Title: Klein v. Farmers Insurance Co.

State: idaho

Issuer: Idaho Supreme Court (civil)

Document:

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IN THE SUPREME COURT OF THE STATE OF IDAHO 
 
Docket No. 46314 
 
ERICA KLEIN, 
 
     Plaintiff-Respondent, 
 
v. 
 
FARMERS INSURANCE COMPANY OF 
IDAHO, 
 
     Defendant-Appellant. 
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Pocatello, September 2019 Term 
 
Opinion filed: November 26, 2019 
 
Karel A. Lehrman, Clerk  
 
Appeal from the District Court of the Sixth Judicial District of the State of Idaho,  
Bannock County. Rick Carnaroli, District Judge. 
 
The judgment of the district court is affirmed. 
 
 
Cooper & Larsen, Pocatello, for Appellant. Gary Cooper argued. 
 
 
Law Office of Kenneth E. Lyon, III, Reno, Nevada, for Respondent. Kenneth E.  
Lyon, III argued. 
 
                     _______________________________________________ 
 
MOELLER, Justice. 
This case arises from a claim for underinsured motorist (UIM) benefits and the resulting 
dispute over the date the action accrued under the statute of limitations. In its motion for 
summary judgment, Farmers Insurance Company of Idaho argued that Erica Klein was barred 
from pursuing a supplemental UIM claim because the five-year statute of limitations in Idaho 
Code section 5-216 had run. Farmers asserted that the statute of limitations began to run on 
either the date of the accident or the date Klein settled with the third party tortfeasor, both of 
which occurred more than five years prior to Klein filing her complaint to compel arbitration of 
her UIM claim. The district court denied Farmers’s motion and subsequent motion for 
reconsideration, holding that the “breach of contract” rule is the proper method of calculating the 
accrual date for Klein’s cause of action. Farmers appeals the district court’s denial of both 
motions.  
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This appeal presents an issue of first impression in Idaho, inasmuch as we are asked to 
determine when the statute of limitations begins to run on a cause of action for UIM benefits 
under an automobile insurance policy. After considering the different approaches taken by other 
states, we adopt the majority’s “breach of contract” rule and affirm the district court’s decisions.  
I. 
FACTUAL AND PROCEDURAL BACKGROUND 
On February 1, 2010, Klein was driving her vehicle when she was “t-boned” by another 
vehicle driven by Seth Hale, the third party tortfeasor insured by Allstate. Klein sustained 
injuries as a result of the accident that she claims are permanent—namely, three disc protrusions 
that continue to cause pain and muscle spasms. At the time of the accident, Klein was insured by 
Farmers under a policy that provided $500,000 in UIM benefits. The terms of the policy for 
uninsured coverage—which includes underinsured motorist coverage—state: 
We will pay all sums which an insured person is legally entitled to recover as 
damages from the owner or operator of an uninsured motor vehicle because of 
bodily injury sustained by the insured person. The bodily injury must be 
caused by accident and arise out of the ownership, maintenance or use of the 
uninsured motor vehicle.  
Determination as to whether an insured person is legally entitled to recover 
damages or the amount of damages shall be made by agreement between the 
insured person and us. If no agreement is reached, the decision will be made by 
arbitration.  
(Emphasis in original). The policy also includes an arbitration provision, which provides:   
If an insured person and we do not agree (1) that the person is legally entitled to 
recover damages from the owner or operator of an uninsured motor vehicle, or 
(2) as to the amount of payment under this part, either that person or we may 
demand that the issue be determined by arbitration.  
. . .  
Formal demand for arbitration shall be filed in a court of competent 
jurisdiction. . . . . Demand may also be made by sending a certified letter to the 
