Opinion
C.A. No. 99C-01-036.
Submitted: December 17, 1999.
Decided: January 20, 2000.
On Defendant's Motion for Summary Judgment. Granted.
Carol P. Braverman, Camden, Delaware for the Plaintiff.
Robert W. Whetzel and Chad M. Shandler (argued) of Richards, Layton, and Finger, Wilmington, Delaware for the Defendant.
ORDER
Before the Court is Defendant's Motion for Summary Judgment. The parties have made their submissions and upon hearing oral argument, it appears that:
1. On January 26, 1999, Insurance Company of North America ("INA"), Plaintiff, filed a complaint against NVF Company ("NVF"), Defendant, for breach of contract due to NVF's alleged failure to pay insurance premiums due under an insurance policy issued to NVF by INA. The Defendant asserts that this claim is barred by the applicable three year statute of limitations and has moved this Court to grant summary judgment in its favor.
2. The terms of the insurance policy at issue called for INA to provide NVF with worker's compensation insurance for a period commencing on October 1, 1993 until October 1, 1994. The Plaintiff contends that $165,101.00 is owed for worker's compensation coverage provided to NVF during the policy period. In addition, INA contends that NVF has been unjustly enriched as a result of receiving coverage and failing to pay for the covered period.
3. The Plaintiff admits, in a letter to the Delaware Department of Insurance on June 16, 1997, that NVF's balance has been due since January 20, 1995. Subsequently, in a letter dated February 20, 1995, Plaintiff informed NVF that $165,101.00 in insurance premiums was past due and if the total amount was not paid within ten days, the matter would be referred to a collection agency. Defendant asserts that the Plaintiff was aware of the outstanding balance in 1995 because the matter had been referred to INA's collection department in that year. However, no action was taken by Plaintiff at this time. This inaction is detrimental to Plaintiff's case.
4. The Plaintiff claims there are genuine issues of material fact remaining with regard to the expiration of the applicable statute of limitations. The final audit of the outstanding premiums owed was completed, at the latest, on January 19, 1995. On February 3, 1995, INA received a fax from an NVF agent exhibiting that on December 13, 1994, the agent had requested a modification of NVF's rating by the Delaware Compensation Rating Bureau. On February 25, 1997, INA received a communication from the Delaware Compensation Rating Bureau stating that NVF had requested a hearing before the Delaware Insurance Department with regard to NVF's request for an experience modification. On March 24, 1997, INA received another communication from NVF asserting that there was going to be a hearing held before the Delaware Department of Insurance. Thereafter, on January 28. 1998, NVF's Executive Vice-President sent a copy of the Appeal to the Insurance Commissioner, which had been filed on or about October 30, 1995, to an INA agent stating that the matter was still under appeal.
5. Plaintiff claims the matter was still before the Insurance Commissioner as late as September 15, 1998. However, according to the Delaware Insurance Commissioner's office, there is no pending case remaining before it because the rating appeal had been dismissed one year after the filing of the appeal, on October 30, 1996, due to failure to prosecute the appeal. At oral argument on the summary judgment motion, Plaintiff contended that their case should not be dismissed as time barred because their administrative appeal tolled the statute of limitations. To the contrary, Defendant asserted that since the Complaint in this case was filed over four years after the alleged breach of contract, it is barred by the applicable statute of limitations and summary judgment should be granted in its favor.
STANDARD OF REVIEW
6. Superior Court Rule 56(c) provides that judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." The burden is on the moving party to show, with reasonable certainty, that no genuine issue of material fact exists and judgment as a matter of law is permitted. When considering a motion for summary judgment, the facts must be construed in the light most favorable to the non-moving party. Further, if the record indicates that a material fact is disputed, or if further inquiry into the facts is necessary, summary judgment is not appropriate.
Super. Ct. Civ. R. 56.
See Celotex Corp. v. Cattret, 477 U.S. 317 (1986); Martin v. Nealis Motors, Inc., Del. Supr., 247 A.2d 831 (1968).
