Summary
denying dismissal of Indiana tort claims as time-barred because plaintiff's complaint had not foreclosed the possibility of tolling the statute of limitations
Summary of this case from Elward v. Electrolux Home Prods., Inc.Opinion
NA 01-73-C-B/S
March 29, 2002
ENTRY DENYING MOTION TO DISMISS AMENDED THIRD PARTY COMPLAINT
This matter comes before the Court on a Motion to Dismiss Interstate Motor Carrier, Inc.'s ("IMC") Amended Third Party Complaint filed by Neace Lukens, Inc. and Alan J. Jones (collectively "Neace"). In the Motion, Neace contends that IMC's claims for professional malpractice were not timely filed within the applicable two-year statute of limitations, and that the timing of the alleged constructively fraudulent acts contradicts IMC's reliance allegations. IMC responds, disputing the date on which Neace claims the cause of action accrued and arguing that Neace's fraudulent concealment of material information should have tolled the limitations period. For the reasons stated in detail below, we DENY the Motion to Dismiss the Amended Third Party Complaint.
Factual and Procedural Background
In December 1998, IMC requested a price quotation for commercial automobile liability and physical damage insurance from Alan Jones, its insurance agent and an employee of Neace Lukens, Inc. Amended Compl. ¶¶ 3-4. IMC provided Jones with information required to generate such an estimate, and Jones responded with a quotation of $228,298.00. Id. ¶ 5. At all times relevant to this transaction, IMC relied upon Jones' expertise as a professional insurance agent, and Jones held himself out as having such expertise. Id. ¶ 15. Jones assured IMC that the estimate was appropriately based on the information provided. IMC purchased the insurance coverage through Jones and his agency. Id. ¶ 6-7. Star Insurance Company issued a one-year commercial lines insurance policy to IMC. Id. ¶ 7. Jones acted as the intermediary between BMUM and IMC with regard to this contract. On November 29, 1999, Big Moose Underwriting Managers ("BMUM") informed Jones of an error in policy pricing. Id. ¶ 9. Throughout the policy term of December 28, 1998, to December 28, 1999, IMC received no notice of the error. Id. ¶ 8. Even after receiving notice from Big Moose, Jones did not disclose the error to IMC, which only learned of the mistake well after the expiration of the policy term, following an audit conducted by Star Insurance Company. Id. ¶ 10. IMC subsequently received an audit premium for an additional $121,295.00, of which $116,008.00 was attributed to the physical damage premium. Id. ¶ 11. IMC now refuses to pay the additional premium and maintains that if it had been aware of the error (and, presumably, the resulting price difference), IMC would not have purchased the policy.
On February 2, 2001, BMUM filed suit against IMC, seeking to collect the additional premium amount. On March 22, 2001, IMC filed a third-party claim against Neace, alleging professional malpractice and fraud based on Jones' incorrect premium quotation. Neace moved to dismiss these claims, and IMC sought leave to amend, which the Court granted on June 13, 2001.
Standard of Review
A party moving for dismissal under 12(b)(6) must show that "the pleadings themselves fail to provide a basis for any claim for relief under any set of facts." Owner-Operator Independent Drivers Ass'n v. Mayflower Transit, Inc., 161 F. Supp. d 948 (S.D.Ind. 2001), quoting Ed Miniat, Inc. v. Globe Life Ins. Group Inc., 805 F.2d 732, 733 (7th Cir. 1986). Under this analysis, we examine only the sufficiency of the complaint, not the merits of the lawsuit. Autry v. Northwest Premium Servs., Inc., 144 F.3d 1037, 1039 (7th Cir. 1998); Zoghlin v. Renaissance Worldwide, Inc., 1999 WL 1004624, at *3 (N.D.Ill. 1999). Dismissal is appropriate only if it appears to a certainty that the plaintiff cannot establish any set of facts which would entitle him to the relief sought. See Hishon v. King Spalding, 467 U.S. 69, 73 (1984); Mosley v. Klincar, 947 F.2d 1338, 1339 (7th Cir. 1991). In applying this standard, we treat all well-pleaded factual allegations as true and we construe all inferences that reasonably may be drawn from those facts in a light most favorable to the party opposing the motion. Szumny v. American Gen. Finance, 246 F.3d 1065, 1067 (7th Cir. 2001); Latuszkin v. City of Chicago, 250 F.3d 502, 504 (7th Cir. 2001).
