Insurance Policy's Limitation of Action Provision Upheld

In the case of Mazzoni v. Travelers Home & Mut. Ins. Co., No. 3:19-cv-2169 (M.D. Pa. Feb. 13, 2020 Mannion, J.), the court dismissed a contract and bad faith case under a statute of limitations argument.

According to the Opinion, the carrier denied coverage on November 3, 2015.

The Plaintiff did not sue for breach of contact or bad faith until September 20, 2019.

The carrier moved to dismiss the breach of contract claim based upon a two (2) year statute of limitations contained in the policy itself. The carrier also moved to dismiss the bad faith claim under the two (2) year statute of limitations under Pennsylvania law.

The court upheld a two (2) year suit limitation contained in the policy as there was no merit to the Plaintiff’s claim that Pennsylvania’s four (4) year statue of limitations with contract claims under 42 Pa. C.S.A. §5501 should control in the case. This was particularly so where the Plaintiff did not allege that the carrier led the Plaintiff to believe that the two (2) year limitations period contained in the policy would not be enforced, or that the carrier took any steps that induced the Plaintiff to file her Complaint after that two (2) year deadline.

The contract claim was therefore dismissed with prejudice.

With regard to the bad faith claim, the court would not let the Plaintiff escape the statute of limitations issue by virtue of the Plaintiff leaving out of the Complaint the date upon which the carrier had denied coverage, or by not attaching the denial letter to the Complaint.

The court stated that it could rely upon and review the November 3, 2015 denial of coverage letter since the Defendant attached that letter to its Motion to Dismiss.

Judge Mannion found that there was “no doubt” that the two (2) year statute of limitation on the bad faith claim began to run when the insured first learned that the carrier was denying coverage. As such, the statutory bad faith claim was found to be barred in this matter as well.

The court also rejected the Plaintiff’s efforts to assert a common law bad faith claim that would allegedly be subject to a four (4) year contract statute of limitations. The court noted that, separate and apart from the fact that the Complaint alleged a statutory bad faith claim, under Pennsylvania law, a common law bad faith claim is solely a contract based claim in Pennsylvania and is deemed to merge with the breach of contract claim. Accordingly, the court found that the alleged common law bad faith claim would be subject to the same two (2) year contractual limitation period at issue in this case.

The court additionally noted that, in any event, common law bad faith claims did not apply to first party property damage claims as were at issue in this case.

Anyone wishing to review a copy of this decision may click this LINK .

I send thanks to Attorney Lee Applebaum of the Philadelphia law office of Fineman, Krekstein & Harris for bringing this case to my attention. Please be sure to check out Attorney Applebaum’s excellent Pennsylvania and New Jersey Insurance Bad Faith Case Law Blog for continuing updates on important bad faith cases in Pennsylvania and New Jersey.