The opinion of the court was delivered by: LEONARD WEXLER, Senior District Judge
In this diversity case, the Plaintiff insurance company seeks
reimbursement for payments allegedly made as a surety on certain
performance bonds. The payments sought to be reimbursed were made in connection with a school construction project that
was begun in 1987. A tortuous state court history, lasting nearly
ten years, precedes this federal litigation. That litigation
culminated in a dismissal holding, essentially, that Reliance
Insurance Company of New York ("Reliance NY"), the palintiff
named in the state court proceedings, was a corporate entity that
did not issue the bonds and therefore never had a claim.
Plaintiff here, Reliance insurance Company, the parent company to
Reliance NY, thereafter commenced this federal action, alleging
that it is the surety entitled to reimbursement.
Presently before the court is Defendant's motion to dismiss.
The motion seeks dismissal on statute of limitations grounds as
well as for improper venue and failure to state a claim. For the
reasons set forth below, the court holds that this action is,
indeed, time barred. Accordingly, the case is dismissed and the
merits of the remainder of the motion need not be reached.
The facts recited herein are derived from the allegations of
the complaint, taken as true at this point in the proceedings, as
well as the state court record all matters properly before the
court in the context of this motion to dismiss.
A. The Parties and the Construction Project
Plaintiff Reliance Insurance Company ("RIC") is a Pennsylvania
corporation alleging that it was a surety with respect to a
construction project under which the claims here are alleged to
arise. Defendant Polyvision Corporation ("Polyvision") is a
corporation alleged to have been formerly known as Information
Display Technology, Inc. ("IDTI"). The construction project
underlying this coverage litigation arises from a 1987 contract
between the Lindenhurst school board (the "School") and Park Industries, Inc. ("Park"), pursuant
to which Park agreed to perform window and curtain wall
replacement at the Lindenhurst senior and junior high schools
(the 1987 Contract"). RIC, as surety, issued bonds binding RIC
with regard to Park's performance under the 1987 Contract.
SWS Industries ("SWS"), a subcontractor for Park, thereafter
agreed to purchase insulated curtain wall panels, manufactured by
Polyvision's corporate predecessor. In June of 1988, after
partially completing the project, SWS and Park filed voluntary
petitions for bankruptcy protection. In connection with the
bankruptcy, both companies rejected all executory contracts and
RIC thereafter succeeded to all of the rights and interests of
Park and SWS under the 1987 Contract. RIC alleges that it
thereafter entered into a "takeover agreement" with the School
pursuant to which RIC agreed to furnish all labor and materials
required to perform the balance of the 1987 Contract.
In July of 1990, RIC was advised that the panels installed at
the schools and furnished by IDTI were defective. IDTI took the
position that any defects were the result of faulty installation
and not any manufacturing defect. RIC thereafter purchased
additional panels and paid to have the new panels installed so as
to cure the defects identified by the School. After further
defects were identified, RIC demanded that IDTI remedy the
problems. IDTI, however, disavowed any responsibility, again
pointing to faulty installation as the culprit.
B. State Court Litigation
In 1994, Reliance NY commenced an action against IDTI and
others seeking indemnification for amounts spent as surety in
connection with the 1987 Contract (the State Court Litigation").
Specifically, Reliance NY identified itself as the issuer of
performance bonds that obligated it to complete the construction project the School
contracted for in 1987. In an order dated March 30, 1995, certain
of Reliance NY's claims, which arose out of purchases made in
1987, were dismissed on statute of limitations grounds. Claims
arising from purchases made in 1991 and 1992 were allowed to
In March of 2001, an order granting Reliance NY leave to amend
to add certain claims of indemnification was entered in the State
Court Litigation. These claims arose from a settlement reached
with the School in connection with separate litigation initiated
by Reliance NY against the School, seeking payment in connection
with the 1987 Contract.
In 2002, a company known as Reading Company ("Reading") sought
leave to intervene in the State Court Litigation. Intervention
was sought on the ground that Reading made payment to Reliance NY
on amounts it spent as surety on the 1987 Contract. Supreme Court
granted the motion to the ...