Brunner v. Economy Preferred Ins. Co., 49A05-9203-CV-66

• Citation: 597 N.E.2d 1317
• Decision Date: 27 August 1992
• Docket Number: No. 49A05-9203-CV-66,49A05-9203-CV-66
• Parties: Erna BRUNNER, Appellant-Plaintiff, v. ECONOMY PREFERRED INSURANCE CO., Appellee-Defendant.
• Court: Court of Appeals of Indiana

Page 1317

597 N.E.2d 1317

Erna BRUNNER, Appellant-Plaintiff, v. ECONOMY PREFERRED INSURANCE CO., Appellee-Defendant.

No. 49A05-9203-CV-66.

Court of Appeals of Indiana Fifth District.

Aug. 27, 1992.

Douglas G. Wagner, Robert H. Brunner, Ross & Brunner, Indianapolis, appellant-plaintiff.

Kent M. Frandsen, Parr, Richey, Obremsky & Morton, Lebanon, for appellee-defendant.

BARTEAU, Judge.

Plaintiff Erna Brunner appeals from an adverse grant of summary judgment in an action she instituted against Defendant Economy Preferred Insurance Company

("Economy") to recover on an insurance policy. We affirm.

FACTS

Brunner owns an apartment building in Indianapolis, Indiana, that was insured by Economy. On May 25, 1989, while the insurance policy was in full force and effect, the building's roof and mansard front were damaged by a hailstorm. However, the hail damage was not discovered until October 1990, when the apartment manager conducted an inspection of the building. On October 19, 1990 Economy was notified of the damage. Economy immediately denied the claim because it had not been timely asserted. Economy later agreed to reconsider the matter, but eventually decided to stand by its original decision and deny the claim.

On May 28, 1991, Brunner sued Economy for breach of insurance contract. Brunner sought $4,525.00 as compensation for the hail damage and $20,900.00 in punitive damages for Economy's "bad faith refusal" to honor the claim.

Economy moved for summary judgment on the ground that the suit was barred by the following provision in the insurance policy which required that claims be brought within one year from the date of loss:

D. LEGAL ACTION AGAINST US

No one may bring a legal action against us under this Coverage Part unless:

1. There has been full compliance with all of the terms of this Coverage Part; and

2. The action is brought within one year after the date on which direct physical loss or damage occurred.

(R. 32).

The trial court granted summary judgment in favor of Economy finding that no genuine issue of material fact existed and that Economy was entitled to summary judgment as a matter of law.

Brunner raises two issues on appeal:

1. Whether the one year limitation on actions under the policy did not begin running until after the plaintiff could have reasonably discovered the damage.

2. Whether Economy waived its one year limitation defense by paying other claims after the one year limit.

LIMITATIONS PERIOD

Our standard for reviewing a summary judgment is the same as that of the trial court: summary judgment is proper only where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Walther v. Indiana Lawrence Bank (1991), Ind.App., 579 N.E.2d 643, 647. While Brunner concedes that she failed to bring an action on the insurance contract within one year from the date of loss as required by the policy, she argues that the twelve month limitation period for bringing actions on the policy should not begin running until the insured discovers the loss.

It is well settled in Indiana that a provision in an insurance policy that limits the time in which a suit may be brought to a period less than that fixed by the statute of limitations is binding, unless it contravenes a statute or public policy. Zehner v. MFA Ins. Co. (1983), Ind.App., 451 N.E.2d 65, 67. Provisions limiting actions on an insurance policy to twelve months have been upheld as valid and enforceable. Id.; Statesman Ins. Co. v. Reibly (1978), 175 Ind.App. 317, 371 N.E.2d 414. Consequently, actions on a policy that are brought after the expiration of the limitation period provision will be barred.

As to the issue of whether a failure to discover damages tolls the contractual period of limitations the parties cite no Indiana cases nor have we found any Indiana cases on point. As Economy concedes, "Indiana has not expressly rejected the argument that the limitation period should be tolled until the insured has notice of the basis for a claim." (Appellee's Brief at 8.) Because this appears to be an issue of first impression we are free to look to the cases of other jurisdictions for guidance.

The vast majority of courts that have considered this issue have held that the policy limitation runs from the date of the In Sager Glove Corp., supra, the insured did not discover that its property had been vandalized until more than twelve months after the damage occurred. The Seventh Circuit, applying Illinois law, stated that the phrase in the policy requiring an action to be brought "within twelve months next after inception of the loss" was clear. It had nothing to do with the state of mind of insured, and dealt with an objective fact. Therefore the time limit began to run at the time the loss occurred whether or not the insured knew of it. Id. at 441; See also Thames Realty Corp., supra (Insured's action against insurance company for additional damages to building that were discovered subsequent to payment by insurers was barred by policy provisions requiring suit to be brought within twelve months after inception of loss.)

                occurrence of the destructive event.  Sager Glove Corp. v. Aetna Ins. Co.  (7th Cir.1963), 317 F.2d 439, cert. den. 375 U.S. 921, 84 S.Ct. 266, 11 L.Ed.2d 165;  Harris v. Hanover Fire Ins. Co.  (5th Cir.1970), 425 F.2d 1168;  Thames Realty Corp. v. Massachusetts Fire & Marine Ins. Co.  (Sup.Ct.1959), 16 Misc.2d 747, 184 N.Y.S.2d 170;  General State Auth. v. Planet Ins. Co., (1975), 464 Pa. 162, 346 A.2d 265.   These courts held that the insured's failure to discover the loss until some time after it occurred was immaterial and that an action on the policy was nevertheless required to be brought within twelve months from the date of the loss
                

The Supreme Court of Pennsylvania held that the fact that the insured, a public agency with limited staff that was allegedly unable to keep insured property under constant surveillance, did not discover the loss until twenty eight months after it occurred did not excuse noncompliance with the twelve month limitation...