When asked if something is ripe, one might immediately think of fruit that is ready to eat. Similarly, the legal term “ripeness” means the readiness of a case for litigation. While a simple smell test may be all that is needed for fruit, the ripeness of a legal case, an insurance claim, and a legal case about an insurance claim, require a little more analysis.
For a property insurance claim, the standard recipe involves: (1) property damage, (2) notification to the insurance company, (3) investigation of the damage, and (4) a decision on the claim. If the recipe doesn’t turn out right with these simple ingredients, one may need to add a little legal support. Unfortunately, each of these steps take time to complete, and much like the timers found in the Iron Chef kitchens, there is a legal timer known as the statute of limitations that can threaten to cut even the best chefs short.
When dealing with large condominium losses, one factor that can take significant time is the investigation of the loss by the insurance company. This is because the insurance company may want to inspect a large property, review boxes full of association records and documents, and interview association board members. Depending on the circumstances, this process may span months or even years. So what is an association to do when a property damage claim is still under investigation but the statute of limitations is running out? In Yacht Club on the Intracoastal Condo. Ass’n, Inc. v. Lexington Ins. Co., 10-81397-CV, 2011 WL 5223127 (S.D. Fla. Nov. 2, 2011), the association went ahead and file suit.
In Yacht Club, the condominium association first notified its insurance company of Hurricane Wilma damage approximately four years and seven months after the loss. The insurance company requested a proof of loss, examination under oath, and various documents. Faced with a potential statute of limitations problem at the five-year anniversary of the loss, the association filed suit for breach of contract before the insurance company’s investigation was complete. The court held that under the specific facts of that case, the lawsuit was not ripe when it was filed because the insurance company could not breach the contract until after it had investigated and denied the claim. The court dismissed the case without prejudice so it could potentially be filed again when and if it became ripe.
In the past, courts have either dismissed an early-filed lawsuit or stayed the litigation so that the insurance company could complete its investigation before reaching a determination on the loss. See El-Ad Enclave at Miramar Condo. Ass’n, Inc. v. Mt. Hawley Ins. Co., 752 F.Supp.2d 1282, 1287 (S.D. Fla. 2010). What is different about Yacht Club, is that after the association filed suit, the insurance company abandoned its efforts to investigate the claim. Over a year went by with significant litigation before the court ultimately dismissed the case, yet the court found that there would be no hardship to the parties if the case was dismissed and re-filed later. Under the court’s logic, and under the facts of that particular case, even though the insurance claim was not brought until close to five years after the loss occurred, the claim would not be barred by the applicable statute of limitations even if the insurance company denied the claim after a lengthy investigation, because the denial would start the countdown clock ticking, not the hurricane itself.
It takes some good analysis to determine when a claim first becomes ripe and when that countdown clock will run out. If you have property damage, be sure to take action early to give yourself plenty of time, and seek professional help to ensure timeliness and accuracy for your claim.