Policy Terms And Statute Of Limitation Applied To Bar Breach Of Contract And Bad Faith Claims (PA)

In Thompson v. Certain Underwriters at Lloyd’s, the Philadelphia Court of Common Pleas granted Lloyd’s motion for judgment on the pleadings and ruled that Thompson’s breach of contract and bad faith claims against Lloyd’s were barred by a suit limitation provision in the policy at issue, as well as the expiration of the applicable two-year statute of limitations.  Accordingly, the court dismissed Thompson’s claims with prejudice.

Plaintiff Lopez T. Thompson filed a claim against his insurance policy issued by Certain Underwriters at Lloyd’s following a fire at his property.  Lloyd’s sent an adjuster to inspect the property and estimate the damages.  Thompson claims that he then contacted Llyod’s approximately 9 months later, demanding that his claim be settled.  Lloyd’s denied the claim shortly thereafter and Thompson responded by filing a writ of summons a few months later and a complaint five months after that alleging that the damage to his property was covered under his insurance policy.

Numerous amended complaints, objections and cross-claims were filed throughout the next year, until the court recently granted Lloyd’s motion for judgment on the pleadings.  The court noted that Thompson’s breach of contract claim failed to meet the policy’s requirement that such claims be brought within one year after the date of loss, barring his claim in light of Thompson’s failure to submit any proof that Lloyd’s had waived the suit-limitation provision.  Further, the court stated that even in light of Lloyd’s “long silence” regarding Thompson’s claim, the time limitation described in the policy started running, at the very latest, when Lloyd’s denied the claim, thus making Thompson’s claim untimely by more than a year.  As Thompson failed to provide a reasonable explanation as to why he did not commence his suit until 2012, the court dismissed the breach of contract claim.  Finally, the court pointed to the applicable two-year statute of limitations and held that Thompson’s bad faith claim was also barred.  The court noted that the statute of limitations also began to run against Thompson’s bad faith claim when Lloyd’s denied the claim.

Special thanks to Nicole Pedi for her contributions to this post.  For more information, please contact Nicole Y. Brown at nbrown@wcmlaw.com.