Thereafter, the adjuster informed Ms. De Jongh that the inspection had revealed no damage covered by her insurance policy.

State Farm entered notes into its claims management system on June 11 and 12, 2012 evidencing its intention to issue a denial of coverage letter to Ms. De Jongh. The notes indicated the letter was to explain that Ms. De Jongh's roof damage had been the result of maintenance issues excluded from coverage.

On July 12, 2012, State Farm closed its file regarding Ms. De Jongh's claim.

Ms. De Jongh asserted that she had never received the June denial letter indicated in State Farm's records. State Farm did not issue any payment to Ms. De Jongh when it closed her file.

On August 17, 2012, Ms. De Jongh requested that State Farm re-inspect the property.

Three days later, State Farm reopened Ms. De Jongh's claim.

On August 23, 2012, a new adjuster re-inspected Ms. De Jongh's property and observed damage to a metal patio cover that was not listed in the initial inspection report. Nevertheless, the cost of repairing the damage the inspection uncovered was less than Ms. De Jongh's deductible, according to the adjuster.

State Farm again closed Ms. De Jongh's claim without payment. State Farm sent a letter on August 23, 2012 acknowledging minor damage but explaining that it would not pay because the amount did not exceed the deductible.

According to Ms. De Jongh, the August 23 letter was the only denial letter she had received from State Farm.

Ms. De Jongh subsequently sued State Farm, which moved for summary judgment. The insurer contended that Ms. De Jongh's claims were barred under the two-year limitations clause in her policy.

The district court ruled in favor of State Farm, finding that her cause of action had accrued on July 12, 2012, when State Farm had first denied her claim and had closed her file. The district court then determined that Ms. De Jongh's suit was time barred because she had not sued State Farm until two years and two days after the accrual date.

Ms. De Jongh appealed to the Fifth Circuit.

The Fifth Circuit's Decision

The circuit court affirmed.

In its decision, the circuit court explained that, in Texas, a cause of action for breach of a first-party insurance contract accrued when the insurer denied the claim. It then agreed with State Farm that its closing of Ms. De Jongh's claim for the first time on July 12, 2012 constituted an outright denial “that triggered the limitations clock.”

The circuit court conceded that the accrual date often was tied to a written notice of denial, but it noted that courts have used the claim closure date as the accrual date even where there was no notice of denial – and even if the failure to send a denial letter was “tortious.”

It also stated that the accrual date remained unchanged, even though State Farm had reopened the claim upon Ms. De Jongh's request. According to the circuit court, requesting that an insurance company reinvestigate a closed file did not “in and of itself reset the limitations clock.”

The Fifth Circuit acknowledged that the “discovery rule” would delay an accrual date if the injury was “fraudulently concealed or inherently undiscoverable,” but it noted that Ms. De Jongh had not relied on the discovery rule.

The case is De Jongh v. State Farm Lloyds, No. 15–20522 (5th Cir. Nov. 30, 2016). Attorneys involved include: Melissa Waden Wray, Richard David Daly, Esq., Daly & Black, P.C., Houston, TX, for Plaintiff–Appellant; Levon G. Hovnatanian, Robert Tresch Owen, Esq., Martin, Disiere, Jefferson & Wisdom, L.L.P., Houston, TX, for Defendant–Appellee.