Case Name: SOUTHERN WIN-DOR, INC., Appellant v. RLI INSURANCE COMPANY, Appellee
Court: Mississippi Court of Appeals
Jurisdiction: Mississippi
Decision Date: 2005-10-25
Citations: 925 So. 2d 884
Docket Number: No. 2004-CA-01595-COA
Parties: SOUTHERN WIN-DOR, INC., Appellant v. RLI INSURANCE COMPANY, Appellee.
Judges: Before KING, C.J., IRVING and BARNES, JJ.
Reporter: Southern Reporter, Second Series
Volume: 925
Pages: 884–893

Head Matter:
SOUTHERN WIN-DOR, INC., Appellant v. RLI INSURANCE COMPANY, Appellee.
No. 2004-CA-01595-COA.
Court of Appeals of Mississippi.
Oct. 25, 2005.
Rehearing Denied Feb. 7, 2006.
Certiorari Denied April 6, 2006.
William C. Hammack, Michael Wayne Strahan, Meridian, attorneys for appellant.
Russell S. Gill, Marilyn Hattie David, Biloxi, attorneys for appellee.
Before KING, C.J., IRVING and BARNES, JJ.

Opinion:
IRVING, J.,
for the Court.
¶ 1. RLI Insurance Co. (RLI) issued a security bond for a construction project undertaken by Green Construction Co., Inc. (Green). In connection with the construction, Southern Win-Dor, Inc. (Southern) delivered materials to Green that Southern alleges Green never paid for. Southern entered into litigation with Green in 2000; after Green declared bankruptcy in 2003, Southern attempted to substitute RLI for Green in its lawsuit. The trial court dismissed the action against RLI because the applicable statute of limitations had run.
¶,2. Feeling aggrieved, Southern appeals, asserting: (1) the statute of limitations should not apply because RLI was joined in an amended complaint that should relate back to the original March 2000 complaint; and (2) even if there is no relation back, RLI should be estopped from asserting the statute of limitations as a defense because RLI misled Southern.
¶ 3. Finding no error in the decision below, we affirm.
FACTS
¶ 4. On May 20,1998, RLI issued a bond in connection with a construction project by Green, under which RLI and Green agreed to bind themselves to pay for the labor, materials, and equipment related to the project. Southern had a contract with Green to supply materials for the construe tion contract. In December 1999, Green filed a complaint for breach of contract against Southern. On March 7, 2000, Southern filed a counterclaim against Green. Southern also filed a proof of claim with RLI under RLI's payment bond. RLI responded on March 10, 2000, by denying the claim pending the outcome of Southern's litigation with Green.
¶ 5. During the litigation between Southern and Green, Green failed to produce court-ordered discovery, and its pleadings were struck in January 2002 as a result. In December 2002, the trial court set aside its order striking Green's pleadings. In March 2003, Green filed for bankruptcy. On January 12, 2004, the trial court entered an order allowing Southern to substitute RLI for Green, and Southern filed an amended counterclaim with the substitution on February 20, 2004. RLI filed a motion to dismiss on March 19, 2004, on the grounds that it had not been made a party to the suit within one year after the performance and settlement of the construction contract as required by statute. In July 2004, the court granted RLI's motion to dismiss with prejudice, finding that Southern's claim against RLI was barred by the time limitation set out in Mississippi Code Annotated section 31-5-53 (Rev. 2000). Southern now appeals the dismissal of its claim against RLI.
STANDARD OF REVIEW
¶ 6. This court conducts challenges to a trial court's rulings of law, including statute of limitations issues, under a de novo standard of review. ABC Mfg. Corp. v. Doyle, 749 So.2d 43(¶ 10) (Miss.1999) cting Ellis v. Anderson fully Co., 727 So.2d 716(¶ 14) (Miss.1998)).
ANALYSIS AND DISCUSSION OF THE ISSUES
¶ 7. As a preliminary matter, it is undisputed that Southern's claim against RLI is barred by the statute of limitations unless we find either that its claim properly relates back or that RLI is barred from raising the statute of limitations by the principle of equitable estoppel.
