(One Year Statute of Limitations period required by Insurance Code Section 2071 in Fire Insurance Policies Does Not Apply to Bar a Claim Based on the California Unfair Competition Act)
(October 2024) - In Katherine Rosenberg-Wohl v. State Farm Fire and Cas. Co., 16 Cal.5th 520 (July 18, 2024), the California Supreme Court reversed the California Court of Appeal's decision in favor of State Farm Fire and Casualty Company ("State Farm") barring a lawsuit based on California Business and Professions Code Section 17200, the Unfair Competition Law ("UCL") under Section 2071, finding that lawsuits against insurers must be filed within one year of the denial of the claim giving rise to such lawsuit. The Supreme Court found that the four-year statute of limitations applicable to the UCL applied, rather than Section 2071, applicable to fire insurance policies. The Supreme Court reasoned that the UCL lawsuit did not pray for damages based on State Farm's denial of policy benefits under a homeowner's policy issued to plaintiff, Katherine Rosenberg-Wohl (the "plaintiff"). Rather, it prayed for non-monetary injunctive relief intended to prevent State Farm from engaging in unfair practices related to the adjustment of property claims. Hence, the plaintiff's claim was not based "on the policy" as it did not seek to recover policy benefits.
The parties' dispute initially arose out of State Farm's denial of a property claim related to the plaintiff's home involving the improper pitch of the staircase in her home, requiring it to be replaced. State Farm denied the claim on August 26, 2019 and the plaintiff filed a bad faith lawsuit against State Farm in October 2020. Because the lawsuit was filed over one year after the denial of the claim, the trial court sustained State Farm's demurrer to the complaint. The plaintiff than filed a Second Amended Complaint ("SAC") seeking injunctive relieve pursuant to the UCL intended to require State Farm to properly investigate and adjust property claims. State Farm demurred again to the plaintiff's SAC based on the one- year statute of limitations in Section 2071 of the Insurance Code and dismissed the lawsuit. The Court of Appeal affirmed the trial court's decision finding that the lawsuit was based on the denial of policy benefits and therefore barred by Section 2071.
In reversing the Court of Appeal's decision, the Supreme Court found as follows:
As previously stated, section 2071 provides in relevant part, "No suit or action on...
