Summary
In Star Net Insurance Co. v. Southern Connecticut Restoration, LLC, 2018 WL 4523952 *3-4 (Conn.Super. 2018) (Blue, J.), Judge Blue granted a summary judgment motion to dismiss a claim to collect a debt as barred under the six-year contract statute of limitations of C.G.S. § 52-576 and held an action to collect the debt by plaintiff was not saved by a prior action to collect the same debt by an affiliated corporation.
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CV176072569
09-04-2018
STAR NET INSURANCE COMPANY v. SOUTHERN CONNECTICUT RESTORATION, LLC
UNPUBLISHED OPINION
Jon C. Blue, Judge
I. INTRODUCTION.
The Motion For Summary Judgment now before the court presents a question of first impression involving the Accidental Failure Of Suit statute, Conn. Gen. Stat. § 52-592(a). Although, as will be seen, the underlying facts are complex, the problem can be put in simple form. Suppose that Alpha Corporation commences an action against Delta Corporation, claiming that Delta owes Alpha money. After the commencement of the action, Alpha files a motion that the summons be amended to state that the plaintiff is Beta Corporation, which, Alpha represents, is the true creditor in the case. The motion is granted. Subsequently, it turns out that Beta has no legal existence in Connecticut, and Beta’s case against Delta is dismissed for lack of subject matter jurisdiction. Can Alpha take advantage of the Accidental Failure of Suit statute to bring a new action against Delta, claiming that it (Alpha) is the true creditor after all? Put another way, is this an accident? For reasons explained below, the answer to both questions is No.
Now for the details.
A. The Background
The plaintiff, Star Net Insurance Company ("Alpha" in the introductory example, but "Star Net" from now on) is one of scores of corporations held by W.R. Berkely Corporation, a conglomerate of insurance companies. Berkely Net Underwriters, LLC ("Beta" in the introductory example, but "Berkely Net" from now on) is also part of this huge conglomerate. No contract between Star Net and Berkely Net has been submitted by the parties. The relationship between these entities appears to be organizational rather than contractual.
The family tree of related corporations submitted by the parties is several pages long, but it can be simplified as follows. W.R. Berkely Corporation, the parent company, controls Signet Star Holdings, Inc. ("Signet"). Signet, in turn, controls two (of many) corporations: Star Net (the plaintiff here) and Starnet Insurance Services, LLC. ("Starnet Insurance"). Starnet Insurance, in its turn, controls Berkely Net. If this were a true family tree, one might say that Star Net and Starnet Insurance are siblings, being the children of Signet (W.R. Berkely being the grandparent), and Berkely Net (the child of Starnet Insurance) is consequently Star Net’s nephew. Perhaps as in most families, the members of this corporate family do not seem to communicate very well.
On November 10, 2007, Star Net entered into a Workers’ Compensation and Employers’ Liability Insurance Policy ("Policy") with the defendant, Southern Connecticut Restoration, LLC ("Delta" in the introductory example, but "Restoration" from now on). The Policy provides that Star Net will provide workers’ compensation coverage for Restoration in return for the payment of premiums. The Policy specifically provides that the premiums are to be paid to Star Net. The Policy covered the period November 10, 2007 to November 10, 2008, but it was subsequently extended for an additional year.
On June 4, 2009, Berkley Net sent a Policy Invoice to Restoration, notifying it that it owed $71,574.00 on the Policy. The Invoice directs Restoration to "[m]ake all checks payable to Berkely Net Underwriters." As mentioned, the Policy specifically provides that Restoration pay Star Net all premiums owed under the contract. The Policy Invoice does not state the basis of Berkely Net’s asserted right to the amount in question.
B. Star Net I
On January 17, 2013, Star Net commenced its initial action against Restoration by service of process. Starnet Insurance Co. v. Southern Connecticut Restoration, LLC, No. CV13-6035944 (N.H.J.D.) ("Star Net I"). Star Net was the sole plaintiff. Its complaint mischaracterized the 2009 Policy Invoice as demanding the sum of "$70,574." (As mentioned, the Invoice was actually for the sum of $71,574.00.) The complaint additionally alleged that Restoration had "failed to pay the balance due."
