Judge Pappert of Eastern Federal District Court Rules that Plaintiff's Post-Gallagher Efforts to Revive Old UIM Claim Denied Under Household Exclusion Time Barred

Another post-Gallagher Household Exclusion has been issued by a judge in the Eastern Federal District of Pennsylvania -- this one favoring the carrier's statute of limitations argument on a plaintiff's effort to revive an old UIM claim that was previously denied by the carrier under an application of a Household Exclusion in the policy.

In O'Brien v. GEICO, No. 19-01920 (E.D. Pa. July 3, 2019 Pappert, J.), a plaintiff sued GEICO for breach of contract and bad faith based upon allegations that GEICO breached the contract by applying the Household Exclusion contained in the policy.

With the suit being originally filed in Philadelphia County Court, GEICO removed the case to the Federal District Court for the Eastern District of Pennsylvania.

GEICO then filed a motion to dismiss based upon a statute of limitations argument.

By way of background, the plaintiff was injured back on May 31, 2014 while operating a motorcycle which was not covered by the GEICO policy at issue in this matter.  Although the opinion does not explain, the plaintiff presumably recovered from the tortfeasor, then recovered under the UIM policy that covered his motorcycle.  He then likely turned to another UIM policy under which he was insured but which covered a separate vehicle in the same household.

The court's Opinion does explain that, following that accident, the plaintiff presented a UIM claim to GEICO under a separate policy with GEICO.  That claim was denied by the carrier on September 19, 2014 under an application of the Household Exclusion in the policy.

Fast forward to January 23, 2019 at which point the Pennsylvania Supreme Court issued its Gallagher v. GEICO decision in which it found the GEICO Household Exclusion to be void as violating the stacking statute under the MVFRL (in footnote 8 the Pennsylvania Supreme Court noted that it was voiding the Household Exclusion across the board and not just in the Gallagher case).

After the issuance of this Gallagher v. GEICO decision by the Pennsylvania Supreme Court, the plaintiff in this O'Brien case revived his previous UIM claim and requested, on February 12, 2019, that GEICO now tender to him the $100,000 UIM limits under that policy.  GEICO denied the demand on March 1, 2019.

The plaintiff filed this breach of contract and bad faith action against GEICO on April 3, 2019.  The plaintiff alleged that GEICO had breached the insurance contract by previously applying the Household Exclusion and denying the plaintiff's claims back on September 19, 2014.

Judge Gerald J. Pappert of the Eastern District granted GEICO's motion to dismiss after finding that this plaintiff could have made the same arguments as made in the Gallagher v. GEICO case before the four year statute of limitations applicable to his breach of contract claim had expired.  The court cited to recent case law holding that the statute of limitations in this context begins to run when a UIM claim is denied by the carrier.

More specifically, Judge Pappert noted that, with GEICO's original denial of the claim being back on September 19, 2014, the statute of limitations expired on September 19, 2018 and the Plaintiff did not file this suit until April 3, 2019.

Notably, Judge Pappert also ruled that the discovery rule did not apply in this matter to extend the statute of limitations.  As noted, the court found that this plaintiff could have raised the same types of issues and arguments as asserted in the Gallagher v. GEICO  when his claim was denied.

The Court in this O'Brien case went on to also hold that the plaintiff's bad faith claim was also barred by the statute of limitations.  The court additionally found that the plaintiff's bare bones and conclusory allegations of bad faith were insufficient to survive the F.R.C.P. 12(b)(6) motion to dismiss challenge.

Please click this LINK to view the O'Brien decision.

I send thanks to Attorney Scott Cooper of the Harrisburg, PA firm of Schmidt Kramer for bringing this case to my attention.

Judge James M. Munley of Federal Middle District Court Rules on Statute of Limitations for UIM Case

In a case in which he addressed the applicable statute of limitations for an underinsured (UIM) motorists claim, Judge James M. Munley of the Federal Middle District Court of Pennsylvania denied the carrier’s Motion for Summary Judgment in the case of Legos v. Travelers Cas. Ins. Co., No. 3:16-CV-1917 (M.D. Pa. Oct. 11, 2018 Munley, J.).

Notably, the court held that the statute of limitations for a UIM is four (4) years from the date of the breach of the contract and not the date of the third party settlement.  

According to the Opinion, the third party case in this matter settled back in March of 2012.   

Over four (4) years later, Travelers sent correspondence to its insured indicating that it believed that the statute of limitations on the UIM claim had expired and that it was, therefore, closing its file.  

The insured nevertheless filed a breach of contract Complaint.   Travelers eventually responded with a Motion for Summary Judgment asserting that the four (4) years statute of limitations had expired once four (4) years from the March of 2012 settlement of the case had run.  

