United States Court of Appeals
For the First Circuit
No. 05-2459
DIMAIO FAMILY PIZZA & LUNCHEONETTE, INC.;
ANTHONY A. DIMAIO,
Plaintiffs, Appellants,
v.
THE CHARTER OAK FIRE INSURANCE COMPANY,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Kenneth P. Neiman, U.S. Magistrate Judge]
Before
Torruella, Lynch and Lipez,
Circuit Judges.
Mark J. Albano, with whom Dalsey, Ferrara & Albano was on
brief, for appellants.
Gerald P. Dwyer, Jr., with whom Wystan M. Ackerman and
Robinson & Cole LLP were on brief, for appellee.
May 30, 2006
TORRUELLA, Circuit Judge. On December 7, 2004, the
United States District Court for the District of Massachusetts
entered summary judgment in favor of Charter Oak Fire Insurance
Company ("Charter Oak") in an action brought by appellants
Anthony A. DiMaio ("DiMaio") and DiMaio Family Pizza &
Luncheonette, Inc. ("DiMaio Family Pizza"). On January 25, 2005,
the district court denied appellants' motion for relief from
summary judgment under Rules 59(e) and 60(b) of the Federal Rules
of Civil Procedure. Appellants herein appeal. Because we find
that their contract claims were time-barred under the applicable
limitations period, we affirm.
I. Facts
Appellants operated the Villa DiMaio Restaurant ("the
Restaurant") at 268 State Road in Whately, Massachusetts. Charter
Oak issued a property insurance policy ("the Policy") to the
Restaurant, effective from February 18, 2000 to February 18, 2001.
On December 18, 2000, the Restaurant sustained
substantial damage in a fire. On February 25, 2000, prior to the
fire, DiMaio Family Pizza had filed for Chapter 11 bankruptcy.
After the fire, on March 21, 2001, DiMaio Family Pizza's bankruptcy
case was converted from a Chapter 11 case to a Chapter 7 case. On
December 27, 2001, DiMaio filed for personal bankruptcy under
Chapter 7. Two bankruptcy trustees were appointed, one to
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represent each estate, and both appellants were represented by
counsel in their respective bankruptcy proceedings.
After the fire, the Town of Whately ("the Town")
requested that DiMaio demolish the building and remove the
destroyed property. Because DiMaio was without funds, the Town
undertook to demolish the building and remove the wreckage. The
Town then made a claim against DiMaio for the demolition and debris
removal, and DiMaio in turn made a claim against Charter Oak.
Charter Oak issued an "advance" check of $20,000 to cover these
costs, payable to both DiMaio and the Town. After DiMaio filed for
personal bankruptcy, Charter Oak paid approximately $345,000 on the
insurance claim to CIT Small Business Lending Corporation, a
creditor of appellants. Appellants initiated this action because
they seek to recover additional money under the Policy for property
damage and business income losses allegedly sustained as a result
of the fire.
Under the Policy's suit limitation provision, the terms
of which are set forth in and mandated by Mass. Gen. Laws, ch. 175,
§ 99, suit must be brought within two years of the date of loss.
The suit limitation was thus set to expire on December 18, 2002.
Accordingly, both bankruptcy trustees asked Charter Oak to agree to
extend the suit limitation period. Charter Oak extended the suit
limitation period to February 17, 2003. Again at the trustees'
request, Charter Oak later agreed to a second extension to
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April 11, 2003. In the end, although Charter Oak agreed to a four-
month extension of the suit limitation period, neither of the
bankruptcy trustees ever brought suit.
On April 11, 2003, the extended suit limitation period
expired. Neither appellants nor their bankruptcy trustees sought
or received a further extension of the suit limitation period. The
complaint in the instant case was not filed until February 12,
2004, more than ten months after the extended suit limitation
period had expired.
II. Analysis
Our review of a grant of summary judgment is de novo, and
we view the facts in the light most favorable to the nonmovant.
Lockheed Martin Corp. v. RFI Supply, Inc., 440 F.3d 549, 552 (1st
Cir. 2006). We review the district court's denial of a motion for
reconsideration of a grant of summary judgment under Rules 59(e)
and 60(b) of the Federal Rules of Civil Procedure for manifest
abuse of discretion. See Roger Edwards, LLC v. Fiddes & Son, Ltd.,
427 F.3d 129, 132 (1st Cir. 2005); Vasapolli v. Rostoff, 39 F.3d
27, 36 (1st Cir. 1994).
