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Long v. Farmers New Century Insurance Co.

United States District Court, E.D. Pennsylvania

March 30, 2017



          STENGEL, J.

         This is a diversity insurance contract action brought by Michael Long against Farmers New Century Insurance Company alleging breach of contract and bad faith. Mr. Long had filed the complaint in the Court of Common Pleas of Berks County, and Farmers removed the action here due to the diversity of citizenship of the parties. Farmers filed a motion for judgment on the pleadings, and Mr. Long responded. Farmers argues that it is entitled to judgment as a matter of law because Mr. Long's action is untimely, and because his claim for bad faith fails to state a claim upon which relief can be granted. For the following reasons, I will grant the motion in its entirety, and enter judgment on behalf of Farmers and against Mr. Long.

         Pursuant to Federal Rule of Civil Procedure 12(c), judgment on the pleadings will be granted only if the movant clearly establishes that there are no material issues of fact, and that it is entitled to judgment as a matter of law. Sikirica v. Nationwide Ins. Co., 416 F.3d 214, 220 (3d Cir. 2005). A party may move for judgment on the pleadings after the pleadings are closed, but early enough not to delay trial. Id. (quoting Fed.R.Civ.P. 12(c)). In deciding a motion for judgment on the pleadings, a court considers the pleadings and exhibits attached thereto, matters of public record, and “undisputedly authentic documents attached to the motion for judgment on the pleadings if plaintiff's claims are based on the documents.” Id. Rule 12(c) motions are reviewed under the same standard that applies to motions to dismiss for failure to state a claim pursuant to Rule 12(b)(6). Turbe v. Gov't of Virgin Islands, 938 F.2d 427, 428 (3d Cir. 1991).

         Accordingly, a motion for judgment on the pleadings will be granted if a plaintiff has not articulated enough facts “to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). It is not enough for a plaintiff to allege mere “labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id. Plaintiffs must plead “factual content that allows the court to draw the reasonable inference that the defendant is liable for misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009). The court “may disregard any legal conclusions.” Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009); see also Iqbal, 556 U.S. at 678 (Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice).

         Here, the complaint alleges that Farmers issued an insurance policy on a residence owned by Mr. Jones at 1419 Fairview Street in Reading, Pennsylvania. The policy contains the following suit limitation clause: “Suit Against Us: No action can be brought unless the policy provisions have been complied with and the action is started within one year after the date of loss.” See Compl. ¶ 28. The policy further requires that notice of a loss and a claim for benefits be given to Farmers promptly.

         The policy also contains the following appraisal clause:

Appraisal: If you and we fail to agree on the amount of the loss, either may demand an appraisal of the loss. In this event, each party will choose a competent appraiser within 20 days after receiving a written request from the other. The two appraisers will choose an umpire. If they cannot agree upon an umpire within 15 days, you or we may request that the choice be made by a judge of a court of record in the state where the “residence premises” is located. The appraisers will separately set the amount of loss. If the appraisers submit a written report of an agreement to us, the amount agreed upon will be the amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will set the amount of loss.

         On May 22, 2014, Mr. Long's property suffered damage during a hail storm. On May 21, 2015, one year later, Mr. Long's representative public adjuster Total Public Adjusting, on behalf of Mr. Long, notified Farmers of the damage to his property and made a claim for insurance benefits. The next day, the one-year anniversary of the loss, Farmers acknowledged receipt of Mr. Long's claim, and in that same letter, stated its position that Mr. Long failed promptly to make a claim for the loss, and reminded him that any suit against Farmers must be filed within one year of the date of the loss. This May 22, 2015 letter also reiterated that Farmers was not waiving any of the terms, conditions, or provisions of the policy. Farmers determined that the damage was covered under the policy, and issued a payment on June 5, 2015.

         Mr. Long believed that Farmers had not fully and fairly compensated him for his loss. In September 2015, Mr. Long's public adjuster submitted a demand that Farmers participate in an appraisal of the claim under the policy. The first demand for appraisal was withdrawn, but was reinstated two weeks later. Fifteen months after the loss was incurred and two months after Farmers had paid Mr. Long for the loss, Farmers declined to engage in the appraisal. Mr. Long filed this complaint on November 23, 2015, eighteen months after the date of loss.

         In Count I of the complaint, Mr. Long alleges that Farmers breached the insurance contract by not providing the coverage for his full loss as required under the policy and by not agreeing to participate in the appraisal. Farmers counters that the action was not timely filed under the terms of the policy and that Mr. Long has failed to establish any basis for waiver or estoppel against Farmers' assertion of the defense of the one-year suit limitation.

         The interpretation of an insurance policy is a question of law. Erie Insurance Exchange v. Baker, 972 A.2d 507, 511 (Pa. 2009). When interpreting an insurance policy, a court must ascertain the intent of the parties as manifested by the language of the written agreement. Id. When the policy's language is clear and unambiguous, the court must give effect to the language of the contract. Id.

         Mr. Long's policy contains a clear and unambiguous one-year limitation on filing suits against Farmers after the loss or damage occurs. The Commonwealth of Pennsylvania has mandated that all fire insurance policies issued contain such a one-year suit limitation clause. See 40 P.S. § 636(2). Such limitation clauses are valid and enforceable. Prime Medica Associates v. Valley Forge Ins. Co., 970 A.2d 1149, 1156 (Pa.Super. 2009). The validity of the one-year limitation of suit provision in fire insurance policies has been consistently upheld by courts. Schreiber v. PA Lumberman's Mutual Ins. Co., 444 A.2d 647, 649 (Pa. 1982)(the statutory requirement represents a legislative determination of a reasonable period within which suits must be brought, a careful balancing of the interests of both insurers and insureds); General State Authority v. Planet Ins. Co., 346 A.2d 265, 267 (Pa. 1975)(the law is clear that such a clause, setting time limits on the commencement of suits to recovery on a policy, is valid and will be sustained). Here, the policy was bound by that same statutory requirement to include the suit limitation clause. See Lyons v. Nationwide Ins. Co., 567 A.2d 1100, 1102 (Pa.Super. 1989)(noting that the types of insurance policies required to include the clause mandated by § 636 include policies on houses and other buildings insuring “against loss or damage, including loss of use or occupancy, by fire, smoke, smudge, lightning, and explosion, whether fire ensue or not, and by tornadoes, cyclones, windstorms; earthquakes, hail, frost, sleet, snow, or flood”) (quoting 40 Pa. P.S. § 382(b)(1)) (emphasis added).

         An insurer might waive the suit limitation defense, or else it may be estopped from relying on it. “Waiver is the voluntary and intentional abandonment or relinquishment of a known right.” Prime Medica, 970 A.2d at 1156. Waiver arises either by express declaration or else by conduct so inconsistent with the defense that there is no reasonable ground to infer that the insurer relies on the suit limitation defense. Id. at 1156-1157. An insurer will be estopped from raising the suit limitation defense if there is clear and convincing evidence that the insurer induced the insured to justifiably rely, to the insured's detriment, on the insurer's words or conduct reflecting a decision not to invoke the defense. Id. at 1157.

         On the other hand, if an insurer invokes the suit limitation clause and does not lull the insured into thinking it will not rely on the clause, the one-year limitation on suits is enforceable. General State Authority, 346 A.2d at 268 (affirming the entry of judgment on the pleadings where the insurer did ...

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