Federal District Court Enforces Suit Limitation Periods Despite Ongoing Settlement Discussions
In two recent but unrelated decisions, the United States District Court for the Western District of Washington granted insurers' motions for summary judgment to enforce policy provisions limiting the time by which an insured may file suit -- City of Ilwaco v. Affiliated FM Insurance Company (.pdf), decided by Judge Franklin D. Burgess and Chi v. Allstate Insurance Company (.pdf), decided by Judge Marsha J. Pechman. In both cases, the Court rejected the insured's equitable arguments that the insurer should be precluded from enforcing the limitation because of ongoing discussions aimed at resolving the dispute. In City of Ilwaco, the insured argued for equitable estoppel and relied upon ongoing discussions with the administrator of its insurance pool. But the Court rejected this theory because the pool was not an agent of the insurer and, in any event, the insured had not pointed to any statements that caused the insured to refrain from filing suit within the two-year limitation period. The Court in Chi rejected similar arguments because the insured had failed to demonstrate that she had acted with reasonable diligence.
Neither decision put an end to the insureds' claims. In both instances, the Court indicated that the contractual limitations period does not apply to non-contract claims. However, in Chi, the Court still dismissed the tort claims for negligence and bad faith because they remain subject to Washington's three year statute of limitation and the insured filed suit on the three-year anniversary of the underlying loss but failed to serve the summons and complaint within 90 days as required by RCW 4.16.070 such that the service date did not relate back to the original filing date. As a result, in both cases, the insured's only remaining claim is for violation of the Consumer Protection Act which has a four year limitation period.