Appellants do not dispute the fact that they failed to
file suit within two years of the date of the fire. Instead, they
appeal the grant of summary judgment on two grounds. First, they
claim that, having filed for bankruptcy and thus having no standing
to bring suit within two years of the loss, they fall within an
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exception to the limitations provision of Mass. Gen. Laws ch. 175,
§ 99. Second, they maintain that Charter Oak's failure to comply
with the provisions of another statute, Mass. Gen. Laws ch. 231,
§ 140B, tolled the limitations period. We address each claim in
turn.
A. Enjoined-or-Abated Clause
Appellants claim that their commencement of this
litigation was timely because their respective bankruptcies
enjoined them from filing suit or action upon the Policy until the
trustees abandoned their claims.1 They rely upon the enjoined-or-
abated clause in Mass. Gen. Laws ch. 175, § 99, which provides as
follows:
If suit or action upon this policy is enjoined
or abated, suit or action may be commenced at
any time within one year after the dissolution
of such injunction, or the abatement of such
suit or action, to the same extent as would be
possible if there was no limitation of time
provided herein for the bringing of such suit
or action.
Mass. Gen. Laws ch. 175, § 99 (emphasis added). Charter Oak argues
-- and the district court agreed -- that appellants were neither
enjoined nor abated from commencing suit against Charter Oak in the
manner contemplated by § 99.
1
The trustee for DiMaio Family Pizza was ordered to abandon any
claim against Charter Oak on April 2, 2003, and the trustee for
DiMaio was ordered to abandon its interest on June 20, 2003.
Appellants initiated this suit on February 12, 2004.
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Appellants first contend that the plain language of the
enjoined-or-abated clause of § 99 clearly includes bankruptcy
proceedings within its ambit. They argue in their brief to this
Court that "the common meaning" and "fair reading" of the enjoined-
or-abated clause makes plain that their respective bankruptcies
"operated to enjoin the assertion of their claims on the policy"
and thus that they qualify for an extension of the limitation
period under § 99. This argument fails.
Appellants' position is predicated on the erroneous
assumption that bankruptcy proceedings created an "automatic stay"
that enjoined or abated their suit against Charter Oak. They
correctly note that the filing of a bankruptcy petition triggers an
automatic stay under § 362(a) of the bankruptcy code. See In re
Jamo, 283 F.3d 392, 398 (1st Cir. 2002). However, that section
provides that a petition in bankruptcy stays the commencement or
continuation of all nonbankruptcy judicial proceedings "against the
debtor." 11 U.S.C. § 362(a). The stay is designed to give
"breathing room" to the debtor, In re Jamo, 283 F.3d at 398, and
has absolutely no effect on the debtors' ability to bring suit
against other parties. Further, the actual language of § 99
permits an extension of the limitation period only "[i]f suit or
action . . . is enjoined or abated." We agree with the district
court's conclusion that, by its own plain language, § 99 is not
personal to appellants, but rather speaks generally to their "suit
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or action." The question is thus whether, at any point during the
extended limitation period, appellants' suit against Charter Oak
was enjoined or abated.
As an initial matter, DiMaio did not file for bankruptcy
until December 27, 2001 -- more than one year after the fire -- and
he could have initiated suit against Charter Oak at any time before
that date. Once trustees were appointed for both bankruptcies,
appellants argue that they were enjoined from bringing suit against
Charter Oak because their rights were transferred to their
respective trustees, who alone had standing to initiate suit.
Indeed, when appellants filed for bankruptcy under Chapter 11, "all
legal or equitable interests . . . in property as of the
commencement of the case" and "[a]ny interest in property that the
estate acquire[d] after the commencement of the case" became the
property of their respective bankruptcy estates. 11 U.S.C. § 541
(a)(1),(7). The parties agree that appellants' claim against
Charter Oak became part of their respective bankruptcy estates and
that their bankruptcy trustees acquired exclusive standing to
assert those claims. Although appellants were thus without
standing to initiate suit, their suit against Charter Oak was not
enjoined or abated. When a trustee is appointed, the trustee
"steps into the shoes of the debtor for the purposes of asserting
or maintaining the debtor's causes of action[]." In re Rare Coin
Galleries, Inc., 862 F.2d 896, 901 (1st Cir. 1988). During their
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representation of appellants' respective bankruptcy estates, the
trustees had the right to initiate suit against Charter Oak.
