TONY R. LLOYD, d/b/a EPOTHANE
v . Iredell County
No. 05 CVS 02048
GRAIN DEALERS MUTUAL INSURANCE
Eisele, Ashburn, Greene & Chapman, PA, by Douglas G. Eisele,
Kilpatrick Stockton, LLP, by Susan H. Boyles and Corena A. Norris-McCluney, for defendant-appellee.
Tony R. Lloyd (plaintiff), trading and doing business as Epothane Flooring Systems (EFS), appeals from a summary judgment entered in favor of the defendant, Grain Dealers Mutual Insurance Company (defendant) based upon plaintiff's alleged failure to file a claim within the three year statute of limitations period for losses suffered by plaintiff after a fire at plaintiff's place of business. We affirm.
On 13 May 2000, EFS purchased a Business Owner's insurance policy from defendant which included coverage for loss of business income in the event of a suspension of business operations. On 7March 2001, a fire damaged EFS' office building. The next day, 8 March 2001, defendant's claims adjuster visited EFS and spoke with plaintiff regarding the coverage provisions of EFS' policy, including the provision for loss of business income. Plaintiff received a payment from defendant for the property damage only.
In March of 2002, plaintiff completed the repairs to the building and EFS resumed business operations. In October of 2002, plaintiff submitted a letter to defendant on behalf of EFS, claiming a loss of income in the amount of $107,944.75. After reviewing the letter, defendant hired an accounting firm to analyze the claim. On 9 April 2003, the accounting firm completed a report regarding plaintiff's claim and concluded EFS lost $4,968.83 in business income. On 22 April 2003, defendant offered plaintiff $4,968.83 as satisfaction for EFS' loss of income claim. Plaintiff rejected defendant's offer and informed defendant that he would discuss the matter further after his accountant reviewed defendant's report. Plaintiff never accepted defendant's offer or submitted a counteroffer to defendant.
On 12 August 2005, plaintiff filed a complaint against defendant seeking damages to recover loss of business income due to the 7 March 2001 fire. On 3 February 2006, defendant filed a motion for summary judgment alleging plaintiff's claim was not brought within the time specified in the insurance contract and was barred by the statute of limitations. Summary judgment was entered in favor of defendant on 6 March 2006. Plaintiff appeals from the order granting summary judgment in favor of defendant. Summary judgment is appropriate only when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Marshburn v. Associated Indemnity Corp., 84 N.C. App. 365, 368, 353 S.E.2d 123, 125 (1987). The burden of establishing the lack of any triable issue of material fact is on the party moving for summary judgment. Id. However, when a defendant has properly pled a statute of limitations, the burden is placed upon the plaintiff to show that the action was instituted within the prescribed period. See Little v. Rose, 285 N.C. 724, 727, 208 S.E.2d 666, 668 (1974).
Under N.C. Gen. Stat. § 1-52(1) (2005), a cause of action for breach of contract must be brought within three years of the breach. Id. Plaintiff contends that under N.C. Gen. Stat. § 1- 15(a) the limitations period prescribed in N.C. Gen. Stat. § 1- 52(1) does not begin to toll until after the cause of action has accrued. N.C. Gen. Stat. § 1-15(a) (2005).
[A]n insurance policy is a contract and its provisions govern the rights and duties of the parties thereto. Fidelity Bankers Life Ins. Co. v. Dortch, 318 N.C. 378, 380, 348 S.E.2d 794, 796 (1986). The language in the policy is to be construed as written without rewriting the contract or disregarding the express language used. Herring v. Liner, 163 N.C. App. 534, 538, 594 S.E.2d 117, 120 (2004) (internal citations and quotations omitted). Where there is no ambiguity in a policy's language, the courts must apply the plain meaning of the policy language and enforce the policy aswritten. Trivette v. State Farm Mut. Auto. Ins. Co., 164 N.C. App. 680, 684, 596 S.E.2d 448, 451 (2004).
According to the provisions of the insurance policy, in the case sub judice, any legal action against defendant must be brought within three years after the date the physical loss or damage occurred. The language in the insurance contract was clear, an action must be brought within three years after the date on which the physical loss or damage occurred. The date of the fire was 7 March 2001, and EFS resumed operations in March 2002. Plaintiff filed the lawsuit 12 August 2005. Even assuming, without deciding, that the statute of limitations ran for the last date of business income loss in March 2002, plaintiff's lawsuit was not timely filed.
