Late filing Defeat suit
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IN Waseem Daker v. State Farm Fire And Casualty Company, No. 21-3210, United States Court of Appeals, Seventh Circuit (Feb. 3, 2023), more than a year after he suffered property damage, Waseem Daker sued State Farm Fire and Casualty Company for insurance coverage, despite knowing that his insurance with State Farm requiring him to file suit within a year of loss. The trial court granted State Farm’s motion to dismiss. It ruled that the policy’s provision was enforceable and Daker’s action was time-barred.
FACTS
Daker, who had been in prison in Georgia for over a decade, retained ownership of a home in Georgia. According to Daker, the property was insured by State Farm, a company incorporated in Illinois. Daker alleges two incidents require coverage: First, tenants “abused and vandalized” the home through June 2017; then, in January 2018, Daker’s brother broke into the home and damaged it further.
Daker filed two insurance claims with State Farm for the damage to his property (one claim for each incident). State Farm denied both claims. In the denial letter, which Daker received in March 2018, State Farm alerted Daker to the provision of his insurance that required him to file suit within one year of the date of claim, it stated:
Suit Against Us. No action shall be brought unless the insurance provisions have been complied with and the action is commenced within one year after the date of loss or damage.
About two years later, in February 2020, Daker sued in federal court in Illinois, asserting diversity jurisdiction. As relevant on appeal, he argued that State Farm breached its policy by denying coverage for his property damage. Daker admitted that he sued after the one-year statute of limitations in his contract with State Farm, but he argued that the period did not matter because, among other things, the provision was unreasonable and State Farm had misled him about it.
After allowing Daker to amend his complaint three times, the district court granted State Farm’s motion to dismiss, with prejudice. Moreover, Daker lacked a valid defense to the provision, given that State Farm told him about it by denying his claims. The one-year statute of limitations barred Daker’s suit, which he filed nearly two years after the last date of property damage.
Daker argued that his complaint was not time-barred because estoppel, equitable estoppel, and equitable tolling defeat the limitation defense. Daker primarily relied on his argument in his motion for reconsideration that State Farm never delivered to him a copy of the policy he says he needed to sue. He contacted his State Farm agent in early 2018 to request another copy of his policy, and she promised to send it to him, but never did. Daker contends that he injuriously relied on the State Farm agent’s promise, so that a promissory note and equitable estoppel would toll the statute of limitations. Daker adds that fair fees also apply because for a time he was unable to access his prison law library, which he also needed to prepare his complaint.
ANALYSIS
Under Illinois law, statutes of limitations—and defenses to them—are governed by the law of the forum. Illinois law regarding the validity of contractual terms superseding statutes of limitations and fees, such contractual term is upheld if it was knowingly and voluntarily accepted, is reasonable, and is consistent with public policy. Georgia law, which Daker favors, is similar: these provisions are generally enforced unless they are unconscionable or so unreasonable as to give rise to a presumption of undue advantage. An equitable defense requires a showing that Daker, despite exercising due diligence, failed to discover the facts material to his claim within the statute of limitations.
The one-year limitations provision in State Farm’s policy is valid.
The severance is reasonable because it gave Daker enough time to bring suit after his loss date. He knew of the deadlines because State Farm notified him of the limitation in its denial of his claim and it reminded him of the one-year deadlines.
Daker claimed he needed the policy to help him prepare his complaint, but his own actions belied that claim: He prepared and filed his complaint. without the promised copy of the policy, and no one has suggested that his complaint insufficiently alleges breach of contract.
He also based the defense on his inability to access his prison’s law library. But he didn’t need the library to allege that State Farm breached its contract, which he told the court he knew when he received the letters from it with waning coverage.
State Farm took no chances with the felon, Daker, by not only denying his claims in writing and warning him — as state regulations require — that the policy contained a one-year private limitation of actions. Daker ignored the warning, arguing with the ingenuity of a prison lawyer that fairness required that the statute of limitations be ignored because State Farm did not provide a copy of the policy and Georgia did not give him access to the prison law library. Both arguments failed because, without the policy or law library, he filed an effective lawsuit, but filed it too late. Because the district court gave Daker three attempts to plead a viable cause of action, State Farm was required to pay a large amount of money to an attorney to defend the charges and waste the court’s time, perhaps because Daker was bored after serving ten years in prison.
(c) 2023 Barry Zalma & ClaimSchool, Inc.
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Barry Zalma, Esq., CFE, now limits his practice to serving as an insurance consultant specializing in insurance coverage, insurance claims management, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims attorney and more than 54 years in the insurance industry. He can be reached at http://www.zalma.com and zalma@zalma.com
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