Limitations on fire insurance can't be extended

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Hon. Neal Nettesheim

An insurer’s partial payments to its insured do not extend the statute of limitations for an action by the insured to collect the balance of the claim, the Wisconsin Court of Appeals held on Oct. 13.

Wieting Funeral Home of Chilton, Inc., had a business owners policy through Meridian Mutual Insurance Company.

On May 12, 2000, Wieting’s funeral home sustained extensive property damage as the result of a storm, and Wieting filed a claim with Meridian for coverage of its damages.

Section 631.83 provides a one-year statute of limitations for an action on a fire insurance policy, but the Meridian policy extended the period to two years to sue for coverage.

Over the course of the following year, from May 12, 2000, through May 14, 2001, Meridian made payments to Wieting for a portion of Wieting’s claim. However, Meridian determined that the structural damage to the roof of the funeral home was not caused by the storm, but rather by "wear and tear." Accordingly, Meridian denied this portion of the claim, notifying Wieting on May 14, 2001, that certain damage was not covered "due to the lack of any hail or wind damage."

Thereafter, the parties continued to communicate about their dispute and possible ways to resolve it. However, in all of these discussions, Meridian continued to deny the claim and repeatedly reserved its rights and defenses under the policy. These discussions proved fruitless, and on Jan. 23, 2003, Meridian offered Wieting $2,500 as "nuisance value" in settlement of the roof claim, but Wieting rejected the settlement offer.

On April 11, 2003, Wieting filed suit against Meridian, alleging a breach of insurance contract due to Meridian’s denial of the roof damage claim. Meridian answered, asserting that Wieting’s action was barred by the one-year statute of limitations set forth in sec. 631.83 and, to the extent the policy extended the statute of limitations to two years, by that additional period of limitation.

Calumet County Circuit Court Judge Donald A. Poppy agreed and granted summary judgment to Meridian. Wieting appealed, but the court of appeals affirmed in a decision by Judge Neal Nettesheim.

Section 631.83 provides in relevant part: "(1) Statutory periods of limitation. (a) Fire insurance. An action on a fire insurance policy must be commenced within 12 months after the inception of the loss. This rule also applies to riders or endorsements attached to a fire insurance policy covering loss or damage to property or to the use of or income from property from any cause, and to separate windstorm or hail insurance policies. … (2) General law applicable to limitation of actions.

Except for the prescription of time periods under sub. (1) or elsewhere in chs. 600 to 646 and 655, the general law applicable to limitation of actions as modified by ch. 893 applies to actions on insurance policies."

Section 893.12 provides: "The period fixed for the limitation for the commencement of actions, if a payment is made as described in s. 885.285(1), shall be either the period of time remaining under the original statute of limitations or 3 years from the date of the last payment made under s. 885.285(1), whichever is greater."

Wieting argued that, pursuant to sec. 893.12, the limitations period should be measured from the date of Meridian’s last partial payment, but the court disagreed, finding that sec. 631.83(2) clearly and unambiguously bars the application of Chapter 893 to a fire insurance policy.

The court concluded, "Wis. Stat. sec. 631.83(2) clearly and unambiguously excepts the time limitations for fire insurance claims from the application of Wis. Stat. sec. 893.12. This subsection reads, ‘Except for the prescription of time periods under sub. (1) or elsewhere in [Wis. Stat.] chs. 600 to 646 and 655, the general law applicable to limitation of actions as modified by ch. 893 applies to actions on insurance policies.’ Thus, the legislature has decreed Wis. Stat. ch. 893 is applicable to actions on insurance policies, but not to actions on fire insurance policies, actions under chs. 600 to 646, and actions under ch. 655."

The court acknowledged that, in Landis v. Physicians Insurance Co. of Wisconsin, Inc., 2001 WI 86, 245 Wis. 2d 1, 628 N.W.2d 893, the Wisconsin Supreme Court looked to Chapter 893 in ruling that the statute of limitations was tolled in a medical malpractice action, even though medical malpractice actions are governed by Chapter 655, but found Landis inapposite for two reasons.

First, the court noted that the Supreme Court’s decision in Landis does not address sec. 631.83 or the potential consequences of that statute on the case. Second, the court noted that although sec. 631.83(2) excepts medical malpractice actions from the provisions of Chapter 893, the chapter nonetheless expressly sets out the statute of limitations applicable to such actions, in sec. 893.55.

In contrast, nothing in Chapter 893 expressly speaks to the statute of l
imitations for fire insurance policies.

The court concluded, "Wis. Stat. sec. 893.12, the ‘[a]dvance payment[s]’ tolling statute relied upon by Wieting, is a general statute that applies to all personal injury and property damage actions. On the other hand, sec. 631.83(2) speaks specifically to fire insurance policies and clearly excepts such policies from the provisions of ch. 893. When two statutes relate to the same subject matter, the specific statute controls over the general statute."

Estoppel

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The court also found that Meridian is not estopped from asserting the statute of limitations as a result of its continued negotiations with Wieting. The court wrote, "we see nothing in Meridian’s conduct indicating a lack of good faith, fraud, or inequitable behavior. We agree with the trial court’s determination that ‘[Meridian] did not engage in any behavior that was unfair or misleading, and it did not engage in any misrepresentations. It did not engage in any behavior contrary to public policy.’

From the very outset, Meridian was, in the trial court’s words, ‘up front’ with its denial of Wieting’s roof damage claim. And while offering to reconsider if adequate proof to the contrary was proffered, Meridian never wavered from its stance denying the claim. Each and every letter from Pritchett to Wieting or its representatives reconfirmed that Meridian was standing by its denial letter of May 14, 2001. In addition, each and every letter expressly reserved Meridian’s rights and defenses under the policy. Given this repeated warning, we are hard pressed to say that Meridian engaged in fraudulent, inequitable, unfair or misleading conduct sufficient to outweigh the public interest served by the law of statute of limitations."

Accordingly, the court affirmed.

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David Ziemer can be reached by email.