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Civil Procedure – Striking Pleadings – Unlicensed Insurer

Where a contractor on a stair construction project in U.Va. student housing was asked to correct defects allegedly attributable to the plaintiff, who is a concrete component subcontractor, and the sub’s insurance carrier denied coverage for the contractor’s claim against the sub, in the plaintiff sub’s suit against the insurer in Richmond federal court, the defendant carrier must comply with Va. Code Sect. 38.2-806′s limitations for insurance carriers not licensed to do business within Virginia.

The sub, SCP, brought the instant suit against the carrier, Clarendon, seeking determinations that SCP was covered by Clarendon and that the carrier breached its duty to defend. Motions presently before the court arise from the carrier’s failure to comply with Va. Code Sect. 38.2-806, which imposes limitations on insurance companies such as Clarendon that are not licensed to do business within Virginia, within the responsive pleading period.

The sub contends that the carrier’s motions and filings before the court constitute an impermissible “pleading” that this court must strike from the docket due to the carrier’s failure to first satisfy the dictates of Code Sect. 38.2-806(A).

The problem in this case is determining whether Virginia law or federal law controls in ascertaining which of Clarendon’s previously filed papers constitute “pleadings” under the statute. The Virginia General Assembly explicitly used the word “pleading” in its creation of Va. Code Sect. 38.2-806, and under Virginia S.Ct. Rule 3:8(a), an answer, “demurrer, plea, motion to dismiss, and motion for a bill of particulars shall each be deemed a pleading in response for the count or counts addressed” in the complaint. (Emphasis added by court). The legislature presumably had knowledge of the Virginia Supreme Court’s Rules’ definition when it explicitly incorporated the word “pleading” into Sect. 38.2-806.

The court finds that the Virginia General Assembly intended to define the word “pleading” in Sect. 38.2-806(A) in accordance with its own Virginia Supreme Court Rules definition and not with respect to definitions found elsewhere, such as that in Fed. R. Civ. P. 7(a). The court finds the language of Sect. 38.2-806 to be plain and unambiguous in its usage and intended definition of the word, “pleading.”

However, the court is also bound to apply the Federal Rules of Civil Procedure, and by contrast, the Federal Rules define a “pleading” quite differently than do the Rules of the Supreme Court of Virginia.

It is beyond dispute that if either Va. S.Ct. R. 3:8(a) or Fed. R. Civ. P. 7(a) is applied to Va. Code Sect. 38.2-806, Clarendon’s answer is considered a pleading for the purposes of Va. Code Sect. 38.2-805, and was not properly filed. Therefore, Clarendon’s answer will be stricken from the docket pursuant to Rule 12(f). If either Va. S.Ct.Rule 3:8(a) or Fed. R. Civ. P. 7(a) is applied to Code Sect. 38.2-806, Clarendon’s motion to postpone is not considered a pleading for the purposes of the statute and that motion will not be stricken from the docket and will be considered on the merits.

Plaintiff’s motion to strike is granted in part with respect to Clarendon’s Answer and denied in part with respect to Clarendon’s Rule 12(b)(6) motion to dismiss and its motion to postpone.

The court is left with the challenging issue of whether to apply Virginia law or the Federal Rules to determine whether Clarendon’s motion to dismiss constitutes an impermissible “pleading” under Sect. 38.2-806. The court concludes that Rule 7 does not directly collide with the definition of “pleading” as promulgated in Va. S.Ct. Rule 3:8(a) and incorporated into Va. Code Sect. 38.2-806. In diversity actions, Rule 7 governs the definition and form of “pleadings” and “motions” for the purposes of the Federal Rules, as well as broader matters of federal civil practice and procedure.

Pursuant to Va. Code Sect. 38.2-806(A), Clarendon’s motion to dismiss is denied as premature, but with leave to refile upon compliance with said statute. Its motion to postpone is construed as a motion for extension of time pursuant to Rule 6(b) and is granted, extending Clarendon seven business days to file a responsive pleading to the complaint. If Clarendon elects to comply with Va. Code Sect. 38.2-806(A)(1), the court fixes bond at $325,000.

Plaintiff’s motion for default judgment is denied as premature.

Structural Concrete Products LLC v. Clarendon America Ins. Co. (Dohnal, J.) No. 3:07cv253, July 27, 2007; USDC at Richmond, Va. VLW 007-3-294, 20 pp.

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