Monday, May 15, 2017
C.A. Upholds Dismissal of Claims for Damage to Lawyer’s Home as Untimely
By a MetNews Staff Writer
An attorney whose homeowner’s insurance claim was closed and reopened by the insurer on three different occasions, based on her alleged failure to provide required information, waited too long to sue, the Court of Appeal for this district ruled Friday.
Div. Eight rejected the argument that a one-year limitations period contained in the policy started anew each time the claim was reopened. The proper interpretation, Justice Elizabeth A. Grimes wrote in an unpublished opinion, was that advanced by the insurer, that the one-year-period ran during each period that the file was closed, and was tolled only during the periods that it was open.
The policy in question was issued by State Farm General Corporation to Lawndale attorney Deborah A. Smillie, covering the Redondo Beach home she shared with her adult daughter and co-insured, Heather Smillie. In March 2010, Deborah Smillie reported damage to the home that occurred earlier than month.
After inspections and partial payment, the insurer informed her in April that she needed to fill out a “personal property inventory form” before the claim could be processed further. Letters to the same effect were sent in May and June.
In July and August, she communicated with the company regarding certain concerns, including “lack of any remediation services” regarding “excess moisture and mold” that she alleged State Farm’s representative had observed. On July 30, State Farm advised her in writing of the one-year limitation, explaining that it was computed from date of loss to the date she reported the claim, and that it was running again from the date of the letter because the claim was being closed.
The parties were again in contact in September, and activity continued on the claim for 14 months. State Farm informed Smillie in April 2011 that it had retained an attorney, and that all communication regarding the claim should be sent to him.
In November 2011, the attorney sent her a check for the covered contents of the dwelling and informed her that the claim was again closed, and reminded her again of the one-year period and said it would begin running again from the date of the letter. The letter also reminded her that there was additional coverage for total loss items replaced within two years of loss, and said the file would again be reopened if replacement cost documentation were provided.
Smillie responded with an email thanking the attorney “for advising of your version of the one-year statute of limitations” and asking how much time remained. She also asserted that there was a four-year statute covering breach of written contract and a two-year statute for “bad faith breach.”
The attorney responded that there had been 313 days remaining on the one-year period as of the date of his letter, which had been sent two weeks earlier.
Smillie submitted additional documents on Dec. 22, 2011, received a check for additional benefits issued April 19, 2012, and had no further communication with State Farm before filing suit, naming her daughter and herself as plaintiffs, on March 29, 2013.
Los Angeles Superior Court Judge Rafael Ongkeko granted summary adjudication, holding that all of Deborah Smillie’s claims and most of Heather Smillie’s were barred by the one-year limitation, but that Heather Smillie’s claim for intentional infliction of emotional distress was not. The judge subsequently granted summary judgment on that claim, finding that the conduct alleged was not extreme or outrageous.
In a prior opinion, the Court of Appeal affirmed as to Deborah Smillie’s claims, so Friday’s ruling only concerned Heather Smillie’s.
The justice rejected the argument that Prudential-LMI Commercial Ins. v. Superior Court (1990) 51 Cal.3d 674 rendered the complaint timely.
Prudential-LMI held that a one-year limitation in an insurance policy is subject to equitable tolling. While the case isn’t on point, since it didn’t involve a claim being closed and reopened, “the principles discussed” in that and later cases “leave us in no doubt that plaintiff’s claim is time-barred,” Grimes wrote.
“In short, nothing in Prudential-LMI suggests that an insurer cannot close a claim—and end the tolling period—when the insurer has nothing to investigate, so long as the insurer formally notifies the insured that the claim is closed. The policy considerations supporting equitable tolling do not support the notion that equitable tolling must continue until the insured is satisfied; it continues until the insurer completes its investigation, makes payment on the claim, and advises the insured in writing that the time to file suit is running.”
Grimes went on to say that the alleged outrageous conduct toward Heather Smillie—a manager having “mocked” her during a phone conversation and telling her he was acting out of spite, which the plaintiff claimed caused her to become hysterical and inconsolable—did not amount to a tort. The justice cited undisputed evidence that Heather Smillie is prone to regular panic attacks, dating back before the insurance loss; the fact that she did not claim medical expenses resulting from the alleged outrageous conduct; the testimony of Deborah Smillie that she “could not control Heather Smillie with regard to communications regarding the Claim” and that her daughter was “verbally abusive” and “cannot calm down.”
Attorneys on appeal in Smillie v. State Farm General Insurance Company, B269353, were Deborah Smillie on behalf of her daughter and Michael J. McGuire and Anne M. Master for State Farm.
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