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14

- P

- 653 Appeals Court

KARL NURSE vs . OMEGA US INSURANCE, INC.

No. 14

- P

- 653.
Suffolk. January 13, 2015.

- October 5 , 2015.
Present: Trainor, Vuono, & Hanlon, JJ.

Insurance , Coverage, Wate r damage

. Contract , Insurance. Limitations, Statute of

. Practice, Civil , Summary judgment, Declaratory proceeding, Statute of limitation s, Commencemen t of action

.

C ivil action commenced in the Superior Court Department on December 28, 2011.
The case was heard by Edward P. Leibensperger , J. , on a motion for summary judgment.

James M. Dunn for the plaintiff. Thomas M

. Prokop for the defendant.

VUONO, J. This cas e arises from the denial of coverage by
the defendant, Omega US Insurance, Inc. (Omega 1 ), for water
damage to a multi

- unit residence owned by the plaintiff, Karl

Nurse . The damage is alleged to have been caused by a bur st

1 Omega's successor

- in

- interest is Canopius US Insurance, Inc. We use the name Omega as did the judge and the parties.2

pipe which resulted from frigid weather. A judge of the
Superior Court granted summary judgment in favor of Omega on the
ground that Nurse's action for declaratory relief and breach of

contract was barred by the two

- year statute of limitations set

forth in G. L. c. 175, § 99 , T welfth (the statute or § 99 ), and
incorporated as a provision of the policy

. 2 While there is no
dispute that Nurse did not commence this action within two years

of the date the loss occurred , he contends that his complaint
was nevertheless timely because the so

- called " discovery rule "
applies to toll the statute of limitations period

. We conclude

that the discovery rule does not apply in these circumstances
and, therefore, summary judgment was proper

. Background

. The material facts, in the light most
favorable to Nurse, the nonmovin g party, are as follows

. 3 Nurse

owns a three

- unit residence (property or building) located at

294 Shawmut Avenue in Boston . The property was insured under a
dwelling policy issued by Omega for the period from April 27,

2 The statute provides, in relevant part:
"No suit or action against this company for the recovery of any claim by virtue of this policy shall be sustained in any court of law or equity in this Commonwealth unless commenced within two years from the time the loss occurred . . . ."

G. L. c. 175, § 99 , Twelfth, as appearin g in St. 1951, c. 478 , § 1

.

3 See Pinti v. Emigrant M ort . Co

. , 472 Mass

. 226, 231 (2015).3

2009, to April 27, 2010

. The policy was subject to the
requirements of G. L. c. 175, § 99, Twelfth, which sets forth

standard terms applicable to all fire insurance policies in the

Commonwealth including a two

- year statute of limitations for any

claims covered by such policies

. 4
In December, 2009, the property was vacant except for
ongoing construction work in the third

- floor unit , which
required that the plumbing supplying water to that unit remain

active

. 5 Both December 17 and December 18 were extremely cold
days with high temperatures reported at Logan Airport of twenty

six and twenty

- eight degrees Fahrenheit , respectively. On
December 19, 2009, which was also a cold day with a high
temperature of thirty

- two degrees, records from the Boston Water
and Sewer Commission (commission) show that the rate of water

usa ge at the property dramatically increased from fifteen cubic

feet of water every six hours for the period between December 1

4 The pertinent policy language states , "N o action can be brought unless the policy provisions have been complied with and the action is started within two years after the date loss or damage occurs."

