Sometimes simple common law principles are the best way to litigate against insurance companies. Specifically, if the insurance policy calls for a two-year limitations period to sue, make sure your attorney alleges common law negligence against the insurance carrier if you want the benefit of the longer, three-year, statute of limitations period (assuming the facts support a negligence claim, of course).
In this Long Island oil spill case, plaintiffs carried an insurance policy (the "Policy") with defendant State Fire Farm and Casualty Company (State Farm) that provided coverage for cleanup of the insured property pursuant to the New York State Department of Environmental Conservation's orders. State Farm provided coverage under the Policy, and with its consultant, H2M, supervised the cleanup work. However, it appears that, according to plaintiffs, State Farm and H2M "caused additional damage to the property," beyond that incurred by the initial oil contamination incident due to their negligent supervision of the cleanup.
As summarized by the Supreme Court (J. Palmieri, Nassau Co.):
- State Farm engaged an engineering firm, H2M, to supervise the investigation and remediation of the [oil] spill. In the Fall of 2011, areas of contaminated soil remained and were identified by H2M. According to the complaint, State Farm authorized and paid for the preparation of plans for the removal of all remaining petroleum-contaminated soil, which led to excavations at the premises through the winter of 2011-2012. However, plaintiffs were advised by a remediation contractor that because the excavations had exposed the home and foundation to the elements and changes in temperatures, extensive structural damage could result.
Plaintiffs agreed to a State Farm request to delay temporarily the remediation until spring/summer of 2012, when the work would be completed. Plaintiffs further allege that by agreement with State Farm excavation sites were temporarily backfilled, but that State Farm reneged on its pledge to finish the remediation in spring/summer of 2012. During the summer of 2013, plaintiffs and State Farm developed and "are developing" plans for restoration of the premises, but that State Farm would not pay to return the property to its pre-spill condition. Although plaintiffs expended their own funds in the cleanup, a substantial amount of contaminated soil remains. The complaint alleges that "the remediation of the Premises is continuing."
Bennett v. State Farm Fire & Cas. Co., 43 Misc. 3d 1224(A), 992 N.Y.S.2d 157 (N.Y. Sup. Ct. 2014).
As part of its defense, State Farm alleged that plaintiffs' claims were untimely because the Policy provided that "[n]o action shall be brought [against State Farm] unless there has been compliance with the policy provisions and the action is started within two years after the occurrence causing loss or damage." The Second Department considered that provision of the Policy ambiguous and construed it against State Farm, by highlighting that it applies only to suits alleging breach of the "policy provisions." The court noted that, in this action, plaintiffs did not allege breach of the "policy provisions" because State Farm did not fail to pay for the damages in violation of the policy. Instead, plaintiffs allege that State Farm acted negligently in connection with its supervision of the remediation work at the subject property. The Second Department held that, under these circumstances, the provision of the Policy providing for a two-year limitations period is inapplicable.
In reversing the Supreme Court, the Second Department determined that the plaintiffs' complaint states a viable negligence cause of action against State Farm independent of the Policy, "although it may be connected with and dependent upon the contract." While the complaint failed to plead conduct potentially warranting punitive damages (i.e., conduct "showing of reckless disregard for the rights of others"), the Second Department found a negligence claim sua sponte and held that the complaint properly alleged that "State Farm, and H2M, acting as State Farm's agent, failed to exercise reasonable care in the course of supervising remediation and repair, and that such failure caused additional damage to the property."
The lesson, here, of course is that when possible, ensure that a negligence claim is plead in order to take advantage of the 3-year statute of limitation - not all courts will find a negligence claim where one is not plead properly.