LATCHUM, District Judge.
This action, commenced in the Superior Court of the State of Delaware on
The defendant has moved for summary judgment on the ground that the one-year limitation of action clause contained in the policy bars the present suit.
The plaintiffs insured their motel property with defendant for a 5-year term on February 5, 1961 through defendant's local agent, C. L. McCabe & Son, Inc. The motel was seriously damaged by storms which occurred on March 6, 1962 and June 24, 1962. The claim in the instant suit, however, relates only to damage allegedly caused by the windstorm of June 24, 1962.
Within a half-hour after the June 24th storm, the plaintiff had a friend telephone Clay D. McCabe, an associate of defendant's local agent, and report the storm damages. The following day Clay McCabe and Mr. L. W. Bothum of the General Adjustment Bureau
The plaintiff, not understanding why his claim had not been paid, contacted the General Adjustment Bureau sometime around the end of May or the first of June, 1963 and upon learning that Mr. Bahen had died became concerned about the long delay. It was at this point, on June 4, 1963, that plaintiff went to Baltimore and retained a lawyer, Claude F. McKenzie, to represent him in connection with his claim against Continental. McKenzie, in plaintiff's presence, telephoned Bryce L. McCabe, another associate of defendant's local agent, and asked why plaintiff's loss had not been paid. McCabe said that the plaintiff had not submitted a proper proof of loss and that it would be necessary for plaintiff to resubmit a detailed breakdown of the damage to each building. Since the actual repair bills had been sent to the General Adjustment Bureau in December, 1962, it was necessary to retrieve them to permit the plaintiff to make a building-by-building breakdown of the losses. Accordingly, McKenzie then telephoned Mr. J. K. Schmid of Continental in Baltimore and arranged to have the General Adjustment Bureau return the bills to the plaintiff. Schmid also told McKenzie that in order to settle the losses a proper proof of loss would have to be filed. McKenzie received the impression from his conversation with Schmid that there would be no problem in adjusting the building losses but that there was a problem with respect to the furniture losses. McKenzie wrote to Schmid under date of June 5, 1963 confirming his arrangement about the bills and Schmid replied by letter on June 6th indicating that the bills had been returned to Bryce McCabe for plaintiff's use. Schmid's letter concluded by saying that he would be happy to discuss the claim with McKenzie when the proof of loss had been completed.
The repair bills were mailed to C. L. McCabe & Son, Inc. in Selbyville, Delaware and received by the plaintiff on June 19, 1963. Sometime between June 10th and 19th, Schmid telephoned McKenzie and arranged an appointment for June 21st or 22d for the purpose of discussing settlement. This meeting was cancelled by Schmid and McKenzie so notified the plaintiffs about June 19, 1963.
On June 22, 1963, McKenzie, while visiting plaintiffs' motel, asked to see the insurance policy. He was told that the plaintiffs never had a copy of the policy
On June 25, 1963, McKenzie again spoke with Schmid and advised that he had the breakdown of the repair bills which he had brought back with him after his weekend visit with the plaintiffs. Schmid told him he would contact Strehler of General Adjustment Bureau and arrange a date to discuss settlement of the claim.
On June 28, 1963, Schmid and Strehler met in McKenzie's office with McKenzie and the plaintiff. Schmid and Strehler first asked the plaintiff to leave the room and then asked McKenzie whether he had filed suit. When McKenzie answered "no", he was informed that the policy contained a one-year limitation provision and that the time for filing
On July 5, 1963, plaintiff consulted with H. Edward Maull, a Delaware attorney, and instructed him to file suit but instead of filing suit Maull requested the State Insurance Commissioner to investigate the defendant's practice of issuing a memorandum of insurance not identical with the insurance policy. When Maull had not filed suit by December, 1963, plaintiff retained Everett Warrington as his attorney. On Warrington's advice plaintiff signed a non-waiver agreement and negotiations toward a settlement commenced. In April, 1964, the defendant offered $9,830.08 in settlement of the claim. Warrington still not having filed suit, became seriously ill and suggested that plaintiff retain A. Dean Betts as his attorney. Plaintiff retained Betts "on his promise to file suit immediately." Plaintiff called Betts frequently during the fall and winter of 1964, forwarded the suit filing fee upon request, and was repeatedly assured that suit would be filed soon. In February, 1964, plaintiff learned that Betts had turned the matter over to another Delaware lawyer, James Sabo, who had also delayed filing suit. At this point plaintiff asked Paul R. Reed, another Delaware attorney, if he had time to file suit. Upon being assured that Reed had time and would file suit, plaintiff retained Reed who said he would study the file and contact plaintiff. Reed, without consulting plaintiff further, wrote him and recommended that plaintiff accept the defendant's previous settlement offer of $9,830.08. Plaintiff, believing that Reed was confusing the matter with another of plaintiff's claims, then retained his present counsel who brought suit in the state court on May 12, 1965. As previously stated, the defendant brought a timely petition of removal and the case was subsequently removed to this Court on June 3, 1965.
