X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Click here for the full text of this decision FACTS:In early 1996, Safety Lights informed its vendors that it would no longer buy from them unless it was added as an additional insured under their commercial general liability policies. Via Net agreed to do so, and its insurance broker issued a certificate of insurance in February 1997 listing Safety Lights as holder and stating that “holder is added as additional insured re: General Liability.” In fact, Via Net’s policy with Lumbermens Mutual Casualty Company did not provide for additional-insured coverage, Lumbermens never issued an endorsement adding Safety Lights as an additional insured. In June 1997, a Via Net employee named Guy Wright was injured when Safety Lights’ employees allegedly dropped a 3,000-pound steel plate on his hand. He sued three weeks later, and Safety Lights requested a defense from Lumbermens three months later. Pointing to its policy, Lumbermens denied the claim in a letter Safety Lights received on Dec. 9, 1997. Safety Lights settled Wright’s suit in 1999 for $235,000 and sued Lumbermens and Via Net’s broker for breach of contract and misrepresentation. A federal district court dismissed the claim because 1. Lumbermens’ policy did not provide coverage for additional insureds, and 2. Safety Lights’ reliance on the certificate of insurance was unreasonable as it explicitly did not alter coverage. On Dec. 7, 2001, almost precisely four years after Lumbermens denied coverage, Safety Lights filed a breach of contract suit against Via Net for failing to add it as an additional insured. The parties agree that the four-year statute of limitations applies. Via Net moved for summary judgment on the ground that more than four years had elapsed since the alleged breach of contract, and the trial court granted the motion. The court of appeals reversed, finding the discovery rule could defer accrual until Safety Lights received Lumbermens’ denial on Dec. 9. HOLDING:Reversed and rendered. A breach of contract claim accrues when the contract is breached, the Texas Supreme Court stated. But the statute of limitations can be extended, the court stated, for a cause of action if “the nature of the injury incurred is inherently undiscoverable and the evidence of injury is objectively verifiable.” The court, however, held that the discovery rule is inapplicable to defer accrual of the claim asserted by Safety Lights. The court noted that it did not hold that the discovery rule could never apply to breach of contract claims. Some contract breaches may be inherently undiscoverable and objectively verifiable, the court stated, and will trigger the discovery rule. But such cases are rare, the court stated, as diligent contracting parties should generally discover any breach during the relatively long four-year limitations period provided for such claims. OPINION:Per curiam.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 3 articles* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.