The Plaintiff countered with the Pennsylvania Supreme Court case of Erie Ins. Exch. v. Bristol, 174 A.3d 578 (Pa. 2017), and asserted that the four (4) year statute of limitations actually commenced in 2016 when the carrier indicated that it was closing its file as that would have been the date of the alleged breach of contract.  

Travelers responded by asserting that the Bristol case only applied to uninsured (UM) motorists claims.  Judge Munley disagreed and held that the Bristol case applied to both UM and UIM cases.  

In a footnote, Judge Munley acknowledged the Third Circuit's 2007 prediction in 

State Farm Mut. Auto. Ins. Co. v. Rosenthal, 484 F.3d 251, 253 (3rd Cir. 2007), that the Pennsylvania Supreme Court would hold that the limitations period on a UIM claim begins to run when the insured party settles with an adverse party for less than the value of the insured's damages. However, Judge Munley ruled that the 2017 Pennsylvania Supreme Court decision in Erie Ins. Exch. v. Bristol, 151 A.3d 1161 (Pa. Super. Ct. 2016), rev'd, 174 A.3d 578 (Pa. 2017) served to clarify state law in the manner held by Judge Munley in this Legos case.

As such, the court found that the UIM breach of contract claim in this matter was not barred by the statute of limitations.   Consequently, the carrier’s Motion for Summary Judgment was denied.

Anyone wishing to review a copy of this case may click this LINK. The Court's companion Order can be viewed HERE.

I send thanks to Attorney Scott B. Cooper of the Harrisburg, PA law firm of Schmidt Kramer P.C. for bringing this case to my attention.  

Commentary:  One troubling aspect of this decision for carriers is that Plaintiffs attorneys are already arguing that this decision basically eradicates any statute of limitations for a UIM claims.  The argument is that, under this decision, the statute of limitation never begins to run until the Plaintiff advises the carrier of a desire to pursue a UIM claim and the carrier denies the claim or indicates it is not going to pay the Plaintiff's initial demand.

Does such an argument further the goal of the statute of limitations to prevent the pursuit of overly stale claims?  Does that seem like a correct application of the statute of limitations to you?  What do you think?

Judge James M. Munley of Federal Middle District Court Addresses UIM Statute of Limitations

In the case of Legos v. Travelers Cas. Co. of Conn., 3:16-cv-1917 (M.D. Pa. Dec. 19, 2016 Munley, J.), Judge James M. Munley addressed the issue of the statute of limitations in a UIM case.

According to the Opinion, the third party case Release was signed in March 2012.  The settlement monies were received by the Plaintiff in April 2012. 

The Plaintiff’s UIM suit was filed in April 2016. 

The insurance company argued that the statute of limitation expired because the UIM claim had to be filed within 4 years of the date of the Release. 

The insured asserted that the statute of limitations was met because suit was filed within 4 years of when the settlement monies were received. 

Judge Munley ruled that issues of fact remained about when the insured recognized the third party was an underinsured motorist.  As such, the carrier’s motion to dismiss was denied.

Anyone wishing to review this Opinion may click this LINK.

I send thanks to Attorney Scott Cooper of the Schmidt Kramer law firm in Harrisburg, PA for bringing this case to my attention.

Eastern District Federal Court Reaffirms Commencement Date for UIM Statute of Limitations

On October 28, 2013, Judge Jan E. DuBois of the Eastern District Federal Court of Pennsylvania issued an opinion in the case of Wilson v. Great American Insurance Company, NO. 2:12-CV-5700 (E.D. Pa. Oct. 28, 2013 DuBois, J.), on the issue of the commencement date for the statute of limitations in an underinsured motorist (UIM) benefits claim.

The insurance company argued that the statute of limitations in a UIM case can be deemed to start to run when the underlying liability carrier tenders its limits. The insured Claimant countered that the commencement date should be when the third party release is signed.

The Eastern District Federal Court held in Wilson that the date the release is signed is the commencement date for the statute of limitations to start to run.

It has been repeatedly held in Pennsylvania that the statute of limitations in a UIM case is four (4) years.

Anyone desiring to review a copy of the Wilson case may click HERE

Commentary:  This decision in the case of Wilson v. Great American Ins. Co. is consistent with prior cases holding that the statute of limitations in a UIM case begins to run when the third party matter is settled or when a verdict is entered in the third party lawsuit.

In Hopkins v. Erie Insurance Company, 65 A.3d 452 (Pa.Super. 2013 Gantman, Allen, and Ott, JJ.)(Opinion by Allen, J.)(Concurrence by Gantman, J.), the Superior Court held that a UIM cause of action accrues when the third party case settled and not when the contract was allegedly breached when Erie denied the claim. In so ruling ,the Superior Court followed the reasoning of the united States Court of Appeals of the Third Circuit in State Farm v. Rosenthal, 484 F.3d 251 (3d Cir. 2007).

