The court agreed with State Farm that the insureds' request for an appraisal made after the statute of limitations had run was too late. Stolz v. State Farm Fire and Cas. Co., 2013 U.S. Dist. LEXIS 86834 (S.D. Miss. June 20, 2013).
The insureds' property sustained damage from Hurricane Katrina. State Farm performed an inspection and concluded that both wind and rain contributed to the loss. On November 8, 2005, State Farm denied the claim insofar as it related to flood damage, which was excluded from coverage. State Farm paid $993.69 for wind damage caused by the hurricane.
A year and a half after State Farm paid $993.69, the insureds requested mediation of their claim for the remaining loss. On August 22, 2007, an impasse was declared on the mediation. On July 6, 2010, the insureds requested an appraisal. State Farm declined to enter an appraisal because the three year statute of limitations had already expired on the insureds' claim.
On January 27, 2012, a year and a half after the appraisal request was denied, the insureds filed suit claiming breach of contract and breach of the duty of good faith and fair dealing. State Farm moved for summary judgment seeking dismissal on the grounds that the insureds' claims were barred by the statute of limitations.
State Farm argued the statute of limitations began to run on November 8, 2005 and expired on November 9, 2008. The insureds did not file their complaint until January 27, 2012. Therefore, State Farm argued that the request for appraisal on July 6, 2010, was made outside the limitations. Even if the demand was within the statute of limitations, such demand would not toll the statute of limitations.
The insureds argued that based upon the mediation and their July 6, 2010 request for appraisal, State Farm should be estopped from refusing to participate in the appraisal process and should be required to comply with the terms of the policy.
The court agreed with State Farm. The denial of flood coverage was clearly communicated on November 8, 2005, meaning the statute of limitations expired three years later. Participating in mediation did not toll the statute. Even if State Farm's participation tolled the limitations period for the 78 days of mediation, the statute of limitations would have still expired on January 26, 2009, well before the insured made their appraisal demand on July 6, 2010, or filed their complaint on January 27, 2012. While some other jurisdictions did permit tolling based on appraisal, they only did so after both parties agreed to engaged in the appraisal. Even then, the statute of limitations would not restart but would merely suspend during the appraisal proceedings.
