Orion Ins. Co. PLC v. Shenker

• Decision Date: 01 April 1987
• Citation: 23 Mass.App.Ct. 754,505 N.E.2d 561
• Parties: The ORION INSURANCE COMPANY PLC et al. 1 v. Barbara B. SHENKER.
• Court: Appeals Court of Massachusetts

Page 561

505 N.E.2d 561

23 Mass.App.Ct. 754

The ORION INSURANCE COMPANY PLC et al. ¹ v. Barbara B. SHENKER.

Appeals Court of Massachusetts Middlesex.

Argued Nov. 10, 1986.

Decided April 1, 1987.

Laurence Field, Boston, for plaintiffs.

Robert D. Cohan, Boston, for defendant.

Before BROWN, CUTTER and WARNER, JJ.

WARNER, Justice.

The Orion Insurance Company (Orion) and Gault Armstrong and Kemble (International) Ltd. (GAK), both corporations organized and existing under the laws of England, brought this action in the Superior Court against Ronald Eliot Insurance Agency, Ltd. (REIA), a Massachusetts corporation, and Ronald Eliot Shenker and Barbara B. Shenker (both Massachusetts residents and officers and directors of REIA) ² to recover substantial amounts of premiums allegedly due on account of the placement of surplus lines of insurance with Orion and other London, England, based insurers and underwriting syndicates. We omit further (insignificant in this appeal) description of the parties, those whom they represent and the relief sought. We relate below the relationship and methods of operation between Orion and GAK and REIA.

The defendants moved to dismiss the complaint of Orion and GAK on the ground that they, being required to do so, see G.L. c. 181, § 3, had failed to register to do business in Massachusetts as foreign corporations, see G.L. c. 181, § 4, and thus were barred from maintaining the action. See G.L. c. 181, § 9, as appearing in St.1973, c. 844, § 1. ³ In a memorandum and order, a Superior Court judge concluded that REIA was doing business in Massachusetts as an agent of both Orion and GAK, that Orion and GAK were not registered to do business in Massachusetts and that, therefore, the action could not be maintained. The judge ordered that the action be dismissed as to Orion and GAK. Subsequently, on motion of Orion and GAK, a final judgment dismissing the action as to them was entered pursuant to Mass.R.Civ.P. 54(b), 365 Mass. 821 (1974).

At the threshold, there is a procedural question. Nowhere in the motion, the judge's memorandum and order or the judgment is there reference to any rule of civil procedure under which the motion was brought or allowed. The procedural tool may, of course, inform the standard of review. The rules of civil procedure require that a party wishing to raise the lack of capacity to sue--or be sued--must do so by specific and particularized negative averments if the issue is raised in the principal pleadings. Mass.R.Civ.P. 9(a), 365 Mass. 751 (1974). However, we have not been referred to, nor have we found, any Massachusetts case dealing with the question whether lack of capacity to sue may also be raised under the rules of civil procedure by a defensive motion. See, as to prior practice, Tyler v. Boot & Shoe Wkrs. Union, 285 Mass. 54, 188 N.E. 509 (1933). We look then to the construction of the Federal Rules of Civil Procedure. See Rollins Environmental Servs. Inc. v. Superior Court, 368 Mass. 174, 179-180, 330 N.E.2d 814 (1975); Anthony v. Anthony, 21 Mass.App.Ct. 299, 302, 486 N.E.2d 773 (1985). Where lack of capacity to sue appears from the face of the complaint, a motion to dismiss may be brought under Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted. See Klebanow v. New York Produce Exch., 344 F.2d 294, 296 n. 1 (2d Cir.1965); Johnson v. Helicopter & Airplane Servs. Corp., 389 F.Supp. 509, 517-518 & n. 1 (D.Md.1974); Johnston v. Fancher, 447 F.Supp. 509, 510-511 (W.D.Okla.1977); 5 Wright & Miller, Federal Practice and Procedure § 1294 (1969 & Supp.1986). The language of Mass.R.Civ.P. 12(b)(6), 365 Mass. 755 (1974), is identical to that of the Federal rule, and there is no compelling reason which calls for a different construction of our rule. See Rollins Environmental Servs., Inc. v. Superior Court, supra, 368 Mass. at 180, 330 N.E.2d 814. The motion to dismiss as presented in this case fits within rule 12(b)(6). ⁴

