Summary
noting that pendency of settlement discussions are not sufficient to support waiver of contractual deadline
Summary of this case from Ballard v. Parkstone Energy, LLCOpinion
04 CIV. 5018 (DLC).
December 23, 2004
Melvyn J. Estrin, Estrin Benn, LLC, New York, New York, For Plaintiff.
Stephen E. Goldman, Gerald P. Dwyer, Jr., Wystan M. Ackerman, Robinson Cole, Hartford, Connecticut, For Defendant.
OPINION ORDER
Plaintiff Enterprise Engineering, Inc. ("Enterprise") has brought this breach of contract action against defendant Hartford Fire Insurance Company ("Hartford") for Hartford's purported failure to comply with the terms of the insurance policy it issued to Enterprise in March 2001. Hartford has moved to dismiss this action as barred by the policy's two-year lawsuit limitation provision. For the reasons set forth below, the complaint is dismissed as untimely filed. Background
The following facts relevant to this motion are taken from the complaint and the documents on which the complaint relies. On or about March 12, 2001, Hartford issued to Enterprise an insurance policy, effective as of that date and for a period of one year, insuring Enterprise for business interruption and property income loss. The insurance policy contains an unambiguous two-year lawsuit limitation period, requiring that legal action be brought within two years after any loss has occurred. Enterprise fully complied with all of its duties and obligations under the insurance policy, including paying any and all premiums owed. Enterprise sustained losses to its business and income, as well as its property income, in the amount of $1,500,000.00, as a result of the events of September 11, 2001. Enterprise submitted claims to Hartford for insurance coverage under the policy for this damage. In April 2002, Hartford issued two checks in the amount of $133,199.33 to Enterprise for the aforementioned losses. Despite repeated demands, Hartford has refused to pay Enterprise the remainder of its losses — $1,366,800.77.
Procedural History
On May 4, 2004, Enterprise filed this action in New York state court. On June 25, Hartford removed the action to this Court. On July 8, Hartford's request for a 30 day extension of time to respond to the complaint was granted. On July 30, Hartford filed its answer, asserting as a first affirmative defense that the action was untimely filed pursuant to the two year limitation clause. On September 29, the parties submitted a joint report pursuant to Rule 26(f), Fed.R.Civ.P., ("September 29 Report") in which Hartford expressed its intent to move for summary judgment on the ground that the suit was time-barred. At the October 8 initial conference, Hartford reiterated that intention. Enterprise countered that the time-limitations period had not expired because there had been ongoing settlement negotiations between the parties and it had never received a formal notice from Hartford that Hartford did not intend to reimburse plaintiff for the full amount of its claims. The Court required Enterprise to provide the defendant with the legal authority on which it intended to rely in opposing defendant's motion that the action was time-barred. In an October 29 letter, Enterprise identified twenty cases on which it would rely. On November 19, Hartford moved to dismiss the action.
Plaintiff's opposition to the instant motion cites only three of these twenty cases, and discusses only one of them in any detail.
Conversion
Although Hartford has moved to dismiss the action pursuant to Rule 12(b)(6), Fed.R.Civ.P., this motion is converted into a motion for summary judgment pursuant to Rules 12(b) and (c), Fed.R.Civ.P. Rule 12(b) provides, in relevant part:
If on a motion asserting the defense numbered (6) to dismiss for a failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56.
Rule 12(b), Fed.R.Civ.P.; see also Rule 12(c), Fed.R.Civ.P.; Sira v. Morton, 380 F.3d 57, 66-68 (2d Cir. 2004); Gurary v. Winehouse, 190 F.3d 37, 43 (2d Cir. 1999). Both Hartford and Enterprise have submitted "matters outside the pleadings" in connection with this motion, and plaintiff's opposition to Hartford's motion repeatedly labels defendant's motion as a "motion for summary judgment." In the September 29 Report and at the October 8 initial pretrial conference, Hartford stated that it would be moving for summary judgment on the timeliness of the lawsuit. In their briefs, Enterprise and Hartford also set forth legal principles derived principally from cases addressing summary judgment motions. In fact, plaintiff relies on the summary judgment standard — there "exists genuine issue of material fact" in dispute — in urging the rejection of this motion. It acknowledges that the plaintiff bears the burden of "establishing" its waiver or estoppel defense through its opposition to this motion. Thus, both parties "recognized the possibility that the motion might be converted into one for summary judgement [and were not] taken by surprise and deprived of reasonable opportunity to meet facts outside the pleadings."Gurary, 190 F.3d at 43. Neither Hartford nor Enterprise has requested additional discovery on the issues presented by this motion.
