SUIT AGAINST US - LIMITATION OF ACTION CLAUSE

OHIO SUPREME COURT

Dominish v. Nationwide Ins. Co., 129 Ohio St.3d 466, 2011-Ohio-4102.

"SUIT AGAINST US" --- ("US" BEING THE INSURER)  ... MUST BE BROUGHT WITHIN A CERTAIN PERIOD OF TIME AFTER THE LOSS OCCURS.

LIMITATION OF ACTION CLAUSE - CONTRACTUAL LIMITATION PERIOD FOR FILING SUIT

Here is the contract clause the Ohio Supreme Court was construing:
“Suit Against Us. No action can be brought against us unless there has been full compliance with the policy provisions. Any action must be started within one year after the date of loss or damage.”

Our office is currently working on a $120,000 case involving this very issue and policy language.  The Dominish decision upholds prior Ohio law on the issue and details the circumstances under which the insurer may end up waiving reliance on the "Suit Against Us" clause.

IN A NUTSHELL, The Court held that an insurer can enforce limitation-of-action clause in its insurance contract because clause is unambiguous and insurer did not admit liability or hold out a reasonable hope of adjustment.
 
The thrust of the analysis is on whether the insurer admitted liability or held out a reasonable hope of adjustment to the insured.  If the insurer did either of those things, there maybe a waiver of the "Suit Against Us" clause and the insured could prevail despite not having filed suit within the period defined within that clause.
 
How Might Waiver of the "Suit Against Us" Clause Occur?


In Hounshell v. Am. States Ins. Co. (1981), 67 Ohio St.2d 427, 21 O.O.3d 267, 424 N.E.2d 311, syllabus, we stated, “An insurance company may be held to have waived a limitation of action clause in a fire insurance policy by acts or declarations which evidence a recognition of liability, or acts or declarations
which hold out a reasonable hope of adjustment and which acts or declarations occasion the delay by the insured in filing an action on the insurance contract until after the period of limitation has expired.” This holding is sufficiently clear that we have not had occasion to revisit it in the intervening 30 years.

The holding states a two-part test to determine whether an insurance company has waived a contractual limitation-of-action clause. We do not consider the test to be the exclusive way to determine whether an insurance company has waived its right to enforce a limitation-of-action clause, but it is one way.

To be deemed to have waived its right to enforce a limitation-of-action clause pursuant to our holding in Hounshell, an insurance company must have either recognized liability or held out a reasonable hope of adjustment and by doing so, induced the insured to delay filing a lawsuit until after the contractual period of limitation expired. We conclude that Nationwide did not recognize liability for the disputed portion of the damage or hold out a hope of an adjustment to include compensation for that portion of the damage.

As such, there was no waiver and the insured was barred from recovery.

Read the case here.