Opinion ID: 2487391
Heading Depth: 1
Heading Rank: 7

Heading: Whether the Bank's Claims Are Barred by the Statute of Limitations.

Text: ¶ 17. Under Section 15-1-49(1) and (2) of the Mississippi Code: (1) all actions for which no other period of limitation is prescribed shall be commenced within three (3) years next after the cause of such action accrued, and not after. (2) in actions for which no other period of limitation is prescribed and which involve latent injury or disease, the cause of action does not accrue until the plaintiff has discovered, or by reasonable diligence should have discovered, the injury. Miss.Code. Ann. § 15-1-49(1)(2) (Rev. 2003). In Oaks v. Sellers, this Court applied this section to insurance cases, stating that the three-year statute of limitations, pursuant to Miss.Code. Ann. § 15-1-49, began to run at the latest when the insured received written notice from the insurer that his claim was denied. Oaks v. Sellers, 953 So.2d 1077, 1084 (Miss.2007). ¶ 18. In Oaks, Donald Sellers purchased complete insurance coverage from Eddie and Brenda Oaks in July 1993 for his business. Oaks, 953 So.2d at 1078-79. The Oakses, agents for DeSoto Insurance, sold Sellers a business liability policy with coverage of $1 million and an umbrella insurance policy with up to $1 million in coverage. Oaks, 953 So.2d at 1079. Neither policy included coverage for personal liability. Id. On September 28, 1996, Sellers's son was involved in a car accident in Tennessee that seriously injured one passenger in the car and killed the passenger's minor child. Id. At the time of the accident, Sellers's son was using Sellers's car and was not acting within the course or scope of Sellers's business. Id. American States Insurance Company, the company that issued and underwrote Sellers's insurance policy, sent Sellers written notice on August 26, 1997, denying his claim on the basis that his umbrella insurance policy would not cover his son, as the son was not acting in the course and scope of the business at the time of the accident. Id. Sellers filed an action against the insurance company and the agents who had sold him the policy for failure to procure the requested insurance and failure to adequately explain the coverage. Id. The issue before the Court at that time was when the statute of limitations had begun to run. Oaks, 953 So.2d at 1080. The defendants argued that the statute of limitations began to run on August 26, 1997, when Sellers had received written notice of the denial of his claim. Id. Sellers, on the other hand, argued that the statute of limitations did not begin to run until the date of his actual injury, which he cites as February 16, 2001, the date when the Tennessee Court of Appeals imputed liability to him. Oaks, 953 So.2d at 1081. This Court found that the trial court had erred in granting Sellers's motion for summary judgment, finding that the statute of limitations began to run when his claim was denied. Therefore, because he filed his claim nearly five years after the statute of limitations had begun to run in August of 1997, his claims against the insurance company and the agents were time-barred. Oaks, 953 So.2d at 1084. ¶ 19. This Court further examined the statute-of-limitations issue in Weathers v. Metropolitan Life Insurance Company. In Weathers, Daniel Ray Weathers purchased a life-insurance policy based on the claims of the agent of Metropolitan Life Insurance Company (MetLife) that he would have vanishing premiums and would not have to pay the premiums after ten years. Weathers, 14 So.3d 688, 689 (Miss.2009). The agent verbally represented to Weathers that the policy would become self-sustaining through dividends. Id. The policy was delivered to Weathers on February 1, 1994. Weathers, 14 So.3d at 689-90. The language of the policy indicated that dividends could be used toward the payment of premiums. Weathers, 14 So.3d at 690. Weathers first became aware that the policy did not contain vanishing premiums when he received notice in the mail about a class-action lawsuit against MetLife. Id. Weathers opted out of the class-action suit and filed a separate action against MetLife. Id. Met-Life argued that the statute of limitations began to run when Weathers received his policy. Id. Weathers argued that the statute of limitations was tolled under Section 15-1-67 of the Mississippi Code. Id. See Miss.Code Ann. § 15-1-67 (Rev.2003). ¶ 20. In Weathers, this Court stated that if an insured is put on notice by the plain language of the policy that the agent's verbal representations are false, a fraud claim accrues on the date of the sale. Weathers, 14 So.3d at 693 (citing Stephens v. Equitable Life Assurance Soc'y of the United States, 850 So.2d 78, 84-85 (Miss.2003)). However, if the plain language of the policy does not clearly contradict the agent's representations such that the insured is put on notice, a fraud claim accrues when the insured becomes aware of the misrepresentation. Weathers, 14 So.3d at 694 (citing Stephens, 850 So.2d at 84-85). ¶ 21. In this case, the Bank argues that the statute of limitations did not begin to run until it suffered an actual loss, and that this loss did not occur until March 20, 2008, after the federal RICO claims were settled. The Bank claims that White's payment of the Bank's expenses from the state claims and Chubb's payment of the defense costs in the federal RICO claims tolled the running of the statute of limitations until they ceased such action, and the Bank had an actual cause of action. ¶ 22. This argument is misguided. In Oaks, this Court clearly stated that when Sellers received written notice of the denial of his claim, he was placed on notice of a possible problem with the procurement and understanding of the terms of his insurance policy and that the statute of limitations began to run on the date he received the notice. Oaks, 953 So.2d at 1084. Further, in Weathers, this Court stated that, if the insured is not put on notice by the language of the policy, a fraud claim accrues when the insured becomes aware of the misrepresentation. Weathers, 14 So.3d at 693. This Court has made it clear, in both Oaks and Weathers, that when an insured becomes aware or is put on notice by his insurance company that there is a possible problem with the insurance policy, the statute of limitations begins to run. ¶ 23. In this case, the statute of limitations began to run on January 18, 2005, when the Bank was notified by Chubb that it did not have entity coverage and that Chubb was under no duty to defend or indemnify the Bank in the pending six state-law complaints. Before the Bank received the letter, it was not clear to the Bank that it would not be covered under the policy. White told the Bank that it did not have entity insurance, but that he felt the Bank would not need entity insurance, based on White's belief that the officers and directors insurance coverage would be sufficient to cover the Bank. However, the Bank became aware of the misrepresentation of the coverage when it received the letter on January 18, 2005, and the statute of limitations began to run that day. The Bank did not file this cause of action until July 18, 2008, six months after the statute of limitations had run. Therefore, the Bank's claims are barred by the statute of limitations.