party against whom arbitration is sought, with a return receipt as evidence. 
(Emphasis in original). 
On December 14, 2010, about ten months after the accident, Klein notified Farmers of 
her intent to settle her injury claim with Allstate for the full policy amount of $25,000. A few 
months later, on April 25, 2011, Klein resolved her claim against Hale for $25,000, i.e., the full 
liability insurance limit from Allstate. Klein subsequently submitted a demand letter and 
accompanying UIM package to Farmers on November 7, 2012, demanding payment in the 
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amount of $250,000 under her UIM benefits policy. Approximately one month later, Farmers 
issued a check to Klein for $75,000 for the undisputed portion of the UIM benefits. Klein did not 
refuse the payment and cashed the settlement check. Nevertheless, Klein’s claim with Farmers 
remained open. In an email from Farmers dated December 13, 2012, the Farmers adjuster 
acknowledged “that [the $75,000 payment] does not resolve the UIM claim. I did make this offer 
to resolve the claim but there has not been any signed release from your client and I will be 
keeping the claim open.”  
For the next few years, Farmers continued to contact Klein and her prior attorney—who 
negotiated the settlement with Allstate—to finalize the claim, but Farmers rarely received any 
response in return. Finally, on July 7, 2016—six and a half years after the accident and more than 
five years after settling with Hale and Allstate—Klein’s new attorney, Kenneth Lyon, contacted 
Farmers because Klein hired his firm to “resolve her outstanding underinsured motorist claim.” 
Farmers responded on August 12, 2016, stating that it was prepared to respond to any demand 
for payment within sixty days of receipt of proof of loss. Six months later, on February 7, 2017, 
Klein provided Farmers with a supplemental demand packet. On April 4, 2017, Farmers’s 
adjuster confirmed receipt of the supplemental demand and indicated that he had completed his 
evaluation. The adjuster also requested a two-week extension to respond to the supplemental 
demand as his supervisors reviewed the evaluation of Klein’s claim. Klein agreed to the 
extension.  
When the two-week extension passed, Klein reached out to Farmers for an update. 
Farmers informed Klein that her claim was barred by the statute of limitations and invited Klein 
to participate in mediation to resolve her claim. The parties later participated in mediation, but 
they were unsuccessful in reaching a resolution. Subsequently, Klein informed Farmers that the 
issue would need to be resolved through arbitration pursuant to the terms of her policy. Klein 
sent a letter to Farmers putting it on notice that she “intended to seek pre-judgment/pre-
arbitration interest and attorney fees . . . unless other alternatives would be reached.” Farmers 
interpreted this as a demand for arbitration, and informed Klein that it was seeking permission to 
file a declaratory action to resolve the statute of limitations question.  
On November 22, 2017, Klein filed a complaint with the district court seeking an order 
requiring Farmers to participate in arbitration regarding the UIM claim. Farmers filed an answer, 
affirmatively alleging that the claim was now barred by the statute of limitations and later moved 
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for summary judgment on the same grounds. The district court denied the motion for summary 
judgment, prompting Farmers to file a motion for reconsideration, which the court also denied. 
The district court noted that there are three approaches to the issue of when a UIM claim accrues: 
the “date of accident” rule, the “breach of contract” rule, and the “settlement/judgment” rule. The 
court further explained that it denied summary judgment to Farmers because it believed Idaho 
would follow the “breach of contract” rule as the relationship between Klein and Farmers is 
