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RELIANCE INSURANCE COMPANY v. POLYVISION CORPORATION

October 3, 2005.

RELIANCE INSURANCE COMPANY, a Pennsylvania Corporation, Plaintiff
v.
POLYVISION CORPORATION, a New York Corporation f/k/a/ INFORMATION DISPLAY TECHNOLOGY, INC., Defendant.



The opinion of the court was delivered by: LEONARD WEXLER, Senior District Judge

MEMORANDUM AND ORDER

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.

  BACKGROUND

  I. Factual Background

  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 proceed.

  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 ...


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