Thornton v. Ga. Farm Bureau Mut. Ins. Co.

• Decision Date: 28 June 2010
• Docket Number: No. S09G1257.,S09G1257.
• Citation: 695 S.E.2d 642,287 Ga. 379
• Parties: THORNTONv.GEORGIA FARM BUREAU MUTUAL INSURANCE COMPANY.
• Court: Georgia Supreme Court

287 Ga. 379

695 S.E.2d 642

THORNTONv.GEORGIA FARM BUREAU MUTUAL INSURANCE COMPANY.

No. S09G1257.

Supreme Court of Georgia.

June 28, 2010.

Roy E. Barnes, John R. Bevis, for appellant.

Swift, Currie, McGhee & Hiers, Mark T. Dietrichs, William W. Downs, Atlanta, James, Bates, Pope & Spivey, Duke R. Groover, Jeanna G. Fennell, Macon, for appellee.

NAHMIAS, Justice.

We granted certiorari in this case to decide whether the Court of Appeals erred in holding that the one-year time-to-sue clause in the parties' insurance policy was not tolled for at least 60 days after Lagrande Thornton submitted a proof of loss, which is the minimum period the policy gave to Georgia Farm Bureau Mutual Insurance Company (GFB) to pay after receiving proof of loss. See Thornton v. Georgia Farm Bureau Mut. Ins. Co., 297 Ga.App. 132, 676 S.E.2d 814 (2009). This is a case of straightforward contract interpretation, and we affirm.

Thornton, whose home was destroyed by fire on February 28, 2006, had a homeowner's insurance policy with GFB. A clause in the policy entitled “Suit Against Us” provides that “[n]o action can be brought unless the policy provisions have been complied with and the action is started one year after the date of the loss.” Another clause entitled “Loss Payment” provides that “[l]oss will be payable 60 days after we receive your proof of loss and: a. reach an agreement with you; b. there is an entry of a final judgment; or c. there is a filing of an appraisal award.”

GFB was notified of the fire the day it occurred. On March 2, 2006, GFB wrote to Thornton discussing his duties under the policy, including his duty to submit a proof of loss, and explaining that the “Suit Against Us” provision of the policy required that he bring an action within one year of the date of the loss. On March 10, 2006, Thornton submitted a proof of loss. On October 30, 2006, following an extensive investigation and many communications about the claim between Thornton and GFB, GFB notified Thornton that it was denying coverage under the policy based on its determination that Thornton was responsible for the fire and had misrepresented material facts. Thornton did not file suit against GFB until March 15, 2007, which was a year and 15 days after the date of the loss.

The trial court granted summary judgment to GFB because Thornton did not file suit within one year of his loss. On appeal, Thornton contended, among other things, that the one-year period of limitation should be tolled until the expiration of the 60-day period that GFB had to pay the claim. The Court of Appeals disagreed and affirmed the trial court's judgment. We then granted certiorari.

1. Thornton first contends that the Court of Appeals erred because his cause of action did not accrue until the end of the 60-day loss payment period, meaning that the contractual time-to-sue period did not begin to run until that date. He argues that, where a right of action depends upon the satisfaction of some condition, here, expiration of the 60-day period, a cause of action does not accrue and a statute of limitation does not begin to run until the condition is satisfied.

Thornton fails to recognize the distinction between a statute of limitation and its particular language and a contractual period of limitation and its particular language. They can be significantly different, as demonstrated by the fact that the statute of limitation for contract claims is six years, see OCGA § 9-3-24, but the courts have nevertheless enforced much shorter contractual periods of limitation including the one-year limitation in insurance policies like the one in this case. See, e.g. Encompass Ins. Co. of America v. Friedman, 299 Ga.App. 429, 431, 682 S.E.2d 694 (2009) (citing cases). The General Assembly has authorized the Insurance Commissioner to prescribe a standard fire insurance policy. See OCGA § 33-32-1 (“No policy of fire insurance covering property located in this state shall be made, issued, or delivered unless it conforms as to all provisions and the sequence of the standard or uniform form prescribed by the Commissioner....”). Until requiring that the minimum contractual limitation period be extended to two years for policies issued after June 20, 2006 (which was after the policy in this case was issued), the Insurance Commissioner also approved of the one-year time-to-sue period. See Ga. Comp. R. & Regs. r. 120-2-19-.01 (setting forth the Insurance Commissioner's current standard fire policy); Morrill v. Cotton States Mut. Ins. Co., 293 Ga.App. 259, 261-262, 666 S.E.2d 582 (2008) (explaining that the standard policy provided for a minimum one-year limitation period until the period was extended to two years effective June 20, 2006).