contractual in nature. The district court also noted its willingness to consider a motion for 
permissive appeal as the parties had presented a question of first impression. Farmers filed a 
motion for permissive appeal pursuant to Idaho Appellate Rule 12. This Court granted the 
motion and Farmers subsequently filed its appeal.  
II. 
  STANDARD OF REVIEW 
When a court reviews a motion for reconsideration, it applies the same standard of review 
for the interlocutory order being reconsidered. Westby v. Schaefer, 157 Idaho 616, 621, 338 P.3d 
1220, 1225 (2014). Thus, this Court must consider the standard for granting the underlying 
interlocutory order when it reviews the appeal of a motion for reconsideration. Id. Here, the 
reconsidered motion was a motion for summary judgment. Summary judgment is proper where 
“there is no genuine issue of material fact, entitling the moving party to judgment as a matter of 
law.” Verity v. USA Today, 164 Idaho 832, 841, 436 P.3d 653, 662 (2019). In addition, “[a]ll 
facts and inferences must be drawn in favor of the nonmoving party.” Id.  
III. 
ANALYSIS 
The parties agree that the applicable statute of limitations is set forth in Idaho Code 
section 5-216, which provides that an action on a written contract must be initiated within five 
years. However, this appeal presents a question of first impression for this Court: whether, 
pursuant to that statute, the accrual date for the statute of limitations on a UIM claim begins on 
the day (1) the insurance company breaches its contract with the insured, (2) the insured reaches 
a settlement or obtains a judgment against the third party tortfeasor, or (3) the accident occurred. 
Each accrual rule has been applied in various jurisdictions, although the majority of jurisdictions 
deciding this issue have applied the “breach of contract” rule. See, e.g., Erie Ins. Exch. v. Bristol, 
174 A.3d 578, 587 (Pa. 2017). Farmers argues that either the “settlement or judgment” rule or 
“date of incident” rule should apply—both of which would bar Klein’s claim—because each rule 
presents an objectively certain date known by both parties. Klein contends that the district court 
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correctly applied the “breach of contract” rule, which is the most consistent with the  arbitration 
provision in the UIM policy and Idaho law. We agree with Klein and hold that the district court 
applied the correct accrual date.  
The primary basis for Farmers’s contention that this Court should follow the “date of 
incident” rule rests on our prior decision in Hill v. American Family Mutual Insurance Co., in 
which this Court concluded that “exhaustion clauses in UIM automobile policies [are] void, 
unenforceable, and severable in Idaho.” 150 Idaho 619, 627, 249 P.3d 812, 820 (2011). Farmers 
argues that the “date of incident” rule is the most consistent with Idaho law because Hill made an 
insurer’s liability for UIM benefits immediately enforceable following the accident. However, 
inasmuch as Hill voided exhaustion provisions for “dilut[ing] Idahoans’ protection against 
underinsured drivers and [preventing] insureds from collecting legitimate claims,” id. at 630, 249 
P.3d at 823, it did not establish a date of accrual for UIM claims or require the insured to 
immediately pursue a UIM claim following the accident. In fact, Hill’s plaintiff first settled with 
the third party tortfeasor and then pursued coverage from her UIM insurance coverage. Id. The 
insurance company only denied her UIM claim because she had failed to “exhaust” the bodily-
injury policy by settling for less than its full value. Id. at 621, 249 P.3d at 815. Thus, Hill dealt 
only with the insurance policy’s exhaustion claim in light of the 2008 legislation that required 
insurers to offer UIM coverage, an act that afforded greater protections to the public from 
underinsured motorists. The question of the date of accrual for UIM claims remains unanswered. 
See id. at 630, 249 P.3d at 823.  