The Superior Court in Hopkins more specifically held that "the four-year statute of limitations on underinsured motorist claims begins to run when the insured settles with, or secures a judgment against, the underinsured owner or operator.”

Click this LINK to view the Hopkins decision. 

I send thanks to Attorney Paul Oven of the Moosic, PA law firm of Dougherty, Leventhal & Price and Scott Cooper of the Harrisburg, PA law firm of Schmidt Kramer for bringing this case to my attention.

Source of image:  www.sandz.net

UIM Statute of Limitations Case

In the Montgomery County Court of Common Pleas Opinion of Hopkins v. Erie Insurance Company, No. 2010 - CV - 35352 (C.P. Montg. Co. Aug. 12, 2012 Carluccio, J.), Judge Carolyn T. Carluccio addressed the issue of the proper statute of limitation for a underinsured (UIM) claim.

This matter came before the court by way of the Plaintiff's Petition for the Appointment of Arbitrators and Request to Compel Arbitration.  The Plaintiff had previously settled her claim against the tortfeasor in June of 2004.

According to the opinion, while the Plaintiff notified the carrier of the settlement at that time by letter and advised the carrier in that letter that she wished to pursue a UIM claim, the Plaintiff took no further action with respect to the UIM carrier other than submitting a demand letter in 2008.  The opinion noted that, in addition to the Claimant's counsel speaking with an Erie claims representative about issues pertaining to an arbitration of the matter, Erie also requested medical records and authorizations from the Plaintiff.  The opinion confirms that executed authorizations were provided to Erie, some of which were sent out by the carrier to request records.

In March of 2009, the carrier issued a letter to the insured advising that it was closing its file on the basis that the statute of limitations on the UIM claim had passed.  The Plaintiff responded by filing the Motion at issue.  That Motion was denied and an appeal filed, triggering the issuance of this Pa.R.A.P. 1925 Opinion from the trial court explaining its reasoning for the Superior Court's review.

According to its filings, the Plaintiff argued that the time period for the four year statute of limitations should have been deemed to commence running as of the date of the Plaintiff's 2008 demand letter.

After reviewing the applicable law, the court upheld its own denial of the Plaintiff's Petition for the Appointment of Arbitrators and Request to Compel Arbitration on the basis of the expiration of the statute of limitations.  The court found that, under Pennsylvania law, since UIM claims were essentially contract claims, the four year statute of limitations for breach of contract claims applied.  In this regard, the court relied upon Boyle v. State Farm Mut. Auto. Ins. Co., 456 A.2d 156, 159-160 (Pa.Super. 1983) and 42 Pa.C.S.A. Section 5525(a)(8).

This court noted in its opinion that there was no "governing precedent" as to when the statute of limitations begins to run in a UIM claim.  Reviewing a series of Pennsylvania state and federal trial court opinions, the Hopkins court was persuaded to conclude (1) that the statute of limitations begins to run in a UIM claim when the underlying matter is concluded, and (2) that letters issued by counsel and negotiations with the UIM carrier were not sufficient to overcome the statute of limitations or to excuse plaintiff's counsel from the necessity of filing a petition for the appointment of arbitrators in order to preserve the claim.

Since more than four years had passed between the Plaintiff's settlement of the claim with the tortfeasor back in 2004 and the filing of the petition to appoint arbitrators in this matter, the court denied the Petition at issue as barred by the statute of limitations.

Anyone wishing to review this decision may click this LINK

I send thanks to the prevailing Attorney Joseph Walsh of the Lansdale, PA law firm of Walsh Pancio for bringing this decision to my attention.


COMMENTARY:

It appears well-settled that the applicable statute of limitations for a UIM or UM claim is four years as those claims are considered to be based in contract.

Less settled, but apparently becoming more accepted, is the notion that the filing of a Petition to Compel Arbitration and/or a Petition to Appoint Arbitrators is the proper method to preserve a UM/UIM claim under a policy that calls for Arbitration to resolve any disputes on that type of claim.

Presumably, where the UIM policy instead requires a claimant to file a lawsuit in the court of common pleas as opposed to proceeding to an arbitration, a breach of contract Complaint alleging UIM claims should likewise be filed within four years of a settlement with, or a verdict against, a tortfeasor.

Note also that some UIM policies may provide that the UIM claim should be filed in conjunction with the lawsuit against the third party tortfeasor. 

Some practitioners may elect in any event to file both negligence claim against the third party tortfeasor and the breach of contract UIM claim in the same Complaint in order to move forward on all claims at the same time.