Case Title: T. Copeland & Sons v. Kansa General Ins. Co.

Citation: 171 Vt. 189, 762 A.2d 471

Docket Number: 

State: vermont

Court: Vermont Supreme Court

Date: 2000-07-28T00:00:00Z

Document:
T. Copeland & Sons v. Kansa General Ins. Co. (98-505); 171 Vt. 189; 
762 A.2d 471 

[Filed 28-Jul-2000]
[Motion for Reargument Denied 29-Aug-2000]

       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal  revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of  Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any  errors in order that corrections may be made before this opinion goes
  to press.

                                 No. 98-505

T. Copeland & Sons, Inc., et al.	         Supreme Court

                                                 On Appeal from
     v.	                                         Orange Superior Court

Kansa General Insurance Company, et al.	         September Term, 1999

Shireen Avis Fisher, J.

R. Bradford Fawley of Downs Rachlin & Martin, PLLC, Brattleboro, for 
  Plaintiffs-Appellants.

Frank H. Zetelski, Rutland, for Defendant-Appellee Kansa General International
  Insurance Co.

John L. Putnam and David R. Putnam of Stebbins, Bradley, Wood & Harvey, 
  Hanover, New Hampshire, for Defendant-Appellee U.S. Fire Insurance Co.

William H. Quinn of Pierson, Wadhams, Quinn & Yates, Burlington, for 
  Defendant-Appellee Zurich Insurance Co.

John Davis Buckley of Theriault & Joslin, P.C., Montpelier, and Richard W. 
  Bryan and Richard S. Kuhl of Jackson & Campbell, P.C., Washington, D.C., 
  for Defendants-Appellees American Homes Assurance Co. and New Hampshire 
  Insurance Co.

Samuel Hoar, Jr., Shapleigh Smith, Jr. and Elizabeth H. Miller of Dinse, Knapp
  & McAndrew, P.C., for Defendant-Appellee Reliance Insurance Co.

Brooks, McNally, Platto & Vitt, P.C., Norwich, and Alexandre de Gramont of 
  Crowell & Moring, LLP, Washington, D.C., for Defendant-Appellee Cigna Insurance Co.

PRESENT:  Amestoy, C.J., Morse, Johnson, Skoglund, JJ., and Van Benthuysen, 
          Superior J., Specially Assigned.

 

       MORSE, J.  Plaintiff Copeland, as judgment creditor, sued the seven
  insurance companies of  the judgment debtor, Maska U.S., Inc., for damages
  under a direct action statute, which provides, "in  case of [the]
  insolvency or bankruptcy [of insured,] an action may be maintained by the
  injured  person or claimant against the company under the terms of the
  policy."  8 V.S.A. § 4203(3).  The  superior court granted defendants'
  motions to dismiss on the ground that Copeland's suit was time-barred by
  the one-year limitations period established by 8 V.S.A. § 4203(2) ("No
  action shall lie  against the company to recover for any loss under this
  policy, unless brought within one year after  the amount of such loss is
  made certain either by judgment against the insured . . . or by agreement 
  between the parties . . . .").  Copeland argues that the court erred by not
  applying the general six-year  limitations period provided by 12 V.S.A. §
  511 ("A civil action . . . shall be commenced within six  years after the
  cause of action accrues and not thereafter."). We affirm.

       Copeland manufactures furniture at the Pierson Industrial Park in
  Bradford, Vermont.  In  June 1992, Copeland sued Maska, an adjoining
  manufacturer of hockey jerseys, for alleged  contamination of its real
  property.  The case settled, and, on June 28, 1995, the superior court
  entered  judgment against Maska in the amount of $7,000,000.  On October
  24, 1995, after it had paid  Copeland $1,000,000 towards satisfaction of
  the judgment, Maska filed for bankruptcy. (FN1) On  November 1, 1996,
  Copeland sued Maska's several insurers, the defendants below, to recover
  its  judgment.

 

       In 1919, the Vermont Legislature passed an act requiring that all
  liability insurance policies  issued in Vermont contain four conditions. 
  See 1919, No. 155, § 2 (codified as 8 V.S.A. § 4203(1)-(4)).  Two are at
  issue in this case.  They are subsection (2):

          No action shall lie against the [insurance] company to recover 
     for any loss under this [insurance] policy, unless brought within one 
     year after the amount of such loss is made certain either by judgment 
     against the insured after final determination of the litigation or by 
     agreement between the parties with the written consent of the 
     company;

id. § 4203(2), and subsection (3):

          The insolvency or bankruptcy of the insured shall not release 
     the company from the payment of damages for injury sustained or 
     loss occasioned during the life of the policy, and in case of such 
     insolvency or bankruptcy an action may be maintained by the injured 
     person or claimant against the company under the terms of the policy, 
     for the amount of any judgment obtained against the insured not 
     exceeding the limits of the policy.

  Id. § 4203(3).  Thus, subsection (2) established a one-year limitations
  period for actions against  insurers seeking to recover under an insurance
  policy, and subsection (3) created an avenue through  which injured parties
  could directly sue insurance carriers if the insured is insolvent or
  bankrupt.  As  mentioned above, Copeland invoked subsection (3) to bring
  the underlying suit against defendants.   We now must determine whether it
  was too late in doing so, because the judgment was entered on  June 28,
  1995, Maska filed for bankruptcy on October 24, 1995, and the suit to
  recover judgment  was not brought until November 1, 1996.

       Copeland contends that the plain language of  § 4203 means that the
  one-year limitations  period is applicable solely to claims brought by the
  insured against the insurer, not by third-party  judgment creditors. 
  Copeland supports its plain-language interpretation by arguing that 

 

  subsection (2) is separate from, and unrelated to, subsection (3) because
  the former lacks any  reference to direct actions or third-party claims,
  and that its only relation to subsection (3) is the  happenstance of being
  one in a series of six conditions that the Legislature requires all
  insurers to  include in the policies they deliver or sell in Vermont. 
  Copeland maintains that the words "loss  under this policy" in subsection
  (2) refer only to the financial detriment suffered by an insured for  which
  the insurer is liable, and the word "recover" preceding them, by
  definition, means only to get  back or regain.  Therefore, the limitations
  period is applicable to those actions brought by the insured  to get back
  or regain the financial detriment that he has suffered, and does not apply
  to third-party  actions seeking payment on a judgment.  See Olds v. General
  Accident Fire & Life Assurance Corp.,  Ltd., 155 P.2d 676, 680 (Cal. Dist.
  Ct. App. 1945) ("The words 'recover' and 'loss under this policy,'  in
  their normal connotation, would seem to refer to actions by the assured
  after he has paid the  judgment.  The injured third person does not suffer
  a 'loss under this policy' nor are his actions to  'recover' such a loss. .
  . . [,] but an action to be reimbursed for damages suffered . . . .").
  (FN2)   Furthermore, Copeland asserts, reading subsection (2) as applicable
  to actions brought by third  parties would render the operative phrase
  "loss under this policy" surplusage.  See Trombley v.  Bellows Falls Union
  High School, 160 Vt. 101, 104,