Read The Policy

Saginaw insurance attorneys and their clients need to read and understand the insurance policies they are presented with by the insurance company. The United States 5th Circuit issued an opinion in November 2013, that illustrates why. The style of the case is Willoughby v. Metropolitan Lloyds. Here is the relevant information.
This appeal involves the timeliness of a homeowner’s lawsuit against her insurer. The district court determined the lawsuit was untimely and granted summary judgment. This appeals court affirmed.
Willoughby contracted with Metropolitan Lloyds for a homeowner’s insurance policy. The policy included a shortened limitations period, stating that “[a]ction brought against [Metropolitan] must be started within two years and one day after the cause of action accrues.” In November 2007, Willoughby reported to Metropolitan that a fire had damaged her home in Blooming Grove, Texas. Metropolitan subsequently investigated Willoughby’s insurance claim and examined her under oath regarding the circumstances of the fire. During the course of this examination, Willoughby provided her mailing address and stated that her and her husband’s attorney was Paul Lewallen. Nine months later, in a letter dated September 25, 2008, Metropolitan denied Willoughby’s claim, explaining that it believed “the fire was set by or at the direction of one or more of the named insureds.” The letter further explained that Willoughby had not complied with her insurance policy’s reporting obligations, one of which required her to provide a signed “proof of loss” statement. Metropolitan sent this letter to the mailing address provided by Willoughby. Willoughby denies ever receiving it.
Less than a month later, in November 2008, attorney Lewallen sent a letter on his firm’s letterhead to Metropolitan. The letter stated that it served “as a written notice” that Lewallen represented Willoughby and her husband with regard to the insurance claim. The letter continued: “My clients are wanting to settle this matter in an amicable fashion; however, in the event it continues unresolved, I will take all steps necessary to protect my clients’ interest.” Lewallen attached to the letter a “proof of loss” statement and an IRS Tax authorization, both of which bore Willoughby’s signature. On December 15, 2008, counsel for Metropolitan responded to Lewallen’s letter by stating that Willoughby’s insurance claim was denied as set forth in the Metropolitan’s original September 25, 2008, letter. More than three years later, in January 2012, Willoughby sued for breach of contract, alleging that Metropolitan wrongfully denied coverage under her homeowner’s policy. Metropolitan argued that the parties’ contractually agreed-upon limitations period of two years and one day barred Willoughby’s claim. In response, Willoughby argued that the limitations period in her insurance policy was not triggered because she never received notice of the denial of coverage.
The court reasoned that even assuming Willoughby did not have actual notice of her claim’s denial, Lewallen’s receipt of the denial letter as her attorney was imputed to her. Thus, according to the court, Willoughby’s cause of action accrued at the latest on December 15, 2008, when Lewallen received a copy of the denial letter, and was barred when Willoughby did not file suit until January 17, 2012, which was in excess of the agreed-upon limitations period.
On appeal, Willoughby did not dispute that she agreed to the limitations period in her contract. Instead, she argues that summary judgment was improper because a genuine dispute remains as to whether the limitations period ever started. She argues that the limitations period did not start because she never received the September 25, 2008, denial letter and did not otherwise receive notice that Metropolitan denied her insurance claim.
In Texas, limitations begin to run on an insurance policy when the loss is denied. This rule is consistent with the more general proposition that an action for damages for breach of a written contract accrues when the breach occurs or when the claimant has notice of facts sufficient to place him on notice of the breach.
Here, if the court accepts the premise of Willoughby’s argument, i.e., that sending the denial letter was insufficient to start the limitations period, the district court’s conclusion that Willoughby possessed at least constructive notice of her claim’s denial through Lewallen, her attorney at the time, is clear. The uncontested evidentiary record confirms that Metropolitan apprised Lewallen on December 15, 2008 that Willoughby’s claim had been denied.” Therefore, at a minimum, Willoughby’s cause of action accrued on that date, and her claim is barred by her insurance policy’s limitations period.

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