Legal Analysis
Neace moves to dismiss the Amended Third Party Complaint on the grounds that the claims for professional malpractice and fraud were filed after the applicable two-year statute of limitations. The parties do not dispute the applicable statute of limitations for claims for negligence in the provision of professional services, such as are present in this case. See Resp. to Motion to Dismiss at 2; Reply Memorandum in Support of Motion to Dismiss at 1 (citing Ind. Code 34-11-2-3). Indiana law provides that "[a]n action of any kind for damages, whether brought in contract or tort, based upon professional services rendered or which should have been rendered, may not be brought, commenced, or maintained, in any of the courts of Indiana against physicians, dentists, surgeons, hospitals, sanitariums, or others, unless the action is filed within two (2) years from the date of the act, omission, or neglect complained of." Id. The primary disagreement turns on when the limitations period began to run and what effect, if any, Jones' failure to notify IMC of the error had on the length of that period.
According to Neace, the alleged injury accrued in December 1998 when IMC purchased insurance based on Jones' inaccurate price quotation. Neace further argues that because Indiana's two-year statute of limitations for claims arising from professional services is an occurrence-based limit, not discovery-based, IMC's third party complaint filed March 22, 2001 fell well outside the limitations period, which would have expired in December 2000. However, under Indiana's discovery rule, the statute of limitations for a tort action begins to run when "the plaintiff knew or, in the exercise of ordinary diligence, could have discovered that an injury had been sustained as a result of the tortious act of another." Pope v. Zanetis, 2002 WL 425050, at *3 (S.D.Ind. 2002), citing Diaz v. Carpenter, 650 N.E.2d 688, 691 (Ind.App. 1995), citing Wehling v. Citizens Nat'l Bank, 586 N.E.2d 840 (Ind. 1992). See also Madlem v. Arko, 592 N.E.2d 686, 686-87 (Ind. 1992). Although the parties have not identified and the Court has not found any Indiana cases directly addressing the application of this doctrine to professional services claims other than in the medical context, we see no reason to discount its applicability to the present dispute. Confining our focus to the content of the pleadings, as we must on this Motion to Dismiss, we cannot conclude that IMC could plead no set of facts that might entitle it to recovery. Accordingly, Neace's Motion to Dismiss for lack of timeliness is DENIED.
Neace further argues that because IMC's constructive fraud claim is based on Jones' alleged failure to advise IMC of the policy rate error after November 29, 1999 (the date BMUM purportedly advised Jones of the rate error), IMC could not reasonably have relied on Neace's alleged misrepresentation or suffered any damage because of Jones' silence. Neace reasons that any damages after November 29, 1999 occurred too close to the expected end-date of the contract to have permitted IMC to back out of the contract. However, the language of the Amended Third Party Complaint reveals that IMC seeks recovery for Jones' alleged failure "to properly review all policies and investigate potential discrepancies in the rating portion of the policies," which occurred in November 1998, not simply the failure to forward notice of the error when he received it in November 1999. IMC specifically alleges that it relied on Jones' review of the policies and that his attestation to the estimate's accuracy induced IMC to purchase the policy. Therefore, Neace's Motion to Dismiss the constructive fraud claim is DENIED.
Conclusion
Neace moved to dismiss IMC's Amended Third Party Complaint, arguing that IMC did not timely file its claims within the applicable limitations period. For the reasons explained in detail above, we find that 1) IMC's third-party complaint filed March 22, 2001 was timely, given that the limitations period began to run sometime after November 29, 1999, and 2) IMC's constructive fraud claim includes Jones' alleged actions and omissions in November 1998, and therefore is not inconsistent with IMC's reliance allegation. Accordingly, we DENY Neace's Motion to Dismiss.