Statute of Limitations

1. S.O.L. Statute of Limitations Be safe. Know the policy. File the case within the limit in the contract!

2. S.O.L. That May Apply To Insurance Claims (Texas) • Breach of Contract – 4 years • Unfair settlement practices – 2 years • Prompt Payment of Claims – 2 years, but could arguably be 4 years – see RX.com Inc. v. Hartford Fire Insurance Co., 426 F. Supp. 2d 546, 563-64 (S.D. Texas, 2006) • Breach of common law duty of good faith and fair dealing – 2 years • Violations of Texas Deceptive Trade Practices Act – 2 years

3. Statutes That May Apply To Insurance Claims (Oklahoma) • Breach of Contract – 5 years • Bad faith – 2 years • Unfair settlement Practices – 2 years • Deceptive Trade Practices Act – 2 years

4. Minnesota • Deceptive Trade Practices – 4 years • Breach of Contract – 6 years • Bad Faith – 6 years

5. When Does The Time Start? • Breach of Contract – the date the breach occurs which can vary depending on the breach alleged • On denial of coverage (some courts have held that reconsideration after denial will not restart accrual period) • On the date final payments under the policy were made

6. When Does The Time Start? • Prompt Payment of Claims (Texas) – the date the insurer violates the Prompt Payment of Claims provision of the Texas Ins. Code. If the insurer has not agreed to pay the proper amount within 30 days of your providing all the items they have requested, then they have violated the prompt payment statute. We take the position that a prompt payment still violates the statute if it is inadequate.

7. When Does The Time Start? • Unfair Settlement Practices – the date the unfair practice occurs which can vary depending on the practice alleged. • When the insurer’s liability becomes reasonably clear but the insurer fails to pay • When the misrepresentation is made to Plaintiff relating to coverage • When insurer refuses to pay Plaintiff’s claim without conducting a reasonable investigation

8. When Does The Time Start? • Breach of the common law duty of good faith and fair dealing – the date the insurer denies or delays payment • Violations of the Texas Deceptive Trade Practices Act – typically will be when the claim is denied or payment is made for a sum less than its value

9. When does the cause of action accrue?THE EXCEPTION – The Discovery Rule • The cause of action would accrue from the date that the Plaintiff discovered, or in the exercise of reasonable diligence, should have discovered the injury

10. “The insurance contract between America First and Spicewood contains the following provision: No one may bring a legal action against [America First] under this policy unless: • There has been full compliance with all terms of this insurance, and • The action is brought within 2 years and one day after the date on which the direct physical loss occurred.” The Spicewood Summit Office Condominiums Assoc., Inc. v. America First Lloyds Ins. Co., 287 S.W.3d 461, 465 (Tex. App. – Austin 2009)

11. Spicewood Summit Office Condominiums Assoc., Inc. v. America First Lloyd’s Ins. Co. “Therefore, Spicewood was not entitled to file suit against America First under the policy on the date on which the direct physical loss or damage occurred because, without more, no breach of the insurance agreement by America First had yet occurred, and Spicewood did not yet have a cause of action for breach of contract.”

12. Spicewood Summit Office Condominiums Assoc., Inc. v. America First Lloyd’s Ins. Co. “…the provision at issue in this case has the practical effect of providing a period in which to file suit that is less than two years. Therefore, the contractual limitations provision is void. As a result, the four-year statute of limitations governs Spicewood’s breach of contract claim.”

13. Texas CPRC § 16.070 Contractual Limitations Period • “(a) except as provided by Subsection (b), a person may not enter into a stipulation, contract, or agreement that purports to limit the time in which to bring suit on the stipulation, contract, or agreement to a period shorter than two years. A stipulation, contract, or agreement that establishes a limitations period that is shorter than two years is void in this state.”

14. LEGAL ACTION AGAINST US You may not bring legal action against us concerning this policy unless you have fully complied with all of its terms. Suit must be brought within one (1) year after the loss.

15. Suit Against Us. No suit or action can be brought unless the policy provisions have been complied with. Action brought against us must be started within two years and one day after the cause of action accrues.

16. Uptegraft v. Home Ins. Co.,1983 OK 41 (Okla. 1983) • “a provision in the insurance policy which limits the time for bringing a suit thereunder to less than the statutory period is void”

17. R.S. Mo. § 431.030 • Missouri: “All parts of any contract hereinafter entered into which either directly or indirectly limit or tend to limit the time in which any suit may be instituted, shall be null and void.”

18. Brisbane Lodging L.P. v. Webcor Builders2013 WL 2404154 (June 1, 2013) (CA – Ct. App.) • California: “parties should be given the ability to enjoy the freedom of contract and to structure risk-shifting as they see fit without judicial intervention,” even where defects and damage are not discovered until after the limitations period expired.” The contractual limitations period was not void.

19. J.S. Reimer Inc. v. Village of Orlando Hills2013 IL App (1st) 120106 • Illinois: “the plain language of [the] section provides that the period of limitations will expire in a fixed time frame … regardless of whether the complained-of injury was discovered or even discoverable within that time period. The practical effect ... is to transform the statute of limitations into a statute of repose.” • A contractual limitation is valid

20. 36 O.S. 1991 § 3617 • Oklahoma: Applies a 2 year statute of limitations to casualty insurance policies; any provision limiting a cause of action beyond that statutory period is void

21. Colorado • Limitations less than 2 years are invalid • Breach of Contract: 3 year Statute of limitations (unless modified by contract – cannot be less than 2 years) • Bad Faith: 2 years

