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1426 Wisconsin LLC v. Travelers Indemnity Company of America

United States District Court, District of Columbia

June 26, 2015

1426 WISCONSIN L.L.C., Plaintiff,


JOHN D. BATES, District Judge.

1426 Wisconsin, L.L.C., seeks to recover costs and lost income under its Travelers insurance policy. But 1426 Wisconsin's claim appears time-barred by a two-year contractual limitations period included in the policy. Because this Court agrees that Travelers engaged in no behavior that would estop it from enforcing that provision, nor waived its right to assert this defense, the Court will grant Travelers's motion for summary judgment.


1426 Wisconsin's relationship with Travelers dates to 2008: the first policy Travelers issued was effective starting January 2009, and 1426 Wisconsin renewed it for 2010 and 2011. See Ex. 1 to Def.'s Mot. [ECF No. 6-2] at 1, 42. The parties agree that the 2011 policy consisted of several declarations and endorsements, as well as a Businessowners Property Coverage Special Form, a thirty-nine page document providing coverage for certain damages to 1426 Wisconsin's property. Ex. 7 to Pl.'s Opp'n [ECF No. 7-8] at 33; Pl.'s Mem. Opp'n [ECF No. 7-1] at 2. And the parties do not dispute that the Special Form contained a provision ("Legal Action Against Us") requiring that any legal action against Travelers be brought "within two years after the date on which the direct physical loss or damage occurred." Pl.'s Mem. Opp'n at 2 ("The undisputed facts are as follows... [t]he insurance policy contained a limitations period of two years for the bringing of legal action against Travelers."). But according to 1426 Wisconsin, Travelers did not send it the Special Form until November 18, 2014-a fact that Travelers denies. Compare Pl.'s Mem. Opp'n at 2 with Def.'s Reply [ECF No. 8] at 2.

On November 24, 2011, 1426 Wisconsin's property was damaged by the collapse of a neighboring building. See Compl. [ECF No. 6-3] at 2. Soon after, 1426 Wisconsin requested payment for damages under the insurance policy. See Ex. 1 to Pl.'s Opp'n [ECF No. 7-2] at 2. Over the next five months, Travelers informed 1426 Wisconsin's sole member, Mossadaq Chughtai, and 1426 Wisconsin's public adjuster, Jeffrey Wolff, that it was investigating the claim-but reserving its rights to deny coverage under the policy. See Ex. 3 to Def.'s Mot. [ECF No. 6-4] at 3. Travelers informed 1426 Wisconsin in April 2012 that it had concluded its investigation of 1426 Wisconsin's claim and found some coverable damage, but would continue to adjust the claim. See id. at 8-10. Several weeks later, it sent 1426 Wisconsin a check for $15, 461.03, representing a "Building Damages Payment." See Ex. 2 to Pl.'s Opp'n [ECF No. 7-3] at 1 (capitalized in original). 1426 Wisconsin ultimately rejected the offered amount, deeming it insufficient to cover its loss-of-rents claim under the policy. See Compl. at 3. Travelers closed the investigation on September 13, 2012, following-it maintained-several unsuccessful attempts to contact Chughtai for further documentation in support of 1426 Wisconsin's loss-of-rents claim. See Ex. 4 to Pl.'s Opp'n [ECF No. 7-5] at 1-2.

Over two years later, on November 19, 2014, 1426 Wisconsin filed suit in D.C. Superior Court, seeking "monetary damages... in repair and restoration costs, " and "lost rental income." Compl. at 3. Travelers removed to this Court, where it has filed a motion to dismiss, or, alternatively, for summary judgment, arguing that the suit is barred by the two-year contractual limitations period.


Travelers has moved for dismissal under Federal Rule of Civil Procedure 12(b)(6), or alternatively for summary judgment under Rule 56. See Def.'s Mot. [ECF No. 6]. If "matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56." Fed.R.Civ.P. 12(d). Doing so requires that "[a]ll parties must be given a reasonable opportunity to present all the material that is pertinent to the motion." Id . No further notice is required where-as here-"the defendant expressly moves for summary judgment in the alternative to a motion to dismiss before discovery has been conducted, and relies on extra-pleading matters to which the plaintiff has an opportunity to respond." Proctor v. District of Columbia, ___ F.Supp. 3d ___, 2014 WL 6676232, at *4 (D.D.C. Nov. 25, 2014). Because 1426 Wisconsin had ample notice and opportunity to respond, the Court will consider the extra-pleading materials submitted by the parties and thus evaluate the motion as one for summary judgment.