(1) Relation Back
¶ 8. Southern first asks this court to find that its claim properly relates back under Mississippi Rules of Civil Procedure 15(c) (Relation Back of Amendments), which states:
Whenever the claim . arose out of the conduct, transaction, or occurrence set forth . in the original pleading, the amendment relates back to the date of the original pleading. An amendment changing the party against whom a claim is asserted relates back if the foregoing provision is satisfied and, within the period provided by Rule 4(h) for service of the summons and complaint, the party to be brought in by amendment: (1) has received such notice of the institution of the action that he will not be prejudiced in maintaining his defense on the merits, and (2) knew or should have known that, but for a mistake concerning the identity of the proper party, the action would have been brought against him.
M.R'.C.P. 15(c) (emphasis added).
Southern argues that its amendment relates back because Southern was mistaken in relying on the express representations of RLI. Southern admits that it was not mistaken as to the identity of any party to the suit. Unfortunately for Southern, mistaken reliance is not a substitute for the M.R.C.P. requirement that a party be mistaken as to the identity of another party to the suit. Therefore, Southern's argument for relation back is without merit because there is no evidence, or even a contention by Southern, that it was mistaken as to the identity of any party to its suit. Thus, the only possible remedy left to Southern is equitable estoppel.
(2) Equitable Estoppel and the Statute of Limitations
¶ 9. One of the first Mississippi cases to apply the doctrine of equitable estoppel to a statute of limitations held that:
when a defendant electing to set up the statute of limitations has previously, by deception or any violation of duty towards plaintiff, caused him to subject his claims to the statutory bar, he must be charged with having wrongfully obtained an advantage which the court will not allow him to hold. Thus defendant will be estopped to set up the statute of limitations in bar of plaintiffs claim when the delay which would otherwise give operation to the statute has been induced by the promise or representation that the statutory bar would not be interposed, or by inducing plaintiff to believe that an amicable adjustment of the claim will be made without suit, or by other forbearance to sue induced by defendant....
Izard v. Mikell, 173 Miss. 770, 163 So. 498, 499 (1935). Southern cites Izard and urges us to find that equitable estoppel should be applied in its case as a result.
¶ 10. However, the case sub judice can be factually distinguished from Izard. In Izard, the court found that estoppel applied to allow a foreclosure sale, even though the statute of limitations had passed, where the debtor had promised to renew his promissory note after the statutory deadline had passed as long as the plaintiff did not foreclose on the property. Id. at 771-72, 163 So. at 499-500. In this case, unlike in Izard, there was no promise by RLI sufficient to have induced Southern not to timely sue. The March 10, 2000 letter from RLI merely stated that RLI was denying Southern's claim preemptively, pending the outcome of the litigation between Green and Southern. There was no promise that RLI would pay Southern's claim. In fact, RLI explicitly retained "all rights and defenses"—including the right to assert a statute of limitations defense. There is no evidence that RLI promised Southern that it would be able to sue RLI after the statute of limitations had run. Nothing in the correspondence between RLI and Southern indicates that RLI was requesting that suit not be filed. Once Southern received the March 10 letter from RLI, it could have sued RLI to recover on the claim; nothing in the letter from RLI to Southern indicates that RLI was opposed to this remedy.
¶ 11. Additionally, under Mississippi law, a party is required to show inequitable or fraudulent conduct in order to estop another party from asserting a statute of limitations defense. Miss. Dep't of Pub. Safety v. Stringer, 748 So.2d 662, 665(¶ 11) (Miss.1999) (citing Carr v. Town of Shubuta, 733 So.2d 261, 265(¶ 12) (Miss.1999)). Southern has failed to meet this requirement. While RLI could have better handled Southern's claim, no evidence has been presented showing that RLI's conduct was inequitable or fraudulent. While it is true that Stringer can be distinguished from the case sub judice because there was no representation in Stringer that expressly conditioned final determina tion of the plaintiffs claim on the outcome of another litigation, Southern still must show inequitable or fraudulent conduct. For the following reasons, Southern has failed to show either of these and thus is barred from invoking equitable estoppel against RLI.
