Opinion
No. CA-C96-00158
July 3, 1997
MEMORANDUM OF DECISION AND ORDER ON CHARTER OAK'S MOTION FOR SUMMARY JUDGMENT
I. STATUTE OF LIMITATIONS
The dispositive issue here is which statutory limitation period applies, the two-year period for fire insurance policies or one of the longer periods for contracts or torts? The court concludes that the insurer, Charter Oak, is protected by the two-year period in G.L.c. 175, sec. 99, Twelfth, even though the plaintiff-landlord was an additional named insured that the insurer improperly failed to include in the loss payments. The courts appreciates the well-reasoned, clearly focused memoranda and arguments of all the parties.
The material facts are undisputed. The plaintiff leased a commercial property to Wilkinson. Pursuant to the lease, Wilkinson obtained insurance for the property from Charter Oak and naming the plaintiff-landlord as an additional named insured. As required by G.L.c. 175, sec. 99, Twelfth, the policy contained a limitations period barring any action against the insurer that is not commenced within two years "from the time the loss occurred."
Windstorms damaged the property on August 19 and October 30, 1991. In response to Wilkinson's claims, Charter Oak made loss payments to Wilkinson with the last payment on December 21, 1991. When making these payments, Charter Oak improperly failed to include payment to the plaintiff-landlord as an additional named insured. Wilkinson kept the money and made no repairs. He has been adjudicated bankrupt. The plaintiff-landlord did not file this action until December 29, 1995, when suit was commenced in the District Court.
In J. T. Enterprises, Inc. v. Liberty Mutual Ins. Co., 384 Mass. 586 (1981), the Supreme Judicial Court held that the two-year statute of limitations period in G.L.c. 175, sec. 99, Twelfth, barred an action on the insurance policy by a mortgagee of property damaged by fire. The court adopted the rule that "an insured mortgagee, as well as the insured mortgagor, is bound by a standard provision limiting the time within which an action may be brought to collect on an insurance policy." Id. at 587-88. The court also noted that "the mortgagor's neglect [in not seeking arbitration] cannot insulate the plaintiff from its own omission with respect to commencement of this action." Id. at 590.
The plaintiff-landlord argues that his loss was not in the storm damage itself but in the breach of contract that occurred later when the insurer failed to include him as a co-payee in the loss payments. The plaintiff contends that his cause of action is therefore not an action on the policy but a breach of contract action controlled by the ordinary six-year contract statute of limitations.
The court, however, is unable to find any sound basis for distinguishing the plaintiff's position from that of the mortgagee in J. T. Although the plaintiff's rights are based on a contract and the insurer's duty to the plaintiff under a contract, the Legislature has established a special limitations period for any action against the insurer "for the recovery of any claim by virtue of this policy." G.L.c. 175, sec. 99, Twelfth. The plaintiff's claim against the insurer necessarily depends on the policy, it exists "by virtue of the policy," and it could not exist without the policy. Cf. Fluhr v. Allstate, 15 Mass. App. Ct. 983, 984 (1983). Neither the tenant's faithlessness nor the insurer's contract breach can exempt the plaintiff from the statutory time limit.
The same reasoning prevents resort to the three year tort statute of limitations. Any reasonable care duty owed by the insurer to the plaintiff arose from the policy and the plaintiff's rights as a named insured on the policy. In these circumstances, G.L.c. 175, sec. 99, Twelfth, must control even if the plaintiff characterizes the insurer's breach of its policy obligation as negligence.
II. THE DISCOVERY RULE
The discovery rule in tort cases determines when the "cause of action accrues." See Henderson v. Sears, 365 Mass. 83 (1974); Bowen v. Ely Lilly Co., 408 Mass. 204 (1990). The discovery rule does not apply to the statute of limitations in G.L.c. 175, sec. 99, Twelfth. U Under the terms of the statute, this limitations period begins to run at "the time the loss occurred." Ames Privilege Associates v. Allendale Mutual Ins. Co., 742 F. Supp. 700, 702-03 (D.Mass. 1990). This is in contrast with other limitation statutes which start the clock when "the cause of action accrues." G.L.c. 260, sec. 1, 2, 2A.
III. THE CHAPTER 93A CLAIM
If the plaintiff had a meritorious claim under G.L. 93A, sec. 11, he might have enough for a genuine fact issue on his claim that the insurer's excessive delay in responding to his January, 1994, inquiry stopped the running of the four year limitations period for Chapter 93A claims.
The summary judgment materials, however, show an absence of evidence on the merits of the 93A claim alleged in the First Amended Complaint. See Kourouvacilis v. General Motors Corp., 410 Mass. 706, 711(1991). The 93A count as pleaded in the amended complaint is based on the insurer's failure to make payment of the insurance proceeds to the plaintiff-landlord. The plaintiff has presented no evidence that the insurer's failure to include the plaintiff in the loss payments was anything worse than negligence. When both parties are engaged in trade or commerce, negligence alone does not amount to unfair or deceptive conduct under G.L.c. 93A, sec. 11. See PMP Associates, Inc. v. Globe Newspaper Co., 366 Mass. 593, 596 (1975); Madden v. Royal Indemnity Co., 26 Mass. App. Ct. 756, 762 (1989); Levings v. Forbes Wallace, Inc., 8 Mass. App. Ct. 498, 504 (1979).
The plaintiff's memorandum suggests that the insurer's delay in providing information on claims paid to Wilkinson in response to the plaintiff's January, 1994, inquiry could amount to a Chapter 93A violation. This is not the 93A violation that is alleged in the First Amended Complaint. Secondly, the alleged information delay following the January, 1994, inquiry did not cause the plaintiff any damages. The plaintiff's only damages occurred back in 1991 when the storms hit his building and the payments hit only Wilkinson.
IV. ORDER
Summary judgment will enter dismissing the claims against Charter Oak Insurance Co.
_________________________ Charles J. Hely Justice
July 3, 1997