Appeal from the United States District Court for the District of New Jersey (D.C. Civil No. 82-0855).
Before: ALDISERT, Chief Judge, GIBBONS, Circuit Judge and DIAMOND, District Judge.*fn*
This appeal in a diversity case, applying New Jersey law in a fire insurance claim, requires us to decide whether the district court properly invoked a twelve month limitation of action clause contained in the insurance policy. Specifically, we must determine whether uncontroverted evidence discloses when the mortgagee received notice that the mortgagor's previous claim for the insurance had been rejected by the company. The district court ruled in favor of the insurance company and the claimant has appealed. Because we hold that the court improperly decided a disputed issue of material fact relating to the date of notice, we vacate the judgment and remand the cause for further proceedings.
On February 7, 1977, I.G.W.T. Corporation, as mortgagor, executed a mortgage secured by property known as the "New Malibu Hotel" located in Lakewood, New Jersey. The original mortgagee, who is not involved here, later assigned his interest in the mortgage to appellant Lieberman. On July 8, 1978, Interstate Fire and Casualty, appellee, issued an insurance policy on the property, which named appellant as mortgagee. On July 27, 1978, the hotel was destroyed by fire. Subsequently, the mortgagor, I.G.W.T., made a claim for the insurance proceeds. Following rejection of the claim, I.G.W.T. sued Interstate to seek recovery under the policy. Interstate purportedly answered this claim, denying liability, on or about April 20, 1979. On June 21, 1982, a jury ruled that I.G.W.T. could not recover because I.G.W.T. had committed a fraud on Interstate by overstating its claim.
Prior to the jury's verdict, appellant Lieberman, the mortgagee, entered a suit on his behalf on March 18, 1982, against Interstate to receive proceeds under the mortgagee clause of the same policy. The insurance policy, in full force and effect on the date of the fire, contained a provision that required that any action for a recovery on the policy be brought within twelve months after inception of the loss:
No suit or action on this policy for the recovery of any claim shall be sustained in any court of law or equity unless all the requirements of this policy shall have been complied with, and unless commenced within twelve months next after inception of the loss.
Under New Jersey law, which applied here, the limitations period contained in the policy begins to run from the date of the loss, but is tolled from the time the insured gives notice of the loss until the time the company formally denied liability. Peloso v. Hartford Fire Insurance Co., 56 N.J. 514, 517, 267 A.2d 498, 501 (1970).
After considering various motions for dismissal and summary judgment, the district court held that Lieberman's claim was tardy and dismissed the case. It reached its conclusion by invoking the following analysis: Lieberman filed suit to recover under the policy on March 18, 1982; he had knowledge, due to Interstate's answer in the prior action, at least by April 20, 1979, that the mortgagor's claim had been rejected; thus, he filed suit almost 36 months after receiving notice of the rejection; therefore, his action is barred by the policy's twelve month limitation of action provision because he was not entitled to the benefit of the New Jersey tolling rule. Lieberman appeals and argues that the court erred in determining that he received notice by April 20, 1979. Our task is not difficult. We must examine the record to determine whether uncontroverted evidence supports the court's determination of notice.
The district court determined that "plaintiff Lieberman became aware, on or about April 20, 1979, that Interstate had denied the claim, but chose to sit on his rights until March 18, 1982. Lieberman's counsel in this case also represented ...