Hartford has submitted correspondence from plaintiff reflecting communications between the parties with respect to the legal authority for this motion. Enterprise has provided as exhibits copies of the April 2002 checks with notations. In its brief, Enterprise also asserted that there have continuous communications and settlement negotiations between the parties regarding the insurance claims.
Discussion
Summary judgment may not be granted unless the submissions of the parties taken together "show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Rule 56(c), Fed.R.Civ.P. The moving party bears the burden of demonstrating the absence of a material factual question, and in making this determination the court must view all facts in the light most favorable to the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). When the moving party has asserted facts showing that the non-movant's claims cannot be sustained, the opposing party must "set forth specific facts showing that there is a genuine issue for trial," and cannot rest on the "mere allegations or denials" of the movant's pleadings. Rule 56(e), Fed.R.Civ.P.; accord Burt Rigid Box, Inc. v. Travelers Property Cas. Corp., 302 F.3d 83, 91 (2d Cir. 2002).
Hartford moves for dismissal on the ground that the insurance policy contained an enforceable two-year lawsuit limitations period, Enterprise did not file the action within two years of suffering covered losses, and Enterprise has failed to show waiver or estoppel of the limitations period. Enterprise does not contest that under New York law the two-year contractual limitation period is enforceable or that it failed to file this action within two years of suffering the damages its seeks to recover. New York law provides that after a defendant insurer meets the initial burden of establishing that a limitations period found in the insurance policy expired prior to the commencement of the action, the burden shifts to the plaintiffs "to aver evidentiary facts establishing that the case at hand falls within an exception to the limitations period."Minichello v. Northern Assurance Co. of Am., 758 N.Y.S.2d 669, 670 (2d Dep't 2003) (citation omitted); cf. CLP Leasing Co., LP v. Nesson, 787 N.Y.S.2d 535 (1st Dep't 2004). Thus, the lone disputed issue is whether Enterprise has shown that a reasonable juror could find Hartford has waived or is estopped from asserting that this action is untimely.
The parties assume that New York law controls this dispute and this implied consent "is sufficient to establish choice of law." Santalucia v. Sebright Transp., Inc., 232 F.3d 293, 296 (2d Cir. 2000).
In order to establish a waiver of a "time for suit clause," the plaintiff must present evidence from which the defendant's intent to relinquish the protection of the contractual limitations period can be reasonably, inferred. Satyam Imports, Inc. v. Underwriters at Lloyd's Via Marsh, S.A., No. 03 Civ. 4387 (GEL), 2003 WL 22349668, at *2 (S.D.N.Y. Oct. 14, 2002); see also Gilbert Frank Corp. v. Federal Ins. Co., 70 N.Y.2d 966, 968 (N.Y. 1988). Waiver "should not be lightly presumed."Gilbert Frank, 70 N.Y.2d at 968. In order to establish estoppel, the plaintiff must offer evidence that it was misled or lulled by the defendant into failing to bring its claim in a timely manner. See Satyam Imports, 2003 WL 22349668, at *2;Gilbert Frank, 70 N.Y.2d at 968; Simcuski v. Saili, 44 N.Y.2d 442, 449 (N.Y. 1978). If the conduct on which the plaintiff relied "ceased to be operational" within the statute of limitations period, and the plaintiff had sufficient time to file the suit within the statute of limitations period, the doctrine of estoppel does not apply. Simcuski, 44 N.Y.2d at 449-50. If the conduct ceases to be operational after the statute of limitations period has run, then the plaintiff must show his "due diligence" in filing the action if he wishes to invoke the doctrine of estoppel. Id. at 450. "[A] plaintiff invoking estoppel must show that he brought his action within a reasonable time after the facts giving rise to the estoppel have ceased to be operational." Overall v. Estate of L.H.P. Klotz, 52 F.3d 398, 404 (2d Cir. 1995) (citation omitted).
In contrast to when an insured is "promised repeatedly by agents for the insurer that the loss would be adjusted without litigation," steps taken by an insurer to investigate a claim do not constitute waiver or estoppel. Satyam Imports, 2003 WL 22349668, at *3 (citation omitted). Communications or settlement negotiations, including offers to settle for a specified sum, do not constitute waiver or estoppel of contractual time limitations on bringing suit whether such discussions occur before or after the expiration of the limitations period. Gilbert Frank, 70 N.Y.2d at 968. Partial payments of claims after the expiration of a limitations period do not amount to waiver or estoppel either.New Medico Assoc., Inc. v. Empire Blue Cross Blue Shield, 701 N.Y.S.2d 142, 145 (3rd Dep't 1999); see also Helios Trading Corp. v. Great American Ins. Co., No. 92 Civ. 1071 (PNL), 1993 WL 502434, at *3 (S.D.N.Y. Mar. 8, 1993).
