Timeliness always plays an important role in property damage claims. Both the insured and the insurer need to promptly comply with their respective obligations set forth by the terms of the insurance policy. Like many other factors, statute of limitations can determine whether it is too late for an insured to sue an insurance company for bad faith. In the unreported decision that I write about today, an insured had a spell of good luck when a change in the law gave him more time to file a lawsuit that would otherwise have been barred by the policy.

In Javaheri v. State Farm Fire and Casualty Company,1 Mr. Javaheri’s home sustained damage as the result of the Northridge earthquake, so he filed a claim with State Farm. Mr. Javaheri’s policy included a provision that established a one year time period to file a lawsuit against State Farm for any particular claim. The lower court granted summary judgment in favor of State Farm finding that Mr. Javaheri’s bad faith lawsuit was barred by the one (1) year time limit in his policy. Mr. Javaheri appealed the decision.

While Mr. Javaheri’s appeal was pending, the California legislature extended the time period within which lawsuits resulting from the Northridge earthquake could be filed:

[T]he California legislature enacted California Code of Civil Procedure § 340.9, (effective January 1, 2001) which extended the limitations period for certain Northridge earthquake cases. Javaheri meets the basic requirements for the extension of the limitations period, namely he filed his claim prior to January 1, 2000, and his case has not been litigated to finality as determined by our recent decision in Campanelli v. Allstate. . . .

The United States Court of Appeals for the Ninth Circuit carefully evaluated the facts and determined that Mr. Javaheri’s claim fell within the scope of those claims for which the statute of limitations was extended. As such, the one year time limit in the policy did not bar Mr. Javaheri’s bad faith lawsuit against State Farm.

It is important to remember that rulings such as this one are very specific to the state and court by which the decision was entered.

1 Javaheri v. State Farm Fire and Cas. Co. 56 Fed. Appx. 836 (9th Cir. 2003).