The Middle District of Pennsylvania recently ruled that an insured’s breach of contract lawsuit against his auto insurer was not barred by the applicable four-year statute of limitations.  In Legos v Travelers Casualty Company of Connecticut, the Court denied Travelers Casualty Company’s (“Travelers”) Motion for Summary Judgment against the breach of contract claim brought against it by Ronald Legos (“Legos”).

The lawsuit arose out of a car accident between Legos and Willard Grasavage (“Grasavage”) in which Grasavage’s underinsured car collided with Legos’ automobile.  As a result, Legos suffered serious personal injuries and initiated a third-party lawsuit against Grasavage on April 29, 2005.  Additionally, on August 29, 2009, Legos filed an underinsured motorist claim with Travelers.

On March 7, 2012, Legos and Grasavage entered into a settlement release for the amount of $75,000.00.  Over four years later, on April 23, 2016, Legos received a letter from Travelers stating that the statute of limitations on his underinsured motorist claim had expired and that Travelers’ was closing his underinsured motorist file.  As a result, Legos asserted a breach of contract claim against Travelers.  In response, Travelers filed a Motion for Summary Judgment claiming that the four-year statute of limitations period for breach of contract cases had run and Legos’ lawsuit was untimely.

The key issue in this matter was when the statute of limitations period started.  Travelers’ argued that the statute of limitations period began when Legos signed the settlement release with Grasavage, on March 7, 2012.  However, Legos claimed that the statute of limitations period began when he received the letter from Travelers advising him that the statute of limitations of his underinsured motorist claim had expired on April 23, 2016.  The Middle District of Pennsylvania agreed with Legos and ruled that the statute of limitations began to run when Travelers issued the letter to Legos, not when Legos entered into the settlement release with Grasavage.

The Court focused on the Erie Insurance Exchange v. Bristol decision in reaching its decision.  In Bristol, the Pennsylvania Supreme Court held that the statute of limitations begins to run on an insurance case when the insurer is alleged to have breached its duty under the insurance contract.  In Bristol, as in a majority of other jurisdictions, it is the accrual of the right of action that commences the statute of limitations period to run.  Thus, a statute of limitations begins to run from the moment a potential plaintiff has a complete and present cause of action.

In contrast, Travelers relied on the argument that Bristol only applied to uninsured motorist benefits claims and not to underinsured motorist claims, such as the one at issue.  The Court rejected Travelers’ position, stating that it was clear that the Bristol opinion repeatedly referred to uninsured and underinsured motorist claims collectively and did not distinguish the two at any point.  Therefore, the Court determined that the Bristol decision clearly applied under these set of facts.

The Court held that the statute of limitations period commenced on April 23, 2016 and that Legos would have had until April 23, 2020 to file his underinsured motorist claim with Travelers.  In so doing, the Court denied Travelers’ Motion for Summary Judgment and found in favor of Legos.

Thanks to Zhanna Dubinsky for her contribution to her post. Please email Vito A. Pinto with any questions.