The Statute of Limitations is defined as the time period within which you must file a lawsuit. Unsurprisingly, there appears to be some confusion over when the statute of limitations runs out against the victims of Hurricane Ike, and public adjusters are not the only ones confused – many lawyers are unsure as well. There is one thing that lawyers are sure about, though: it’s better to be safe rather than sorry!
The traditional statute of limitations in Texas for a contract dispute is four (4) years from the accrual of a cause of action (i.e., when you can file suit). However, Texas law allows for contracting parties to shorten their limitations period, but not for a period less than two (2) years. Under Texas law, a provision creating a limitations period of less than two years is automatically void. Insurance companies know this law well and most have provisions in their policies which shorten the limitations period to two years. Since Hurricane Ike passed through on September 13, 2008, if your insurer shortened the statute of limitations, the last day you could file a lawsuit for damages related to Hurricane Ike is September 13, 2010. That is less than two months away!
So where does the confusion lie? Perhaps some people are confused because of the Texas case that negated a contractually-shortened limitations period which reduced the limitations period to less than two years. On June 21, 2009, Chip Merlin discussed Spicewood Summit Office Condominiums Association, Inc. v. America First Lloyd’s Insurance Company. In Spicewood, the Texas Court of Appeals held that the two year and one day contractual limitations period contained within the policy was void because additional provisions within the policy, which were conditions precedent to filing suit, made it impossible for the policyholder to file suit immediately after the loss. This had the effect of making the limitations period less than two (2) years and void under Texas law. Because the limitations provision was void, the court determined that the traditional four (4) year statute of limitations applied instead.
The insurance company in Spicewood petitioned the Supreme Court of Texas to review this case, but the court declined. This does not necessarily mean that the Texas Supreme Court agrees with the Spicewood decision; it might have declined to hear the case for other reasons.
There will continue to be confusion over this issue until the Supreme Court of Texas delivers a definitive ruling. Although your statute of limitations period may be later than September 13, 2010, Merlin Law Group advises everyone to use the date of loss as the starting point for computing the two-year limitations period, just to be on the safe side. As an added bonus, filing by September 13, 2010, will prevent insurance companies from slowing down the resolution of your claim by litigating defenses based on the limitations period.