Thus, the length of the limitation period is very different in the standard fire insurance contract than in OCGA § 9-3-24. The language describing when the limitation period begins to run is also very different. OCGA § 9-3-24 provides that the limitation period begins to run “after the [claim] become[s] due and payable,” whereas the limitation period in Thornton's policy begins to run “after the date of the loss.” The trigger for the one-year limitation period that controls this case is clear: the date of the loss. Parties could agree, or the Insurance Commissioner could require, that the limitation period should start to run after the claim becomes due and payable, but that is not this case.

Indeed, Thornton's argument regarding when a contractual limitation period like the one in this case begins to run was rejected almost a century ago by the Court of Appeals. In Maxwell Bros. v. Liverpool & London & Globe Ins. Co., 12 Ga.App. 127, 76 S.E. 1036 (1913), the fire insurance policy at issue contained two provisions similar to those at issue here. See id. at 129, 76 S.E. 1036. The insureds filed suit over one year after the date of the fire but argued that the limitation period should be construed not to run until the end of the 60-day period granted to the insurer to evaluate the proof of loss. Like Thornton, the insureds in Maxwell Bros. argued that the

period of limitation stipulated in the policy begins to run when the right of action for the loss accrues; that no right of action accrues either in law or equity until the claimant can legally sue; in other words, that a stipulation in an insurance policy that suit can be brought only “within twelve months next after the fire” means that the insured shall

have twelve months after the accrual of the right of action on the policy; and that where the policy stipulates that an action shall not be sustainable until after due compliance with conditions such as that the loss shall not be payable until sixty days after notice has been given of the fire, or until the loss has been ascertained and satisfactory proof furnished, the right of action accrues only after compliance with the conditions, and consequently the period of limitation as to suit begins to run only when these conditions have been fully complied with.

Id.

The Court of Appeals rejected that argument for the same reason we do, explaining that,

[i]f there were any ambiguity in the stipulation as to the period of limitation, we would undoubtedly adopt that construction ... which would prevent a forfeiture, but where the language is explicit and unambiguous, the courts can only enforce the terms and conditions of the contract as expressed by the parties. If the question were under the general statute of limitations, it would be true that the limitation did not begin to run until the accrual of the right of action, but the contract expressly makes a period of limitation as distinguished from the statute of limitations, and the stipulation is not that the insured shall have twelve months from a compliance with any of the conditions relating to the furnishing of proof or notice, but is clear and distinct that “no suit or action on this policy ... shall be sustainable in any court of law or equity ... unless commenced within twelve months next after the fire.” The cases cited by learned counsel for the plaintiffs in error, in support of his contention that the period of limitation does not begin to run until the accrual of the right of action, relate to the statutory period of limitation, and are not applicable to limitations made by the parties to the contract.

Id. at 129-130, 76 S.E. 1036. Accord Pennsylvania Millers Mutual Ins. Co. v. Thomas Milling Co., 137 Ga.App. 430, 431, 224 S.E.2d 55 (1976); Walton v. American Mut. Fire Ins. Co., 109 Ga.App. 348, 348, 136 S.E.2d 168 (1964).

Thornton seeks to rely on cases construing statutes of limitation, but those cases, interpreting different language in a non-contractual context, are simply not on point. See Burton v. Metropolitan Life Ins. Co., 48 Ga.App. 828, 828, 173 S.E. 922 (1934) (construing a statute of limitation triggered by when the action became “due and payable”); Sandy Springs Toyota v. Classic Cadillac Atlanta Corp., 269 Ga.App. 470, 471, 604 S.E.2d 303 (2004) (interpreting a statute of limitation triggered by when the cause of action accrued).

Thornton also argues that, under the rationale of Thomas v. Hudson, 190 Ga. 622, 10 S.E.2d 396 (1940), the limitation period did not begin to run until the end of the 60-day loss payment period. In Thomas, this Court held that, when a party agrees not to sue until a particular event occurs, the statute of limitation is suspended until the happening of that event. See id. at 631, 224 S.E.2d 55. Thomas is inapposite, however, because in this case there was no agreement by the insured not to sue until a particular date. For these reasons, we reject Thornton's contention that the time-to-sue period on his claim did not begin to run until the expiration of the 60-day loss payment period.

2. Thornton next contends that, if the one-year contractual limitation period began to run on the date of the loss, it should be tolled until the 60-day loss payment period ends,...