5 To operate the plumbing while the building was vacant , Nurse was obligated under the policy to ensure that the heating system was set to at least fifty

- five degrees. Records of electricity use during the period in question esta blished that the heating system was not operating. Nurse maintains , however, that he left an electric space heater in the front hallway of the building to maintain a minimum level of heating. These facts, while relevant to other defense s raised by Omega, have no bearing here.4

and December 18, to approximately 260 cubic feet of water every

six hours . This rate of water usage continued from December 19
to December 28, 2009 , and in excess of 8,000 cubic feet of water
was released during that period

. The damage for wh ich Nurse
seeks coverage occurred on December 19, 2009, the day on which
the water usage first spiked. 6 On December 28, 2009, the

commission notified Nurse of the increased water usage ; h e went

to the property that day, where he discovered substantial water
damage to the building . He traced the damage to a leak under

the sink in the third

- floor unit , and he immediately shut off

the water supply. 7

Nurse subsequently filed a claim for coverage under the
policy, which Omega denied on January 1 4 , 201 1 , following a year
of investigation

. On December 28, 2011 , Nurse brought this

action , seeking a declaration that Ome ga provide coverage for

6 Nurse claims to have entered the property on December 21, 2009, and to have seen no water damage, but he only entered the front hallway and did not observe the third

- floor unit where the leak occurred. In any eve n t it is undisputed that the leak

-- and damage

-- occurred on December 19, 2009.

7 A subsequent investigation revealed that a soldered joint of a copper pipe supplying water to the kitchen sink in the third

- floor unit had failed. There was no indicatio n of rust, corrosion, or any other structural defect in the pipe or the joint. Nurse asserts that he found a sliding door on the deck open and speculated that it had been left open by the contractor.5

the damage to the property

. 8 Omega filed a motion for summary
judgment asserting, among other defenses , that Nurse's complaint
was barred by application of the statute of limitations, as the
loss occurred on December 19, 2009 , and Nurse waited until
December 28, 2011, more than two years later, to file suit. 9 The
judge agreed with Omega and concluded that Nurse's suit was time
barred. In reaching his conclusion, the judge explicitly
rejected Nurse's argument that the discovery rule should apply

to toll the statute of limitations in § 99.

Discussion

. Summary judgment is appropriate where there
are no genuine issues of material fact , and the moving party is
entitled to judgment as a matter of law. See Mass.R.Civ.P.

56 (c), as amended, 436 Mass. 1404 (2002); Kourouvacilis v.

General Motors C orp ., 410 Mass. 706, 716 (1991). We review a
decision to grant summary judgme nt de novo. See Ritter v.

Massachusetts Cas. Ins

. Co ., 439 Mass. 214 , 215 (2003).

8 The complaint also alleged that Nurse was entitled to recover damages because Omega (1) breached its contract by declining to pay damages and (2) engaged in unfair insurance practices.

9 The judge considered Nurse 's failure to file his suit within the li mitations period as dispositive, and therefore, t he judge did not reach Omega's additional arguments for summary judgment . These were that Nurse had failed to comply with a condition precedent (his obligation to use reasonable care to maintain h eat at the property) and the so

- called "freeze

- up" exclusion contained in the policy. Given our conclusion, we likewise do not reach these issues.6

A s we have noted, neither party disputes that the water
damage or "loss" occurred on December 19, 2009 , that Nurse filed
his complaint on December 28, 2011 , or that the two

- year statute
of limitations applies

. 10 Instead, Nurse urges us to reject the
judge's rationale and apply a discovery rule to the commencement

of the two

- year limitations period provided by § 99 and the
policy

. 11 This raises the question whether the dis covery rule
applies in this context.
A brief review of the history of the discovery rule is
helpful to our discussion. As the judge explained in his order
granting summary judgment in favor of Omega , in Massachusetts
the discovery rule operates to t oll certain statute s of

limitations for particular types of claims until the claimant
discovers, or reasonably should have discovered, the damage.

Felton v. Labor Relations Commn

. , 33 Mass. App. Ct. 926, 927
(1992). The discovery rule was first adopted b y the Supreme

Judicial Court in Hendrickson v. Sears , 36 5 Mass. 83 (1974). In

10 While our review is de novo, we agree with the judge's well

- reasoned memorandum of decision.