One New York trial court has found payments prior to the expiration of the limitation period in combination with extensive investigation and negotiation of a possible settlement raised a question of fact as to whether the plaintiff would succeed on its waiver or estoppel defenses. See Ilic v. Peerless Insurance Co., 670 N.Y.S.2d 1006, 1007-1008 (N.Y.Sup.Ct. 1998). InIlic, a memo with one of the checks stated that it was a "partial payment." Id. at 1008. The second check stated that it was "SUBJECT TO FINAL REVIEW AND SETTLEMENT." Id.; see also Helios, 1993 WL 502434, at *3 (if a check with a notation suggesting that the remainder of the claim was subject to settlement is delivered prior to the expiration of the limitations period, a plaintiff would have a stronger argument that these notations lulled him into forbearance of suit).
The only allegations in Enterprise's pleading relevant to estoppel and waiver — that Hartford made partial payment on Enterprise's claims and that Enterprise has made repeated demands of Hartford for the remainder — are insufficient to allege waiver or estoppel. In its brief in opposition to this motion, Enterprise has supplemented it meager pleading with three evidentiary facts. Enterprise asserts that there was waiver or estoppel of the contractual limitations period because (1) Hartford has never denied that it was liable for the remainder of the claims; (2) Hartford has participated in continuous communications and settlement negotiations with Enterprise; and (3) the April 2002 partial payments contained notations that they were for "undisputed" claims. Enterprise alleges that the "undisputed" notations manifested Hartford's intent not only to pay the remainder of the claim, but also that it would not resist enforcement of such payment.
Enterprise did not submit an affidavit along with its opposition to the motion.
Enterprise supplied a copy of these checks in an exhibit to its opposition to the motion to dismiss. Under the label "Nature of Payment," an April 17, 2002 check for $33,199.84 contained the notation "UNDISPUTED LOSS OF INCOME CLAIM." An April 18, 2002 check contained the notation "UNDISPUTED DEPENDENT PROPERTY INCOME LOSS."
In one part of its brief, Enterprise intimates that Hartford provided "reassurances" in addition to the notations on the checks that it would satisfy the remainder of Enterprise's claims. Enterprise, however, never specifies in what form those "reassurances" came. In addition, throughout the rest of its brief, Enterprise repeats that the notations on the checks were the source of its belief that the remainder of its losses would be forthcoming. Enterprise has failed to allege or submit evidence that anything other than the notations on the checks led it to believe future payments were forthcoming and Hartford had conceded liability.
Reading these additional waiver and estoppel arguments in the light most favorable to the plaintiff, Enterprise has not raised a question of fact as to whether Hartford voluntarily and intentionally abandoned their limitation defense, or misled Enterprise into failing to bring its claim in a timely manner. A conclusory assertion of continuous settlement negotiations is insufficient to prove their existence. In any event, as previously stated, continuous communications and settlement negotiations before and after the time to bring suit has expired are insufficient evidence of waiver or estoppel. Hartford's failure to affirmatively deny that it was liable for the remainder of plaintiff's claim is also not evidence of intentional or voluntary waiver of a right or misconduct. Moreover, even in combination with the aforementioned allegations, the notations on the two April 2002 checks provide no comfort to Enterprise. Unlike the checks in Ilic, Hartford's payments did not state that they were "partial payments" or that they were for the purpose of settlement. A reasonable insured could not have read these short notations to indicate a waiver by Hartford of the limitations period or an intention to pay the remainder of the claim. Enterprise has provided no additional support for its view that these checks were only partial payments, that future payments were forthcoming, or that Hartford intended to abandon the limitation provision of the insurance policy.
Enterprise faces another hurdle in presenting its estoppel defense. It has not pointed to any action by Hartford after the checks were sent that would have lulled a reasonable person into delaying the filing of the lawsuit. The payments were in April 2002, approximately 17 months before the policy's limitations period expired. At some point during the year and a half before the limitations period concluded, Hartford should have realized that additional payments from Enterprise were not forthcoming, or at a minimum, that Hartford contested the extent of its liability. Indeed, Enterprise concedes in its complaint that its repeated and longstanding demands for payments from Hartford have been rejected.
Conclusion
The motion by Hartford Fire Insurance Company is granted. The Clerk of Court shall enter judgment for the defendant and close the case.
SO ORDERED.