This date of accrual question has arisen in numerous jurisdictions over the years, 
prompting three different legal approaches with the “breach of contract” rule emerging as the 
majority rule amongst our sister jurisdictions. See, e.g., Erie Ins. Exch., 174 A.3d at 587. The 
foundation for this rule rests upon the bedrock of contract law. Because there is a contractual 
relationship between the insurer and insured in UIM claims, most courts have focused on the 
alleged breach by the insurer (i.e., the refusal to pay the full amount of the claim) as the 
occurrence that gives rise to the cause of action, and thus, triggers accrual. McDonnell v. State 
Farm Mut. Auto. Ins. Co., 299 P.3d 715, 728 (Alaska 2013); Spear v. California State Auto. 
Assn., 831 P.2d 821, 825 (Cal. 1992); Hamm v. Allied Mut. Ins. Co., 612 N.W.2d 775, 784 (Iowa 
2000); Berkshire Mut. Ins. Co. v. Burbank, 664 N.E.2d 1188, 1188 (Mass. 1996); Vega v. 
Farmers Ins. Co. of Oregon, 918 P.2d 95, 98 (Or. 1996); Erie Ins. Exch., 174 A.3d at 587–90; 
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Am. States Ins. Co. v. LaFlam, 69 A.3d 831, 840–41 (R.I. 2013); Blutreich v. Liberty Mut. Ins. 
Co., 826 P.2d 1167, 1170–71 (Ariz. Ct. App. 1991). Indeed, the UIM policy at issue here is a 
written contract, the claim for UIM benefits concerns a right bestowed by the contract, and the 
essence of the relationship between the insurer and the insured is defined by the terms of the 
contract.  
The Supreme Court of Pennsylvania dealt with an analogous situation to Klein’s claim in 
Erie Insurance Exchange v. Bristol, where the insured plaintiff filed an uninsured motorist (UM) 
claim following a hit-and-run accident. 174 A.3d 578, 580 (2017). His insurance policy afforded 
coverage of $500,000 per accident and contained an arbitration clause. Id. About two years after 
the accident, the plaintiff’s attorney put the insurance company on notice of the UM claim. Id. 
The insurance company reserved its rights and each party selected arbitrators. Id. at 580–81. 
Other than a little correspondence between the parties, no action was taken until the insurance 
company filed an action for declaratory judgment in 2013, approximately eight years after the 
accident. Id. at 581. The insurance company sought a determination of whether the plaintiff’s 
UM claim was time barred by Pennsylvania’s four-year statute of limitations, arguing that the 
accrual date was the date of the accident. Id.  
As an issue of first impression, the Supreme Court of Pennsylvania examined the 
statutory language of the applicable contract statute of limitations as well as the laws of other 
jurisdictions that dealt with this question. Id. at 585–90. The court concluded that “the proper 
circumstance to start the running of the limitation period is an alleged breach of the insurance 
contract, which will be occasioned in this context by a denial of a claim or the refusal to 
arbitrate.” Id. at 589. While the majority of case law from other jurisdictions concurred with this 
conclusion, the court’s primary basis for its determination was in applying general contract 
principles and the controlling language of the statute of limitations. Id. Like in Idaho, 
Pennsylvania holds that the running of the limitations period starts when a cause of action arises:  
 “Unless a statute provides otherwise, the statute of limitations begins to run 
at the time when a complete cause or right of action accrues or arises, which 
occurs as soon as the right to institute and maintain a suit arises.” 
. . .  
Therefore, applying these general contract principles to the enforcement of an 
insured’s UM/UIM claim, the statute of limitations would begin to run when the 
insured’s cause of action accrued, i.e., when the insurer is alleged to have 
breached its duty under the insurance contract. 
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Id. at 585–86 (emphasis in original) (quoting  54 C.J.S. Limitations of Actions, § 81).  
 