On August 21, 2014, Star Net filed a "Motion For Order." (No. 101.) The Motion states as follows:
This case was commenced in the name of Star Net Insurance Company. The proper plaintiff in this case is Berkely Net Underwriters, LLC, who is owed the monies due in this case.
WHEREFORE THE PLAINTIFF PRAYS THAT THIS MOTION BE GRANTED AND THAT COURT ORDER THAT THE DOCKET/SUMMONS BE AMENDED TO REFLECT THE PLAINTIFF AS BERKELY NET UNDERWRITERS, LLC.
(Capital letters in original.)
On September 8, 2014, the Motion For Order was granted by Robinson, J.
On October 26, 2016, Restoration filed a Motion To Dismiss. (No. 114.) The Motion alleged that Berkely Net "is not a legal entity registered to do business in Connecticut nor does it have a proper legal existence in the State of Connecticut by Certificate of Existence from the Secretary of State." Consequently, the Motion contended, the court lacked subject matter jurisdiction over the action.
On December 12, 2016, the Motion To Dismiss was granted "absent objection" by Robinson, J.
C. Star Net II
On July 28, 2017, the present case (Star Net II ) against Restoration was commenced by service of process. The sole plaintiff is, once again, Star Net (now represented by different counsel). The Complaint cites Restorations’ obligations under the Policy and, without stating a specific amount, alleges that Restoration has failed "to pay the premiums that are currently due and owing as a result of certain audits." The Complaint additionally states that the action is filed "pursuant to the accidental failure of suit statute, C.G.S. 52-592(a)."
On November 7, 2017, Restoration filed the Motion For Summary Judgment now before the court. The Motion claims the running of the statute of limitations. The Motion was argued on September 4, 2018.
II. DISCUSSION
Conn. Gen. Stat. § 52-576(a) provides that, "No action for an account, or on any simple or implied contract, or on any contract in writing, shall be brought but within six years after the right of action accrues." It is common ground that, unless Star Net II is saved by the Accidental Failure Of Suit statute, it was not commenced within the time limited by law.
The focus of the case is consequently on Conn. Gen. Stat. § 52-592(a). That statute provides as follows:
If any action, commenced within the time limited by law, has failed one or more times to be tried on its merits because of insufficient service or return of the writ due to unavoidable accident or the default or neglect of the officer to whom it was committed, or because the action has been dismissed for want of jurisdiction, or the action has been otherwise avoided or defeated by the death of a party or for any matter of form; or if, in any such action, after a verdict for the plaintiff, the judgment has been set aside, or if a judgment of nonsuit has been rendered or a judgment for the plaintiff reversed, the plaintiff, or, if the plaintiff is dead and the action by law survives, his executor or administrator, may commence a new action for the same cause at any time within one year after the determination of the original action or after the reversal of the judgment.
The question presented is whether the statute just quoted is applicable to this case. No discovered judicial decision provides a definitive answer to this question. The answer, instead, involves consideration of basic principles.
It is well established that, "total identity of plaintiffs is not a prerequisite to application of the statute." Isaac v. Mount Sinai Hospital, 210 Conn. 721, 733, 557 A.2d 116 (1989). The court must, instead, look to "the essence of the plaintiff’s status and the interest [it] represented." Id. Isaac was a wrongful death action. The original action was ostensibly commenced by "Deborah Isaac, Administratrix." Unhappily for Isaac, she had not yet been appointed administratrix of the decedent’s estate by the probate court at the time of commencement of the action. (She was appointed later.) The action was dismissed because a wrongful death action under Conn. Gen. Stat. § 52-555 may only be maintained by the executor or administrator of an estate. 210 Conn., at 724. The second action was commenced by "Deborah Isaac, Administratrix," this time correctly. The Supreme Court held that the second action was saved by the Accidental Failure Of Suit statute. It noted that "the named plaintiff in each case was ‘Deborah Isaac, Administratrix’ " and opined that, "It is difficult to conceive of a closer identity of interest than is found in this case." Id., at 732. Since the plaintiff in each case represented the same interest, the Accidental Failure Of Suit statute applied. Id., at 733.
