Swimming Pool Claim Sunk
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Private Limitation of Action Provision Defeats Bad Faith Suit
Post 4780
No Right to Bad Faith If No Coverage for Loss
James H. Drevs and Patricia Henderson appealed from the order of the Law Division dismissing with prejudice their complaint seeking insurance coverage for storm damage to their real property.
In James H. Drevs and Patricia Henderson v. Metropolitan Property And Casualty Insurance Company, No. A-0637-22, Superior Court of New Jersey, Appellate Division (April 4, 2024) applied the private limitation of action provision of the policy.
No Right to Bad Faith If No Coverage for Loss
James H. Drevs and Patricia Henderson appealed from the order of the Law Division dismissing with prejudice their complaint seeking insurance coverage for storm damage to their real property.
In James H. Drevs and Patricia Henderson v. Metropolitan Property And Casualty Insurance Company, No. A-0637-22, Superior Court of New Jersey, Appellate Division (April 4, 2024) the Appellate Division applied the private limitation of action provision of the policy.
FACTS
Plaintiffs own property in Cherry Hill, which has a home and an inground swimming pool. In 2020, the property was insured under a policy issued by Farmers Property and Casualty Insurance Company, formerly known as defendant Metropolitan Property and Casualty Insurance Company.
On or about July 6, 2020, a windstorm and significant rainfall damaged plaintiffs’ home and swimming pool. Plaintiffs filed two claims for insurance coverage with defendant arising from the storm: the first claiming damage to the roof of their home and the second claiming a partial collapse of their inground pool.
Defendant undertook an investigation of plaintiffs’ claims. It hired an engineering firm to investigate the cause of the partial collapse of the pool. The engineering firm concluded the pool damage was caused by excessive hydrostatic pressure from significant rainfall during the July 6, 2020 storm. The insurer’s claims coordinator sent plaintiffs a letter denying their claim for coverage of the damage to the pool.
The claims coordinator issued a check to plaintiffs for the covered portion of the loss from the damaged roof of their home.
Plaintiffs sued defendant alleging breach of contract and bad faith in its denial of plaintiffs’ claim for coverage for the damage to their pool.
According to defendant, the one-year period began running again on September 14, 2020, when it denied plaintiffs’ pool damage claim. Defendant argued that because the complaint was filed on May 19, 2022, a year and eight months after September 14, 2020, it was time barred.
The trial court issued an oral opinion granting defendant’s motion.
ANALYSIS
The appellate court found no basis on which to reverse the trial court’s order. Plaintiffs’ policy is referenced in the complaint. The correspondence from defendant denying plaintiffs’ pool damage claim and granting their claim for damages to their house form the basis of plaintiffs’ claims. The September 14, 2020 letter unequivocally denied plaintiffs’ claim for coverage of the damage to their pool. Plaintiffs produced no evidence that the parties engaged in discussions, correspondence, or any other type of interaction in the seven months between defendant’s denial of plaintiffs’ pool damage claim and correspondence by counsel for the plaintiffs.
It was undisputed that more than one-and-a-half years passed between the September 14, 2020 denial of plaintiffs’ pool damage claim and the May 19, 2022 filing of the complaint.
A bad faith claim may not be asserted by a party who cannot establish a right to payment of the claim as a matter of law.
Because plaintiffs filed an untimely complaint challenging the denial of their claim, they cannot prove they are entitled to coverage for the damage to their pool.
ZALMA OPINION
Every first party property policy or homeowners policy contain a private limitations of action provision preventing insureds from suing one year after a loss. New Jersey, and many states, toll the running of the statute from the date of loss until the date the insurer makes an unequivocal denial of coverage. The insureds waited more than a year and a half after the denial of the claim and its suit was barred. They are not without a remedy, their lawyer knew or should have known of the limitation and failed to file suit within the period allowed nor did he seek an extension to the time to sue.
(c) 2024 Barry Zalma & ClaimSchool, Inc.
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Jury’s Findings Interpreting Insurance Contract Affirmed
Post 5105
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Madelaine Chocolate Novelties, Inc. (“Madelaine Chocolate”) appealed the district court’s judgment following a jury verdict in favor of Great Northern Insurance Company (“Great Northern”) concerning storm-surge damage caused by “Superstorm Sandy” to Madelaine Chocolate’s production facilities.
In Madelaine Chocolate Novelties, Inc., d.b.a. The Madelaine Chocolate Company v. Great Northern Insurance Company, No. 23-212, United States Court of Appeals, Second Circuit (June 20, 2025) affirmed the trial court ruling in favor of the insurer.