In contrast, the minority approaches—both the “settlement or judgment” rule and the 
“date of incident” rule—conflict with Idaho law. Running the limitations period at the date of 
settlement with, or entry of judgment against, the tortfeasor “is based on a form of the discovery 
rule used in tort cases which is that the insured has no way of knowing what liability, if any, the 
UM/UIM carrier will have until the insured has exhausted the liability coverage of the tortfeasor 
by settlement or judgment.” Hamm v. Allied Mut. Ins. Co., 612 N.W.2d 775, 783 (Iowa 2000) 
(analyzing and rejecting “the settlement/judgment” rule). This tort-based rule also tends to look 
at the insurance policy’s controlling language—exhaustion clauses in particular—rather than 
contract principles or the language of the applicable statute of limitations. See Brown v. Am. 
Family Ins. Grp., 989 P.2d 196, 197–98 (Colo. App. 1999) (“by the terms of the policy, 
plaintiff’s cause of action accrued by the time of their settlement.”); Consiglio v. Transamerica 
Ins. Grp., 737 A.2d 969, 971 (Conn. App. Ct. 1999) (applying the exhaustion clause of the 
insurance policy, making the date of accrual the date of settlement or judgment for underlying 
insurance); Butler v. Econ. Fire & Cas. Co., 557 N.E.2d 1281, 1286 (Ill. App. Ct. 1990) 
(interpreting the insurance policy’s phrase “occurrence of loss” to mean the loss stemming from 
the tortfeasor’s underinsurance relative to the plaintiff’s damages, and thereby eliminate any 
conflict between the exhaustion clause and limitations clause of the policy). Even Florida and 
Minnesota courts—which have taken a middle-ground approach—hold that an action for UIM 
benefits accrues on the date of the accident unless an exhaustion clause in the insurance policy 
tolls the limitations period until settlement or judgment with the tortfeasor. Woodall v. Travelers 
Indem. Co., 699 So. 2d 1361, 1363–65 (Fla. 1997); Sargent v. State Farm Mut. Auto. Ins. Co., 
486 N.W.2d 14, 16 (Minn. Ct. App. 1992). Having previously held such exhaustion provisions to 
be void in Idaho, we will not adopt a rule that relies on a void exhaustion provision as the basis 
for an accrual date. See Hill, 150 Idaho at 627, 249 P.3d at 820. 
Other courts have adopted the rule that the limitations period for a UIM claim begins to 
run on the date of the incident, as Farmers encourages us to do. See Woodall, 699 So. 2d at 
1363–65; Green v. Selective Ins. Co. of Am., 676 A.2d 1074, 1078–79 (N.J. 1996). “The 
jurisdictions that favor this approach reason that the right of action against the UIM carrier stems 
from the plaintiff’s right of action against the tortfeasor, and thus the limitations period begins at 
the same time for both the insurance and the tort actions.” Green, 676 A.2d at 1078. Or, as 
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articulated by the Supreme Court of Iowa, “the insured’s claim for UIM benefits derives from the 
tort claim against the underinsured tortfeasor and that the insurer essentially stands in the shoes 
of the tortfeasor.” Hamm, 612 N.W.2d at 782 (analyzing and rejecting “the date of incident” 
rule). In essence, the focus of this rule is the question of whether the cause of action is based on a 
tort or a contract, as well as the nature of the relationship between the insured and her insurance 
provider for a UIM claim.  
We reject the “date of incident” rule for two key reasons: first and foremost, we conclude 
that an insured’s recovery from its own insurer primarily depends on the insurance contract—the 
basis for the insurer’s liability—rather than the underlying tort. See Shelter Mut. Ins. Co. v. Nash, 
184 S.W.3d 425, 427 (Ark. 2004); Hamm, 612 N.W.2d at 782; Wille v. Geico Cas. Co., 2 P.3d 
888, 892 (Okla. 2000). This has been implicitly recognized by both parties; indeed, Farmers has 
conceded that the applicable statute of limitations in this case is the five-year statute for the 
breach of a written contract pursuant to section 5-216 of the Idaho Code, rather than the two-year 
statute applicable to Klein’s tort claims against Hale provided in section 5-219(4). When all 
aspects of the insurer/insured relationship are taken together, the relationship is, in its essence, 
contractual in nature. 
Second, applying an early accrual date—tied to of the date of the accident—raises 
concerns of fairness to prospective plaintiffs. The Supreme Court of Nevada has adroitly 
articulated these concerns:  
It would be fundamentally unfair to time-bar an insured from compensation that 
she bargained for because an insured may not be aware until long after the 
