33 F.4th 932
7th Cir.2022Background
- In May 2016 hail/wind damaged north-facing sides (and roofs/gutters) of Legend’s Creek condominium buildings; Legend’s Creek (HOA) filed a claim with Travelers in Sept. 2016.
- Legend’s Creek retained public adjuster Kris Kassen; Travelers’ agent Steven Knopp and Kassen negotiated repairs and supplemental payments through 2017–2018. Travelers paid initial and additional amounts and ultimately agreed to replace and paint the damaged north-facing sides.
- Less than three weeks before the policy’s two-year contractual suit limitation (from date of loss), Kassen demanded replacement of all building sides as mismatched; Knopp denied that late request in June 2018.
- Legend’s Creek sued Travelers in July 2018 (26 months after loss) for breach of contract and bad faith; Travelers moved for summary judgment arguing the suit was time-barred under the two-year contractual limitation.
- During litigation a magistrate compelled appraisal for discovery; the appraiser issued an award for the alleged mismatch, but the district court later granted summary judgment for Travelers and held the appraisal award invalid as outside the two-year limitation.
- On appeal the Seventh Circuit affirmed: the two-year suit limitation was enforceable, no waiver or equitable tolling applied, and the appraisal award and post-deadline motion to compel appraisal were void.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of the two-year suit limitation | The policy’s cooperation/"full compliance" clause made it impossible to sue within two years when investigation/adjustment continued, creating ambiguity | The insured could have complied and filed suit before the deadline; negotiations did not render compliance impossible | Court: Limitation enforceable; policy not ambiguous here and Legend’s Creek could have sued within two years |
| Waiver by continued negotiation | Continued claims handling and supplement payments past deadline amounted to waiver or implied promise not to insist on the limitation | Payments and negotiation were for the claim and supplements, not an ongoing settlement of the same dispute past the deadline; no conduct reasonably implying waiver | Court: No waiver; negotiations did not demonstrate insurer relinquished right to rely on the limitation |
| Duty to notify or conscious silence re: deadline / failure to answer inquiry | Travelers’ agent’s failure to respond to an inquiry about a deadline and general communications estopped Travelers from invoking the limitation | Indiana law imposes no duty to notify insured that insurer will rely on contractual suit limitations; silence to a question about a non-existent replacement-cost deadline doesn’t create waiver | Court: No duty to notify; silence/failure to answer did not reasonably lead insured to believe limitation would be waived |
| Validity of appraisal award and motion to compel appraisal filed after the two-year limit | Appraisal was proper and award binding as to damages | Appraisal process and motions filed after the contractual two-year limit are "legal actions" barred by the limitation; appraisal award is void if compelled outside the limitation | Court: Appraisal motion and award filed post-deadline are barred and invalid; district court did not abuse discretion |
Key Cases Cited
- Miller v. Chicago Transit Auth., 20 F.4th 1148 (7th Cir. 2021) (standard of review: summary judgment reviewed de novo)
- Summers v. Auto-Owners Ins. Co., 719 N.E.2d 412 (Ind. Ct. App. 1999) (insurer conduct can implicitly waive contractual limitation if it causes insured reasonably to believe period won't be insisted on)
- State Farm Mut. Auto. Ins. Co. v. Jakubowicz, 56 N.E.3d 617 (Ind. 2016) (policy ambiguity where exhaustion requirement prevents timely filing)
- Auto-Owners Ins. Co. v. Hughes, 943 N.E.2d 432 (Ind. Ct. App. 2011) (no duty for insurer affirmatively to notify insured it will rely on suit limitation)
- Huff v. Travelers Indem. Co., 363 N.E.2d 985 (Ind. 1977) (waiver found where parties negotiated the same claim past the contractual deadline)
- Schafer v. Buckeye Union Ins. Co., 381 N.E.2d 519 (Ind. Ct. App. 1978) (waiver applies when insurer neither denies liability nor insists on limitation and continues settlement negotiations)
- Continental Ins. Co. v. Thornburg, 219 N.E.2d 450 (Ind. Ct. App. 1966) (equitable tolling where insurer’s conduct induces insured to refrain from suing)