McCall v. Villa Pizza, Inc., Del. Supr., 636 A.2d 912 (1994).
APPLICABLE LAW
7. Delaware courts classify lawsuits contesting insurance coverage as actions in contract. A cause of action for breach of a contract accrues at the time of the breach. Under 10 Del. C. § 8106, the applicable statute of limitations for a breach of contract is three years. Since Plaintiff is asserting that the statute of limitations should be tolled in this case, it bears the burden of demonstrating to the Court that a limited circumstance exists to justify such a result.
Travelers Indem. Co. v. Lake, Del. Supr., 594 A.2d 38, 41 (1991).
Fineberg v. Credit Int'l Bancshares, Ltd., 857 F. Supp. 338 (D.Del. 1994); Nardo v. Guido DeAscanis Sons, Inc., Del. Super., 254 A.2d 254 (1969).
10 Del. C. § 8106. Actions subject to 3 year limitation.
No action to recover damages for trespass, no action to regain possession of personal chattels, no action to recover damages for the detention of personal chattels, no action to recover a debt not evidenced by a record or by an instrument under seal, no action based on a detailed statement of the mutual demands in the nature of debit and credit between parties arising out of contractual or fiduciary relations, no action based on a promise, no action based on a statute, and no action to recover damages caused by an injury unaccompanied with force or resulting indirectly from the act of the defendant shall be brought after the expiration of 3 years from the accruing of the cause of such action. . . .
U.S. Cellular Inv. Co. of Allentown v. Bell Atl. Mobile Sys. Inc. Del. Supr., 677 A.2d 497 (1996); Wilson v. King, Del. Super., 673 A.2d 1228 (1996).
8. If the Court finds that NVF never acknowledged any subsisting debt to INA, it must, in turn, grant Defendant's motion for summary judgement because the cause of action was time barred. Plaintiff has directed the Court's attention to three letters adopted by NVF that were drafted in response to inquiries by INA regarding the status of NVF's appeal before the Insurance Commissioner in support of its position that Summary Judgment should not be granted. The Court is not persuaded that these letters acknowledged the debt in question.
9. It is clear that under Delaware law, "[a]n admission or acknowledgment by a debtor of a subsisting debt from which a promise to pay may be implied, may take a case out of the operation of the statute of limitations. For a case to be removed from the applicable statute of limitations, there must be a clear, distinct and unequivocal acknowledgment of a subsisting debt and a recognition of an obligation to pay it." Upon reviewing the briefs and hearing oral argument, I cannot find that the letters referred to by Plaintiff are sufficiently unequivocal to avoid the bar of the statute of limitations.
Kojro v. Sikorski, Del. Super., 267 A.2d 603. 606 (1970); Snyder v. Baltimore Trust Co., Del. Super., 532 A.2d 624, 626 (1986).
10. The letters that Plaintiff is relying upon are vague and imprecise, and as such, cannot constitute an unequivocal acknowledgment of debt. In Vinson v. University of Delaware , although the defendant attempted to negotiate a settlement with plaintiff after the statute of limitations had run, the plaintiff admitted in deposition that defendant never made any precise promise to pay for the lost contributions. Consequently, the Court refused to toll the statute of limitations because the defendant's efforts to resolve the dispute were not an unequivocal acknowledgment of debt.
Del. Super. C.A. No. 87C-JL-138, Del Pesco. J. (Sept. 21, 1989).
Accord Boney v. City of Dover, Del. Super., C.A. No. 91C-05-189. Babiarz, J. (Jan. 25, 1994).
11. Likewise, in Kojro v. Sikorski and Snyder v. Baltimore Trust Co., Delaware courts refused to toll the statute of limitations when the statements relied upon by the respective plaintiffs were insufficient to constitute an acknowledgment of debt by the defendants and remove the claims from the statute. Both of these cases dealt with statements that were more comparable to an acknowledgment of debt than the claims made in the case at bar. In Snyder, the defendant stated that he would "take care of" the plaintiff and made other such remarks to the effect of looking out for the plaintiff in the future. However, the Court found that these were "far too vague to constitute the `clear, distinct and unequivocal' acknowledgment of a preexisting debt necessary to remove the debt from the statute of limitations." Accordingly, in Kojro, statements by the plaintiff that they would settle "about our money" was not considered sufficient to constitute an acknowledgment of debt and remove the claim from the statute.
