A Massachusetts state trial court recently ruled that, even though an insured’s contractual coverage claim against its insurer was time-barred, its claim for insurer bad faith could proceed under a separate statutory limitations period. Gray Excavation, Inc. v. Acadia Insurance Co., No. 0602026C (Mass. Super. Ct. Jan. 29, 2008).
The case involved a standard form Massachusetts property insurance policy subject to Massachusetts G. L. c. 175, § 99. Under the statute, claims for coverage under the policy must be commenced “within two years from the time the loss occurred.”
On summary judgment, the court held that the insured’s contractual claims were timed-barred because they were filed almost three years after the loss occurred. However, the court further found that the insured’s bad faith claims under M.G. L. c. 93 and M.G. L. c. 176D for failure to act reasonably with respect to the insured’s claim and for denial of coverage without conducting a reasonable investigation were not time barred. In so holding, the court opined that that statutory bad faith claims are “not merely ‘duplicative’ of ordinary breach of contract claims on the policy,” but instead “create an independent statutory obligation and remedy.” Accordingly, the court applied M.G. L. C. 260, § 5A’s four-year limitations period to the insured’s bad faith claims, thereby permitting the insured’s bad faith claims to proceed.