The defendant has moved for summary judgment contending that the one-year limitation clause of the policy bars the present action.
In order to grant summary judgment the Court must find that no genuine issue of material fact exists and that the movant is entitled to judgment as a matter of law. The plaintiff resists the application of the one-year limitation provision in this suit for two main reasons: first, for the failure of the "Memorandum of Insurance" to include the one-year limitation clause; and second, for the alleged bad faith of the defendant's agents in "lulling" the plaintiffs into a false sense of accommodation during the one-year period between June 24, 1962, the date of the loss, and June 28, 1963, when liability was denied. While the parties differ as to the inferences and conclusions to be drawn from the conduct of the defendant prior to June 28, 1963, the basic issue here is whether any genuine issue of material fact is in dispute. On the view which the Court takes of the cause, any factual dispute concerning the failure to include the limitation clause in the memorandum of insurance, or concerning the conduct of defendant's agents before June 28, 1963 is not material to the determination of the present motion.
It is undisputed that on June 28, 1963, defendant's agents informed plaintiff's attorney McKenzie that the policy
Assuming, however, for the purposes of this motion that the failure to include the limitation provision in the memorandum of insurance was misleading and therefore would have prevented the defendant from asserting the clause as a bar to any action commenced before June 28, 1963, this Court, nonetheless, concludes that such failure to include the limitation clause in the memorandum of insurance (and any factual dispute related to such failure) does not affect the determination of the present motion. Although it may be assumed that an estoppel to raise the defense as of June 28, 1963 could have been based on the failure to include the limitation provision in the memorandum of insurance, this defect was effectively cured by notice of the one-year limitation period which the plaintiffs and their attorney received from the defendant on June 28, 1963. Thus, the one-year limitation period commenced to run, at least as of June 28, 1963, but as previously noted, suit was not filed until nearly two years later.
Plaintiffs' second ground for challenging the applicability of the one-year limitation clause is the allegedly misleading conduct of the defendant during the one-year period following the loss. Assuming such conduct was so inequitable as to estop the defendant from asserting the limitation period as of June 24, 1963, the question before the Court is whether any issue of fact relating to defendant's conduct before June 24, 1963, which would have justified an estoppel as of that date, is relevant to determining the present motion, when suit in fact was not brought until May 12, 1965, almost two years later.
The plaintiffs here apparently proceed on the theory that if there was any basis for an estoppel existing on June 24, 1963, the conduct and circumstances which would have justified an estoppel at that time should be held to bar the defendant completely and permanently from ever relying upon the limitation clause of the contract. This theory is an attempt to deal with the undisputed failure of plaintiffs to bring suit until nearly two years after notice of the limitation period and almost three years after the loss. Significantly, plaintiffs have not relied in any way on the defendant's conduct after June 28, 1963 in opposing the present summary judgment motion. Plaintiffs' contention that defendant's conduct before June 28, 1963 permanently bars defendant's reliance on the one-year limitation period is incorrect as a matter of law. This error stems from plaintiffs' failure to distinguish between the concepts of waiver and estoppel.
In this case the record is clear there was no express waiver of the one-year limitation period by the defendant. Furthermore, while the Delaware cases recognize that a waiver can be established "by such conduct as clearly indicates an intention to renounce a known privilege or power" (Nathan Miller, Inc. v. Northern Ins. Co., supra, 39 A.2d at 25), in this case it must be emphasized that plaintiffs have in no way relied on the theory of waiver either in their brief or argument and have pointed to no facts which clearly indicate that the defendant intentionally waived its rights under the one-year limitation clause. On the contrary, plaintiffs have grounded their argument exclusively on the inequity of allowing the defendant to rely on the one-year limitation provision because of defendant's allegedly misleading conduct. Plaintiffs' failure to frame their argument before this Court in terms of waiver may possibly indicate plaintiffs' recognition that no basis for a waiver can be established. In any event, this Court, after an independent examination of the record in the light of the standard for establishing a waiver under Delaware law, finds no indication of any action by the defendant which suggests or even intimates an intention to renounce its rights under the one-year limitation clause.