11 In addition to ur ging us to apply the discovery rule, Nurse also argues that the question whether he should have been aware of the water damage before December 28, 2 009, the date he was notified by the commission of the increase in water usage, is one of fact that should b e decided by a fact finder . See Silvest r is v. Tantasqua Regional Sch

. Dist

. , 446 Mass. 756, 766

- 767 (2006). However, given our conclusion that the discovery rule does not apply, the date on which Nurse reasonably should have been aware of the damage is n ot relevant.7

Hendrickson , the court applied the rule to a claim of legal
malpractice and "held that, if an attorney's negligent title

search overlooked an easement of record and the title defect
was, in the circumstances, inherently unknowable by his clients,
their cause of action against him did not accrue until they
discovered or should reasonably have discov ered the attorney's
misrepresentation concerning the record title." Bowen v. Eli
Lilly & Co ., 408 Mass. 204, 206 (1990) ( summarizing the holding

in Hendrickson v. Sears , supra ) . The rule was later applied to
claims of fraudulent misrepresentation, see Fr iedman v.

Jablonski , 371 Mass. 482, 485 (1976), and to medical malpractice
actions, see Franklin v. Albert , 381 Mass. 611, 618

- 619 (1980).

See also Harrington v. Costello , 467 Mass. 720 , 724 (2014)
(relying on Friedman v. Jablonksi , supra )

. In each insta nce, the court was construing statutes that set forth limitations
period s that began when a cause of action "accrued." As the

court noted in Bowen , it developed "a discovery rule for the
purpose of determining when a cause of action accrues." Bowen

v. El i Lilly & Co ., 408 Mass. at 205. In this case we are not

con s truing language pertaining to when a cause of action

"accrues."
We see no basis for extending the discovery rule to
insurance cases governed by § 99

. Unlike the situations where
the discovery rule was initially applied, such as Hendrickson v.8

Sears , supra , the damage here was not "inherently unknowable."
Also, neither party has provided us with a case directly on
point, nor have we found one. 12 Howev er, J

. & T

. Enterprises,

Inc . v. Liberty Mut

. Ins. Co ., 384 Mass. 586 (1981) , is

instructive . In that case, the Supreme Judicial Court held that

the two

- year statute of limitatio ns set forth in § 99 barred an

action on a fire insurance policy commenced mo re than two years

after a fire occurred at the insured property (a restaurant )
even though it was unclear when the plaintiff , a mortgagee of
the property, first learned of the fire. Of significance is the

court 's strict application of § 99 in ruling that the action was

barred as untimely regardless of who had authority to bring

suit. Id . at 587

- 588, 590

.

M ore recently in Hawley v. Preferred Mut. Cas. Co

. , 88
Mass. App. Ct. 360 , 364 (2015) , we cited J

. & T

. Enterprises,

Inc

. , noting that "it is well settled that the statute of

limitations begins to run at the time the loss occurred ."
Specifically at issue in Hawley was whether the provision of

§ 99 providing for the tolling of the statute of limitations
applied in the circum stances presented; this court determined

that it did not and that the limitations period was not tolled.

12 Nurse's reliance on Providence Builders, LLC v. Philadelphia Indem. Ins. Co ., 83 Mass. App. Ct. 1127 (2013), a summary decision issued pursuant to our rule 1:28, does not help him. The decision has no precedential value and, in any event, is distinguishable.9

In constru i ng Massachusetts law in Nunheimer v. Continental

Ins. Co

. , 68 F. Supp. 2d 75, 78 n.5 (D. Mass

. 1999), a F ederal

District Court judge determined that the discovery rule does not
apply to the statute of limitations in § 99. There, the judge
concluded that the "loss" referenced by the statute is the

incident "causing the damage to the property" rather than the

denial of insurance be nefits , reasoning that prior S tate court

decisions reflected this i nterpretation "unequivocally." See

id . at 78. 13 Outside of Massachusetts, the application of the
discovery rule in this context varies across jurisdictions , and

we draw no clear guidance f rom the relevant decisions

. 14

13 In Mulhern v. Philadelphia Indem. Ins. Co ., 802 F. Sup p . 2d 317, 322 (D. Mass. 2011), the insurer moved for partial summary judgment on statute of limitations grounds. A different Federal District Court judge, construing Massachusetts law, assumed that the discovery rule applied to a loss governed by § 99 in a situation where the damage occurred gradually and there was a question of fact as to when it could reasonably have been perceived. Consequently, the judge denied t he insurer's motion. (It is noteworthy that the decision does not contain any analysis of the distinction between t he Massachusetts cases that adopt the discovery rule

-- construing statutes w ith "accrual" language

-- and case s under § 99 using "loss occu rred " as the starting date for the running of the limitations period.)

