Seven years ago, Merlin Law Group lawyer Shane Smith wrote a blog post about how insurance often shortens Tennessee's statutory restrictions. 1 The limitation period applicable to contracts is specified in Tenn. Code Ann. § 28-3-109 (a) (3) and limits the time during which an insured can bring an action against his insurance company to six years. Shane noted that Tennessee courts have argued that shortening the time a case must be brought before a court from six years to one year remains valid in Tennessee and can be enforced under any Tennessee insurance policy. But what if this one-year restriction has expired? Is there anything an insured can do? Fortunately, there is!
To overcome this contractual limitation, a fair estoppel argument can be successful. In Imperial Park, LLC v. Penn-Start Insurance Company insured persons make a number of arguments in response to the insurance company's Motion for Summary Judgment that prevent recovery from the contractual limitation ̵
If a party through promises or appearances is induced to believe that the other party will pay a claim or otherwise satisfy the requirements of the first party, and in relies on the representation that the fist party delays the submission of complaints within the applicable limitation period, the party representing the representation may be proposed to increase the limitation period as a defense. 2
In Imperial Park the insurance company continued to negotiate with the insured before, during and after the contractual limitation date. The court found that this continued negotiation led the insured to believe that the parties were working on a resolution. The continued negotiations served as a incentive on which the insured relied not to wear a suit within the contractual limit. Due to this reasoning, the court considered that the insurance company is barred from raising the limitation argument.
Another Tennessee case is Certain Underwriter & # 39; s at Lloyd & # 39 ;s of London v. Transcarriers . In fact, the insurance company never denied the claim and stated that they continued to investigate the claim. 3 The Court of Appeal stepped aside by stating whether the contractual limitation defense has ceased to be a fact. for the court that is not before them now; however, the court noted in dicta that:
The insurer may also refrain from claiming the limitation period as a defense where it misleads the insured into believing that his claim will be paid and thus insure the insured to inaction, or where the insurer intentionally delayed the adjustment of the claim until after the limitation period had expired. 4
Alternatively in Das v. State Farm Fire and Casualty Company, The Supreme Court of Tennessee denied a petition in which the Board of Appeal held that renewal of discussions on coverage after denial did not burden or reinstate the contract in the insurance policy. 5 The Court found that “there is no evidence that the defendant [the insurance company] requested a delay in the complaint or that the plaintiff [the insureds] was forced to delay his complaint by the defendant's agreement. 6 The insurance company only agreed that he insured could apply for further inspections at his own expense, which is not sufficient to meet the incentive requirement. However, the Court notes that if the supplementary report had been delayed after the contractual limitation date, incentives could exist.
In addition, an insured person can not just sit and wait for the insurance company to act. In Brick Church Transmission, Inc. v. Southern Pilot Insurance Company the insured also raised the estoppel argument in response to a contractual limitation in the policy, but the court found no basis for estoppel based on the protocol. 7 The Court noted that the Protocol noted that the insured or the insurance company did not act for the last 23 months before the expiry of the contractual restrictions.
Fair estoppel is a doctrine of justice that aims to prevent one party (the insurance company) from benefiting the other party (the insured) through words or conduct. Access to a fair estoppel defense in each individual case is highly fact-dependent and not particularly favored in court. But such a defense can save an otherwise dead case from a movement to reject.
1 Shane Smith. Police language that shortens Tennessee's restrictions . The property. Blog about copyright. January 19, 2014. https://www.propertyinsurancecoveragelaw.com/2014/01/articles/insurance/policy-language-which-shortens-the-tennessee-statute-of-limitations/  2 Imperial Park, LLC v. Penn-Start Ins. Co. 133 F.Supp.3d 1003, 1027-28 (MD Tenn., 2015), cites Sparks against Metro Gov & # 39; t of Nashville 771 SW2d 430 (Tenn. Ct. App. 1989).
3 Some underwriters at Lloyd & # 39 ;s of London v. Transcarriers Inc. 107 SW3d 496, 500 (Tenn. Ct. App., 2002), cite Das v State Farm Fire & Cas. Co. 713 S.W.2d 318, 323 (Tenn. Ct .App. 1986).
5 Das v. State Farm Fire and Cas. Co. 713 S.W.2d 318 (Tenn. Ct. App. 1986).
6 Id. at 323.
7 Brick Church Transmission, Inc. v. Southern Pilot Ins. Co. 140 S.W.3d 324 (Tenn. Ct. App. 2003).