¶ 12. Southern has presented no evidence that RLI intended to defraud Southern with its March 10 letter, which stated only that Southern's claim was preemptively rejected, pending the outcome of the suit between Green and Southern. Although Southern intimates that the delays in its suit with Green were possibly part of a conspiracy between Green and RLI to defraud Southern, this appears to be mere speculation on the part of Southern, since it presents no evidence to substantiate its accusation. Southern also has not offered any evidence showing inequitable conduct by RLI; after RLI's letter, there is no evidence of any communication between Southern and RLI until Southern attempted to substitute RLI for Green in its lawsuit. Since Southern has shown neither inequitable nor fraudulent conduct, RLI is not estopped from raising the statute of limitations as a bar to suit.
CONCLUSION
¶ 13. The pleadings and evidence produced by the parties strongly indicate that Southern genuinely believed from RLI's letter that Southern should have withheld pursuing its claim until after the lawsuit with Green. Unfortunately, Southern has not provided any sound legal basis for a ruling in its favor. There was no "mistake" as to the identity of RLI/ Green in the original counterclaim, so the amended counterclaim cannot relate back to the original counterclaim. Equitable estoppel should only be applied against the statute of limitations in the most egregious of eases, because
[t]he primary purpose of statutory time limitations is to compel the exercise of a right of action within a reasonable time.... They are designed to suppress assertion of false and stale claims, when evidence has been lost, memories have faded, witnesses are unavailable, or facts are incapable of production because of the lapse of time. Accordingly, the fact that a barred claim is a just one or has the sanction of a moral obligation does not exempt it from the limitation period. These statutes of repose apply with full force to all claims and courts cannot refuse to give the statute effect merely because it seems to operate harshly in a given case. The establishment of these time boundaries is a legislative prerogative.
Cole v. State, 608 So.2d 1313, 1317-18 (Miss.1992) (cited in Stringer as support for why equitable estoppel should be applied sparingly to any statute of limitations. Stringer, 748 So.2d at (¶ 13)). Southern has failed to show conduct by RLI sufficient to justify estopping RLI from invoking the statute of limitations as a defense. Since we find that Southern's amended claim does not properly relate back and RLI is not estopped from shielding itself with the statute of limitations, the judgment below dismissing Southern's claim must be affirmed.
¶ 14. The dissent argues that we do not appreciate the significance of RLI's response to Southern that Southern's claim was denied pending the outcome of Southern's litigation against Green. Quite the contrary, we do appreciate the significance of RLI's response in this regard. We just believe that we must consider the entirety of what RLI said in its March 10 letter. Even if RLI, by use of the term "pending," was indicating that it was deferring decision on Southern's claim until the litigation between Southern and Green had conclud ed, it also, by use of the statement, "[we] make no waivers and reserves all rights and defenses", was indicating and placing Southern on notice that any claim Southern had against it would become time barred if the litigation between Southern and Green had not concluded prior to the running of the statute of limitations on any claim Southern might have against RLI. Otherwise, the statement: "RLI Insurance Company makes no waivers and reserves all rights and defenses" becomes meaningless.
¶ 15. For the reasons discussed, we affirm the judgment of the court below.
¶ 16. THE JUDGMENT OF THE CIRCUIT COURT OF GREENE COUNTY DISMISSING APPELLANT'S CLAIM IS HEREBY AFFIRMED. ALL COSTS OF THIS APPEAL ARE ASSESSED TO THE APPELLANT.
KING, C.J., LEE, P.J., MYERS, BARNES AND ISHEE, JJ., CONCUR. GRIFFIS, J., CONCURS IN PART AND DISSENTS IN PART WITH SEPARATE WRITTEN OPINION JOINED BY BRIDGES, P.J., AND CHANDLER, J.
. The letter read: "RLI Insurance Company received your proof of claim form and the accompanying documents. We have also received a response from Green Construction, Inc. in relation to the claim. As you are aware, there is a lawsuit against your company in the Circuit Court of Green [sic] County, Mississippi by Green Construction, Inc. for damages. Pending the outcome of this litigation against you your claim is denied by the Surety. RLI Insurance Company makes no waivers and reserves all rights and defenses."