Limitation of Actions Provision in Homeowner's Policy Upheld

In the case of Palek v. State Farm Fire and Cas. Ins. Co., No. 2:20-CV-170-JFC (W.D. Pa. Aug. 26, 2020 Conti, J.), the court granted the carrier’s Motion to Dismiss for failure to state a claim with regards to a breach of contract claim and a bad faith claim relative to the handling of a homeowner's insurance claim. 

The granting of the dismissal relative to the breach of contract claim was with prejudice but the granting of the dismissal with respect to the bad faith claim was without prejudice. The Plaintiff was granted twenty (20) days to file an Amended Complaint. 

As noted, this matter arose out of claims under a homeowner’s policy. According to the Opinion, the State Farm policy provided coverage for accidental and direct physical loss to, among other things, the in-ground swimming pool on the Plaintiff’s property. 

According to the Opinion, the Plaintiffs had emptied their swimming pool of water in order to perform routine maintenance. In doing so, they noticed damage to the swimming pool’s liner. They presented a claim for State Farm who eventually determined that the damage was not covered under the policy. The carrier asserted that the damage was caused by earth movement and, therefore, was excluded under the policy. 

The Plaintiffs filed a claim for breach of contract of the policy and a bad faith denial of benefits without a reasonable basis to do so. 

With regard to the breach of contract claim, the court agreed with State Farm that the Plaintiff’s claims were barred by the 1-year suit limitation provision contained in the policy. The court upheld this provision and found no evidence to support a finding of waiver or estoppel as raised by the Plaintiff.

The court additionally found that, even if the suit limitation provision did not apply, the alleged damages would be excluded under an application of the policy language. 

Relative to the bad faith claim, the court confirmed that a claim for bad faith is an independent cause of action separate from a contract claim. The court noted that the Plaintiff could proceed on the bad faith claim even where a contractual limitation period has been enforced and a breach of contract claim has been dismissed. Given that the Plaintiff had claims with respect to how the claim was handled, the court allowed the Plaintiff to provide more details in support of an alleged bad faith claim. 

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

I send thanks to Attorney Mark A. Martini of the Pittsburgh office of the law firm of Robb Leonard Mulvihill, LLP for brining this case to my attention.