The Rhode Island Supreme Court has affirmed the dismissal of an insured's lawsuit against its insurer on the ground that it was filed more than two years after the date of the loss, where the policy required that any such suit be filed within two years of the date of loss.
The Case
Eric Chase alleged that a property that he owned on Bosworth Court in Newport, Rhode Island, suffered a casualty loss on June 25, 2010 that caused extensive interior and exterior damage. Mr. Chase timely reported the loss to Nationwide Mutual Fire Insurance Company, which insured the property pursuant to a policy that it had issued to Mr. Chase.
After investigating the loss, Nationwide accepted the claim as covered under the policy. Nationwide then authorized Mr. Chase to repair the property and further authorized a partial release of funds to enable Mr. Chase to begin the repairs.
Mr. Chase asserted, however, that the funds released were not sufficient to pay for the repairs and to cover his alternative living expenses. Accordingly, he demanded that Nationwide release additional funds, but the insurer refused.
Mr. Chase alleged that Nationwide then “engaged in a pattern of dilatory conduct thereby refusing to fulfill its obligations under the [p]olicy.”
On March 6, 2014, after nearly four years had elapsed since the casualty loss, Mr. Chase attempted to invoke the policy's appraisal provision. In a letter dated March 10, 2014, Nationwide rejected Mr. Chase's demand for an appraisal, citing the passage of time and that Mr. Chase had failed to submit certain documentation that Nationwide had requested under the terms of the policy.
In November 2014, Mr. Chase brought a two-count lawsuit against Nationwide, alleging breach of contract and bad faith.
Nationwide moved for judgment on the pleadings.
The trial court dismissed Mr. Chase's complaint, and he appealed to the Rhode Island Supreme Court.
The Nationwide Policy
The Nationwide policy provided:
3. Your Duties after Loss. In case of loss, you must:The Rhode Island Supreme Court's Decision* * *
c) as often as we reasonably require:
(1) show us the damaged property; and
(2) provide records and documents we request and permit us to make copies.
(3) submit to examinations under oath and sign same.
* * *
8. Suit Against Us. No action can be brought against us unless there has been full compliance with the policy provisions. Any action must be started within two years after the date of loss or damage.
The court affirmed.
The court found that it was “clear from the pleadings” that Mr. Chase had not complied with the terms of the insurance contract because he had not brought suit within two years from the date of his loss.
The court rejected Mr. Chase's contention that the two-year clock had not begun to run until Nationwide had formally rejected Mr. Chase's claim “because the causes of action for breach of contract and bad faith did not accrue until the insurance company breached the contract by refusing to pay the claim.” The court said that, as appealing as this reasoning might be on the surface, it was “unavailing” because the insurance policy “clearly” stated that “[a]ny action must be started within two years after the date of loss or damage[,]” and not from the date that the claim was rejected. (Emphasis added.)
In this case, the court pointed out, the casualty loss had occurred in June 2010, but Mr. Chase's suit had not been filed until four years later, in November 2014.
The court also rejected any argument that Nationwide was estopped from enforcing the two-year provision, noting that Mr. Chase only had alleged that Nationwide had “engaged in a pattern of dilatory conduct thereby refusing to fulfill its obligations under the [p]olicy.” The court concluded that, “[w]ithout more than this salvo,” it could not rule that the delay had been aimed at inducing or causing Mr. Chase to exceed the two-year contractual window in which to file suit.
Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].