14 Some jurisdictions have adopted a version of the discovery rule in the insurance context

. See, e.g., Prudential

LMI Commercial Ins . v. Superior Ct ., 5 1 Cal. 3d 674, 686 ( 1990) (ann ouncing "delayed discovery rule" for "accrual of a cause of action" by which "inception of the loss" occurs when "appreciable damage occurs and is or should be known to the insured, such that a reasonable insured would be aware that his notification duty u nder the policy has been triggered"); Jackson
v. State Farm Fire & Cas. Co ., 108 Nev. 504, 509 ( 1 992) (limitations period triggered by "manifestation of loss" which10

More fundamentally, we agree with the judge that the plain
language of the statute does not support the application of the
discovery rule. "[C]onsistent with our general practice of

occurs when "appreciable damage occurs and is or should be known to the insured") (citation s omitted) . See also Elsey v. Hastings Mut. Ins. Co ., 161 Mich. App. 484, 488 (19 87) (implicitly applying discovery rule in concluding that plaintiffs' claim was time barred because, "through the exercise of reasonable diligence, they should have discovered their loss").
However, in extending these principles several courts have indicated that the discovery rule is only appropriate where a claim is predicated on a "non obvious injury or loss." See, e.g., Parker v. Worcester Ins. Co ., 247 F.3d 1, 4 & n.4 (1st Cir. 2001) ("no one would expect an insured to be stripped of coverage where a reasonable person would not have detected the injury or loss"); Prudential

- LMI Commercial Ins . v. Superior Ct ., 51 Cal. 3d at 681 ("delayed discovery rule" appropri ate where plaintiffs were "blamelessly ignorant" of objective facts underlying claim); O'Reilly v. Allstate Ins. Co ., 474 N.W.2d 221, 223 (Minn. Ct. App. 1991) (extending delayed discovery rule in cases involving latent or progressive property damage).
Other courts have altogether declined to extend the discovery rule to limitations periods in the insurance context, reasoning that a loss occurs or "has its inception" when the casualty insured against takes place irrespective of when the damage is discov ered. See, e.g., Sager Glove Corp . v. Aetna Ins. Co ., 317 F.2d 439, 441 (7th Cir.), cert. denied, 375 U.S. 921 (1963) (" [ t ] he loss occurs and has its 'inception' whether or not the insured knows of it"); Harvey Fruit Mkt ., Inc . v. Hartford Ins. Co ., 294 I ll. App. 3d 668, 669 (1998) ("date utilized for determining the date of loss is the date on which the actual physical loss of property occurred"); Moore v. Mutual of Enumclaw Ins. Co ., 317 Or. 235 (1993) (unlike statutes referencing accrual of cause of act ion, statute referencing inception of loss not amenable to discovery rule); Borgen v. Economy Preferred Ins. Co ., 176 Wis. 2d 498, 505 (Ct. App. 1993 ) ("'inception of the loss' clearly and unambiguously means th e date on which the loss occurs

. . . '[i]nce ption' means 'beginning; start; commencement'") (citations omitted)

