UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

TOOL-PLAS SYSTEMS, INC.,

Plaintiff/Counter-Defendant,

v.

CAMACO, LLC,

Defendant/Counter-Plaintiff.

 /

Case No. 09-12003

Honorable Patrick J. Duggan

OPINION AND ORDER

At a session of said Court, held in the U.S.

District Courthouse, Eastern District 

of Michigan, on March 31, 2010.

PRESENT: THE HONORABLE PATRICK J. DUGGAN

U.S. DISTRICT COURT JUDGE

On May 26, 2009, Tool-Plas Systems, Inc. (“TPS”), filed this lawsuit alleging,

among other things, that Camaco, LLC (“Camaco”), breached a contract between the

parties and owes TPS $138,796. On June 15, 2009, Camaco filed an answer with

affirmative defenses to Plaintiff’s complaint. At that time, Camaco also filed six

counterclaims against TPS. Presently before the Court is a Motion to Substitute Proper

Party filed by TPS on December 22, 2009. The motion has been fully briefed and,

pursuant to Eastern District of Michigan Local Rule 7.1(f)(2), the Court dispensed with

oral argument on March 29, 2010. For the reasons set forth below, the Court grants

TPS’s motion.

I. Factual and Procedural Background
2

This case arises from an arrangement between the parties by which Camaco agreed

to purchase three stamping dies produced by TPS. Camaco uses the dies to make seating

components for Ford vehicles. On August 22, 2008, the parties entered into a written

agreement requiring Camaco to pay TPS $668,510 for the three dies and providing that

there would be “no set-offs or deductions other than those already identified” in a

document attached to the agreement. (Compl. Ex. A.) Camaco ultimately paid TPS

$529,714, leaving a balance on the contract of $138,796. TPS filed the present suit to

recover that amount. Specifically, TPS’s complaint alleges a breach of contract and

conversion by Camaco. In addition to damages, TPS seeks judicial foreclosure,

injunctive relief, and declaratory judgment.

Meanwhile, Camaco asserts that it was entitled to withhold $138,796 from TPS

because one of the dies, the D1116 die, was delivered in a defective and deficient

condition. Camaco alleges that it notified TPS of the deficiency but that TPS technicians

could not make the necessary repairs. Camaco asserts that it paid another supplier,

Uelner Precision Tools & Dies (“Uelner”), $138,796 to repair the die. Based on these

allegations and other expenses allegedly incurred by Camaco during TPS’s production of

the D1116 die, Camaco responded to Plaintiff’s complaint with an answer and several

counterclaims. Specifically, Camaco alleges a breach of contract, breach of an express

warranty, breach of an implied warranty of merchantability, breach of an implied

warranty of fitness for a particular purpose, and unjust enrichment. Camaco seeks both

damages and declaratory judgment. In November 2009, the Court granted Camaco leave
3

to amend its counterclaims to include additional damage claims that arose after its

original filing.

In December 2009, TPS filed the present motion to substitute Toolplas Systems,

Inc. (“NewCo”) for itself as the real party in interest in this litigation. In September 2008,

TPS entered receivership in the Canadian courts. As part of that proceeding, NewCo

purchased TPS’s assets and name. When plaintiff’s counsel filed the present lawsuit in

May 2009, he mistakenly filed it in the name of TPS rather than NewCo. TPS now

alleges that NewCo is the real party in interest in terms of enforcing the August 22, 2008,

settlement agreement and seeks to substitute NewCo as plaintiff. Camaco opposes the

motion. Camaco instead requests that the Court add NewCo as an additional plaintiff and

counter-defendant, grant Camaco leave to file and amended counterclaim naming both

TPS and NewCo, and re-open discovery.

II. Substitution of Parties

Pursuant to the Federal Rules of Civil Procedure, every “action must be prosecuted

in the name of the real party in interest.” Fed. R. Civ. P. 17(a)(1). “[T]he real party in

interest is the person who is entitled to enforce the right asserted under the governing

substantive law.” Certain Interested Underwriters at Lloyd’s, London, England v. Layne,

26 F.3d 39, 42-43 (6th Cir. 1994). Even so, “[t]he court may not dismiss an action for

failure to prosecute in the name of the real party in interest until, after an objection, a

reasonable time has been allowed for the real party in interest to ratify, join, or be

substituted into the action.” Fed. R. Civ. P. 17(a)(3). In deciding whether to allow a real
4

party in interest to substitute into an action for the named plaintiff, the Court considers

whether there has been an honest mistake as opposed to tactical maneuvering,

unreasonable delay, or undue prejudice to the non-moving party. See Esposito v. United

States, 368 F.3d 1271, 1275-76 (10th Cir. 2004); Jordan v. Fox, Rothschild, O’Brien, &

Frankel, 20 F.3d 1250, 1278 (3d Cir. 1994).

A. Real Party in Interest

Camaco first opposes TPS’s motion on grounds that TPS presents insufficient

evidence to establish that NewCo is, in fact, the real party in interest. Attached to TPS’s

motion is the Canadian court’s order approving NewCo’s purchase of TPS’s “Assets as

defined in the Offer.” (TPS’s Mot. Ex. B.) Camaco argues that, because “the Offer” is

not included as an exhibit, it is unclear whether TPS’s rights under the August 22, 2008,

settlement agreement—the agreement TPS seeks to enforce in this lawsuit—transferred to

NewCo as an asset. Furthermore, Camaco asserts that any purported transfer between

TPS and NewCo may be barred by an anti-assignment clause contained in a contract

between the parties. In response, TPS maintains that NewCo purchased all of TPS’s

assets and that there is no anti-assignment clause in the August 22, 2008, settlement

agreement.

