The Woods Appartments, LLC et al v. United States Fire Insurance Co. et al

Filing 39

MEMORANDUM OPINION AND ORDER by Judge Jennifer B. Coffman on 2/7/2012, re 23 Motion for Partial Summary Judgment and 26 Motion for Partial Summary Judgment. IT IS ORDERED that USFIC's motion for partial summary judgment (DN 23 ) is GRANTED and the plaintiffs' motion for partial summary judgment (DN 26 ) is DENIED. cc: Counsel (CDF)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
LOUISVILLE DIVISION
CIVIL ACTION NO. 11-41-C
THE WOODS APARTMENTS, LLC, ET AL.,
V.

PLAINTIFFS,

MEMORANDUM OPINION AND ORDER

UNITED STATES FIRE INSURANCE CO., ET AL.,

DEFENDANTS.

***********
This matter is before the court upon motions for partial summary judgment
by the plaintiffs (R. 26) and by United States Fire Insurance Co. (R. 23) on the
issue of whether the plaintiffs’ claim for reimbursement for damages caused by a
2007 hailstorm is time-barred by the suit limitation provision of the insurance policy
issued by United States Fire Insurance Co. (“USFIC”). For reasons explained below,
the plaintiffs’ motion will be denied and USFIC’s motion will be granted.
This action involves two separate insurance claims arising out of two
separate losses under two separate USFIC policies, but the motions for partial
summary judgment concern only the claim related to a 2007 hailstorm. According
to the plaintiffs’ complaint, The Woods Apartments in Jeffersonville, Indiana, were
damaged by a hailstorm on August 16, 2007. The plaintiffs filed a claim with
USFIC, which sent an independent adjuster to inspect the apartments. The adjuster
1

concluded that there was no hail damage to the property and, in a letter dated
August 29, 2007, informed the plaintiffs that the claim file was being closed per
USFIC’s instructions.
The following year the apartment building incurred additional damage in a
storm produced by the remnants of Hurricane Ike. The plaintiffs filed a new
insurance claim and also asked that USFIC re-open their 2007 claim file and reinspect the property for hail damage. USFIC sent an engineering firm to inspect the
property and, in a letter dated February 3, 2009, reiterated its denial of the
plaintiffs’ claim for damages from the 2007 hailstorm. The letter also stated that
“U.S. Fire will continue to insist upon compliance with all of the provisions of the
insurance policy, including the time for filing suit against it in connection with this
claim, waiving none.”
In October 2009, the plaintiffs’ insurance broker contacted USFIC to ask that
it again reconsider the 2007 hail damage claim. The following month, USFIC again
reiterated the company’s denial of the claim and stated that the plaintiffs’ time to
file suit based on any the hailstorm damage had expired. USFIC and the plaintiffs
entered into a tolling agreement on August 24, 2010 and the plaintiffs filed this
lawsuit on September 13, 2010. Both events occurred more than three years after
the 2007 hailstorm.
The USFIC policy states that “[n]o one may bring a legal action against
[USFIC] under this Coverage Part unless . . . [t]he action is brought within 2 years
2

after the date on which the direct physical loss or damage occurred.” USFIC
contends that this provision bars legal action connected to the hailstorm claim.
Generally, under Kentucky law, clear and unambiguous insurance policy
provisions must be enforced as written. See Kemper Nat. Ins. Companies v.
Heaven Hill Distilleries, Inc., 82 S.W.3d 869, 874 (Ky. 2002). Contract provisions
limiting the time within which an insured may sue are also generally valid under
Kentucky law. Smith v. Allstate Ins. Co., 403 f.3d 401, 404 (6th Cir. 2005).
The plaintiffs proffer two reasons that the two-year lawsuit limitation
provision in the policy should not be enforced. First, they cite the principle that
estoppel applies to bar enforcement of a suit limitation defense when an insurer
lulls the insured into believing that a claim will be paid without having to file suit.
See Smith v. Allstate, 403 F.3d at 407. But the operative facts of this case do not
include any action on the part of USFIC that could have led the plaintiffs to
reasonably believe that their claim would ever be paid without having to file suit.
Therefore, this theory fails.
Second, the plaintiffs claim that USFIC violated Kentucky Insurance
Regulation 806 KAR 12:095 §6(4), which states:
“Insurers shall not continue negotiations for settlement of a
claim directly with a first party claimant who is not legally represented
if the first party claimant's rights may be affected by a statute of
limitations or a time limit in a policy, certificate, or contract, unless the
3

insurer has given the first party claimant written notice of the
limitation.”
The plaintiffs allege that USFIC continued negotiations with plaintiff Mike
Blankenbaker, who had no legal representation, without providing adequate written
notice of the applicable suit limitation provision in the policy. USFIC contends that
there were no negotiations for settlement -- or communications of any kind -between the insurance company and the plaintiffs from February 3, 2009, until
October 24, 2009. USFIC further claims that even if there had been
communication, the company provided written notice of the time limitation
provision in its February 3, 2009, letter to the plaintiffs.
In his affidavit in support of the plaintiffs’ motion, Mike Blankenbaker alludes
to communications that he had with USFIC representatives between February 3 and
October 24, 2009. But he provides no evidence that any communication
constituted negotiation for settlement. USFIC’s position that there was no damage
to the apartment building in the 2007 hailstorm was consistent throughout the
entire claims process. Therefore it could not have participated in continuing
negotiations for settlement within the context of 806 KAR 12:095 § 6(4).
Accordingly,
IT IS ORDERED that USFIC’s motion for partial summary judgment (R. 23) is
GRANTED and the plaintiffs’ motion for partial summary judgment (R. 26) is
DENIED.
4

Signed on February 7, 2012

5