District Court Applies Equitable Tolling in Refusing to Dismiss Sandy Coverage Dispute

In a recent District Court case, Judge Kugler denied an insurance company’s motion to dismiss an insured’s claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and violation of the Consumer Fraud Act in regard to damages Plaintiff’s property sustained during Superstorm Sandy. Plaintiff Richard Inacio initially submitted a claim to his insurance company, State Farm Fire and Casualty Co., for damage to his property as a result of winds and rains from Superstorm Sandy. State Farm paid Mr. Inacio $901.12 in November 2012 and sent a letter on December 7,2012 stating that the property damage was caused by flooding, which was not covered under the policy. Mr. Inacio subsequently hired a damage consultant to assist him in receiving additional payment. State Farm then agreed to reinspect and sent Mr. Inacio a check for $15,005.37, which Mr. Inacio still believed to be insufficient to cover the damages to his home. State Farm denied Mr. Inacio’s request to resolve the matter through appraisal, and Mr. Inacio consequently filed suit.

State Farm moved to dismiss Mr. Inacio’s claims on the ground that the action was barred by the one-year statute of limitations in the insurance policy. The Court denied State Farm’s motion and held that the letter sent by State Farm on December 7, 2012 was ambiguous and not an outright denial of coverage, and therefore, the doctrine of equitable tolling was applicable. The Court noted that the letter only referred to flood damage, did not contain a clear denial of coverage, and included an open-ended request for information, and determined that the letter was not an unambiguous denial of Mr. Inacio’s insurance claim. Thus, the running of the statute of limitations was not triggered and Mr. Inacio’s claims were not time-barred.