A federal district court in Pennsylvania has granted summary judgment to an insurer on a breach of contract claim brought by a homeowner because she filed her action more than one year after she learned of a water leak in her home.
The Case
On March 14, 2015, Richard Carroll, a real estate agent, went to check on a home in East Stroudsburg, Pennsylvania, owned by Jennifer Pratts and discovered that water pipes had burst and the home had been extensively damaged. Mr. Carroll contacted Ms. Pratts and advised her of the damage.
The next day, Mr. Carroll and a claims adjuster employed by State Farm Fire & Casualty Company, which had issued a homeowners' insurance policy to Ms. Pratt, met at the property. The adjuster estimated that the property damage could be close to $100,000.
Another claim adjuster came to the home two or three months later, took measurements and photographs, surveyed the damage, and did price adjustments.
Following its investigation, State Farm determined that there was coverage for the loss, prepared a repair estimate totaling $110,244.83, and issued an actual cash value payment to Ms. Pratt in the amount of $93,049.95.
On June 10, 2016, Ms. Pratt's public adjuster prepared a repair estimate totaling $155,785.06.
After evaluating the public adjuster's estimate, State Farm prepared an updated repair estimate totaling $132,876.77, and issued a supplemental payment to Ms. Pratt for $17,460.25.
Ms. Pratt cashed neither of the State Farm checks.
Ms. Pratt commenced an action by filing a summons in a Pennsylvania court on March 14, 2016. She filed her complaint on November 4, 2016, alleging that State Farm had breached the insurance policy.
State Farm moved for summary judgment on this cause of action on the ground that Ms. Pratt had failed to commence litigation within the parties' contractually-agreed upon one year limitation period.
The Court's Decision
The court granted the motion with respect to Ms. Pratt's breach of contract claim.
In its decision, the court explained that, under Pennsylvania law, contract actions were subject to a four year statute of limitations. The court pointed out, however, that the State Farm insurance contract provided for a shorter time to file suit – specifically, “one year after the date of loss or damage.”
The court noted that such contractual provisions shortening the period for an insured to file a claim were “permissible under Pennsylvania law,” and that a one-year period had been found reasonable.
The court then rejected Ms. Pratt's contention that her lawsuit was timely because she began it on March 14, 2016 and the date of loss was March 14, 2015 – the date her realtor discovered the water damage at her home.
The court noted that the water company had advised Ms. Pratt in January 2015 that water was leaking in the house, and that her water bills reflected the water usage at house. The loss, the court concluded, had occurred at the latest in January 2015, and Ms. Pratt's lawsuit, therefore, was untimely.
The case is Pratts v. State Farm Fire & Casualty Co., No. 3:16-CV-2385 (M.D. Pa. May 2, 2019). Attorneys involved include: For Jennifer Pratts, Plaintiff: John M. Mulcahey, LEAD ATTORNEY, Munley Law, P.C., Scranton, PA. For State Farm Fire and Casualty Company, Defendant: Robert Todd Grolnick, Yolanda K. DeSipio, LEAD ATTORNEYS, Bennett, Bricklin & Saltzburg, LLC, Blue Bell, PA.
Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].