Summary of a Recent
Judicial Development in
Federal Crop Insurance

Insured Complied with Limitations Period in Insurance Contract by Initiating
Legal Action within One Year of Notice of Denial

Walt McCarter
National AgLaw Center Research Associate

Summary of Decision

In Bullington v. Blakely Crop Hail, Inc., 668 S.E.2d 732 (Ga. Ct. App. 2008), the Georgia Court of Appeals held that an insured's action against his insurance provider was not barred by the one-year limitations period set forth in his insurance contract, because he had initiated a legal action within twelve months after issuance of the final notice of denial of his claim.

Background

Plaintiff brought an action to recover under its crop insurance policy from its insurance provider, Blakely. Id. at 733. The statute of limitations for bringing an action on the claim as provided in the insurance agreement was one year after the date on which final notice of denial of the claim was provided to the claimant. Id. at 734. In denying plaintiff's insurance claim, Blakely had issued a letter stating the basis for the denial, which concluded, "[i[f you do not agree or would like to add any other information concerning this claim, please respond to the above address." Id. Plaintiff did so, and a few weeks later received another letter from Blakely which stated that its previous letter denying plaintiff's claim "must stand," but referenced slightly different grounds for the denial. Id. at 734-35. Plaintiff filed a demand for arbitration pursuant to the insurance contract within twelve months after the issuance of the second denial letter (but more than twelve months after the first letter) and subsequently brought this action in state court. Id. at 735. Blakely sought and obtained summary judgment on the grounds that the plaintiff's action was untimely, and plaintiff appealed. Id.

Arguments

Plaintiff argued that six-year statute of limitation for actions on written contracts was applicable instead of the one-year period set out in the insurance agreement, and alternatively that the actual final notice of denial of his claim was the second letter issued by Blakely, so his arbitration action was brought within one year. Id.

Analysis and Holdings

The court first held that the insurance contract plainly established a one-year period of limitation, which was valid and enforceable even though it shortened the period allowed by statute. Id. It agreed with the plaintiff, however, that the second denial letter was the actual "final notice of denial" for purposes of the one-year statutory limitations period set forth in the insurance contract, because the first letter expressly invited the plaintiff to contact Blakely if he disagreed with its assessment, and the second letter indicated that Blakely had thoroughly reconsidered its decision. Id. Therefore, because the plaintiff had filed his demand for arbitration, which is considered a "legal action," within twelve months after issuance of the second and final denial letter, his action was not barred by the limitations period. Id. at 736.

The case was decided on September 24, 2008.