Court Opinion

ID: 9673292
Source: CourtListenerOpinion
Date Created: 2023-08-24 04:09:40.573729+00
Date Added: 2024-06-11T18:16:21.343516
License: Public Domain

Allen, J.
This is an action to recover on an insurance policy covering an airplane which was illegally converted by a lessee. Defendant insurance company issued its policy to the owner of the plane and added an endorsement covering the interest of plaintiff bank which held a lien on the plane as the result of its loan to the owner. We are asked to decide if the action is barred by the applicable statute of limitation. The trial judge ruled that it was, and granted the defendant’s *152motion for accelerated judgment under GCR 1963, 116.1(5).
The proofs show that the plane was illegally converted on September 30, 1967. The defendant was notified of the loss by the plaintiff’s letter dated December 13, 1967. After an extended exchange of letters, the defendant denied all liability in a letter dated June 9, 1969. The plaintiff finally started this lawsuit on May 13, 1974.
The controlling statute of limitation is MCLA 600.5807(8); MSA 27A.5807(8) which states:
"No person may bring or maintain any action * * * unless, after the claim fírst accrued * * * he commences the action within [6 years] * * * .” (Emphasis supplied.)
When did the plaintiff’s claim accrue in the present case? The trial judge ruled that the cause of action accrued on the date of loss, i.e., on September 30, 1967, when the airplane was illegally converted. His opinion cited McGuire v Continental Insurance Co, 39 Mich App 612; 197 NW2d 846 (1972), for the rule that a claim under an insurance contract accrues when the loss occurs. McGuire so held, but the holding was based on contract language which was significantly different from the policy involved in the present litigation. The McGuire policy provided:
"No suit or action on this policy * * * shall be sustainable * * * unless commenced within twelve months next after inception of the loss.” (Emphasis supplied.)
The underscored language was the basis for the holding that the contractual limitation period began to run on the date of the loss.
*153The policy in the present case does not specify a deadline beyond which suit may not be brought; therefore, that point is controlled by the statute of limitation, MCLA 600.5807(8); MSA 27A.5807(8). But, unlike the McGuire policy, the present one does specify the earliest date when a suit may be brought.
"Payment for loss may not be required nor shall action lie against the Company * * * until thirty (30) days after proof of loss is filed * * * .” (Emphasis supplied.)
Assuming the validity of the contract provision, it is clear that the plaintiff could not have brought suit on the day of loss. Therefore, it would be unrealistic to hold that the claim accrued and the limitation period began to run on that date. The general rule is that the parties to an insurance contract may specify the time when a cause of action accrues. 44 Am Jur 2d, Insurance, § 1904, p 841. Michigan has repeatedly recognized insurers’ ability to contractually shorten the statutory limitation period. See, e.g., Tom Thomas Organization, Inc v Reliance Insurance Co, 396 Mich 588; 242 NW2d 396 (1976). We hold that the parties may also effectively lengthen the limitation period by agreeing that the insured may not file suit until some specified time after the date of loss.
The parties to the present case made such an agreement when they agreed that no action on the contract would lie "until thirty (30) days after proof of loss is filed”. Obviously, the six-year limitation period began to run on the first day that suit could have been brought. According to the contract, that point was reached 30 days after proof of loss was filed. The contract details the requirements which the proof of loss must meet. *154The problem is that, nine years after the loss occurred, no proper proof of loss has yet been filed.
That fact forces us to choose among three possible analyses designed to cope with that omission. First, we could find plaintiff is still free to file a proper proof of loss and the limitation period will not even begin to run until it does so. That holding would permit the plaintiff to proceed with its suit. Second, we could find the proof of loss requirement was waived (and therefore "satisfied”) when the defendant wrote, on June 9, 1969, that it would deny all liability on the policy. Since suit was filed on May 13, 1974, this interpretation would mean that the original complaint was timely filed. Finally, we could find that the plaintiff’s letter of December 13, 1967, notifying the defendant of the conversion is a sufficient proof of loss.
While we are not fully satisfied with any one of the three, we adopt the third. Adoption of this alternative means that the plaintiff’s right to sue on the policy contract accrued on January 12, 1968, i.e., 30 days after the proof of loss letter on December 13, 1967. The complaint, dated May 13, 1974, was filed more than six years after the claim accrued; thus it was barred by the statute of limitation. MCLA 600.5807(8); MSA 27A.5807(8).
The plaintiff urges us to hold that the claim did not accrue until the defendant formally denied all liability in its letter of June 9, 1969. We must reject that suggestion. The statute states that a claim accrues "at the time the wrong upon which the claim is based was done”. (Emphasis supplied.) MCLA 600.5827; MSA 27A.5827. What was the "wrong” in the present case? Assuming that the plaintiff’s claim was meritorious, payment of the policy proceeds became due on January 12, 1968, and the plaintiff could have sued to enforce the *155duty to pay. While not morally or ethically wrong, we believe that the defendant’s failure to pay promptly was a sufficient "wrong” in the statutory sense to start the running of the limitation period. The subsequent refusal to pay was also a "wrong” but the six-year period had already begun to run by then.
We acknowledge but decline to follow Schimmer v Wolverine Insurance Co, 54 Mich App 291; 220 NW2d 772 (1974), which held that a cause of action did not accrue until the insurance company denied its obligation under the contract. On our facts, Schimmer would require an obviously improper holding that the statute of limitation did not begin to run until nearly 18 months after the plaintiff could have started its lawsuit.
We have also considered and rejected the argument that the defendant improperly misled the plaintiff into complacency by its seeming willingness to negotiate the claim. Where such actions cause a plaintiff to lose a valid claim, the courts may hold that the insurance company has waived the protection of the limitation statute or that the statute was tolled during the negotiations. See, e.g., Better Valu Homes, Inc v Preferred Mutual Insurance Co, 60 Mich App 315; 230 NW2d 412 (1975). But the present plaintiff still had more than 4-1/2 years in which to file its complaint after the defendant flatly denied all liability. If a good claim was lost, the fault lies with the plaintiff, not the defendant.
The judgment below is affirmed.