accident that she will need to pursue a claim against her UIM insurer. 
Specifically, at the time of the accident or even several years thereafter, the 
insured may not know the extent of her injuries, the amount of the tortfeasor’s 
available coverage, or whether the cost of her medical treatment will exceed the 
value of the tortfeasor’s insurance policy and available assets.  
Grayson v. State Farm Mut. Auto. Ins., 971 P.2d 798, 799–800 (Nev. 1998), as modified on 
denial of reh’g (Mar. 19, 1999). Such concerns echo in Idaho case law where this Court has 
invalidated contractual provisions which run afoul of the public policy set by the Idaho 
Legislature. Specifically, in Hill, we noted the potential delays a plaintiff could endure in 
litigating or settling with the tortfeasor prior to making a UIM claim. Hill, 150 Idaho at 626, 249 
P.3d at 819 (“Litigation would create drastic delays for litigants who may have suffered serious 
injuries and desperately need to collect benefits. These delays would be exacerbated by the fact 
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that the claimant may have to undergo further arbitration against the UIM carrier after obtaining 
a judgment from the tortfeasor.”). Likewise, a plaintiff pursuing her UIM claim would be up 
against the clock as she tries to settle her claims with both her insurance provider and the 
tortfeasor from the date of the accident, especially if she does not yet know the extent of her 
injuries or whether the tortfeasor will ultimately be underinsured.    
Perhaps most importantly, however, the “breach of contract” rule provides the court with 
an actual justiciable controversy—a fundamental precursor to any lawsuit. As the Massachusetts 
Supreme Court has explained, the minority approaches both lead to serious justiciability 
concerns: “[p]rior to the time when the contract is violated there is no justiciable controversy, 
and it would be illogical to let the statute of limitations for bringing an action begin to run before 
the action can be brought.” Berkshire Mut. Ins. Co, 664 N.E.2d at 1188. On the other hand, the 
“breach of contract” rule corresponds well with existing Idaho case law, which mandates that 
“[a] cause of action accrues and the statute of limitations begins to run when a cause of action 
exists.” Swafford v. Huntsman Springs, Inc., 163 Idaho 209, 212, 409 P.3d 789, 792 (2017) 
(quoting Lido Van and Storage, Inc. v. Kuck, 110 Idaho 939, 942, 719 P.2d 1199, 1202 (1986)).  
Idaho Code section 5-216 imposes a five-year statute of limitations for “an action upon 
any contract, obligation or liability founded upon an instrument in writing.” Generally, the cause 
of action accrues upon the breach of contract, which could encompass various circumstances in 
the UIM context, including a refusal of payment, the rejection of a claim, or the denial of a 
request for arbitration. See, e.g., Erie Ins. Exch., 174 A.3d at 589; McDonnell, 299 P.3d at 728. 
At the time of settlement with, or judgment against, a tortfeasor, the insured only has knowledge 
that some payment is still owed to her because the tortfeasor was underinsured. Should she bring 
an action at this stage—before the insurance provider has acted on the UIM claim—the insured 
lacks an actual injury against the insurer, or, at the very least, an unripe claim. Because the 
plaintiff does not have an action, or an injury, by simply knowing how much she is owed by her 
insurer under the UIM policy, her cause of action is, at best, speculative and undetermined. On 
the date of the accident, the insured has even less of a claim because she does not yet know if the 
third-party tortfeasor is underinsured, much less whether her insurance company will breach the 
UIM policy or pay in full. On the other hand, the “breach of contract” rule provides for a clear 
cause of action on a justiciable controversy because the insured will be able to allege an actual 
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injury caused by the insurance provider based upon an actual breach of contract, rather than 
hypothetical and speculative claims.  
Farmers argues that the “breach of contract” rule has proven unworkable because it 
indefinitely extends the time within which to make a UIM claim. Additionally, Farmers suggests 
that applying a breach of contract standard will create uncertainty as to whether and when an 
insurer breaches the insurance policy. However, this concern was addressed and appropriately 
rejected by the Supreme Court of Pennsylvania:  
These apprehensions about an insured delaying submission of a claim or an 
