Statute of Limitations and the “Relation Back” Doctrine

Last month’s newsletter discussed a recent case out of Westchester Supreme Court involving a puff back that occurred at the home of Victoria Subin.  Ms. Subin thought she had retained Castle Oil to perform service work on her oil boiler and burner prior to the loss; but in fact, Castle Oil had made arrangements to have a separate company, “Dynamic Plumbing and Heating Incorporated” (“Dynamic”) to actually do the work.   Dynamic was instructed to use an unmarked vehicle when performing its service work (presumably, so as to keep Dynamic’s name a secret to the customer).

Dynamic’s alleged service on the boiler and burner was completed by January 30, 2010.  Nine days later, on February 9, 2010, a severe puff back occurred. [1]   Ms. Subin’s carrier, Nationwide, filed a subrogation lawsuit against Castle Oil on August 21, 2012.   Thereafter, on February 18, 2013, Nationwide filed a separate lawsuit against Dynamic.  The two lawsuits were consolidated, and Dynamic moved to dismiss the suit filed against them on the ground that the statute of limitations had run.   Dynamic argued that a three-year statute of limitations governed, that the puff back damage was caused February 9, 2010, and that since they were not sued until February 18, 2013, the lawsuit was untimely (by nine days).  

Nationwide argued that since Castle Oil had been timely sued, the claim against Dynamic should also be found to be timely, based on the “relation-back” doctrine. [2]  This doctrine  holds that a claim filed late against Party B may nonetheless be timely if the claim “relates back” to a claim that had been timely filed against Party A that is “united in interest” with Party B.   The court agreed with Nationwide and held that Dynamic was timely sued, even though the filing was nine days late. [3]   The Court found that Nationwide had established that Dynamic was acting as an agent of Castle Oil, and that therefore those two companies were “united in interest” for purposes of the statute of limitations.  The Court found that the “doctrine of ostensible agency” applied to the facts of this case.  Apparent or ostensible agency can be established where a subcontractor [i.e., Dynamic] was hired by a contractor [i.e., Castle Oil] or “otherwise was acting on the [contractor’s] behalf and the client [i.e., Ms. Subin] reasonably believed that the contractor [Dynamic] was acting at the employer’s [Castle Oil] behest.”  The court found that Dynamic should have been aware that a customer, such as Ms. Subin, would believe that an “agent” of Castle Oil was the one working at her house, including when Dynamic came to her house in response to a service call she had made to Castle Oil prior to the puff back.  Under these facts, while Dynamic was not an express agent of Castle Oil, Dynamic was an “ostensible or apparent” agent.   Thus, concluded the court, Dynamic and Castle Oil were “united in interest” for purposes of the relation-back doctrine, and the lawsuit against Dynamic was not dismissed on the grounds of statute of limitations.

Bottom Line: There’s a fair amount of legal lingo in the discussion above (“relation-back doctrine,”  “united in interest,” “ostensible agency”).  The basic concept is as follows:  where one company (“Company B”) does work at the request of another company (“Company A”), the two companies may, in certain instances, be considered “united” for purposes of the statute of limitations, so that if you only name Company A in the complaint, the lawsuit is nonetheless considered to be timely filed against Company B as well.  Of course, wherever possible, your subrogation counsel should name all possible defendants when filing a lawsuit, especially when the statute of limitations is close to running out.   However, sometimes (as with the Castle Oil case), the defendant(s) may deliberately try to conceal the name of the “real” culpable party until after the statute of limitations has run.   In such situations, the court may allow you to amend your complaint to name the real culprit under an agency theory.

[1] A “puff back” occurs when un-burned oil in the combustion chamber of an oil-fired boiler explodes.  A puff back explosion is caused by the ignition of un-burned oil lying on or in the bottom of the heating appliance combustion chamber.  It can cause extensive soot damage.  One possible cause of a puff back is poor oil burner maintenance, for example failure to clean the oil spray nozzle which then becomes partly blocked.
[2] Found at CPLR 203(b)
[3] Nationwide a/s/o Subin v. Castle Oil Corp., et al.;  2013 NY Misc. LEXIS 3970 (Westchester Co. SCt 9/9/13)