Summary judgment is appropriate where "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). A material fact is one "that might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Additionally, "all inferences must be viewed in a light most favorable to the non-moving party." McCready v. Nicholson, 465 F.3d 1, 7 (D.C. Cir. 2006) (internal quotation marks omitted).


Courts generally recognize the validity of contractual provisions limiting the period within which insurance policy holders may file suit. Nkpado v. Standard Fire Ins. Co., 697 F.Supp.2d 94, 98 (D.D.C. 2010). And here 1426 Wisconsin concedes that its policy contains just such a two-year limitations period. Pl.'s Mem. Opp'n at 2. 1426 Wisconsin also admits that it failed to file suit before the expiration of that limitations period. Pl.'s Opp'n [ECF No. 7] at 1. But 1426 Wisconsin believes its situation falls within some exceptions to this general rule. Under District of Columbia law, "[b]oth waiver and estoppel can be invoked to preclude a party from asserting [a limitations period] as an affirmative defense." Martinez v. Hartford Cas. Ins. Co., 429 F.Supp.2d 52, 57 (D.D.C. 2006) (quoting P'ship Placements, Inc. v. Landmark Ins. Co., 722 A.2d 837, 841 n.14 (D.C. 1998)). 1426 Wisconsin argues that Travelers failed to send it the part of the insurance policy containing the contractual limitations clause-and therefore lulled 1426 Wisconsin into believing that no such limitations period existed. In 1426 Wisconsin's view, then, Travelers is estopped from relying on that clause. Pl.'s Mem. Opp'n at 4-5. 1426 Wisconsin further argues that because Travelers had "transmitt[ed] partial payment" for 1426 Wisconsin's claim, and "had engaged in settlement discussions, " it waived the contractual limitations period in any event. Id . The Court is not persuaded by either argument.

At a fundamental level, 1426 Wisconsin's estoppel and waiver arguments cannot succeed because any of Travelers's allegedly delay-inducing behavior ended, at a minimum, a year before the contractual limitations period expired. An insured cannot estop the insurer from asserting a policy's limitations period, nor will the insurer have waived the defense, when "the inducement by the insurance company not to file suit ended well before the limitations period expired." Bailey v. Greenberg, 516 A.2d 934, 939 (D.C. 1986). Thus, "[i]f ample time to file suit within the statutory period exists after the circumstances inducing delay have ceased, there is no estoppel against pleading the bar of the statute." Prop. 10- F, Inc. v. Pack & Process, Inc., 265 A.2d 290, 291 (D.C. 1970). 1426 Wisconsin contends that the check Travelers sent for its building damages claim was a concession of Travelers's liability, causing 1426 Wisconsin to delay filing suit. See Pl.'s Mem. Opp'n at 4-5. But even if this Court were to construe Travelers's payment of the building damages claim as a delay-inducing action, 1426 Wisconsin still cannot prevail: Travelers denied 1426 Wisconsin's claim well before the limitations period expired. See Bailey, 516 A.2d at 939. Here, construing the facts in the light most favorable to 1426 Wisconsin, any inducement to delay ended, at the latest, in September 2012, when Travelers sent a letter to 1426 Wisconsin informing 1426 Wisconsin that Travelers was closing its investigation of the claim. See Ex. 3 to Def.'s Mot. at 11-12. That was more than a year before the two-year limitations period expired. But 1426 Wisconsin instead waited two more years-until November 19, 2014-before filing suit.

Similar reasoning applies to the Special Form that 1426 Wisconsin says Travelers never sent it. 1426 Wisconsin received multiple policy documents-which, for the reasons explained below, afforded it notice that the Special Form was missing-in 2010 at the latest. See Ex. 5 to Pl.'s Opp'n [ECF No. 7-6] at 3 (noting that the issue date of the policy was November 29, 2010). Accordingly, even assuming that Travelers did not send 1426 Wisconsin the Special Form, this supposedly dilatory behavior ceased when 1426 Wisconsin received the other policy documents in 2010, and failed to note that the Special Form was missing. Despite having had two years to file suit before the policy's November 2013 limitations period expired, 1426 Wisconsin delayed bringing this action until a full year later-in November 2014. 1426 Wisconsin's own inaction cannot now be used to estop ...

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