Kojro, supra.
Snyder, supra.
Snyder at 627.
Kojro at 606.
12. In the case sub judice, Plaintiff contends that the three letters they are relying upon implicitly acknowledge the debt in question. The letter of September 15, 1998 refers to an "alleged debt" that has been contested and may be referred to a collection agency in the future. Similarly, the letters of March 24, 1997 and January 28, 1998 merely state that the matter has been appealed to the Insurance Commissioner and do not explicitly, nor implicitly, refer to any debt between the parties. Furthermore, there is no recognition of any obligation to pay the subsisting debt by the Defendant. The Defendant's appeal of the insurance rating was not connected to the alleged debt that was owed Plaintiff. Given the facts of this case, Plaintiffs claim was not brought within the applicable three year statute of limitations.
13. Any argument by Plaintiff that since the matter was on appeal to the Insurance Commissioner the statute of limitations is tolled is misplaced. In essence, Plaintiff is arguing that since the amount in controversy could not be determined because of the appeal of their insurance rating, this uncertainty of the debt tolled the statute of limitations. This Court's research indicates no case law to support this proposition. A cause of action for breach of contract accrues at the moment of the breach. The Court in Fooks v. Delaware Health and Social Services opined that "[a] statute of limitations period is tolled only if the cause of action is inherently unknowable and the plaintiff was blamelessly ignorant that the cause of action existed or if defendants fraudulently concealed the cause of action." However, the statute of limitations period accrues from the moment a plaintiff has reason to know of, or knows of, the cause of action.
Although the appeal of the insurance rating may have affected how much money was owed, it would not have eliminated the debt, nor changed the circumstances of the breach. This situation is akin to a personal injury action where the statute of limitations begins to run on the date of the accident, although future medical expenses and lost wages may not be ascertained until a time closer to trial. Therefore, the appeal to the Insurance Commissioner was a separate and distinct legal matter that was unrelated to the Plaintiff's cause of action for breach of contract which is currently before the Court.
Fooks v. Delaware Health and Social Services, Del. Super. C.A. No. 98C-10-027. Graves, J. (Sept. 14, 1999).
Id. at 3.
Began v. Dixon, Del. Supr., 547 A.2d 620 (1988).
14. On the facts of that case, the court in Fooks concluded "that the moment the defendants accused [plaintiff] of abusing the clients and told her the contract was terminated because of such abuse, the applicable statute of limitations period began running. Contrary to [plaintiff's] contentions, the law is not that a statute of limitations period tolls until a plaintiff has a defendant's verification that a cause of action exists." The plaintiff's argument in Fooks is analogous to that of the Plaintiff in this case. In the instant case, the Plaintiff is claiming that the cause of action did not begin to accrue until their insurance rating was determined by the Insurance Commissioner because that would affect the amount owed as a result of the breach. However, this argument defeats the purpose of the statute of limitations as evidenced by Fooks.
Id.; Began at 623 ("If all parties were allowed to toll the statute until they learned of the legal theory of a proposed action or so pursued an action, there would be no purpose to the statute of limitations.").
15. In the case at bar, the Plaintiff was aware of the alleged breach by the Defendant during the applicable limitations period, yet chose to wait until nearly four years after the breach to file suit. This legal theory circumvents the purpose of the statute of limitations. Regardless of the amount that was actually being disputed, Plaintiff was on notice of the alleged breach. It was at this time that the statute to limitations began to run, not when the appeal before the Insurance Commissioner was disposed of. Consequently, Plaintiff should have brought its claim within the three years following the breach which occurred, at the latest, on January 20, 1995, after the final audit of the insurance policy had been performed.
Therefore, Defendant's Motion for Summary Judgment must be granted . IT IS SO ORDERED.