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A Pennsylvania appellate court has ruled that an insured’s breach of contract lawsuit against his auto insurer, which he filed in 2016 and which related to an April 2003 auto accident, was not barred by the applicable four-year statute of limitations—and that it even would have been timely had the insured filed his lawsuit in April 2020.

The Case

Ronald Legos asserted that, on April 29, 2003, he and Willard Grasavage were driving separate automobiles in Elmhurst Township, Pennsylvania, when Grasavage steered his underinsured vehicle into Legos’ lane of travel and collided with Legos’ automobile, resulting in injuries to Legos.

In July 2006, Legos sued Grasavage. The next month, Legos filed a claim for underinsured motorist (UIM) benefits with his insurer, Travelers Casualty Co. of Connecticut.

In March 2012, Legos settled with Grasavage for $75,000 and released him from liability.

Over four years later, in April 2016, Legos received a letter from Travelers claiming that the statute of limitations on Legos’ UIM claim had run. Travelers advised Legos that it had closed his UIM file.

Then, in August 2016, Legos sued Travelers for breach of contract.

Travelers moved for summary judgment, arguing that Pennsylvania’s four-year statute of limitations for breach of contract cases precluded Legos’ claim.

Travelers contended that the statute of limitations started to run in March 2012, the date that Legos signed a settlement agreement releasing Grasavage from liability. Thus, according to Travelers, the statute of limitations expired in March 2016, four months before Legos filed his lawsuit against Travelers.

For his part, Legos argued that the statute of limitations started to run in April 2016, when he received a letter from Travelers advising him that the statute of limitations on his UIM claim had expired and it would be closing his file, thus effectively denying coverage. Therefore, he contended, his lawsuit filed in August 2016 was timely.

The District Court’s Decision

The district court denied the insurer’s motion, ruling that the statute of limitations began to run when Travelers effectively denied Legos’ UIM claim, not when Legos settled his claim against Grasavage.

In its decision, the district court explained that, in Erie Insurance Exchange v. Bristol, the Pennsylvania Supreme Court held that the statute of limitations began to run in insurance cases when the insured’s cause of action accrued—that is, when the insurer was alleged to have breached its duty under the insurance contract.

The district court rejected Travelers’ contention that Bristol did not apply to UIM claims, and that it applied only to uninsured motorist (UM) benefits claims. The district court acknowledged that the Bristol court only explicitly included UM claims in its holding, but it stated that it was “clear” that the holding extended to UIM claims as well.

The district court reasoned that, throughout the “entire opinion,” the Bristol court “repeatedly referred to UM/UIM claims collectively, at no point distinguishing them.”

Moreover, the district court said, it was “clear” that the issue on appeal in Bristol pertained to both UM and UIM claims.

The district court then denied Travelers’ motion for summary judgment, concluding that because Travelers denied coverage in April 2016, the statute of limitations ran until April 2020, and Legos’ August 2016 lawsuit was timely.

The case is Legos v. Travelers Casualty Co. of Connecticut.

Malcolm L. MacGregor of McDonald & MacGregor in Scranton represented Legos. Allison L. Krupp and Brooks R. Foland of Marshall Dennehey Warner Coleman & Goggin in Camp Hill represented Travelers.

Steven A. Meyerowitz is the director of FC&S Legal, the editor-in-chief of the Insurance Coverage Law Report, and the founder and president of Meyerowitz Communications Inc. As FC&S legal director, Meyerowitz, a member of the team that conceptualized FC&S Legal, provides daily analysis and commentary on the most significant insurance coverage law decisions from courts across the country and news regarding legislative and regulatory developments. A graduate of Harvard Law School, Meyerowitz was an attorney at a prominent Wall Street law firm before founding Meyerowitz Communications Inc., a law firm marketing communications consulting company.