DocketNumber: No. 52 Middle District Appeal Docket, 1986
Judges: Files, Flaherty, Hutchinson, Larsen, McDermott, Nix, Papadakos, Zappala
Filed Date: 8/14/1987
Status: Precedential
Modified Date: 10/19/2024
OPINION OF THE COURT
This is an appeal from an order of the Superior Court, 353 Pa.Super. 146, 509 A.2d 377, which reversed an order of the Court of Common Pleas of Dauphin County which in turn had revoked certification of a class in a class action proceed
The accident responsible for the death of the Cunning-hams’ daughter occurred in January of 1979, and, more than five years later, in March of 1984, the instant action was filed. In response thereto, INA moved for summary judgment on grounds the claims of the representative plaintiffs were barred by the statute of limitations set forth in the No-Fault Act, 40 P.S. § 1009.106(c), which provides that suits must be brought within, at most, four years from the date of the accident. See Kamperis v. Nationwide Insurance Co., 503 Pa. 536, 469 A.2d 1382 (1983) (discussion of statute of limitations governing actions for post-mortem work loss benefits). The trial court determined that the individual claims of the Cunninghams were indeed barred by the statute of limitations but conditionally granted class certification with the proviso that counsel would be required to intervene new class representatives within twenty days. New class representatives were not, however, intervened, and, after the twenty day period and certain extensions granted with respect thereto had expired, the court granted a motion for decertification of the class.
An appeal was taken to the Superior Court, whereupon summary judgment was vacated and the order revoking certification of the class was reversed. The basis for the Superior Court’s action was its determination that the running of the statute of limitations against the Cunninghams’
In holding that the Cunninghams’ claim in the instant action was not barred by the statute of limitations, the Superior Court reasoned that the running of the statute had been tolled for a period of approximately four years, to wit, from the time of commencement of the Nye action until its final dismissal by this Court. The issue presented by the instant appeal is, therefore, whether tolling of the statute of limitations occurred so as to prevent the Cunninghams’ claim from becoming time-barred.
It is well established that upon the filing of a class action, the statute of limitations is normally tolled for all putative plaintiffs in the class. See Alessandro v. State Farm Mutual Automobile Insurance Co., 487 Pa. 274, 279 n. 9, 409 A.2d 347, 350 n. 9 (1979) (members of a class which is subsequently decertified “will not be time barred by the statute of limitations, as it is suspended during the time they are allegedly parties to the class action. American Pipe & Construction Co. v. Utah, 414 U.S. 538, 94 S.Ct.
Class actions in Pennsylvania emanate from Pa.R.C.P. 1701 et seq. Tolling of the statute of limitations is discussed in the Explanatory Note to Pa.R.C.P. 1701, following that rule’s definition of the term “class action.” A “class action” is defined in Pa.R.C.P. 1701 as “any action brought by or against parties as representatives of a class until the court by order refuses to certify it as such or revokes a prior certification under these rules.” The Explanatory Note following that definition states,
This definition becomes important in determining the effect of the commencement of a class action as tolling the statute of limitations as to the members of the class other than the named representatives. It carries into effect the decision of the United States Supreme Court in American Pipe and Construction Company v. State of Utah, 414 U.S. 538, 94 S.Ct. 756, 38 L.Ed.2d 713 (1974), in which the Court held that the commencement of an action as a class action suspends the applicable statute of limitations during the interim period from commencement until refusal to certify as to all putative members of the class who would have been parties if the action had been certified as such.
Thus, given that the statute of limitations is normally tolled upon the filing of a class action, there would, if this were a typical case, be no question that the statute was tolled during the period when the Cunninghams were putative class members in the earlier class action against IN A. A difficulty arises, however, in that the earlier class action, i.e., the Nye case, was one in which the representative plaintiff lacked standing to maintain a suit against INA. The narrow issue presented, therefore, is whether that lack
It is the contention of INA that, because the representative plaintiff in Nye lacked standing to pursue claims against INA, lack of standing rendered that class action a nullity, ab initio, such that it could not have had the effect of tolling the statute of limitations, and INA asserts that to hold otherwise would be to accord Nye an effect that offends constitutional principles of justiciability under Article 5 of the Pennsylvania Constitution. Because we hold, on other grounds, that the Nye action was not effective to toll the statute of limitations with respect to actions against INA, we do not reach the constitutional issue. See generally Commonwealth v. Allsup, 481 Pa. 313, 317, 392 A.2d 1309, 1311 (1978) (resolution of constitutional question should be avoided when there exists a non-constitutional ground for decision).
Statutes of limitations embody important policy judgments that must be taken into account in determining the scope of application of the tolling principle. Those policy judgments include a belief that defendants should be protected against the prejudice of having to defend against stale claims, Insurance Company of North America v. Carnahan, 446 Pa. 48, 51, 284 A.2d 728, 729 (1971), as well as the notion that, at some point, claims should be laid to rest so that security and stability can be restored to human affairs, Schmucker v. Naugle, 426 Pa. 203, 205-206, 231 A.2d 121, 123 (1967). The defense of the statute of limitations is not a technical defense but rather is a substantial and meritorious one, and has been regarded as favored in the law and as advancing the welfare of society. Id.
