Thursday, September 4, 2014

Kentucky Supreme Court Addresses Diligence in Raising Defense of Lack of Capacity to be Sued

      Recently, the Kentucky Supreme Court issued an opinion addressing a narrow but interesting question as to the ability to sue a labor union and similar unincorporated organizations that are not susceptible to being sued in their own name.  In this case, the Plaintiff argued that the Defendant labor union was tardy in raising as a defense its inability to be sued.  On the facts of this case, the Supreme Court found that it acted on a timely basis.  United Brotherhood of Carpenters v. Birchwood Conservancy, No. 2011 SC-000659-DG, 2014 WL 2773105 (Ky. June 19, 2014).
      The Birchwood Conservancy, itself an unincorporated association, had certain discussions with members of the United Brotherhood of Carpenters labor union regarding the dismantling of an old barn and the erection of a new one.  When that work was not completed to Birchwood’s expectations, it brought suit against the United Brotherhood of Carpenters.  The initial Complaint was filed in September 2004, with an Amended Complaint filed in 2005.  In response to the initial Complaint, the union denied a contract existed.  In response to the Amended Complaint, the Union’s answer was that the Complaint failed to state a claim and therefore should be dismissed.  Finally, in March 2007, the Union filed a Motion to Dismiss on the grounds that “an unincorporated association such as a labor union, cannot sue or be sued in the name of the association.”  In response, Birchwood asserted that the union had waived that defense by failing to previously raise it.
      Perhaps uniquely, this case raised as well the issue of the capacity of the Plaintiff to bring an action.  The Birchwood Conservancy was itself an unincorporated association that lacked the capacity, in its own name, to bring suit.  Ultimately, a non-profit corporation was allowed to join the suit as a Plaintiff.
      Ultimately, the Court found that once the corporation with standing to bring suit joined the action and brought additional claims for relief, the clock for defending on the basis of lack of capacity to be sued was re-set:
Therefore, when the new plaintiffs (who did possess the authority to file suit) intervened and were allowed to substitute themselves for Birchwood Conservation Center, adding several new damage claims, it was as if an entirely new complaint had been filed.  Thus, any defenses asserted by the Union in its answer to the new plaintiff’s complaint were timely made, as this was, in effect, the Union’s first response to the new parties’ properly filed complaint with its new or substantially altered claimed damages.  (Emphasis in original.)
      Characterizing this entire dispute as between “two parties who both squandered the Court’s time and resources, in addition to their own,” the suit was dismissed.

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