Isaac is consistent with case law from other jurisdictions holding that statutes analogous to Conn. Gen. Stat. § 52-592(a) allow second actions to be commenced by successors in interest to original parties whose prior actions have failed as a matter of form. See Smallwood v. Central Peninsula General Hospital, 151 P.3d 319, 331 (Alaska 2006) (second action commenced by assignee of original plaintiff’s rights); Van Der Stegen v. Neuss, Hesslein & Co., 200 N.E. 577, 580 (N.Y. 1936) (second action commenced by curator in bankruptcy of original plaintiff). Beyond cases of this description, however, there is little case law to provide guidance.
The relationship between Star Net and Berkely Net in this case is plainly more attenuated than the relationship between original and subsequent plaintiffs in the cases just cited. Star Net and Berkely Net are distinct corporate entities. Neither is the successor of the other. Isaac, speaking of the relationship between Deborah Isaac, individually, and Deborah Isaac, administratrix, said that, "It is difficult to conceive of a closer identity of interest than that found in this case." 210 Conn., at 732. No similar statement can be made in the present case.
There is, in any event, a more fundamental problem with applying the Accidental Failure Of Suit statute to the fact of the present case. The failure of Star Net’s original action was not an accident in the first place.
Conn. Gen. Stat. § 52-592(a) is expressly designed to address the injustice that would otherwise occur when an original plaintiff’s action fails as a matter of form after the statute of limitations has run. Star Net’s original action did not, however, fail as a matter of form. As recounted above, Star Net was the original plaintiff in Star Net I . However, in filing its August 21, 2014 Motion For Order, Star Net intentionally asked that the summons be amended to "reflect the plaintiff as Berkely Net Underwriters, LLC." This was not done as a matter of form. This was done on the ground that it was Berkely Net, rather than Star Net, "who is owed the monies due in this case." While Berkely Net’s case subsequently failed as a matter of form, Star Net’s case failed, and admittedly so, on the merits.
It is helpful to remember that two plaintiffs failed to prevail in Star Net I . The two plaintiffs failed to prevail for different reasons. Berkely Net failed to prevail because of a matter of form- it not have a corporate existence in Connecticut. Star Net failed to prevail on the merits- according to its own Motion For Order, it was not owed the monies due. If Berkely Net had subsequently acquired a corporate existence in Connecticut, it could (at least for present purposes) appropriately invoke the protections of § 52-592(a).
Star Net, on the other hand, cannot appropriately invoke such protection. Star Net’s failure to prevail in Star Net I was not the sort of formalistic injustice that the Accidental Failure Of Suit statute was intended to remedy. Star Net was, instead, the victim of its own motion. Its decision to file its Motion For Order was just as binding on it as the failure to file a memorandum in opposition to a motion to dismiss was binding on the plaintiff in Walworth v. Hartford Hospital, 23 Conn.App. 404, 408, 580 A.2d 545 (1990).
Unlike the subsequent dismissal of Berkely Net’s action, which (for present purposes) could fairly be characterized as an accidental failure of suit, Star Net’s failure in Star Net I was not based on jurisdictional grounds but on Star Net’s substantive assertion that the money in question was owed to Berkely Net. This was a decision on the merits. See Walworth v. Hartford Hospital, supra, 23 Conn.App., at 408-09.
Our Supreme Court has held that, "the term ‘accident’ is to be construed in its ordinary meaning of an ‘unexpected happening’ ... and means ‘unexpected or unintended.’ " Capstone Building Corp. v. American Motorists Insurance Co., 308 Conn. 760, 774, 67 A.3d 961 (2013). (Citations omitted.) Star Net’s August 21, 2014 Motion For Order was neither unexpected nor unintended. It was intentional. Consequently, Star Net’s failure to obtain relief in Star Net I was not an accident. It was suicide. Under these circumstances, Conn. Gen. Stat. § 52-592(a) affords Star Net no relief.
III. CONCLUSION
The Motion For Summary Judgment is granted.