Opinion ID: 2383663
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Heading: Commencement of Limitations

Text: The issue presented is whether Murray's good faith claim is barred by limitations as a matter of law. The statute of limitations governing this cause of action is set forth in Tex.Civ.Prac. & Rem.Code Ann. § 16.003(a) (Vernon 1986): A person must bring suit for trespass for injury to the estate or to the property of another, conversion of personal property, taking or detaining the personal property of another, personal injury, forcible entry and detainer, and forcible detainer not later than two years after the day the cause of action accrues. Thus, we must determine the date Murray's cause of action accrued. The parties dispute whether this should be the date coverage was denied (September 5, 1984) or the date SJA admitted its denial was unwarranted (March 15, 1985). In Arnold, we recognized the duty of an insurer to deal fairly and in good faith with its insured in the processing and payment of claims and that breach of that duty is compensable in tort. 725 S.W.2d at 167; see also Aranda v. Insurance Co. of N. America, 748 S.W.2d 210, 212 (Tex.1988); Chitsey v. National Lloyds Ins. Co., 738 S.W.2d 641, 643 (Tex.1987). We further held that limitations on a good faith claim does not begin to run until the underlying contract claims are finally resolved. Arnold, 725 S.W.2d at 168; see also Street v. Second Court of Appeals, 756 S.W.2d 299, 302 (Tex.1988). Murray contends that her underlying contract claims were not finally resolved, and limitations did not begin to run, until SJA admitted on March 15, 1985, that its September 5, 1984 denial of coverage was unwarranted. This argument must fail. SJA voluntarily admitted that it had made a mistake in denying coverage. Under this theory, if SJA had never admitted coverage, the contract claim would never have been finally resolved, and limitations would never have begun to run. Such a result was not intended in Arnold. Limitations statutes afford plaintiffs what the legislature deems a reasonable time to present their claims and protect defendants and the courts from having to deal with cases in which the search for truth may be seriously impaired by the loss of evidence, whether by death or disappearance of witnesses, fading memories, disappearance of documents or otherwise. The purpose of a statute of limitations is to establish a point of repose and to terminate stale claims. Safeway Stores, Inc. v. Certainteed Corp., 710 S.W.2d 544, 545-546 (Tex.1986); see also Moreno v. Sterling Drug, Inc., 787 S.W.2d 348 (Tex.1990); United States v. Kubrick, 444 U.S. 111, 117, 100 S.Ct. 352, 356, 62 L.Ed.2d 259 (1979). We hold that Murray's good faith claim accrued and limitations commenced on the day SJA wrongfully denied coverage (September 5, 1984). This holding comports with well-established precedent and other authorities. See, e.g., S. Ashley, Bad Faith Liability: A State-By-State Review § 4.05 (1987) (one would expect that in a first party case the insured's bad faith cause of action accrues the moment an insurer should pay a claim but fails to do so. At that moment, the insurer's wrongful conduct first causes harm to the insured.). For the purposes of application of statute of limitations, a cause of action generally accrues at the time when facts come into existence which authorize a claimant to seek a judicial remedy. Robinson v. Weaver, 550 S.W.2d 18, 19 (Tex.1977). Put another way, a cause of action can generally be said to accrue when the wrongful act effects an injury. Moreno, 787 S.W.2d at 351. Murray was unable to obtain much-needed medical attention because of SJA's September 5, 1984 denial and had sufficient facts that day to assert her good faith claim. See Arnold, 725 S.W.2d at 167 (A cause of action for breach of the duty of good faith and fair dealing is stated when it is alleged that there is no reasonable basis for denial of a claim ...). The fact that damage may continue to occur for an extended period after denial does not prevent limitations from starting to run. Limitations commences when the wrongful act occurs resulting in some damage to the plaintiff. Atkins v. Crosland, 417 S.W.2d 150, 153 (Tex.1967); First Nat. Bank v. Nu-Way Transports, Inc., 585 S.W.2d 813, 816 (Tex.Civ.App.-Fort Worth 1979, writ ref'd n.r.e.). When, as SJA has done, an insurance company denies a claim, other jurisdictions have decided that the good faith cause of action accrues on the date of denial. [2] See, e.g., Frazier v. Metropolitan Life Ins. Co., 169 Cal.App.3d 90, 103, 214 Cal Rptr. 883, 890 (1985); Safeco Ins. Co. of America v. Sims, 435 So.2d 1219, 1222 (Ala.1983). The Alabama Supreme Court, in Farmers & Merchants Bank v. Home Ins. Co., 514 So.2d 825, 831-832 (Ala.1987), determined that a cause of action for bad faith refusal to pay insurance benefits accrues when the insured has actual knowledge of facts which would put a reasonable mind on notice of the possible existence of bad faith. The court, however, went on to decide that, as a matter of law, the bad faith cause of action in that case accrued on the date insurance coverage was denied. Id.; see also Alfa Mut. Ins. Co. v. Smith, 540 So.2d 691, 692-93 (Ala.1988).