Having reviewed the relevant documents, the Court concludes that the record

evidence sufficiently supports TPS’s request for substitution. Despite Camaco’s assertion

to the contrary, the Court has been unable to locate an anti-assignment clause in the
1

The Court expresses no opinion as to whether such a clause, if it existed, would be

enforceable.

2

TPS maintains that NewCo even purchased the “Tool-Plas Systems” name. To that end,

the Canadian court order changes TPS’s name to “1732187 Ontario Inc.” (TPS’s Mot. Ex. B.) It

appears to this Court, then, that some substitution must take place: this case must be prosecuted

either in the name of NewCo or 1732187 Ontario Inc., as Tool-Plas Systems no longer exists as a

separate legal entity.

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settlement agreement.1 And while the Canadian court order does not use the term “all

assets,” the tenor of that order suggests that NewCo purchased all of TPS’s assets.2

Furthermore, if NewCo did not purchase TPS’s rights in the settlement agreement, TPS

would only be prejudicing its own interests in seeking substitution of NewCo. Under

these facts, the Court is inclined to allow the substitution requested by TPS.

B. Unreasonable Delay

Next Camaco objects to TPS’s delay in bringing the present motion. Camaco notes

that the Canadian court approved the asset sale to NewCo more than seven months before

TPS filed this lawsuit and more than a year before TPS filed this motion. Camaco

maintains that, had TPS engaged in reasonably diligent investigation, the lawsuit would

never have been filed in TPS’s name in the first place. Camaco also suggests that TPS’s

president may be personally liable for the mix up. TPS admits that it made a mistake but

claims it was an honest mistake and that it has gained no tactical advantage by filing in

TPS’s name. In fact, TPS notes that the relevant statutes of limitations have yet to run

and, if the case is dismissed for failure to name the real party in interest, NewCo will

simply re-file.
6

The Court agrees with TPS that the delay in this case is insufficient to bar

substitution. Case law suggests that, in deciding the present motion, the Court should

focus on whether TPS’s mistake was made honestly and absent tactical maneuvering. See

Esposito, 368 F. 3d at 1275-76. While TPS likely could have discovered the discrepancy

earlier and avoided the present dispute, that fact does not foreclose the possibility of

substitution. The Court fails to detect any bad faith or tactical maneuvering on behalf of

TPS or NewCo and believes that substitution is appropriate absent any undue prejudice to

Camaco thereby.

C. Undue Prejudice

This brings the Court to Camaco’s final argument: Camaco contends that it will be

unduly prejudiced if TPS’s motion is granted. Camaco’s concerns appear to focus on two

interrelated issues: (1) its counterclaims against TPS and (2) discovery. TPS’s motion

seeks substitution of NewCo as plaintiff only, not as the counter-defendant. TPS

contends that NewCo is the real party in interest as to the claims in the complaint but that

Camaco’s counterclaims are properly asserted against TPS. Upon substitution, then, TPS

asserts that Camaco’s “counterclaims” would become “third-party claims.” Camaco

argues, however, that it may be able to assert its counterclaims against NewCo under the

purported assignment of the settlement agreement. To determine its rights under the

assignment, Camaco seeks additional time for discovery, which closed since TPS filed the

present motion. Camaco also seeks leave to file amended counterclaims against both TPS

and NewCo.
3

See footnote 2, supra.

4

The Court acknowledges that TPS filed a motion for partial summary judgment on

March 1, 2010. In light of the substitution, the Court will construe that motion as a motion for

partial summary judgment by NewCo. The Court intends to decide that motion while the parties

complete discovery unless the parties notify the Court by April 9, 2010, of a reason to hold the

motion in abeyance.

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Ultimately, the Court concludes that NewCo should be substituted for TPS as the

plaintiff in this action. At the same time, however, measures should be taken to prevent

Camaco from being prejudiced by the substitution. The Court agrees that Camaco should

have an opportunity to conduct discovery into the purported assignment and identity of

NewCo. To this end, the Court will re-open discovery until May 31, 2010. 

As to the counterclaims, the Court acknowledges that the sale of TPS’s assets to

NewCo is likely to necessitate the filing of an amended pleading by Camaco.3

 If, after

conducting discovery, Camaco determines that such an amendment is necessary, Camaco

shall file an appropriate motion for leave to amend with the Court. In light of these new

scheduling orders, the parties shall have until July 1, 2010, to file dispositive motions.4

Accordingly,

IT IS ORDERED that TPS’s motion to substitute NewCo (Toolplas Systems, Inc.)

as plaintiff is GRANTED.

IT IS FURTHER ORDERED that discovery is re-opened until MAY 31, 2010.

IT IS FURTHER ORDERED that the parties shall file all dispositive motions on

or before JULY 1, 2010.
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s/PATRICK J. DUGGAN

UNITED STATES DISTRICT JUDGE 

Copies to:

Michael O. Fawaz, Esq.

Stephen P. Dunn, Esq.

Adam J. Wienner, Esq.

Jason D. Menges, Esq.

John R. Trentacosta, Esq.