2485 (2010), a case not cited or

discussed by defendants. In Krupski, a cruise ship passenger who

was injured when she tripped over a cable onboard ship, sued

Costa Cruise Lines - the company listed on the front of her

ticket - for damages. After the limitations period on

plaintiff’s claim expired, her counsel was notified that the

actual operator of the ship was an Italian company knows as Costa

Crociere S.p.A. Costa Cruise, the original defendant,

successfully moved for summary judgment on grounds that it was

not a proper defendant. In response to an order from the

District Court, plaintiff amended her complaint to join Costa

Crociere. Finding that this joinder did not relate back to the

original filing date of the complaint, the District Court then

dismissed plaintiff’s claims on limitations grounds. It

concluded that the first two prerequisites for relation back

found in Rule 15(c)(1)(C)(I) - that the claim against the new

defendant arose out of the same transaction as the previous

claim, and that the new defendant had constructive knowledge of

the existence of the suit - were satisfied, but that plaintiff

could not show, as required by Rule 15(c)(1)(C)(ii), that “the

action would have been brought against [the new defendnant], but

for a mistake concerning the proper party’s identity.”

The Supreme Court reversed. It noted that the focus of the

lower courts’ decisions was on whether and when the plaintiff,

Ms. Krupski, was aware that she might have sued the wrong party

or that Costa Crociere was the correct party. That focus,

according to the Court, was “the wrong starting point.” The

Court held that Rule 15's inquiry is not what the plaintiff did

or did not know, but “whether [the new defendant] knew or should

have known that it would have been named as a defendant but for

an error.” Krupski, 130 S.Ct. at 2493. As the Court explained,

“[i]nformation in the plaintiff's possession is relevant only if

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it bears on the defendant's understanding of whether the

plaintiff made a mistake regarding the proper party's identity.” 

Id. at 2493-94. Recognizing that a defendant who has no

knowledge of a potential claim during the applicable limitations

period has a strong interest in “repose,” the Court nonetheless

concluded that “repose would be a windfall for a prospective

defendant who understood, or who should have understood, that he

escaped suit during the limitations period only because the

plaintiff misunderstood a crucial fact about his identity.” Id.

at 2493.

Drawing on this reasoning, the Lesters argue that

defendants’ focus on whether the Lesters knew of the possible

involvement of Erwin, Mid-Ohio, HEG or Marmax in the auto sale -

or whether the Lesters knew that it was Hartzler, not WOW Car

Company, Ltd., who actually sold them the car - is misplaced. 

They contend that under Krupski, any inquiry into what the

Lesters did or did not know at the time of suit is simply

irrelevant. Because there is at least the possibility that, if

Hartzler, Erwin, Mid-Ohio, HEG or Marmax were involved in the

transaction as the proposed second amended complaint alleges,

those persons or entities were both aware of the lawsuit and

should have known that but for the Lesters’ misunderstanding of

the entire picture, they would have named all of these parties as

defendants, the Lesters assert that the claims all relate back

under Rule 15(c).

It was certainly the law in this Circuit, prior to Krupski,

that any time a new party, rather than a substituted party, is

added to a case, Rule 15(c)’s relation back rule cannot be

applied. That was the holding in Kent, and the Court of Appeals

has consistently followed that rule. See, e.g., Asher v. Unarco

Material Handling, Inc., 596 F.3d 313 (6th Cir. 2010). Although

Asher was decided shortly before Krupski, this Court has held

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that it is still good law and unaffected by Krupski. See DeBois

v. Pickoff, 2011 WL 1233665 (S.D. Ohio March 28, 2011)(Rice,

J.)(explaining that because Krupski involved a “one-for-one”

substitution of parties and not the joinder of new parties, its

holding is not in conflict with Asher). See also Smith v. Gallia

County Sheriff, 2011 WL 2970931 (S.D. Ohio July 20, 2011)(Kemp,

M.J.)(following DeBois). 

These district court decisions are not, of course, binding

precedent. And there is some suggestion from the Court of

Appeals itself that the Marlowe-Kent-Asher line of cases might

not apply to the situation described in the Lesters’ second

amended complaint. See Beverly v. MEVA Formwork Systems, Inc.,

500 Fed. Appx. 391, (6th Cir. Sept. 12, 2012). There, because it

was plain that the proposed new party did not have actual or

constructive notice of the suit, the Court of Appeals said that

it “need not examine the line of cases in this circuit [i.e.

Kent, Smart v. Ellis Trucking Co., 580 F.2d 215 (6th Cir. 1978),

Marlowe and Asher] that preclude relation back under Rule 15(c)

where the plaintiff seeks to add a new defendant.” Id. at **4. 

It did note, however, that “[w]hile these cases arguably preclude

relation back in this particular situation, they differ from the

instant case because the new party in those cases was unrelated

to the original party”). Id. 

On the other hand, in at least two other unpublished

opinions, the Court of Appeals has held that Krupski did not

alter this rule, and it refused to apply Rule 15(c) even when the

new parties were related to the original party defendant. See

Brown v. Cuyahoga County, Ohio, 2013 WL 1003511 (6th Cir. March

15, 2013)(refusing to apply Rule 15(c) to the proposed addition

of county jail employees to a suit against the county); Smith v.

