One should always be aware of contractually shortened statute of limitation provisions in insurance contracts, as was highlighted in the recent case of Chandler Management Corp. v. First Specialty Insurance (Sup. Ct. N.Y. Co. Docket No. 509677/15).
In this case, Chandler purchased insurance coverage for an apartment complex it owned in Dallas, Texas. The policy specifically stated that the parties submitted to the exclusive jurisdiction of the New York courts, and that the laws of the State of New York would govern. More importantly, the policy stated that any lawsuits regarding coverage must be commenced within twelve months of the date of the physical loss or damage.
According to Chandler, its apartment sustained roof damage on or about May 24, 2011. On June 25, 2012 it commenced a lawsuit in the District Court of Dallas, Texas, apparently unaware of the above noted provisions. The case was dismissed by the trial level court because of the New York forum selection clause and this holding was affirmed on appeal.
More than three years later Chandler commenced an action against First Specialty in the Supreme Court of New York County.
Justice Karen Rothenberg, in a decision dated May 4, 2016, dismissed the complaint finding that contractually shortened statute of limitation provisions, with a twelve month time limitation, have previously been held to be enforceable. The case was dismissed because the action was not commenced in New York within one year of the physical damage. It was not helpful to plaintiff’s claim, moreover that the case it had previously commenced in Texas also failed to meet the one year statute of limitations.
The moral of the story is that one must always be vigilant in reviewing insurance policies to make sure any claim regarding coverage is timely interposed.