Although they requested and received from Charter Oak two
extensions of the suit limitation period, the bankruptcy trustees
never initiated suit. However, the trustees' failure to exercise
that right does not mean that the suit itself was enjoined or
abated. Furthermore, appellants were not without any rights during
this period. The Bankruptcy Code allows "[a]ny party [to] petition
the bankruptcy court to compel the trustee either to bring suit or
to abandon the claim." Koch Ref. v. Farmers Union Cent. Exch.,
Inc., 831 F.2d 1339, 1347 n.9 (7th Cir. 1987); see also In re
Dawnwood Props./78, 209 F.3d 114, 117 (2d Cir. 2000) ("If not
satisfied with the trustee's [failure to pursue a claim],
plaintiffs were free to bring the matter to the attention of the
Bankruptcy Court for whatever directions or relief the Court
thought appropriate, including a direction to the trustee either to
initiate the action in question or to abandon the claims within the
limitation period so as to allow the plaintiffs to pursue the
claims on their own."). Upon abandonment, interest in the claim
would have reverted to the appellants. See In re Charles George
Land Reclamation Trust, 30 B.R. 918, 923 (Bankr. D. Mass. 1983).
In sum, we find that § 99 does not apply to extend
appellants' limitation period. Their suit against Charter Oak was
not enjoined or abated by appellants' bankruptcy proceedings
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because at no point during the limitation period was there an
abatement or injunction against appellants' rights to initiate suit
against Charter Oak; further, we also note that there was no
abatement or injunction against the trustees. There is no
unfairness here.
B. Tolling
Appellants also argue that the suit limitation period was
tolled because Charter Oak violated Mass. Gen. Laws ch. 231, § 140B
by failing to give them proper notice of the applicable statute of
limitations period when it made a partial payment to the Town of
Whately for the removal and disposal of the restaurant's building
remnants and debris. Section 140B provides, in applicable part,
that
Any person against whom a claim or suit for
damages on account of bodily injury, property
damage, or death is made, or if such person is
insured against loss by reason of his
liability to pay such damages the insurer of
such person may advance money to, or pay bills
incurred by or on behalf of, such claimant, or
plaintiff, as the case may be . . . .
Any such insurer who makes an advance payment
under this section shall at the time of making
such payment, by notice in writing, inform the
claimant of the statute of limitations
applicable to his claim and the time within
which an action is required to be commenced to
enforce such claim in a court of competent
jurisdiction.
The cause of action of any claimant who
receives an advance payment under this section
but who is not given the written notice
required hereunder shall accrue on the date
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such written notice is actually given and not
on the date the injury or damage was
sustained.
Mass. Gen. Laws ch. 231, § 140B (emphasis added).
Appellants maintain that Charter Oak's $20,000 payment to
the Town for demolition and removal constituted an "advance
payment" under § 140B and that they were "claimants" who were due
notice of the applicable statute of limitations. Because they did
not receive such notice, they argue that the statute of limitations
was tolled.
The statute provides for three types of actors: a
"person," an "insurer," and a "claimant." As a threshold matter,
we must determine the identity of the claimant within the context
of § 140B. The claimant is the critical actor because the statute
provides for the tolling of the statute of limitations only with
respect to the claimant's cause of action. Charter Oak argues, and
the district court agreed, that the claimant referred to in this
section is the Town. Appellants urge us to interpret the statute
such that they are the claimants.
The plain language of § 140B clearly favors Charter Oak's
position. It is obvious from the statutory text that the "person"
referred to is the insured (here DiMaio). The "claimant," by
contrast, is the entity that initiates a "claim or suit" against
the insured. The text cannot support the notion that the "person"
and the "claimant" are one and the same.
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We understand the statute's notice requirement to
benefit third-party claimants rather than insurance policy holders.
Indeed, it appears that every Massachusetts case to have
interpreted and applied § 140B has done so in the context of claims
made by third-party claimants against insureds. See, e.g., Trinity
Church v. John Hancock Mut. Life Ins. Co., 502 N.E.2d 532, 539
(Mass. 1987); Allstate Ins. Co. v. Reynolds, 685 N.E.2d 1210, 1212-
13 (Mass. App. Ct. 1997). This interpretation has the force of
reason. As the district court points out, "requiring such notice
to the insured every time an insurance company renders a payment to
a third party . . . would not only be burdensome but, given that
the insured is provided notice of the statute of limitations in the
insurance contract itself, nonsensical." DiMaio Family Pizza &
Luncheonette, Inc. v. Charter Oak Fire Ins. Co., 349 F. Supp. 2d
128, 134 (D. Mass. 2004).
III. Conclusion
For the foregoing reasons, we affirm the district court's
grant of summary judgment in favor of Charter Oak and its denial of
appellants' Motion for Reconsideration.
Affirmed.
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