Brillman v. New England Guar. Ins. Co.

• Decision Date: 21 February 2020
• Docket Number: No. 2019-115,2019-115
• Court: Vermont Supreme Court
• Parties: Cindy Brillman v. New England Guaranty Insurance Company, Inc.

2020 VT 16

Cindy Brillman v. New England Guaranty Insurance Company, Inc.

No. 2019-115

Supreme Court of Vermont

September Term, 2019

February 21, 2020

NOTICE: This opinion is subject to motions for reargument under V.R.A.P. 40 as well as formal revision before publication in the Vermont Reports. Readers are requested to notify the Reporter of Decisions by email at: JUD.Reporter@vermont.gov or by mail at: Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801, of any errors in order that corrections may be made before this opinion goes to press.

On Appeal from Superior Court, Windham Unit, Civil Division

Robert P. Gerety, Jr., J.

Robert P. McClallen of McClallen & Associates, P.C., Rutland, for Plaintiff-Appellee.

John E. Brady of Brady/Donahue, Springfield, for Defendant-Appellant.

Doreen F. Connor of Primmer Piper Eggleston & Cramer, PC, Manchester, New Hampshire, for Amici Curiae American Property Casualty Insurance Association and National Association of Mutual Insurance Companies.

PRESENT: Reiber, C.J., Robinson, Eaton and Carroll, JJ., and Skoglund, J. (Ret.), Specially Assigned

¶ 1. ROBINSON, J. At issue in this interlocutory appeal is the meaning of "date of loss" for the purpose of an insurance policy's condition that any action be commenced within one year after the "date of loss." The trial court concluded that the insurance provision requiring that an action be brought "within one year after the date of loss" was ambiguous and must be interpreted against insurer to mean that the one-year period began to run when insurer breached its obligations, i.e., at the time homeowner received final, allegedly insufficient, payment from insurer. The court accordingly denied insurer summary judgment and granted partial summary judgment to homeowner. We conclude that the provision is unambiguous in requiring suit to be brought within one year of the date of the occurrence giving rise to coverage and reverse the partial summary judgment for homeowner. Because the only issue certified for interlocutory review was the interpretation of the contract, and given that homeowner has raised a colorable claim that insurer waived the contractual requirement, we remand for further proceedings.

¶ 2. The following facts were undisputed for purposes of summary judgment. At all relevant times plaintiff (homeowner) was covered by a homeowner's insurance contract issued by New England Guaranty Insurance Company (insurer). The policy included the following language: "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." "Date of loss" is not defined in the insurance contract.

¶ 3. Homeowner alleged that on January 18, 2010, her property was damaged by water in an occurrence covered under the insurance policy. She reported the incident and insurer began investigating the loss. The parties disagreed about the value of the claim and insurer's obligations and communicated about the claim over the course of several years. Following its adjuster's "Fifth and Final Supplement Report," insurer made its final payment on February 16, 2017. After insurer did not act on homeowner's subsequent request for an appraisal, homeowner filed suit against insurer on February 12, 2018, alleging breach of contract and bad faith.

¶ 4. Insurer moved for summary judgment, arguing that homeowner failed to file suit within the one-year limitation period provided in the contract, which insurer construed as running from the date of the occurrence giving rise to coverage. Homeowner opposed summary judgment and filed a motion for partial summary judgment on the issue of whether her suit was timely filed, arguing that the term "date of loss" in the insurance contract was ambiguous and therefore should be construed against insurer to mean the date insurer breached its agreement under the insurancecontract. Homeowner also asserted that by continuing to engage in negotiations with her, insurer had waived any defense that the contractual period for filing suit had expired.

¶ 5. The trial court concluded that the undefined term "date of loss" was ambiguous in the context of this insurance policy. It explained that the language could reasonably be construed to mean either the date of the covered damage to homeowner's home or the date that insurer breached the insurance contract by failing to perform under the contract. Consequently, the court construed the contract in favor of homeowner, concluding that the words "date of loss" meant the date of insurer's last act in performance of its obligations under the contract. Concluding that insurer's last act was delivery of the final payment on February 16, 2017, the court concluded that homeowner's February 12, 2018 suit was timely under the contract. The court accordingly granted partial summary judgment to homeowner. The trial court granted insurer's request for permission to bring an interlocutory appeal on the contract-interpretation question.