insurer delaying action on a claim may be of concern but do not justify departing 
from the normal breach of contract principles attendant to triggering the statute of 
limitations. We note that an insured would rarely be advantaged by delay in the 
submission of a claim and insurers are charged with acting in good faith. 
Deviations from these norms may be addressed on equitable grounds or in other 
ways based on particular facts.  
Erie Ins. Exch., 174 A.3d at 589. Likewise, it is a fallacy for Farmers to contend there is greater 
uncertainty generated under this rule, when it has the option to file an action seeking arbitration 
itself, rather than allowing the process to languish. Any uncertainty created where parties dispute 
when an alleged breach of contract occurred becomes a question of fact for the arbitrator, just as 
in any other contractual litigation. Borah v. McCandless, 147 Idaho 73, 79, 205 P.3d 1209, 1215 
(2009) (“Generally, unless the facts presented are undisputed, whether there was a breach of the 
terms of a contract is a question of fact.”). Moreover, this is not a case where it can be fairly 
argued that the insured merely sat on her claim at the expense or frustration of her insurance 
company. Klein filed her UIM claim with Farmers after settling her claim against Hale. Farmers 
made a payment and then explicitly kept the claim open subject to Klein’s future medical needs. 
Later on, when the parties began to dispute how to resolve the claim and whether the statute of 
limitations had run, Farmers offered to go to mediation to resolve Klein’s claim. In short, 
Farmers had numerous opportunities to ensure the UIM claim was not left open for an 
indeterminate period of time. Nothing prevented it from demanding arbitration under its policy 
or closing the UIM claim at an earlier date.  
While Farmers argues that the “breach of contract” rule has “fall[en] out of favor,” it fails 
to cite to any authority that supports this contention. In fact, the opposite assertion is true; a 
majority of jurisdictions that have considered the issue now favor the breach of contract rule for 
the reasons set out above. See, e.g., Erie Ins. Exch., 174 A.3d at 587.  
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The Court is mindful of the apparent paradox in this case: neither party has specifically 
argued that there was a breach of contract here. Indeed, Klein’s briefing states “there has been no 
breach of the insurance contract,” while recognizing that Farmers’s refusal to participate in 
arbitration would act as a breach of the insurance contract. Of course, this is the natural result of 
the language in the insurance policy requiring the parties to demand arbitration by filing an 
action in court, or by sending a certified letter. Here, Klein initiated this action to compel 
arbitration. Incidental to that is the question answered here today, when does such an action 
accrue.  
A similar situation occurred in Erie, where the parties selected arbitrators, fell out of 
communication, and then the insurer sought a declaratory action on the question of the action’s 
accrual date. Erie Ins. Exch., 174 A.3d at 581. The Supreme Court of Pennsylvania concluded 
that there was no accrued cause of action because the insurer had not yet refused arbitration or 
denied coverage. Id. at 589–90. Unlike the district court in this case, the trial court in Erie erred 
in granting summary judgment to the insurer on the basis that the statute of limitations had 
expired, resulting in that case being reversed and remanded for further proceedings. Id. Here, the 
district court correctly applied the “breach of contract” rule, and concluded that Klein’s 
complaint was not time barred by the five-year statute of limitations. Accordingly, we affirm the 
district court’s order.  
IV. 
CONCLUSION 
After reviewing the different approaches taken by other states, and the compelling 
arguments for and against these approaches proffered by learned counsel, we now adopt the 
majority’s “breach of contract” rule, which is the most consistent with Idaho law, public policy, 
and the justiciability doctrine. Because the application of the “breach of contract” rule would not 
bar Klein’s claim on timeliness grounds, we affirm the district court’s rulings which denied 
Farmers’s motion for summary judgment and its subsequent motion to reconsider. The case is 
remanded for further proceedings consistent with this Opinion.  Costs are awarded to Klein as 
the prevailing party. 
Chief Justice BURDICK, and Justices BRODY, BEVAN and STEGNER CONCUR.