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Commercial Auto |
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Statute Of Limitations
Begins On Date Claim Is Denied |
Eddie Sellers, a resident of
Mississippi, was driving his father's car on September 28, 1996 when he was
involved in an automobile accident in Tennessee. Shane Thurman, a passenger in the
car, was seriously injured, and Thurman's minor son, Dalton, was killed. Eddie
was not working for his father at the time of the accident. Eddie and his
father, Donald, were named as defendants in a Tennessee lawsuit resulting from
the accident.
Donald Sellers had an
American States Insurance Company (American States) business liability policy
for $1 million and an umbrella insurance policy for up to $1 million covering
his Mississippi business, Donnie's Amoco. He had purchased this insurance
through Brenda and Eddie Oaks of Oaks Insurance Company, agents for DeSoto
Insurance (DeSoto). The umbrella policy provided coverage for business, not
personal, liability. The policy was renewed by payment of premiums and was in
effect on the date of Eddie Sellers' accident.
Sellers notified his agents
of the accident and asked them to file a claim with American States. On August
26, 1997, American States sent Sellers written notice denying his claim.
According to American States, the umbrella policy did not provide coverage
because Eddie was not acting in the course and scope of Sellers' business at
the time of the accident. Donald Sellers was eventually found personally liable
for the injuries caused by his son's negligence. He appealed this decision to
the Tennessee Supreme Court, but the court refused to hear the case. Sellers
then filed suit in a Mississippi court alleging that the Oaks, Oaks Insurance
Company, and DeSoto had failed to procure the requested insurance and
adequately explain the coverage. This lawsuit was filed in January 13, 2003,
more than five years after American States' denied the claim.
The Mississippi statute of
limitations provides that "[a]ll actions for which no other period of
limitation is prescribed shall be commenced within three (3) years next after
the cause of such action occurred, and not after." Defendants Oaks and
DeSoto filed a motion asking the trial court to dismiss Sellers' lawsuit
because the statute of limitations had expired. The trial court denied their
motion. They appealed to the Supreme Court of Mississippi, and the court agreed
to address the statute of limitations issue.
On appeal, Sellers asserted
that the three-year statute of limitations began to run on the date of the
"actual injury." According to Sellers, the "actual injury"
occurred when the Tennessee Court of Appeals declared him to be liable for his
son's actions. That date was February 16, 2001, less than three years from the
date he filed the lawsuit. The defendants argued that the statute of limitations
began to run on the date that American States denied Sellers' claim: August 26,
1997.
The Supreme Court of
Mississippi found that the trial court erred by finding in favor of Sellers. In
reaching its decision, the court noted that it was clear that the insurance
policies were for business insurance only. Even if Sellers had never received
copies of the actual policies, his knowledge of their contents was to be
assumed, especially in light of the fact that he had renewed them. The court
also emphasized that Sellers knew in August 1997 that his claim had been
denied, and at that point he was put on notice that there could be a problem.
Sellers was aware of his potential liability on the date American States denied
the claim, not the date the Tennessee court found him liable. Thus, the statute
of limitations began to run on August 26, 1997, the date Sellers received
notice of denial of his claim. More than five years had passed from the date
Sellers filed his lawsuit against the defendants, so the statute of limitations
barred the lawsuit.
The decision of the lower
court was reversed and it was directed to dismiss Sellers' claims against the
Oaks and DeSoto.
Oaks vs. Sellers-No.
2006-IA-00005-SCT-Supreme Court of Mississippi-April 12, 2007-953 Southern Reporter
2d 1077