Private Limitation of Action Provision Defeats Suit Against Insurer
Post 5072
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In Vishnudut Ramyead et al. v. State Farm General Insurance Company, B329614, California Court of Appeals, Second District, Second Division (April 29, 2025) resolved a purported class action suit because it was filed late.
After their personal property suffered water damage, plaintiffs and appellants Vishnudut and Teika Ramyead (collectively, plaintiffs) submitted a claim to their property insurer, defendant and respondent State Farm General Insurance Company (State Farm). State Farm paid plaintiffs a total of $750.75. Dissatisfied with State Farm’s handling of their claim, plaintiffs filed a class action lawsuit against State Farm, bringing causes of action for alleged violations of the unfair competition law and declaratory relief.
The trial court granted State Farm’s motion for summary judgment.
FACTS AND PROCEDURAL BACKGROUND
Plaintiffs took out a homeowner’s insurance policy with State Farm, effective for one year from February 17, 2018.
The policy established that, in accordance with state law, “[n]o action shall be brought” against State Farm “unless there has been compliance with the policy provisions. The action must be started within one year after the date of loss or damage.”
Plaintiffs’ Claim
On May 8, 2018, a leaking water supply line damaged plaintiffs’ property, including a sofa and ottoman in an adjacent bedroom. On May 10, 2018, plaintiffs’ attorneys filed a claim with State Farm. They reported that the value of the sofa and ottoman was $2,500 and $1,000, respectively; both pieces were about 20 years old.
Complaint
On February 19, 2020, plaintiffs filed a class action against State Farm. Their operative first amended complaint (FAC) set forth two causes of action: (1) violations of the unfair competition law and (2) declaratory relief.
The FAC alleged that State Farm violated California law by adding sales tax to the retail price of personal property before finding and subtracting the property’s depreciated value. Plaintiffs contended that this practice effectively depreciates sales tax, “a non-depreciable item” under section 2051 and related regulations. As a result, State Farm wrongly withheld “money that is owed to [p]laintiffs and those other insureds similarly situated.” Among other things, the FAC sought “disgorgement of all sums unjustly obtained” by State Farm, and “restitution to plaintiffs” and other policyholders.
State Farm’s Motion for Summary Judgment and Plaintiffs’ Opposition
In December 2022, State Farm moved for summary judgment, arguing that (1) plaintiffs’ claims were untimely because they were brought after the one-year limitations period, and (2) as a matter of law, section 2051 does not prohibit depreciation of sales tax. The trial court granted State Farm’s motion for summary judgment.
The trial court ruled that plaintiffs’ claims are indisputably untimely. Because plaintiffs’ claims for unfair competition and declaratory relief seek to recover amounts they contend State Farm should have included in their payment under the policy and California law their claims are on the policy for purposes of the one year limitation contained in their policy.
Moreover, the trial court found that section 2051 and related regulations do not bar an insurer from depreciating sales tax when calculating the actual cash value of personal property.
DISCUSSION
The expiration of the applicable statute of limitations or private limitation of action provision is a complete defense. If the movant presents evidence establishing the defense and plaintiff did not effectively dispute any of the relevant facts, summary judgment was properly granted.
Plaintiffs’ Lawsuit is Barred by the Applicable Statute of Limitations
The parties disagree about which statute of limitations applies to plaintiffs’ lawsuit. Plaintiffs contend that it falls under the four-year period of limitations governing the unfair competition law.
The One-Year Statute Of Limitations Applies To Plaintiffs’ Lawsuit
The Court of Appeals held that section 2071 is concerned with causes of action that in some manner seek a financial recovery attributable to a claimed loss that was covered under a policy.
In the First Amended Complaint (FAC), plaintiffs request not just declaratory and injunctive relief, but also the return of money that, per plaintiffs, State Farm unlawfully withheld from the amount owed on their claim.
Plaintiffs’ Lawsuit Is Time Barred
Three dates are used to ascertain whether a plaintiff filed suit within section 2071’s one-year limitations period.