BACKGROUND
Great Northern refused to pay the full claim amount and paid Madelaine Chocolate only about $4 million. In disclaiming coverage, Great Northern invoked the Policy’s flood-exclusion provision, which excludes, in relevant part, “loss or damage caused by ....
Failure to Name a Party as an Additional Insured Defeats Claim
Post 5104
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Contract Interpretation is Based on the Clear and Unambiguous Language of the Policy
In Associated Industries Insurance Company, Inc. v. Sentinel Insurance Company, Ltd., No. 23-CV-10400 (MMG), United States District Court, S.D. New York (June 16, 2025) an insurance coverage dispute arising from a personal injury action in New York State Supreme Court.
The underlying action, Eduardo Molina v. Venchi 2, LLC, et al., concerned injuries allegedly resulting from a construction accident at premises owned by Central Area Equities Associates LLC (CAEA) and leased by Venchi 2 LLC with the USDC required to determine who was entitled to a defense from which insurer.
KEY POINTS
Parties Involved:
CAEA is insured by Associated Industries Insurance Company, Inc. ...
Exclusion Establishes that There is No Duty to Defend Off Site Injuries
Post 5103
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Attack by Vicious Dog Excluded
In Foremost Insurance Company, Grand Rapids, Michigan v. Michael B. Steele and Sarah Brown and Kevin Lee Price, Civil Action No. 3:24-CV-00684, United States District Court, M.D. Pennsylvania (June 16, 2025)
Foremost Insurance Company (“Foremost”) sued Michael B. Steele (“Steele”), Sarah Brown (“Brown”), and Kevin Lee Price (“Price”) (collectively, “Defendants”). Foremost sought declaratory relief in the form of a declaration that
1. it owes no insurance coverage to Steele and has no duty to defend or indemnify Steele in an underlying tort action and
2. defense counsel that Foremost has assigned to Steele in the underlying action may withdraw his appearance.
Presently before the Court are two ...
ZIFL Volume 29, Issue 10
The Source for the Insurance Fraud Professional
See the full video at https://lnkd.in/gK_P4-BK and at https://lnkd.in/g2Q7BHBu, and at https://zalma.com/blog and at https://lnkd.in/gjyMWHff.
Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/ You can read the full issue of the May 15, 2025 issue at http://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-05-15-2025.pdf
This issue contains the following articles about insurance fraud:
Health Care Fraud Trial Results in Murder for Hire of Witness
To Avoid Conviction for Insurance Fraud Defendants Murder Witness
In United States of America v. Louis Age, Jr.; Stanton Guillory; Louis Age, III; Ronald Wilson, Jr., No. 22-30656, United States Court of Appeals, Fifth Circuit (April 25, 2025) the Fifth Circuit dealt with the ...
Professional Health Care Services Exclusion Effective
Post 5073
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This opinion is the recommendation of a Magistrate Judge to the District Court Judge and involves Travelers Casualty Insurance Company and its duty to defend the New Mexico Bone and Joint Institute (NMBJI) and its physicians in a medical negligence lawsuit brought by Tervon Dorsey.
In Travelers Casualty Insurance Company Of America v. New Mexico Bone And Joint Institute, P.C.; American Foundation Of Lower Extremity Surgery And Research, Inc., a New Mexico Corporation; Riley Rampton, DPM; Loren K. Spencer, DPM; Tervon Dorsey, individually; Kimberly Dorsey, individually; and Kate Ferlic as Guardian Ad Litem for K.D. and J.D., minors, No. 2:24-cv-0027 MV/DLM, United States District Court, D. New Mexico (May 8, 2025) the Magistrate Judge Recommended:
Insurance Coverage Dispute:
Travelers issued a Commercial General Liability ...
A Heads I Win, Tails You Lose Story
Post 5062
Posted on April 30, 2025 by Barry Zalma
"This is a Fictionalized True Crime Story of Insurance Fraud that explains why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is designed to help everyone to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime."
Immigrant Criminals Attempt to Profit From Insurance Fraud
People who commit insurance fraud as a profession do so because it is easy. It requires no capital investment. The risk is low and the profits are high. The ease with which large amounts of money can be made from insurance fraud removes whatever moral hesitation might stop the perpetrator from committing the crime.
The temptation to do everything outside the law was the downfall of the brothers Karamazov. The brothers had escaped prison in the old Soviet Union by immigrating to the United...
