Saad v. Citizens Insurance Co. of America

576 N.W.2d 438, 227 Mich. App. 649

• Court: Michigan Court of Appeals
• Decided: April 30, 1998
• Docket: Docket 196748
• Status: Published

Opinions

Sawyer, J.

Plaintiff appeals from an order of the circuit court granting summary disposition to defendant on the basis that the period of limitation had expired on plaintiffs claim under an insurance policy. We affirm.

Plaintiff suffered a theft loss on May 12, 1994, and sought coverage under an insurance policy issued by defendant. Notice of the loss was given to defendant on either May 12, 1994, or May 26, 1994.¹ On December 16, 1994, defendant mailed a notice to plaintiff formally denying the claim, which notice plaintiff alleges to have received on December 19. Thereafter, plaintiff brought suit on December 18, 1995.

The trial court granted summary disposition to defendant on the basis that the contractual period of limitation, one year, had expired on December 16, 1995, two days before suit was actually filed and one year after defendant mailed the denial to plaintiff. Plaintiff contends that the period of limitation did not expire until December 19, 1995, one year after plaintiff received the denial notice.

There is no dispute that the period of limitation was tolled from the time of the notice of loss until the claim was denied. See Tom Thomas Organization, Inc v Reliance Ins Co, 396 Mich 588; 242 NW2d 396 (1976). The question presented here is one of first impression: does the tolling end when the notice of dériial is mailed by the insurer or when it is received b^ the insured?

Both sides present strong arguments for their positions, but cite no controlling authority. The cases cited either deal with specific statutes or involve cases in which the dispute was the adequacy of the notice, not the timing of the notice.

We do find the following statement by this Court in Hamdi v Michigan Basic Property Ins Ass’n, 190 Mich App 333, 337-338; 475 NW2d 467 (1991):

The limitations period began to run on February 15, 1988, the date of the loss. The period was then tolled three days later when plaintiff gave notice of his loss. On August 15, 1988, the period began to run again when defendant sent plaintiff a letter formally denying coverage. In re Certified Question [Ford Motor Co v Lumbermens Mut Casualty Co, 413 Mich 22; 319 NW2d 320 (1982)]; Bourke v North River Ins Co, 117 Mich App 461; 324 NW2d 52 (1982). If plaintiff had taken no further action against defendant, the statutory period of limitations would have expired on August 12, 1988, and plaintiff’s lawsuit would have been time-barred.. See Kassab v Michigan Basic Property Ins Ass’n, 185 Mich App 206, 211; 460 NW2d 300 (1990).

However, when plaintiff opted to appeal under defendant’s internal appeals procedure, the limitations period was again tolled. . . . Defendant’s appeals committee formally denied the (appeal on October 14, 1988, thus causing the-limitations period to recommence. [Emphasis added.]

While Hamdi is persuasive, it is not controlling. First, it dealt with the inteipretation of a statute establishing a standard fire-loss policy. Second, the issue that resolved the case was whether the period of limitation was tolled while the internal appeal process was underway; the dates of sending and receiving the notices were not relevant to the resolution of the appeal.

We do note with interest, however, the Hamdi Court’s reference to the period of limitation recommencing when the appeals committee formally denied the appeal. Indeed, in Thomas, supra, the Supreme Court refers to the period of limitation being tolled “until the insurer formally denies liability.” Id. at 594. Thus, the emphasis is on the action taken by the insurer, not when the information is received by the insured.

Ultimately, it probably makes little difference, other than to the outcome of this case, which rule is adopted. While the parties do make reference to practical considerations concerning both rules, both insurers and insureds can adjust their procedures to either rule. If we adopt a “date mailed” rule, insureds merely have to calculate the filing deadline from the postmark on the notice. If a “date received” rule is adopted, then insurers will want to send their denials by certified or registered mail so that there will be a record of when the notice is received.

With these considerations in mind, we are satisfied that the trial court correctly inteipreted the existing .case law as providing a tolling until the claim is formally denied and that formal denial occurs when the insurer mails the notice of denial. Accordingly, the trial court properly granted summary disposition to defendant.

In light of our resolution of this issue, we need not consider the other issue raised by plaintiff in his brief.

' Affirmed. Defendant may tax costs.

Mackenzie, P.J., concurred.

1 There is a dispute concerning when notice of loss was given. However, resolution of that dispute is not required for resolution of this appeal.