Hail Claims And Statute Of Limitations

Weatherford insurance lawyers need to have a clear understanding how the statute of limitations is calculated in a hail damage claim. A U.S. District Court case from The Southern District, McAllen Division is necessary reading. It is styled, Hector Chapa, et al v. Allstate Texas Lloyds, et al.
This is a summary judgement case, wherein Allstate filed the motion for summary judgment based on among other things, the statute of limitations.
The following facts are undisputed. On March 29, 2012, a wind and hail storm struck causing significant damage to Plaintiffs’ home. Plaintiffs immediately filed a claim with Allstate on March 30, 201. On April 9, 2012, an adjuster from Allstate inspected the claim and determined the replacement cost value for the hailstorm damage amounted to $24,713.17. To pay the claim, Allstate made an initial cash value payment to Plaintiffs on April 10, 2012, which is the date they assert the claim was settled in accordance with the policy, and provided a recoverable depreciation payment when the repairs were completed on June 22, 2012. Allstate closed the claim on June 22, 2012 and had no further communication with Plaintiffs for almost two years.
On June 12, 2014, Correct Claim Public Adjusters (“Correct Claim”) sent a letter notifying Allstate that Mr. Chapa had retained the firm in relation to the loss. On June 16, 2014, Allstate sent two letters to Correct Claim. The first letter acknowledged receipt of Correct Claim’s letter of representation and stated that Allstate was continuing to investigate the claim. The second letter informed Correct Claim that a re-inspection would not be granted. In the second letter, Allstate further stated: “If you are not in agreement with our estimate for repairs, then we request that you submit a detailed estimate for further review. If you are including repairs for damages which were not included in our estimate, then we are also requesting photos that show the additional damages.” At the end of the letter, Allstate expressly reserved all rights and defenses with regards to the claim and followed up with a letter on June 17, 2014 reiterating that any activity on Allstate’s part by way of investigation, damage determination, or emergency advance payments to Plaintiffs, does not constitute a waiver of Allstate’s rights. The June 17, 2014 letter states that Allstate reserves the right to deny coverage for the March 29, 2012 loss “supplement” because the request came twenty-six months after the loss was settled on April 10, 2012.
On August 4, 2014, Correct Claim sent Allstate a damages estimate for Plaintiffs’ home totaling $67,671. 40. In response, on August 4, 2014, Allstate restated their denial of the claim.
The parties generally agree on the facts and timeline presented, so there is no genuine issue of material fact before the Court. Additionally, the issue before the Court is not whether Allstate waived any rights or defenses that they repeatedly asserted in the letters. Instead, the Court is tasked with determining, as a matter of law, when Plaintiffs’ causes of action accrued and whether the statute of limitations period tolled between when Allstate’s involvement on the claim in 2012 and the most recent activity in 2014.
Allstate’s policy with Plaintiffs clearly states: “No suit or action can be brought unless the policy provisions have been complied with. Action brought against [Allstate] must be started within two years and one day after the cause of action accrues.” The parties do not dispute that this is a proper contractually agreed upon limitations period for breach of an insurance contract in accordance with Texas state law. Additionally, the parties seem to be in agreement that the statute of limitations for extra-contractual claims related to insurance contracts is also two years from when the cause of action accrues. More specifically, a claim under the Deceptive Trade Practices Act-Consumer Protection must be brought within two years of the false, misleading, or deceptive act or practice, and the same is true for claims under the Texas Insurance Code.
At the center of the dispute between the parties is when the cause of action for the breach of contract and extra-contractual claims accrued. Allstate asserts that the cause of action accrued on the date they mailed the coverage-payment position letter and closed the claim, April 10, 2012. Allstate further contends that any engagement it had with Public Claims did not restart the limitations period, especially since Allstate did not modify or act contrary to its original position. In contrast, Plaintiffs claim that the statute of limitations did not expire “because Defendant reopened the claim on June 16, 2014, proceeded to investigate Plaintiffs’ losses, and openly acknowledged additional damage on August 4, 2014.” Plaintiffs argue that the statute of limitations did not begin to run until August 4, 2014, the date of “the last determination” made by Allstate.
The question of when a cause of action accrues is typically a question of law. Generally, a cause of action accrues and the statute of limitations begins to run “when facts come into existence that authorize a party to seek a judicial remedy … regardless of when the plaintiff learns of that injury or if all resulting damages have yet to occur.” Importantly in this case, an insured’s cause of action “accrues the moment an insurer should pay a claim but fails to do so” because “[a]t that moment, the insurer’s wrongful conduct first causes harm to the insured.”
Under Texas law, a plaintiff’s cause of action for bad-faith breach of a first-party insurance contract and violations of the Texas Insurance Code, DTPA, and duty of good faith and fair dealing accrue on the date the insurer denies the insured’s claim. The limitations period begins to run even though damage may continue to occur after the denial. If there is no outright denial of a claim, the exact date of accrual of a cause of action may be a question of fact to be determined on a case-by-case basis. However, the determination is only a fact issue if there is ambiguity surrounding the insurer’s actions, such as stringing an insured along without denying or paying a claim.
In cases such as the one at hand, where the insurer paid the claim and closed the case file, the Fifth Circuit has found that the cause of action begins to accrue, at the latest, upon the issuance of a final letter and the closing of the claims file. Any request by the plaintiff to reopen the claim does not toll or extend the limitations period following the claims decision. Even if the insurance company is willing to review additional information, if it does not change its position on the claims, the limitations period continues to toll.
Based on the above and upon further discussion the court ruled for Allstate.