1. The limitations period starts running on the date that the insured discovers a loss to covered property. In this case, plaintiffs discovered the damage to their furniture on May 8, 2018.
2. the clock stops running on the date that the insured reports the claim. Plaintiffs submitted a claim to State Farm on May 10, 2018.
3. the limitations period resumes running on the date that the insurer closes its investigation into the insured’s claim.
Plaintiffs’ lawsuit was untimely. The limitations period began running on May 8, 2018. Plaintiffs stopped the clock two days later, when they filed their claim on May 10, 2018. At this point, two days of their one-year limitations period had already elapsed. Thus, from the date State Farm closed its investigation, plaintiffs had one year, less two days, to file suit.
Assuming that State Farm closed the investigation on November 14, 2018, plaintiffs would have had until November 12, 2019, to sue. If State Farm did not close the investigation until February 19, 2019, then plaintiffs had until February 17, 2020. But they did not file this lawsuit until February 19, 2020-two days after the last date on which the statute of limitations could have expired.
Because State Farm successfully established that the applicable statute of limitations bars plaintiffs’ lawsuit, and plaintiffs did not effectively dispute any of the relevant facts, the Court of Appeals affirmed summary judgment in State Farm’s favor.
The judgment was affirmed. State Farm is entitled to costs on appeal.
ZALMA OPINION
Private Limitation of Action provisions have existed in insurance policies since the turn of the 20th Century with the New York Standard Fire Insurance policy. California case law tolled the running of the limitation while the insurer adjusted the claim and started it running again when they were done. The plaintiffs failed to even file timely with the delay and lost.
(c) 2025 Barry Zalma & ClaimSchool, Inc.
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Hiscox Insurance Company (“Hiscox”) moved the USDC to Dismiss a suit for failure to state a claim because the insured reported its claim more than 60 days after expiration of the policy.
In Mluxe Williamsburg, LLC v. Hiscox Insurance Company, Inc., et al., No. 4:25-cv-00002, United States District Court, E.D. Missouri, Eastern Division (May 22, 2025) the trial court’s judgment was affirmed.
FACTUAL BACKGROUND
Plaintiff, the operator of a massage spa franchise, entered into a commercial insurance agreement with Hiscox that provided liability insurance coverage from July 25, 2019, to July 25, 2020. On or about June 03, 2019, a customer alleged that one of Plaintiff’s employees engaged in tortious ...
ZIFL – Volume 29, Issue 11
The Source for the Insurance Fraud Professional
Posted on June 2, 2025 by Barry Zalma
Post 5087
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Read the full article and the full issue of ZIFL June 1, 2025 at https://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-06-01-2025.pdf
Zalma’s Insurance Fraud Letter – June 1, 2025
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ZIFL – Volume 29, Issue 11
The Source for the Insurance Fraud Professional
Read the full article and the full issue of ZIFL June 1, 2025 at https://lnkd.in/gTWZUnnF
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 ...
No Coverage if Home Vacant for More Than 60 Days
Failure to Respond To Counterclaim is an Admission of All Allegations
Post 5085
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In Nationwide Mutual Insurance Company v. Rebecca Massey, Civil Action No. 2:25-cv-00124, United States District Court, S.D. West Virginia, Charleston Division (May 22, 2025) Defendant Nationwide Mutual Insurance Company's (“Nationwide”) motion for Default Judgment against Plaintiff Rebecca Massey (“Plaintiff”) for failure to respond to a counterclaim and because the claim was excluded by the policy.
BACKGROUND
On February 26, 2022, Plaintiff's home was destroyed by a fire. At the time of this accident, Plaintiff had a home insurance policy with Nationwide. Plaintiff reported the fire loss to Nationwide, which refused to pay for the damages under the policy because the home had been vacant for more than 60 days.
Plaintiff filed suit ...
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
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Professional Health Care Services Exclusion Effective
Post 5073
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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 ...
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Post 5062
Posted on April 30, 2025 by Barry Zalma
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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...