We do not believe that the principle of tolling, as it has developed under applicable precedents and under Pa.R.C.P. 1701, supra, contemplates that tolling will occur in cases like the present one, where the lack of standing of the class representative in the prior action, Nye, was apparent upon the face of the complaint filed therein. Indeed, the complaint filed in Nye clearly stated that the representative
In American Pipe & Construction Co., supra, the decision relied upon by Crown, Cork and Seal Co., supra, Alessandro, supra, and the Explanatory Note to Pa.R.C.P. 1701, it was inferred that tolling should not occur in cases where the class representative lacked standing. Although American Pipe & Construction Co. did not involve a class representative who lacked standing, but rather was a decision invoking the principle of tolling for a class action that had been decertified for lack of numerosity in the plaintiff class, the Supreme Court of the United States stated as follows regarding possible limits on the scope of application of the tolling principle:
We hold that ... at least where class action status has been denied solely because of failure to demonstrate that “the class is so numerous that joinder of all members is impracticable,” the commencement of the original class suit tolls the running of the statute for all purported members of the class ... As the Court of Appeals was careful to note in the present case, “Maintenance of the class action was denied not for failure of the complaint to state a claim on behalf of the members of the class ... not for lack of standing of the representative, or for reasons of bad faith or frivolity.” 473 F.2d, at 584. (Footnote omitted.)
414 U.S. at 552-553, 94 S.Ct. at 765-66, 38 L.Ed.2d at 726 (emphasis added). Indeed, where a class action has been
Application of the rule of tolling in American Pipe and its progeny was based upon a need to promote efficiency and economy of litigation, recognizing that, unless tolling were afforded, class members would not be able to rely on the existence of the suit to protect their rights. See Crown, Cork & Seal Co., 462 U.S. at 350, 103 S.Ct. at 2396, 76 L.Ed.2d at 633-634. Thus, were it not for tolling, class members might be forced to intervene or take other actions prior to the running of the statute of limitations to ensure that their rights would not be extinguished in the event that class certification were denied.
The potential for abuse of the tolling rule has, however, been recognized since the time of its inception. As Justice Blackmun stated in his concurring opinion in American Pipe, “Our decision ... must not be regarded as encouragement to lawyers in a case of this kind to frame their pleadings as a class action, intentionally, to attract and save members of the purported class who have slept on their rights.” 414 U.S. at 561, 94 S.Ct. at 770, 38 L.Ed.2d at 731. Similarly, Justice Powell, joined by Justice Rehnquist (now Chief Justice) and Justice O’Connor, stated as follows while concurring in Crown, Cork & Seal Co., “It seems important to reiterate the view expressed by Justice Blackmun in American Pipe [citing quote, supra] ... The tolling rule of American Pipe is a generous one, inviting abuse.” 462 U.S. at 354, 103 S.Ct. at 2398, 38 L.Ed.2d at 636.
In the instant case, it is to be noted that counsel for the Cunninghams is the same counsel as filed the class action in Nye, and in the Nye complaint there appears an admission that counsel’s purpose in bringing suit against thirty-one insurance companies even though he represented an insured of only one of them was that he sought to toll the statute of limitations for all carriers, inasmuch as counsel believed that many potential plaintiffs would not otherwise act upon
It is argued that, for purposes of tolling, it should make no difference whether the representative plaintiff had standing to maintain a class action, in that even if standing were lacking the defendant would be put on adequate notice of the existence of claims against him. See Crown, Cork & Seal Co., 462 U.S. at 353, 103 S.Ct. at 2397, 76 L.Ed.2d at 635 (one of the purposes of limitations periods is to assure prompt notice to defendants of the need to preserve evidence and gather necessary witnesses). Such an argument, however, rests upon the faulty premise that the legislature, in enacting statutes of limitations, intended merely to assure that defendants would be given notice, within a given time frame, that there are individuals who might, if they were aware of their rights and desirous of pursuing them, bring actions against such defendants.
As stated in Crown, Cork & Seal Co., 462 U.S. at 352, 103 S.Ct. at 2397, 76 L.Ed.2d at 635, “Limitations periods are intended to put defendants on notice of adverse claims and to prevent plaintiffs from sleeping on their rights____” When a complaint is filed by one who, upon the face of the pleadings, is patently without standing, it cannot be said that the defendant has been given notice of an actual adverse claim; rather, the defendant has been advised only of the possibility of such a claim, a fact of which the defendant may well have been aware even in the absence of a complaint having been filed. In such a case, the defendant has been given notice only of a palpably non-justiciable
Providing notice of the mere possibility of an actionable claim, by filing a patently non-justiciable class action suit, cannot be regarded as sufficient to toll the statute of limitations. To hold otherwise would be to render the statute of limitations so diluted in its effect as to skirt the clear legislative policy expressed therein, and would encourage plaintiffs to sleep on their rights in the hope that officious intermeddlers, who lack standing, will institute actions on their behalf.
The argument has been advanced that, by not applying the tolling principle in the context of this case, the utility of class action suits will be completely vitiated, rendering it necessary in every case for putative plaintiffs to intervene or file their own actions because of an inability to rely on the standing of other representative plaintiffs. Such an argument misconstrues the impact which this decision will have upon the status of class action litigation, for the most direct effect will be to discourage plaintiffs from filing suits in cases where they lack standing, thus reducing the incidence of cases where standing may be questioned. Only in a comparatively small number of cases will it be necessary, therefore, for purported class members to take actions to ensure that their rights are not extinguished as a result of apparent defects in the standing of representative plaintiffs. Further, it should be emphasized that the present case is one where the lack of standing of the representative plaintiff in Nye was plainly discernible on the face of the pleadings, and where the trial court in Nye ruled from the outset, at the preliminary objections stage,
Order of the Superior Court reversed.
. Class certification should not have been granted initially in the -absence of there being a viable class representative. Pa.R.C.P. 1702(3), (4).