Court Opinion

ID: 8599754
Source: CourtListenerOpinion
Date Created: 2022-11-23 21:01:04.758629+00
Date Added: 2024-06-11T16:55:09.126537
License: Public Domain

NOT RECOMMENDED FOR PUBLICATION
                               File Name: 22a0474n.06

                                    Case Nos. 22-5426/5501

                         UNITED STATES COURT OF APPEALS
                              FOR THE SIXTH CIRCUIT
                                                                                  FILED
                                                                            Nov 23, 2022
                                                    )                   DEBORAH S. HUNT, Clerk
CREATIVE PACKAGING COMPANY;
                                                    )
CREATIVE PROPERTIES OF KENTUCKY,
                                                    )
LLC, fka Creative Properties, LLC,
                                                    )     ON APPEAL FROM THE UNITED
       Plaintiffs-Appellants,                       )     STATES DISTRICT COURT FOR
                                                    )     THE EASTERN DISTRICT OF
v.                                                  )     KENTUCKY
                                                    )
SECURA INSURANCE, a Mutual Company,                 )                                 OPINION
       Defendant-Appellee.                          )
                                                    )

Before: SUTTON, Chief Judge; COLE and THAPAR, Circuit Judges.

       THAPAR, Circuit Judge. Creative Packaging Company sued Secura Insurance for breach

of contract. But it brought its claim too late, so the district court granted summary judgment to

Secura. We affirm.

                                               I.

       Creative Packaging owns commercial property that was insured by Secura, a foreign

insurer. On April 25, 2015, a hailstorm damaged the property. The Secura policy covered hail

damage. But it also contained two clauses relevant here. First was a provision requiring “prompt

notice” of any damage to the insured property. Second was a suit-limitations clause prohibiting

Creative Packaging from suing Secura unless (1) “there ha[d] been full compliance with all of the
Case Nos. 22-5426/5501, Creative Packaging Co. v. Secura Ins.

[contract] terms,” and (2) “the action [was] brought within 2 years after the date on which the

direct physical loss or damage occurred.” R. 11-1, Pg. ID 308.

       Creative Packaging didn’t notify Secura of the hail damage until May 11, 2020, over five

years after the hailstorm. Secura denied the claim as untimely. So on February 24, 2021—nearly

six years after the hailstorm—Creative Packaging sued Secura in Kentucky state court for breach

of the insurance contract. Secura removed to federal court, invoking diversity jurisdiction. See 28

U.S.C. §§ 1332, 1441. The district court granted summary judgment to Secura, holding that the

two-year limitations clause barred Creative Packaging’s breach-of-contract claim.          Creative

Packaging timely appealed.

                                                II.

       The contractual suit-limitations clause is valid and enforceable against Creative Packaging.

       Under Kentucky law—which the parties agree applies—suit-limitations clauses in

insurance contracts are generally valid. Smith v. Allstate Ins. Co., 403 F.3d 401, 404 (6th Cir.

2005). And a Kentucky statute specifically acknowledges that foreign insurers may include such

clauses in their policies, so long as they don’t “limit the time for commencing actions against such

insurers to a period of less than one (1) year from the time when the cause of action accrues.”

Ky. Rev. Stat. § 304.14-370.

       When does a cause of action accrue in this context? Our court has already answered this

question. In Smith, we noted that under Kentucky law, a cause of action for breach of an insurance

contract may accrue on the date an insured property is damaged—even if the insured cannot sue

until the insurer later denies the claim. 403 F.3d at 405. And we recognized that “Kentucky courts

have repeatedly enforced insurance contract provisions under which the time for suit began to run

before the insured had a right to sue.” Id. (citing Ashland Fin. Co. v. Hartford Accident & Indem.

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Case Nos. 22-5426/5501, Creative Packaging Co. v. Secura Ins.

Co., 474 S.W.2d 364, 365–66 (Ky. 1971)). So we concluded that the suit-limitations provision in

Smith—which required the insured to sue Allstate within one year of their loss—was “not

inconsistent” with Kentucky law. Id. (citing Ky. Rev. Stat. § 304.14-370).

          Smith decides this case. The policy here gave Creative Packaging two years from the date

of damage to sue Secura (twice as long as the period we approved in Smith). Thus, the limitations

clause is valid under Kentucky law.

          To be sure, in Smith, we also recognized an exception to the general rule: A valid suit-

limitations provision “may nonetheless be unenforceable if it did not allow the [insured] a

reasonable time to sue.” 403 F.3d at 405. But here, Creative Packaging provides no reason to

conclude it qualifies for that exception.

          Our reasonableness analysis focuses on the period beginning when Creative Packaging

could “reasonably have been expected” to notify Secura of the damage and ending on the two-year

anniversary of the hailstorm. Id. at 406. “The question is whether that period afforded [Creative

Packaging] an adequate time for filing suit.” Id. For example, if Creative Packaging should have

learned of the damage six months after it happened, the question would be whether one-and-a-half

years was a reasonable period in which Creative Packaging could have been expected to notify

Secura.

          Here, all agree that Creative Packaging didn’t notify Secura of the damage until five years

after the hailstorm—despite the contract requirement of “prompt notice.” But the relevant question

is when Creative Packaging should have learned of the damage, not when Creative Packaging

actually learned of the damage. See id. at 406. And here, Creative Packaging does not explain its

delay in discovering and reporting the hail damage, nor does it offer any reason why it wouldn’t

“reasonably have been expected” to discover the damage within the two-year period. In sum,

                                                 -3-
Case Nos. 22-5426/5501, Creative Packaging Co. v. Secura Ins.

following Smith, we conclude that the suit-limitations clause in Creative Packaging’s insurance

policy bars its suit, and we do not find the two-year period unreasonable in the circumstances

presented here.

       Creative Packaging invites us to distinguish Smith because that case involved fire damage,

and this case involves hail damage. But nothing in Smith limits the rule to cases involving fire

damage.

                                        *      *       *

       We affirm.

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