Firm wins victory for insured in federal court on nonsuit tolling

Judge Robert E. Payne of the United States District Court for the Eastern District of Virginia, Richmond Division, denied a motion to dismiss based on the statute of limitations filed by property carrier First Liberty against its insured.  John Rasmussen of the Insurance Recovery Law Group, PLC, defended the insured against that motion, which addressed an issue of first impression under Virginia insurance and procedural law.

A two-year statute applies to property insurance claims in Virginia.  The insured filed a lawsuit seeking money damages and declaratory relief for a fire, but more than two years after it happened.  The insured, however, had earlier filed and nonsuited an action to appoint an appraisal umpire in Hanover Circuit Court.  And she refiled the damages claim within six months of that nonsuit.

First Liberty filed a motion to dismiss and argued, among other things, that because the first action seeking an umpire sought a different remedy than the later suit for damages, the Virginia tolling statute did not apply.  The district court rejected that "different remedies" test, and instead applied the "same operative facts" test used by the Fourth Circuit in Hatfill v. New York Times Co., 416 F.3d 320 (4th Cir. 2005).

In doing so, the court held that the insured's (1) right of action to an umpire and (2) rights of action to damages and declaratory relief both arose from the same cause of action and operative facts – her claim for insurance after a fire.

This issue has received significant attention recently, after a Virginia Circuit Court judge did not apply the tolling statute to a second suit because it sought a different amount of damages.  As noted above, this decision rejected that approach.

This decision allows the insureds' several hundred thousand dollar claim for lost personal property to go forward.