Walter Judge | Downs Rachlin Martin
Brillman v. New England Guaranty Ins. Co., 2020 VT 16 (Feb. 21, 2020)
In this insurance coverage decision, the Vermont Supreme Court determined that the “date of loss,” which starts the clock running on the one-year limitations period in the homeowners policy for bringing suits against the insurer, was not an ambiguous term, and it reversed the superior court’s grant of partial summary judgment for the plaintiff/insured/homeowner on this issue, where she brought suit more than a year after the covered event occurred.
The superior court had concluded that the “loss” did not occur until the date on which the insurer finally breached its obligations to fully reimburse the insured, i.e., when the homeowner received final – allegedly insufficient – payment from the insurer. The Supreme Court’s decision was a victory for the insurer. However, since the insured had asserted the issues of waiver and estoppel in response to the insurer’s summary judgment motion, the Supreme Court remanded for a determination of whether the insurer waived the one-year period by continuing to negotiate with the insured without informing the insured of the upcoming one-year suit bar.
The relevant facts as revealed by the supreme court decision were that on January 18, 2010 the plaintiff’s home sustained water damage. The plaintiff/homeowner/insured and the defendant insurer then negotiated over the value of the claim for several years. The insurer made its final payment on February 16, 2017 – more than seven (7) years after the covered water damage event. The insured, unsatisfied, then demanded an appraisal, but the insurer refused. The insured then filed suit on February 12, 2018.
The insurer moved for summary judgment based on the one-year provision in the policy for bringing suit, as measured from the “date of loss.” The insured oppose summary judgment and cross-moved on the grounds that the term “date of loss” was not defined in the policy, was ambiguous, and could be construed to mean the date on which the insurer breached its agreement to compensate the insured, which the insured contended was February 16, 2017. The superior court agreed with the insured’s interpretation and granted partial summary judgment to the insured. The insurer appealed and the Vermont Supreme Court reversed.
First, the Supreme Court held that although Vermont statutory law provides a six (6) year limitations period for breach of contract, the parties to an insurance contract may agree to a shorter limitations period, as long as it is not shorter than one (1) year.
Next, after considering the parties’ arguments about the meaning of the term “date of loss,” the Court concluded that it unambiguously means the date of the occurrence giving rise to coverage. In so holding, the Court considered the plain language of the term, the policy as a whole, and precedent from other courts that have considered the question. First, the Court referred to Black’s definition of “loss,” which confirmed the insurer’s interpretation. Second, the Court found that, while “date of loss” is not a defined term in the policy, the word “loss” recurs in the policy and clearly refers to the event causing damage for which the insured seeks coverage. Lastly, the Court noted that a majority of other courts agree with this interpretation.
Accordingly, the Supreme Court held that the term “date of loss” unambiguously referred to the date on which the event giving rise to coverage occurred – in this case, January 18, 2010 – and that the insured had not commenced its suit within that time. It therefore reversed the grant of partial summary judgment for the insured.
However, that did not mean a final victory for the insurer. In opposing the insurer’s motion for summary judgment, the insured had argued that by continuing to negotiate with her after the one-year limitations period had expired, the insurer had waived its reliance on the policy’s limitations period. This was an issue that the superior court had not addressed on summary judgment, because it found the term “date of loss” ambiguous. Because the Supreme Court found that the insured had raised a colorable claim of “waiver,” and because the merits of that issue were not part of the appeal, the Court therefore remanded the case back to the superior court for a determination of whether the insurer had in fact waived the one-year limitations period.