The problem raised by the plaintiffs' confusion of the doctrine of waiver and estoppel was considered in Insurance Co. of North America v. Board of Education, 196 F.2d 901 (C.A.10, 1952). In that case, remarkably similar to the one at bar, the plaintiff had purchased a standard fire policy from the defendant insurance company. The policy, whose provisions were prescribed by statute in Oklahoma, contained a standard one-year limit on the time when an action could be brought on the policy.
The loss in question occurred on January 7, 1947. The action to recover on the policy was not commenced until August 25, 1949, more than two and one-half years after the loss was incurred. The trial court found that because the defendant had engaged in dilatory tactics, had continued to negotiate with the School Board for settlement of the claim until February, 1948 and had not denied liability until April, 1948, the School Board had been led to believe that the loss would be adjusted. The trial court thus concluded that the defendant's conduct was so inequitable as to deprive it of the defense that the action was barred by the one-year limitation provision.
To the same effect is Roumel v. Niagara Fire Insurance Co., 225 A.2d 658 (D.C.Appeals, 1967). There plaintiff sustained fire damages to his premises on May 20, 1962. Approximately five months later, the insurance company refused to proceed with an appraisal agreement. No action was taken by either party until May 18, 1965, nearly three years after the fire, at which time suit was brought. The policy contained a standard one-year limitation of action clause. In granting defendant's motion for summary judgment based on plaintiff's failure to bring suit within the contractual one-year period, the court found "without merit" the plaintiff's contention that a decision in defendant's favor would allow insurance companies "to avoid payment of claims by entering into prolonged negotiations and then withdrawing after the twelve-month limitation [had] passed."
The present case must also be contrasted with Nathan Miller v. Northern Ins. Co., supra. In Nathan Miller the plaintiff claimed that defendant's examination of the damage and an offer of settlement constituted a waiver of the 60-day period for submitting proof of loss. The court stated: "A distinct recognition of liability of the company, made under such circumstances as reasonably to show that it is satisfied as to the loss, will amount to a waiver of formal notice and proofs or of defects therein."
In the present case, the defendant made an offer of settlement of $9,830.08 in April, 1964. Does this offer then raise any question as to the propriety of summary judgment for the defendant in this case? This Court is of the opinion that Nathan Miller and other Delaware cases relating to the timeliness of filing formal proofs of loss are distinguishable. First, it must be noted in the present action that plaintiffs on the advice of counsel signed a non-waiver agreement before the offer of settlement was made. Second, the plaintiffs have not suggested that defendant's settlement offer or any
Nor is GMC Realty Corp. v. Girard Fire & Marine Ins. Co., 8 Terry 216, 89 A.2d 857 (1952) applicable. In that case the plaintiff signed a non-waiver agreement after the expiration of the 60-day period for filing proof of loss. The court noted, however, that on more than one occasion after the non-waiver agreement was executed the defendant had offered to pay the amount of the lowest estimate of damage incurred in plaintiffs' fire loss. The important difference between GMS Realty Corp. and the present case is that in GMS the defendant, in spite of the non-waiver agreement, never raised any question concerning the failure to file a proof of loss until the action was commenced. In the present case, it is undisputed that the defendant advised the plaintiffs of the one-year limitation provision and denied liability on that ground long before the non-waiver agreement was signed. Therefore, the giving of notice of the existence of the limitation provision, coupled with the later signing of a non-waiver agreement by plaintiffs, on the advice of counsel, provide no basis for inferring an intentional relinquishment by the defendant of its right to rely on the one-year limitation provision.
Thus, this Court finds that the plaintiff was given effective notice of the one-year limitation provision on June 28, 1963 and any estoppel barring the defendant from asserting this defense expired at the latest, one year following receipt of such notice, absent evidence of conduct after the date of the notice which would further toll the running of the limitation period. The plaintiff has not pointed to, and the record upon close examination does not disclose, any evidence of this character. On the contrary, the record clearly shows that plaintiffs' delay in bringing suit after June 28, 1963 was not attributable to the defendant but was due solely to the plaintiffs' inability to persuade their own attorneys to act. Since suit was not commenced until May 12, 1965, more than a year and a half after notice of the limitation provision was given, this Court finds (a) there is no estoppel barring the defendant from raising the one-year limitation clause as a defense to this action and (b) there is no evidence of a waiver, i. e. an intentional relinquishment of its rights under that clause. The one-year limitation provision is validly interposed by the defendant, and under the undisputed facts of this case, provides a complete bar to plaintiffs' present action as a matter of law.
Accordingly, summary judgment will be entered in defendant's favor and the present action dismissed with prejudice.
Present order in accordance with this opinion.