City of Akron, 476 Fed. Appx. 67, 69 (6th Cir. Apr. 6, 2013)(same

for addition of city police officers to a suit against the city). 

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In fact, in Smith, the Court of Appeals reasoned:

The problem with Smith's amended complaint is that

adding new, previously unknown defendants in place of

“John Doe” defendants “is considered a change in

parties, not a mere substitution of parties,” and “such

amendments do not satisfy the ‘mistaken identity’

requirement of Rule 15(c)[ ].” Cox v. Treadway, 75 F.3d

230, 240 (6th Cir.1996). Smith did not make a mistake

about the identity of the parties he intended to sue;

he did not know who they were and apparently did not

find out within the two-year limitations period. The

relation-back protections of Rule 15(c) were not

designed to correct that kind of problem. 

These cases suggest that Krupski’s focus was on a specific type

of mistake, namely the belief that the named defendant was a real

party in interest when, in fact, it was not. Here, by contrast,

the “mistake,” if any, was not that the named defendants are not

real parties in interest (they are, or at least the Lesters

allege that they are); it was the Lester’s lack of knowledge that

there were additional real parties in interest. The Lesters’

lack of knowledge of the identity of these parties, and the fact

that they are being named as new rather than substitute parties, 

precludes them, under Sixth Circuit precedent, from being joined

under a “relation back” theory even after Krupski. Given the

fact that the line of cases beginning with Marlowe and extending

through Asher is not completely inconsistent with Krupski; that

none of these decisions was mentioned in that section of Krupski

which identified a circuit conflict; and that the Court of

Appeals has declined to repudiate this line of cases on at least

two separate occasions, this Court has little choice but to

follow circuit precedent. That means that the TILA and OCSPA

claims against the new defendants would be time-barred if

asserted, and it would be futile to allow an amendment to assert

them. 

The Lesters’ alternative argument is that they have

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adequately alleged that the four new defendants are simply alter

egos of whichever individual or entity sold them the car, so that

they are really not “new” defendants at all but have always been

parties to the case. If that is so, the Lesters timely pleaded

their claims against the actual seller of the car, whoever it may

have been, and identifying the alter ego or alter egos of the

seller is not a change in parties at all.

The alter ego doctrine developed in response to improper

uses of the corporate form to commit crimes or fraud. Belvedere

Condominium Unit Owners' Assn. v. R.E. Roark Cos., Inc., 67 Ohio

St.3d 274, 287 (1993) sets out a three-part test for piercing the

corporate veil, which is one way in which obligations of a

corporation can be deemed obligations of individual shareholder

or directors. This mechanism for piercing the corporate veil

cannot be used in reverse (at least in Ohio), see In re Zhang

463 B.R. 66, 80 (Bkrtcy. S.D. Ohio 2012). However, the first

prong of the Belvedere test “is a restatement of the alter ego

doctrine, which requires that plaintiff ‘show that the individual

and the corporation are fundamentally indistinguishable.’” 

Taylor Steel, Inc. v. Keeton, 417 F.3d 598, 605 (6th Cir. 2005),

quoting id. As Taylor Steel explains, there are a number of

factors which go into the alter ego inquiry, but they relate to

factors dealing with the reality of the corporation’s existence

as a separate entity, including the level of its capitalization,

observance of corporate formalities, the keeping of corporate

records, and whether the corporation was used as a facade for the

business operations of the individual shareholders or directors. 

Id. Further, this theory may permit the Court to treat an

individual and a corporation as essentially the same entity, and

to allow someone with a claim against the individual to reach

corporate assets to satisfy that claim. See, e.g., In re Fisher,

296 Fed. Appx. 494, 506 (6th Cir. Oct. 10, 2008)(“This court has

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explained ... that veil piercing and alter ego concepts are

distinct. The former asks a court to hold A vicariously liable

for B's debts, while the latter asserts that A and B are the same

entity and therefore liability is direct”), citing International

Union, United Auto., Aerospace and Agr. Implement Workers of

America v. Aguirre, (6th Cir. 2005). Consequently, at least in

theory, the Lesters might be able to prove that all of the

entities and individuals they propose to name in the second

amended complaint should be treated as the same entity, and that

the obligations of any one of them are also, in law, the

obligations of all of the others.

The question then becomes: does the existence of such a

theory eliminate any need to analyze the second amended complaint

in terms of whether the claims against the new defendants relate

back to the original filing date? According to the Lesters, that

is exactly the effect of alleging an alter ego theory of

liability. In support of that assertion, they rely primarily on 

Wm. Passalacqua Builders, Inc. v. Resnick Developers South, Inc.,

933 F.2d 131 (2d Cir. 1991), a case which involved a slightly

different scenario - the commencement of an action against

alleged alter egos of a judgment debtor to enforce the judgement

against the alter egos. There, the court held that the action

was governed by New York’s twenty-year statute of limitations on

actions to enforce a judgment, and not by the six-year statute of

limitations which applied to the causes of action on which the

judgment was rendered. This case is not directly on point

because the Lesters do not have a judgment against either of the

current defendants, and an action to enforce a judgment against

any of the proposed new defendants would clearly be premature. 