22. Be Safe. Know the Policy. File the case as soon as possible and before the earliest conceivable limitation

23. Bad Faith Avenues for extra-contractual damages

24. Bad Faith How do we collect more than it takes to fix the property? Avenues for Extra Damages • Texas Prompt Pay Statute – Attorney’s fees + 18% per annum penalty – No Bad Faith Required • Texas Unfair Claims Settlement Practices Statute • Attorney’s fees +possible 3 times damages • Common Law Bad Faith – Mental Anguish plus punitive damages • Misrepresentations • Colorado Bad Faith Statute: Automatic 3 times damages + Attorney’s fees

25. Attorney’s Fees (Texas) Bad Faith Remedies Two ways Attorney’s Fees are covered: 1) Violation of Prompt Pay Statute 2) Unfair Settlement Practices

26. Texas Prompt Pay Statute • Deadlines • No later than 15 days after notice of the claim • The Carrier Must • Acknowledge the claim in writing (this should also include a general reservation of rights where appropriate) • Commence its investigation and request pertinent information • Provide a proof of loss form to the insured along with instructions for completing the forms

27. Texas Prompt Pay Statute No later than 15 days after receipt of all requested documents The Carrier Must Accept the Claim, reject the claim, or submit written request for additional time to complete its investigation. The request should explain the reason for the need for additional time.

28. Texas Prompt Pay Statute No later than 45 days after its request for additional time to investigate The Carrier Must Accept or Reject the Claim

29. Texas Prompt Pay Statute No later than 5 business days after the claim has been accepted, or within 60 days of receipt of all requested items: The Carrier Must Pay the Claim

30. Texas Prompt Pay Statute Remedies • Attorney’s Fees • 18% per annum penalty in addition to other penalties • All Penalties are Mandatory

31. Prompt Pay Statute – Colorado(§ 10-3-1115) Improper denial of claims - prohibited – definitions – severability “(1)(a) A person engaged in the business of insurance shall not unreasonably delay or deny payment of a claim for benefits owed to or on behalf of any first-party claimant.” This is a different standard than at common law. Colorado does not require a finding of “knowing,” you are required to show ONLY unreasonable conduct by insurer. Kisselman v. American Family Mut. Ins. Co., 292 P.3d 964, 972 (Co. Ct. App. 2011)

32. Prompt Pay Statute – Colorado(§ 10-3-1116) Remedies for unreasonable delay or denial of benefits – required contract provision – frivolous actions – severability “(1) A first-party claimant … whose claim for payment of benefits has been unreasonably delayed or denied may bring an action in a district court to recover reasonable attorney fees and court costs and two times the covered benefit” If the jury finds unreasonable, the damages are automatically trebled.

33. Proving the Case Best Proof for Breach of Contract and Bad Faith: • The Insurance Company Claim File • The Insurance Company Underwriting File

34. Claim File Example Reports – Bad Faith

35. Claim File Example Email Communication

36. Claim File ExampleReports – Original

37. Claim File ExampleReports - Edited

38. Underwriting File Example

39. Underwriting FileImages

40. Unfair Claims Settlement PracticesStatutory Liability • Actions that are unfair settlement practices: • Misrepresenting to a claimant a material fact or policy provision relating to coverage at issue • Failing to attempt in good faith to effectuate a prompt, fair, and equitable settlement of: • A claim with respect to which the insurer’s liability has become reasonably clear; or • A claim under one portion of a policy with respect to which the insurer’s liability has become reasonably clear to influence the claimant to settle another claim under another portion of the coverage unless payment under one portion of the coverage constitutes evidence of liability under another portion

41. Unfair Claims Settlement Practices Bad Faith (3) Failing to promptly provide to a policyholder a reasonable explanation of the basis in the policy, in relation to the facts or applicable law, for the insurer’s denial of a claim or offer of a compromise settlement of a claim; “You are not covered” is not good enough

42. Unfair Claims Settlement PracticesBad Faith (4) Failing within a reasonable time to: (A) affirm or deny coverage of a claim to a policyholder; or (B) submit a reservation of rights to a policyholder

43. Unfair Claims Settlement PracticesBad Faith (5) Refusing, failing, or unreasonably delaying a settlement offer under applicable first-party coverage on the basis that other coverage may be available or that third parties are responsible for the damages suffered, except as may be specifically provided in the policy

44. Unfair Claims Settlement PracticesBad Faith (6) Undertaking to enforce a full and final release of a claim from a policyholder when only a partial payment has been made, unless the payment is a compromise settlement of a doubtful or disputed claim (7) Refusing to pay a claim without conducting a reasonable investigation with respect to the claim

45. Unfair Claims Settlement PracticesBad Faith (9) Requiring a claimant as a condition of settling a claim to produce the claimant’s federal income tax returns for examination or investigation by the person unless: (A) a court orders the claimant to produce those tax returns (B) the claim involves a fire loss; or (C) the claim involves lost profits or income

46. Unfair Claims Settlement Practices Remedies for Bad Faith Section 541.152 of the Tex. Insurance Code:: • A plaintiff who prevails in an action under this subchapter may obtain: • The amount of Actual Damages, plus court costs and reasonable and necessary attorney’s fees; • An order enjoining the act or failure to act complained of; or

47. Texas Unfair Claims Settlement Practices Remedies (continued) 3. Any other relief the court determines is proper (b) On a finding by the trier of fact that the defendant knowingly committed the act complained of, the trier of fact may award an amount not to exceed three times the amount of actual damages.

48. Breach of Contract Test: Insurer does not pay, or do what they were supposed to pay or do under the policy. Remedy: 1. The amount they should have paid; 2. Attorney’s fees

49. Texas Common Law Bad Faith Test: “failing to attempt in good faith to effectuate a prompt, fair, and equitable settlement of: A) A claim with respect to which the insurer’s liability has become reasonably clear…”

50. Texas Common Law Bad Faith Remedies: • Damages independent of the original breach of contract. • Mental Anguish • Loss of Franchise • Punitive Damages