Plaintiff argues that a cause of action does not accrue under the business owners' insurance policy until after a sworn proof of loss form containing the information regarding the loss has been returned to defendant. Plaintiff concludes, that because defendant did not send a sworn proof of loss form, defendant did not comply with the claims procedure in its policy and thereby breached the insurance contract. We disagree.
[A]n insurance contract provision requiring the insured party to file a proof of loss with the insurance carrier should be construed as existing for the benefit of the insurer. Magnolia Mfg. of North Carolina, Inc. v. Erie Ins. Exchange, ___ N.C. App. ___, ___, 633 S.E.2d 841, 844 (2006). Further, an insurer may waive a provision or condition in an insurance policy which is forits own benefit. Id. (quoting Brandon v. Nationwide Mut. Fire Ins. Co., 301 N.C. 366, 370, 271 S.E.2d 380, 383 (1980)). Generally, the waiver is not effectuated by a single act, but rather by a series of acts or a course of conduct inconsistent with an intention to enforce the requirement. Brandon, 301 N.C. at 372, 271 S.E.2d 380 at 384. Some of the relevant factors to consider are: (1) whether the insurer had actual knowledge of the loss; (2) whether an agent or adjuster made representations to the insured indicating that no proofs need be filed; and (3) whether the insurer made partial payment or otherwise indicated a recognition of liability by assurances that an adjustment would be made. Id.
In the case before us, we know that defendant had actual knowledge of plaintiff's loss because defendant immediately hired an accounting firm to investigate plaintiff's claim after receipt of plaintiff's claim for loss of business income. When tendering a settlement offer to plaintiff, the offer was not preceded by a request for a completed proof of loss form. Further, defendant's conduct indicated liability for the loss because defendant attempted to settle plaintiff's claim by submitting an offer of settlement to plaintiff based upon the report generated by the accounting firm. Here, as in Brandon, defendant's series of acts and course of conduct was inconsistent with an intention to enforce the requirement that a proof of loss form be submitted. See Brandon, 301 N.C. at 372, 271 S.E.2d 380 at 384. Therefore, defendant effectively waived the proof of loss requirement byaccepting and acting upon plaintiff's October 2002 letter claiming a loss of business income. See Meekins v. Aetna Ins. Co., 231 N.C. 452, 456, 57 S.E.2d 777, 781 (1950). Since defendant had discretion to waive the requirement for completion of a proof of loss form, defendant's decision to waive the requirement was not a breach of contract.
Plaintiff relies upon F&D Co. v. Aetna Ins. Co., 305 N.C. 256, 287 S.E.2d 867 (1982), to support its contention that the cause of action did not accrue until defendant failed to supply plaintiff with the proof of loss form. In F&D, a provision of the plaintiff's insurance contract required that a lawsuit be brought within the twelve months next following the date of the physical loss or damage out of which such claim arose. Id., 305 N.C. at 263, 287 S.E.2d at 871. The policy also required that proof of loss be submitted to the insurance company and that payment be made for such loss within thirty days after receipt of the proof of loss. Also, F&D involved a statute that prevented an insurance policy from limiting the time period to bring an action to less than one year. Our Supreme Court held that the limitations period in the policy violated the applicable statute. However, because the policy also included a clause which provided that if the limitations period was invalid, the limitations period would become the shortest period possible under applicable law, the Supreme Court held that the limitations period did not begin until the cause of action accrued. The cause of action accrued either thirty days after submission of proof of loss or when the insurancecompany rejected the claim. Id., 305 N.C. at 264, 287 S.E.2d at 871.
F&D is distinguishable from the case before us because in F&D the limitations period in the insurance contract was invalidated by statute. In the case before us, the limitation period provided in the insurance contract is valid and complies with N.C. Gen. Stat. § 58-3-35 (2005) (time to commence action against insurer cannot be less than period prescribed by law) and N.C. Gen. Stat. § 1-52(1) (three year statute of limitations for claims arising under contracts). Additionally, in F&D, the insurance company did not waive the proof of loss requirement. Here, defendant effectively waived the proof of loss requirement by accepting plaintiff's claim, investigating plaintiff's claim, and offering to settle plaintiff's claim. Further, unlike F&D, plaintiff's cause of action in the case sub judice, arose at the time of the loss. Specifically, plaintiff's cause of action was not postponed until defendant's time to respond expired or until defendant rejected plaintiff's claim.
For the reasons stated herein, we affirm the order of the trial court.
Judges GEER and JACKSON concur.
Report per Rule 30(e).
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