Further, the case law suggests that any type of action which, in

essence, seeks to enforce a judgment against an alleged alter ego

to a judgment debtor is a claim separate from the underlying

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causes of action which led to the judgment; it may be

appropriately filed if and when judgment is entered, but it does

not justify tolling the running of the statute of limitations on

the original claims as against the alleged alter egos. See,

e.g., Matlock v. McCormick, 948 S.W.2d 308, 311 (Tex. App.

1997)(“whether [the proposed new defendants] are alter egos ...

is a relevant issue only after [plaintiff] proves her causes of

action against [the existing defendant]”). 

There is some authority for the general proposition that

both an original defendant and its alter ego are to be treated

the same for limitations purposes, so that service on one is the

equivalent of service on the other. See, e.g., N.L.R.B. v.

O’Neill, 965 F.2d 1522, 1529 (9th Cir. 1992)(“Where two parties

are alter egos, service on one is sufficient to initiate

proceedings against both within the statute of limitations). 

While that may be true, taking that principle to the extreme - as

the Lesters attempt to do here - creates a curious type of

argument: No “relation back” analysis need be done if plaintiff

is simply joining new parties who are alter egos of existing

parties, and the factual predicate which eliminates the need to

do that analysis - the existence of an alter ego relationship -

can be established simply by the unproven allegations of the

proposed amended complaint. If that argument were accepted, a

plaintiff could do an end run around cases like Kent and Asher

simply by adding alter ego allegations to a proposed amended

complaint which otherwise would fail the “relation back” analysis

mandated by Rule 15(c).

Synthesizing these various principles leads the Court to

this conclusion. If, in fact, the four proposed new parties are

alter egos of either Ms. Hartzler or Wow Car Company, Ltd., they

would stand liable for any judgment rendered against those two

existing defendants, and their liability can be established and

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enforced in a subsequent case which is timely filed under the

statute of limitations relating to enforcement of judgments - a

statute which would not begin to run until the judgment becomes

final and enforceable. Such separate suits are routinely filed

in Ohio. See, e.g., Stypula v. Chandler, 2003 WL 22844296

(Geauga Co. App. Nov. 26, 2003). In fact, that was the scenario

in Wm. Passalacqua Builders, Inc., the case cited by the Lesters. 

Thus, whether the statute of limitations has or has not run on

the underlying claims is irrelevant to the alleged alter egos’

liability for any judgment entered against Ms. Hartzler or Wow. 

The only meaningful question, then, is not whether the Lesters

can file suit to determine these parties’ liability - clearly,

they can - but whether they should be permitted to do so in the

context of this case. To answer that question, the Court would

have to determine if the alter ego claim has accrued in the

absence of a judgment against the existing defendants, and

whether, even if it has, it is proper to join that claim with the

underlying claims - or to do it at this stage of the case. The

parties have not briefed these issues, and it would not be

appropriate to address them in this order.

Before finally resolving this issue, the Court notes that

the Wow defendants have reasserted their statute of limitations

argument concerning the TILA claim asserted against Ms. Hartzler. 

That is not a new claim, however, but one found in the current

complaint and one which is the subject of the motion to dismiss

that complaint. This is an issue better resolved by the District

Judge (assuming it is raised again by way of a motion to dismiss

the second amended complaint).

 IV.

 Based on the foregoing analysis, the Court concludes the

following. First, any TILA or OSCPA claims which the Lesters

wish to assert directly against the four proposed new defendants

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do not relate back to the original filing date and would be

barred by the statute of limitations. Second, the Lesters should

be permitted to assert an alter ego claim against the four

proposed new defendants, but without prejudice to those

defendants’ ability to move to dismiss that claim. Third, the

Lesters should be permitted to re-plead their TILA claim against

Ms. Hartzler, again without prejudice to her ability to re-file

her motion to dismiss that claim. The Lesters shall file a

second amended complaint in conformance with this order within

fourteen days. The motion to amend (Doc. 68) is granted in part

and denied in part as set forth in this Opinion and Order.

 V.

Any party may, within fourteen days after this Order is

filed, file and serve on the opposing party a motion for

reconsideration by a District Judge. 28 U.S.C. §636(b)(1)(A),

Rule 72(a), Fed. R. Civ. P.; Eastern Division Order No. 91-3, pt.

I., F., 5. The motion must specifically designate the order or

part in question and the basis for any objection. Responses to

objections are due fourteen days after objections are filed and

replies by the objecting party are due seven days thereafter. 

The District Judge, upon consideration of the motion, shall set

aside any part of this Order found to be clearly erroneous or

contrary to law.

This order is in full force and effect, notwithstanding the

filing of any objections, unless stayed by the Magistrate Judge

or District Judge. S.D. Ohio L.R. 72.3.

/s/ Terence P. Kemp 

United States Magistrate Judge

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