The PA Superior Court recently decided in Selective Way Ins. Co. vs. Hospitality Grp Servs., 2015 Pa.Super. LEXIS 398, 2015 Pa. Super 146 that the 4 year statute of limitations for an insurance company to file a declaratory judment action is not triggered by the date of the filing of the Complaint.
In Selective, the incident occurred in February 2006 and a complaint was filed against the Defendant Hospitality in August 2007. Selective, Hospitality's insurance carrier provided defense for Hospitality and sent a reservation letter in 2007. Selective filed Declaratory Judgment Complaint in June 2012 seeking determination of no coverage. Summary judgment for Hospitality was granted by teh trial court in Westmoreland County, PA on the basis that Selectiveâ€™s DJ Complaint fell outside the 4 yr statute, and should have been filed by August 2011. Selective argued that did not have sufficient facts to file the DJ Complaint until after Plaintiffâ€™s co-worker's deposition in 2009.
Judge Christine Donohue wrote the Superior Court opinion, and found that the determination of when statute runs is factual question for lower court, and is not necessarily triggered the date that the Complaint is filed. Rather, when the insurance company has sufficient factual basis to present the averments in its complaint for declaratory judgment that the policy does not provide coverage. This can be at time complaint is filed, during discovery of the underlying case or not until there is a recovery that the carrier does not believe is covered.
The decision was 5-3 with Judges Ford Elliott, Panella and Shogan dissenting, and Judge Mundy concurring but concluding that the appeal was moot due to a settlement between the parties.
Practical point from this case - although the insurance company is getting a break so to speak in that there is no strict requirement to file a DJ action 4 years after receipt of the complaint, itâ€™s always better to err on the side of filing and amending the Complaint later, rather than leaving the determination to the trial judge. The other side of this is that there is no requirement for a carrier to even file a DJ action to support its denial. However, most do to avoid a later breach of contract/bad faith action.