Claim and Suit Time Barred by Private Limitation of Action

Post number 5370

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Suit Fails Because the Plaintiffs Ignored the Policy’s Private Limitation of Action

In Shree Ugtai Express, Inc. d/b/a Hollday Express Shop v. West Bend Insurance Company, No. 1:26-cv-01050-STA-jay, United States District Court, W.D. Tennessee, Eastern Division (June 9, 2026) Shree Ugtai Express, Inc., doing business as Holladay Express Shop, sued West Bend Insurance Company for wrongful denial of insurance benefits after property damage allegedly caused by a burst water heater pipe on December 25, 2022.

The insurance policy required any suit to be brought within two years of the date of direct physical loss or damage. Plaintiff filed its complaint in Tennessee state court on December 17, 2024, which was within that two-year period.

FACTS

However, although a summons issued the same day, it was never served and never returned. Plaintiff did not obtain an alias summons until February 6, 2026, more than one year later. Plaintiff also asserted a statutory bad-faith claim under Tennessee law, alleging that it had made a formal demand on December 7, 2023 and that West Bend failed to pay within sixty days.

LAW

Under Tennessee Rule of Civil Procedure 3, filing a complaint commences an action for statute-of-limitations purposes, but if process is not served within 90 days, the plaintiff cannot rely on the original filing date to toll the statute unless new process is obtained within one year of the prior process (or filing, if no process issued).

Tennessee law also permits insurance policies to impose contractual limitations periods, and such provisions are enforceable. Here, the policy imposed a two-year contractual limitations period for the breach-of-contract claim.

For the bad-faith claim under Tenn. Code Ann. § 56-7-105, Tennessee courts apply a one-year statute of limitations, which begins to run sixty days after formal demand or upon refusal to comply with the demand.

DISCUSSION / ANALYSIS

The court held that Plaintiff’s filing of the complaint on December 17, 2024 did not toll the limitations period because Plaintiff failed to comply with Rule 3. The original summons was issued on the filing date but was never served or returned within ninety days, and Plaintiff did not obtain new process within one year. Because the alias summons was not issued until February 6, 2026, Plaintiff could not rely on the original filing date as the commencement date.

As a result, the breach-of-contract action was deemed commenced, at the earliest, on February 6, 2026, which was outside the policy’s two-year limitations period running from the December 25, 2022 loss. The breach-of-contract claim was time-barred.

The same procedural failure doomed the bad-faith claim. Because the complaint filing did not toll the statute, the bad-faith claim also was not timely commenced within its one-year statute of limitations, which had accrued no later than sixty days after the December 7, 2023 demand. Thus, that claim too was barred as a matter of law.

CONCLUSION

The court granted West Bend’s motion to dismiss. It held that Plaintiff failed to comply with Tennessee Rule 3, so the complaint did not toll the limitations periods. Consequently, the breach-of-contract claim was not commenced within the policy’s two-year limitations period, and the bad-faith claim was not commenced within the applicable one-year statute of limitations. Both claims were dismissed with prejudice.

In summary, the failure to comply with Tenn. R. Civ. P. 3 means that the filing of the complaint did not toll the statute of limitations. Accordingly, the the breach of contract claim was not commenced within two years of the loss, and the bad faith claim was not commenced within one year of accrual. Defendant’s motion to dismiss was GRANTED, and Plaintiff’s claims were dismissed with prejudice.

ZALMA OPINION

Whenever a person insured is unhappy with an insurer’s claims handling and decides to sue the insured and the insured’s counsel must first read the insurance policy to determine if it contains a private limitation of action provision limiting the time available to sue different from state statutes of limitations. Shree Ugtai Express, Inc’s counsel first filed suit within the two year limit but failed to serve it promptly and fell to the private limitations of action because state law did not recognize the suit until it was served. The lesson is don’t sit on your rights or you will lose them.

(c) 2026 Barry Zalma & ClaimSchool, Inc.

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