Coverage action not subject to nonsuit tolling

A plaintiff who thought she had the right to a courthouse do-over after taking a nonsuit in a suit over insurance coverage was left empty handed when the Supreme Court of Virginia ruled against her this month.

The case confirms there are limits to Virginia’s plaintiff-friendly nonsuit rule – it applies only to cases where the limitations period is set by statute. It does not apply when a contract supplies the deadline for filing suit.

The decision resolves an issue that has divided Virginia trial courts – state and federal – for several years, one attorney said.

The nonsuit provisions in the Virginia Code allow a plaintiff one free dismissal without prejudice in most civil actions. A refiled suit is considered timely if filed within six months of the nonsuit.

Jennifer Ploutis did not have the benefit of that grace period, the high court ruled.

Broken water pipes damaged Ploutis’ home in 2010, according to an account in the court’s Sept. 17 opinion, Allstate Property & Casualty Ins. Co. v. Ploutis (VLW 015-6-071).

Allstate, the homeowner’s fire insurance company, made an initial payment for damages, but the insurer balked at additional loss claims.

Ploutis sued in Fairfax County Circuit Court in 2012, alleging breach of the insurance contract. At her request, the judge entered a nonsuit order in 2013. Ploutis refiled in 2013, mindful of the six-month extension provided by Virginia’s nonsuit statutes.

Allstate demurred, saying the nonsuit extension did not apply. The insurance company pointed to the language of the policy saying actions must be brought within two years “after the inception of loss or damage.”

Fairfax Circuit Judge Dennis J. Smith rejected Allstate’s view. Because the policy language was similar to the Virginia standard policy form, he regarded the policy limitations period as the “Virginia statute of limitations,” subject to tolling with a nonsuit.

Smith also reasoned that the refiled lawsuit was merely a reinstatement of the original action, brought within two years of the loss.

In a unanimous ruling, the Supreme Court reversed the trial court and entered final judgment in favor of Allstate, ending the homeowner’s bid for additional loss recovery.

The court compared the policy’s limitations clause with the standardized form language set out in the Virginia Code. The policy used its own language, but it essentially adopted the state’s minimum two-year period for bringing suit on the policy, the court said.

Application of the nonsuit tolling statute was controlled by a 1998 case, the court decided. In that case, the court held the plain meaning of the statute limited its scope to a statute of limitations, not a contractual period of limitations.

“The policy’s adoption of the statutorily-imposed minimum period of limitations did not alter the contractual nature of the policy’s limitations period,” wrote Justice Elizabeth A. McClanahan for the court.

Neither the statutorily prescribed limitation period nor the comparable Allstate deadline was a “statute of limitations” within the meaning of the nonsuit tolling statute, the court said.

The high court also rejected the trial court’s “reinstatement” view of the second Ploutis lawsuit. In a footnote, the court emphasized that an action filed after a nonsuit is a new action that stands independent of any prior nonsuited action.

Since Ploutis did not meet the two-year deadline for suing Allstate, the circuit court erred in rejecting Allstate’s demurrer, the court said.

The Supreme Court’s ruling resolved a long standing division among trial judges, said Stephen A. Horvath of Fairfax, who represented Allstate.

Despite the 1998 Virginia Supreme Court decision, Alexandria U.S. District Judge T.S. Ellis III and judges of the Western District had allowed nonsuit grace periods in insurance cases, Horvath said.

“They clarified an issue that we have been debating in the federal and circuit court cases, and for a long time,” Horvath said.

Ploutis was represented by John C. Decker of Burke, who did not respond to a request for comment.

Updated Oct. 1 to add Horvath comment.