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A property loss coverage claim was dismissed under the policy’s two-year suit limitation provision, requiring that any suit be brought within two years of the date of loss. In dismissing this breach of contract claim, the court reiterated the Third Circuit’s holding that an insurer does not have to show prejudice in enforcing a suit limitation provision.

The insured also brought a statutory bad faith claim, and a breach of the covenant of good faith and fair dealing count. The insurer moved to dismiss the bad faith claim on statute of limitations grounds, arguing that the policy benefit was denied more than two years prior to suit. (It is well established that the bad faith limitations period is two years).

The insurer relied on a notice of denial, attached to its answer, in moving to dismiss. The insured asserted because this document was not attached to the complaint, it could not be considered on a motion to dismiss. Under the circumstances of this case, the court disagreed.

The court observed that courts handling motions to dismiss “may consider an undisputedly authentic document that a defendant attaches as an exhibit to a motion to dismiss if the plaintiff’s claims are based on the document.” Absent this exception, plaintiffs with legally deficient claims could simply omit attaching a document to avoid dismissal of claims that should be dismissed.

The court found the denial referenced in the complaint to be based on this notice of denial  document, and so considered it on the motion to dismiss.  The notice of denial was issued over two years before suit. Thus, the bad faith claim was independently time barred, and was dismissed on that basis.

[Note: This court ruled two weeks earlier that a bad faith claim could proceed even when the underlying breach of contract was dismissed because of a suit limitations provision, i.e., the bad faith claim could proceed even though no coverage was due. A link summarizing that opinion, and the viability of bad faith claims when no coverage is due, can be found here.]

Finally, the court dismissed the breach of the covenant of good faith and fair dealing as being subsumed within the breach of contract claim.

Date of Decision: May 23, 2019

Mail Quip, Inc. v. Allstate Insurance Co., U. S. District Court Eastern District of Pennsylvania CIVIL ACTION No. 19-223, 2019 U.S. Dist. LEXIS 87923 (E.D. Pa. May 23, 2019) (Kenney, J.)