Bay State Insurance v. Hill

Moore, J., delivered the opinion of the Court. A friendly fire almost became a conflagration as the result of faulty construction of a fireplace in a newly-constructed residence in Silver Spring, Montgomery County. Appellant, Bay State Insurance Company, paid a fire damage claim in the sum of $4,286.46 presented by the homeowners, its insureds. Subsequently, it brought suit against the builder, R. H. Hill, appellee, pursuant to a subrogation clause in the fire insurance policy.

A jury in the Circuit Court for Montgomery County returned a verdict for Bay State but the presiding judge (McAuliffe, J.) thereafter granted a motion for judgment n.o.v. and entered judgment for costs in favor of Mr. Hill. In a comprehensive written opinion, the court ruled that appellant’s claim was barred by the two-year statute of limitations applicable to implied warranties 1 under Maryland Code, Real Prop. Art., § 10-204; and that Mr. Hill, as a mortgagee “loss payee” under the terms of the insurance contract, was immune from suit by Bay State; he could not, in effect, be sued by his own insurer. 2 Upon our review of the record and the applicable law, we affirm the trial court’s ruling that the statute of limitations barred the action, although we do so on different grounds. We find it unnecessary to consider the question of appellee’s immunity as a “loss payee.” ⁵⁹⁵ I The critical factors involving the statute of limitations emerge from the following chronological outline: November 21,1971 Fire casualty occurred; April 17,1974 Original declaration filed by Bay State alleging breach by Hill of express warranty based upon construction contract; November 25,1974 Plea of Hill filed asserting general issue, waiver and estoppel, and immunity; November 7,1975 Amended declaration filed containing same allegations as original but further alleging that Hill breached the implied warranties contained in Real Prop.

Art., § 10-203. 3 November 10,1975 Plea filed to amended declaration asserting same defenses but adding, “That the plaintiffs action, or parts thereof, are not brought within the time prescribed by statute of limitations for such cases made and provided.” (Emphasis added.) The express warranties alleged in the original and amended declarations were that, under the terms of the ⁵⁹⁶ construction contract, appellee Hill agreed to construct the fireplace according to the plans and specifications and in a workmanlike manner, “using sound materials, and in compliance with all building regulations then in effect in Montgomery County.” At the trial, appellant’s proof was confined to evidence of Mr. Hill’s alleged breaches of the implied warranties set forth in § 10-203. No evidence of an express warranty was introduced and, indeed, the trial court instructed the jury that no express warranty was either claimed or proven. 4 Appellant’s cause of action, as subrogee under the fire insurance policy, arose on the date of the alleged breach, i.e., November 21, 1971. Cotham v. Board of County Commissioners, 260 Md. 556, 562 , 273 A. 2d 115, 118 (1971); Real Prop., § 10-204 (c). Except as otherwise provided by statute, a civil action sounding in contract must be filed within three years from the date of the breach.

Cts. & Jud. Proc., § 5-101. Thus, the original declaration, which alleged only a breach of an express warranty, having been filed approximately 2V2 years following the casualty, was timely. There is, however, a shorter period of limitations, namely two years, for breach of implied warranties created by § 10-203.

In this respect, § 10-204 (c) provides: “(c) Limitation of actions. — Any action arising under this subtitle shall be commenced within two years after the defect was discovered or should have been discovered or within two years after the expiration of the warranty, whichever occurs first.” From the chronology heretofore presented, it is readily apparent that both the original and amended declarations were filed after the two-year statute of limitations above quoted. The trial court held that although the original declaration was filed after the two-year period, Mr. Hill waived that defense by not specifically pleading it in his initial plea and the court then analyzed the questions presented as being (1) whether the amendment of the ⁵⁹⁷ declaration “related back” to the date oí the original fire; and (2) assuming relation back, whether the special plea of limitations interposed to the amended declaration would likewise relate back and operate as a bar. 5 Although we reach the same ultimate result as the learned trial judge, we do not agree that there was any waiver of limitations on the part of Mr. Hill. The only cause of action alleged in the original declaration was a breach of an express warranty as to which a three-year statute of limitations pertained and, as previously shown, the original declaration was filed within 2l/z years. Mr. Hill therefore had no reason to plead limitations to the original declaration.

The doctrine of relation back and the familiar cases in which it has been applied and explicated are not apposite. See, e.g., Morrell v. Williams, 279 Md. 497 (1976); Mack Trucks, Inc. v. Webber, 29 Md. App. 256 , 347 A. 2d 865 (1975), cert. denied, February 3, 1976. The fundamental issue is whether appellee Hill could legally interpose the defense of the two-year statute of limitations when he filed a plea to the amended declaration on November 10, 1975. We think the answer is clearly in the affirmative.

The subject of amendments