New Jersey Court of Appeals Enforces Lloyd’s Suit Limitations Provision

In Rihanna Corp. v. Certain Underwriters At Lloyd’s of London, App. Div. (per curiam) (14 pp.), the New Jersey Court of Appeals found in favor of Certain Underwriters at Lloyd’s of London and against plaintiffs enforcing the applicable policy’s one year suit limitations provision and concluding that plaintiffs filed their complaint outside of the required one year.

Specifically, plaintiffs appealed an order granting defendant Certain Underwriters at Lloyd’s of London summary judgment and an order denying plaintiffs’ motion to amend their complaint. Plaintiffs’ declaratory judgment action against defendant sought payment under a business owner’s insurance policy for an October 3, 2008 fire loss suffered by Rihana Restaurant Inc. Defendant denied coverage, citing a limitation provision of the policy, which precluded suit filed more than one year from the date of loss.

On summary judgment, the Law Division judge agreed plaintiffs’ claim were properly rejected under the insurance contract and dismissed plaintiffs’ complaint. Thereafter, the motion to amend the complaint was denied.

On appeal, plaintiffs maintained the trial judge erred in refusing to relax the contract’s one-year limitations period following a disclaimer of coverage. Plaintiffs sought reversal of the order and reinstatement of their action.

The court held that even assuming the suit limitation was tolled because of defendant’s delayed notification of the decision to deny coverage, plaintiffs’ complaint was not initiated within one year after being informed coverage was disclaimed. Plaintiffs waited nearly two years after the claim was rejected, nearly three years after the fire, to file this action. The appellate panel found no basis justifying application of the suit limitation period should be relaxed.

The panel also rejected as unavailing plaintiffs’ suggestion they were unaware of the limitations provision of the policy. The panel stated that policy clause is not a special contractual clause specific to the Lloyd’s policy; rather it is a standard clause mandated to be included in every New Jersey fire insurance policy by N.J.S.A. 17:36-5.20.

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