Skanska USA Building, Inc. v. Zurich American Insurance Company
1:24-cv-12607
D. Mass.May 19, 2025Background
- Skanska USA Building, Inc. was the construction manager for a new high school and middle school in Belmont, Massachusetts, under a contract with the Town of Belmont.
- Skanska constructed a geothermal HVAC system for the project; during the project, a coupling failed in July 2021, leading to the release of water-glycol and air entrapment in the system, resulting in ongoing repairs and damages.
- Zurich American Insurance Company issued a Completed Value Builders Risk Policy for the project, naming the Town of Belmont as insured, that included various deductibles and limitations for defective work claims.
- Skanska (or the Town, on its behalf) submitted a $600,735 claim to Zurich for repair and remediation of the HVAC system breakdown and related issues.
- Zurich partially denied coverage, citing deductibles and exclusions, and argued the claim was untimely based on the policy’s suit limitations clause.
- Skanska filed suit for declaratory judgment, breach of contract, and breach as third-party beneficiary; Zurich removed the case to federal court and moved to dismiss based on purported untimeliness of the suit.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicability of Mass. Gen. Laws ch. 175, § 99 to policy | § 99 does not apply because the policy is a builder’s risk policy, not a standard fire policy | § 99 applies, making the policy’s two-year limitation provision enforceable | § 99 does not apply to this builder's risk policy |
| Validity of suit limitation clause under Mass. Gen. Laws ch. 175, § 22 | The policy’s limitation clause is void under § 22 because it starts the clock at loss, not denial of claim | The suit is time-barred because it was filed more than two years after the loss commenced, as the policy requires | The limitations clause is void and unenforceable under § 22; clock runs from denial of claim |
| Timeliness of Skanska’s action | Claim accrues at time of Zurich’s denial (Feb 13, 2024); suit filed timely | Claim accrues at time of loss (July 7, 2021); suit filed too late | Suit is timely, claim accrual is at denial of claim |
| Reasonableness of policy’s shortened limitations period | Shortening statute of limitations to less than two years from accrual violates public policy and is barred | Shortened limitations period is permissible and contractually agreed | The limitations period is not reasonable or valid; policy provision unenforceable |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility pleading standard for motions to dismiss)
- Ashcroft v. Iqbal, 556 U.S. 662 (plausibility pleading and factual content required to state a claim)
- Riverdale Mills Corp. v. Fireman's Fund Ins. Co., 123 F. Supp. 2d 37 (property insurance in Massachusetts must adhere to § 99 standard form)
- Gabelli v. S.E.C., 568 U.S. 442 (claims generally accrue when the plaintiff has a complete and present cause of action)
- Foisy v. Royal Maccabees Life Ins. Co., 356 F.3d 141 (under Massachusetts law, contract claims generally accrue at breach)
- Goldsmith v. Reliance Ins. Co., 353 Mass. 99 (limitations selected by parties to insurance policy must comply with statutes and public policy)