In G. Matts Hospitality, LLC t/a Sands Motel v. Scottsdale Insurance Company and John Doe 1-100, the Federal District Court of New Jersey addressed a case in which an Insured suedits commercial insurer for property damage caused by Superstorm Sandy. The action was brought more than three years after the Insured received a coverage determination letterfrom the Insurer that partially denied coverage. The Insured filed a Complaint against the Insurer asserting a cause of action for breach of contract seeking consequential damages due to the alleged failure to pay a covered loss. The Court found that the Insurance Policy’s suit limitations provision barred the Insured’s recovery because the Insured failed to file its Complaint within two years of receipt of the coverage determination letter.
This case arose on November 15, 2012, when the Insurer received a notice of claim from the Insured claiming a loss on October 29, 2012. The Insured claimed damage to its property from flooding and winds, as a result of Superstorm Sandy. The Insurer investigated and adjusted the Insured’s claims ofproperty damage. On July 11, 2013, the Insurer issued a claimsdetermination letter stating that it would cover certain water intrusion damage created by wind damage; however, the letter also stated that certain other water damage was not covered because “the policy requires the rain enter through an opening created by a covered cause of loss.” The Insurer determined that some water damage to the insured property was due to seepage and plumbing leaks rather than rainwater entering through awind created opening. On October 11, 2016, the Insured,through its adjusters, requested that the Insurer consider additional payments, which the Insurer denied on February 22, 2017. On June 29, 2017, the Insured filed a Complaint in New Jersey Superior Court against the insurer for breach of contract, which was removed to the United States District Court for theDistrict of New Jersey.
In District Court, the Insurer argued that the Policy’s suit limitation provision barred the Insured’s recovery because the Insured failed to file the Complaint within the two-year suitlimitations period in the Policy. The Court found that the July 11, 2013 claims determination letter was a clear and unequivocal trigger of the suit limitations provision. The Insured argued that the July 11, 2013 coverage determination letter was ambiguous as to denial of coverage, and that a February 22, 2017 denial was the first definitive denial of coverage.
The District Court granted the Insurer’s motion for summary judgment. The suit limitation provision of the insurance policy stated that no legal action may be brought against the Insurer under the policy unless “[t]he action is brought within 2 years after the date on which the direct physical loss or damage occurred.” The Insured’s argument that the July 11, 2013 denial letter was ambiguous failed. The Court found that the denial letter was clear and unequivocal as it “meticulously explained which claimed property damages were and were not covered and the grounds for each decision.” Further, the co-owner of the Insured premises conceded that the denial letter was clear when he testified “they’re writing [the denial letter] as if they’re being clear on what they will cover.” Since the denial letter was clear on July 11, 2013 the suit limitations provision started running on that date, making the Insured’s Complaint filed on June 29, 2017 almost two years too late. Therefore, the Court enforced the Policy’s suit limitation provision and granted the Insurer summary judgment due to Insured’s failure to file a timely Complaint.
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