.11

statutory interpretation, we look first to the language of the
statute because it is 'the principal source of insight' into the
intent of the Legislature." Sisson v. Lhowe , 460 Mass. 705, 708
(2011), quoting from Bishop v. TES Realty Trust , 459 Mass. 9, 1 2
(2011). In instance s where the discovery rule has been

extended , the governing statute of limitations required a
determination of when the cause of action accrued, as opposed to

when the "loss occurred." 15 By contrast, § 99 does not reference

accrual. 16

15 As discussed previously, the Massachusetts cases that have both adopted and extended the discovery rule construe language pertaining to the accrual of a cause of action. Friedman v. Jablonksi , 371 Mass. at 484 , involved G. L. c. 260, § 2A, as then in effect, which provided in pertinent part: "E xcept as otherwise provided, actions of tort, actions of contract to recover for personal injuries, and actions of replevin, shall be commence d only within two years next after the cause of action accrues " (emphasis supplied). Franklin v. Albert , 381 Mass. at 612 n.3, involved G. L. c. 260, § 4, as then in effect, which provided, in pertinent p art: "Actions of contract or tort for malpractice, error or mistake against physicians, surgeons, . . . hospitals

. . . shall be commenced only within three years next after the cause of action accrues " (emphasis supplied).

16 The ju dge further noted that even if a discovery rule applied to Nurse's claim , it was likely the claim would nevertheless be barred. The discovery rule starts the running of the statute of limitations when a claimant reasonably should know of his loss. The policy required Nurse to inspect the vacant property on a weekly basis ("Y ou, or a responsible adult appointed by you, must inspect the dwelling on a weekly basis to ensure that there are no visible signs of loss or damage to the insured property . . ."). Nurse visited the premises on D ecember 21, 2009, but claims he did not se e the damage. As already noted (see note 6, supra ) , d uring that visit he did not inspect th e premises beyond the hallway. According to the12

Moreover, t he phrase "loss occurred" is un ambiguous. It
clearly denotes the time at which the damage to the property
happens

. As the court observed in J

. & T . Enterprises v. Liberty Mut. Ins. Co

. , 384 Mass. at 588, § 99 "states broadly

that no act ion for recovery of any claim by virtue of the policy
shall be sustained unless brought within two years from the time

the loss occurred." In Nunheimer v. Continental Ins. Co ., 68 F.
Supp. 2 d at 78, the court interpret ed the word "loss" as the

incident or ev ent that causes " damage to the property. " Accord

H a wley v. Preferred Mut. Ins. Co ., 88 Mass. App. Ct. at 364

. It

is well settled that "statutory language should be given effect
consistent with its plain meaning and in light of the aim of the

L egislature. " Herrick v. Essex Regional Retirement B d

. , 77
Mass. App. Ct. 645, 649 (2010) , S

. C ., 465 Mass. 801 (2013) , quoting from Sullivan v. Brookline , 435 Mass . 353, 360 (2001)

. The language we must construe here ("from the time the loss
occurred") has not chang ed since the time the provision was

added in 18 81 , 17 despite the application of the discovery rule in

other contexts

. The phrase "loss occurred" simply does not rest

on a determination of when the loss was discovered. Put simply,

judge, "A jury would likely conclude that Nurse should have been aware of the damage by no later than December 21, 2009."

17 See St. 1881, c. 166, § 1.13

if th e aim of the L egislature had been to incorporate the notion

of accrual into § 99, it would have done so. 18
For the foregoing reasons, we conclude that the discovery
rule does not apply to claims governed by § 99 . Because it was
beyond dispute the water damage for whi ch Nurse seeks coverage

occurred on December 19 , 2009, the statute of limitations began

to run on that date. Accordingly, this action i s untimely, and
summary judgment was properly granted.
Judgment affirmed

.

18 The Supreme Judicial Court's decision in Goldsmith v. Reliance Ins. Co ., 353 Mass. 99 (1967), provides add itional, albeit somewhat tangential, support for our conclusion. In that case the court was faced with a conflict between G. L. c. 175, § 22, which provides that an insurance policy may not contain a provision that limits the time within which a cause of action accrues to less than two years, and § 99, which provides that the action must be brought within two years of the time that the loss occurred. The court determined that the conflict could be resolved by confining the application of § 22 to "nonstatu tory limitations." The court observed that "§ 99, in limiting actions to two years from the time the loss occurs, limits them to less than two years from the time the cause accrues." Id . at 102.