McDonnell v. State Farm Mutual Automobile Insurance Company
299 P.3d 715
Alaska2013Background
- McDonnell sued State Farm for declaratory relief on appraisal of a UM/UIM dispute under AS 21.96.035 and on the enforceability of a two-year contractual limitation to file suit.
- The accident occurred August 7, 2007; Luke and McDonnell claim UM/UIM benefits for injuries, with two policies at issue.
- McDonnell filed the complaint on August 7, 2009, seeking appraisal under the statute and to void the two-year limit as against public policy.
- The Superior Court held AS 21.96.035 does not apply to personal injury claims and that the two-year limit is enforceable only if prejudice is shown, with accrual at denial of coverage, not at the accident.
- Both sides cross-appealed; the issue also involved whether the two-year provision is moot or subject to public policy.
- The Alaska Supreme Court affirmed: AS 21.96.035 does not apply to personal injury claims, and State Farm’s two-year limitation is enforceable subject to prejudice and accrual at denial of the contract.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does AS 21.96.035 apply to UM personal injury claims? | McDonnell argues it applies to personal injury claims as a form of ‘personal property’ loss. | State Farm argues it applies only to tangible property losses and not to choses in action like injuries. | AS 21.96.035 does not apply to personal injury claims. |
| Is the two-year contractual limitation provision enforceable against UM claims? | McDonnell contends the provision is void as public policy. | State Farm argues the clause is enforceable if prejudicial delay is shown under Estes. | Enforceable subject to prejudice requirement. |
| What is the generally applicable limitations period for UM claims and accrual date? | UM claims should follow contract-based three-year limitations, accruing at breach. | State Farm argues the tort two-year or contract three-year period may apply depending on accrual. | UM claims generally accrue on denial/breach of the contract, with a three-year contract statute of limitations applying. |
| When does the contractual limitations period begin to run for UM claims? | The accrual date is the breach date, i.e., when denial or refusal to pay occurs. | The contract purports to begin on the accident, shortening time before accrual. | Contractual limitations do not commence before accrual; begin at denial/breach. |
| Does Estes require prejudice showing to enforce a shortened UM limitations period? | McDonnell relies on public policy to void the clause outright. | State Farm must show prejudice to enforce a shortened period per Estes. | Estes prejudice requirement applies; clause enforceable only with prejudice shown. |
Key Cases Cited
- Estes v. Alaska Ins. Guar. Ass’n, 774 P.2d 1315 (Alaska 1989) (prejudice required to enforce shortened contractual limitations in insurance)
- Fireman’s Fund Ins. Co. v. Sand Lake Lounge, Inc., 514 P.2d 223 (Alaska 1973) (validates contractual time limitations if reasonable and purpose aligned; prejudice concept)
- Curran v. Progressive Nw. Ins. Co., 29 P.3d 829 (Alaska 2001) (contracts/insurance claims approach; public policy limits)
- Wing v. GEICO Ins. Co., 17 P.3d 783 (Alaska 2001) (insurance contract interpretation; prejudice considerations)
- Howarth v. First Nat. Bank of Anchorage, 540 P.2d 486 (Alaska 1975) (contracts/statutes of limitations in Alaska context)