¶ 6. On appeal from a summary-judgment order, "we apply the same standard as the trial court. We will affirm summary judgment if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law." Hardwick Recycling & Salvage, Inc. v. Acadia Ins. Co., 2004 VT 124, ¶ 14, 177 Vt. 421, 869 A.2d 82; see V.R.C.P. 56(a).

¶ 7. Vermont law provides that suit-limitation provisions requiring that an action be commenced within one year of the date of the covered occurrence are generally enforceable in connection with actions on the insurance contract itself, and may apply to bad-faith claims to the extent those claims are essentially breach-of-contract claims presented as a tort. In this case, we conclude that the limitation provision unambiguously bars actions on the contract commenced later than one year from the date of the covered occurrence. Common law and regulatory provisions providing that insurers may be deemed to have waived the suit-limitation provision mitigate the potentially incongruous or unfair consequences of the suit-limitation provision.

I. Vermont Law Concerning Suit-Limitation Provisions

¶ 8. Pursuant to our existing caselaw, an insurance contract may establish a one-year limitation for filing suit on the contract notwithstanding the applicable statute of limitations if the limitation is unambiguous and reasonable. The limitation may likewise apply to some, but not all, suits for bad faith.

¶ 9. Generally, insurance contracts may contain provisions shortening the period for filing suit if the shorter period is consistent with any applicable statute, is reasonable, is clear and unambiguous, and provides "adequate notice of the reduction." 16 S. Plitt, et al., Couch on Insurance § 235:4 (3d ed. 2019) (explaining that under most authority "parties to an insurance contract have a right to contract for limitation periods shorter than the general statute of limitations"); see also Hebert v. Jarvis & Rice & White Ins., 134 Vt. 472, 475, 365 A.2d 271, 273 (1976) ("It is well established that a condition in an insurance policy providing that no recovery may be had thereon unless suit is initiated in a given time is valid unless the time can be said to be unreasonable.").

¶ 10. Here, under either party's interpretation, the provision is consistent with the applicable Vermont statute, which allows insurance policies to contain a condition limiting the time to commence suit as long as the time period is not "less than 12 months from the occurrence of the loss, death, accident, or default." 8 V.S.A. § 3663. The issue is whether this particular provision is clear and unambiguous.

¶ 11. Applying these principles, we have upheld such contractual limitations periods. In Gilman v. Maine Fire Ins. Co., 2003 VT 55, 175 Vt. 554, 830 A.2d 71 (mem.), the homeowners sued the homeowners' insurer on the policy, and for breach of the covenant of good faith and fair dealing. The insurer moved to dismiss on the ground that the homeowners filed suit beyond the period allowed by the insurance contract, which stated that any suit had to be filed " 'within one year after the date of loss.' " Id. ¶ 8. This Court enforced the contract limitation provision. Id.¶ 9. We declined to decide whether the "date of loss" meant the date of the covered occurrence or the date the insurer allegedly breached the duty of good faith because the homeowners filed suit more than thirty-four months after the date of loss and over two years after the insurer made its final payment, making the claim untimely on either theory. Id. ¶ 10. We also recognized the homeowners' claim that insurer had waived the one-year limitation by continuing negotiations beyond that period and failing to provide the homeowners with the notice required by regulation, but concluded that the homeowners did not raise enough facts to support their contention. Id.

¶ 12. The next year, we considered a similar issue in Greene v. Stevens Gas Service, 2004 VT 67, 177 Vt. 90, 858 A.2d 238. In that case, the covered damage occurred in December 1995; the claims representative for the homeowner's insurer and the insured communicated over a period of time; the insured's last outreach to the claims representative was in March 1997; and the insured filed suit in December 2001. The Court recognized that the contractual provision requiring the insured to bring suit "within two years after the loss" was enforceable with respect to the claim on the policy, id. ¶¶ 18, 22. We also acknowledged that whether the limitation could also apply to the bad-faith claim was a more difficult question, and because applicability may arise on remand in this case, we review that analysis here. We began with the applicable statute, which provides:

A policy . . . shall not contain a condition or clause limiting the time of commencement of an action on such policy or contract to a period less than twelve months from the occurrence

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