Orion and GAK submitted affidavits in connection with their applications for trustee process and real estate attachments; these were the only affidavits submitted in the case. In his memorandum and order on the motion to dismiss, the judge said that he considered those affidavits, as well as the pleadings (certifications by the Massachusetts State Secretary that neither Orion nor GAK were registered to do business were attached to the motion to dismiss) in arriving at his decision. The defendant argues that by so doing the judge converted the rule 12(b)(6) motion to one for summary judgment under Mass.R.Civ.P. 56, 365 Mass. 824 (1974). See Mass.R.Civ.P. 12(b)(6); White v. Peabody Constr. Co., 386 Mass. 121, 126, 434 N.E.2d 1015 (1982); Cousineau v. Laramee, 388 Mass. 859, 860 n. 2, 448 N.E.2d 756 (1983). Our review of the affidavits shows that they add nothing material to the question of capacity to sue which is not contained in the complaint. See Stop & Shop Cos. v. Fisher, 387 Mass. 889, 892, 444 N.E.2d 368 (1983) ("The category of 'matters outside the pleading' is broad, but even when construed broadly, such matters must provide some relevant, factual information to the court").

We pass the question whether the judge's consideration of the State Secretary's certificates would be sufficient to convert the motion under rule 12(b)(6) to one under rule 56. We do so because we think any implicit conversion from a motion to dismiss to a motion for summary judgment would have been improper because Orion and GAK were not so notified and given an opportunity to present relevant materials in opposition to summary judgment. See rule 12(b)(6); Stop & Shop Cos. v. Fisher, supra. This is not a case where Orion and GAK should be held to have constructive notice of a conversion to a motion for summary judgment because they submitted relevant material not already properly before the court on the motion to dismiss. Contrast White v. Peabody Constr. Co., supra, 386 Mass. at 127-128, 434 N.E.2d 1015. See Stop & Shop Cos. v. Fisher, supra, 387 Mass. at 892, 444 N.E.2d 756.

We review the allowance of the motion to dismiss and the ensuing judgment under a now familiar standard. " 'In appraising the sufficiency of the complaint we follow, of course, the accepted rule that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.' " Nader v Citron, 372 Mass. 96, 98, 360 N.E.2d 870 (1977), quoting from Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957). Spence v. Boston Edison Co., 390 Mass. 604, 615, 459 N.E.2d 80 (1983). "The plaintiffs need only surmount a minimal hurdle to survive a motion to dismiss for failure to state a claim." Bell v. Mazza, 394 Mass. 176, 184, 474 N.E.2d 1111 (1985). In this case, we look to the complaint to determine whether it appears beyond doubt that neither Orion nor GAK can prove any set of facts which would relieve it from regulation as a foreign insurance company under G.L. c. 175 or from registering to do business as a foreign corporation under G.L. c. 181, § 4, with the result that it would be prohibited from maintaining this action under G.L. c. 181, § 9.

The following account emerges from the complaint. REIA entered into arrangements with Orion and GAK for the placement of surplus lines insurance covering loss from the death of horses. See G.L. c. 175, § 47, Thirteenth, and § 168. See also Church of Christ in Lexington v. St. Paul Surplus Lines Ins. Co., 22 Mass.App.Ct. 407, 408, 494 N.E.2d 45 (1986). Under a written contract with Orion, called the "Bloodstock contract," REIA was authorized to bind insurance coverage on behalf of Orion on horses owned by clients domiciled in the United States. All communications, required accountings and premium payments were to be made by REIA to GAK for transmittal to Orion. The complaint (as well as the contract) describes the function of GAK under the contract as "an intermediary" for Orion. Under the contract and under the binding certificate of insurance to be issued by REIA, Orion agreed to submit to any appropriate judicial jurisdiction in the United States in connection with a claim under an insurance policy.

REIA also had an arrangement with GAK, apparently not in any written form, for the placement of surplus lines insurance covering horses in the so-called open market in London. The insurance was also available to cover horses owned by clients domiciled in the United States. REIA would submit a proposal to GAK which would then attempt to place the insurance with various London insurance companies or underwriting syndicates. Once placed, GAK would confirm the coverage and REIA would remit the premium due to GAK for payment to the insurer.

We first consider the status of Orion. As a foreign surplus lines insurance company not authorized to transact insurance business in Massachusetts, it may nevertheless write policies "on property or interests in this Commonwealth" placed by a Massachusetts licensed special insurance broker ⁵ when the conditions of G.L. c. 175, § 168, have been met. See Church of Christ in Lexington v. St. Paul Surplus Lines Ins. Co., supra. Before Orion could issue such a policy, however, it would be obligated to comply with the regulations contained in G.L. c. 175, § 168, regarding financial and management security.

General Laws, c. 181, § 3, as appearing in St.1973, c. 844, § 1, provides in material part: "Every foreign corporation which does business in the commonwealth ..., shall be considered to be doing business in the commonwealth for the purposes of this chapter [including the requirement of registration, G.L. c. 181, § 4] unless its activities within the commonwealth consist of no more than one or more of the following: ... (e ) performing activities subject to regulations under ... chapter one hundred and seventy-five, if the foreign...