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Department Of Insurance Changes To Suit Limitations Periods Cannot Be Applied Retroactively

November 02, 2008 BY Karen Karabinos

            On April 21, 2008, United States District Court Judge Orinda D. Evans held that the emergency regulations issued and subsequently adopted by the Georgia Insurance Commissioner’s Office (hereinafter “the Commissioner”) in 2006, which changed the suit limitation for certain property insurance policies to two years, cannot be applied retrospectively to extend the suit limitations period for losses filed under policies written or renewed prior to the effective dates of those regulations.  The District Court appears to be the first, and currently the only court, to have addressed the application of the Commissioner’s regulations.

            In the case of Kenneth Lucas v. Travelers Property Casualty Company of America, Civil Action File NO.: 1:07-cv-02932-ODE, a bus operated by the Metropolitan Atlanta Rapid Transit Authority (“MARTA”) struck the insured’s home on November 4, 2005.   Travelers issued a policy of insurance, effective February 23, 2005 through February 23, 2006, which provided that no action shall be brought by the insured “unless there has been compliance with the policy provisions and the act is started within one year after the occurrence causing the loss or damage.”  It was undisputed that the insured did not file suit until October 26, 2007, nearly two years from the date of the loss.   Travelers moved for summary judgment on the grounds that the lawsuit was barred by that one year suit limitation.  In response to the motion for summary judgment, the insured contended that emergency regulations and subsequent final adopted regulations applied to increase his time for filing suit to two years.   The District Court, however, disagreed.

            The change regarding the time for filing suits initially began on February 20, 2006, when the Commissioner issued a “Notice of Emergency Rulemaking” changing the one-year suit limitations contained in fire policies to a four year periods.  Those emergency regulations became in effect on March 1, 2006 and remained in effect for 120 days. 

            Those regulations, however, were superseded on June 9, 2006 when the Commissioner issued another notice regarding two additional Emergency Regulations, 120-2-19-.01-0.20 and 120-2-20-.02-0.21.  The June regulations changed the suit limitation period in the Standard Fire Policy to two years and the suit limitation period for property, casualty, credit, marine and transportation, as well as vehicle insurance policies providing first party insurance coverage, was also changed to two years. The regulations specifically stated that these regulations were to be in effect for policies written or renewed on or after June 20, 2006. The Commissioner permanently adopted these emergency regulations effective October 12, 2006, and the regulations are cited as Ga. Comp. R. & Regs. 120-2-19-.01 and 120-2-20-.02.

            The District Court, noting that the Commissioner’s Notice of Emergency Rulemaking dated June 9, 2006 specifically stated that the regulations “shall be effective for policies written or renewed on or after June 20, 2006,”  held that “a plain reading of the regulations evinces the Commissioner’s intent that the regulations only apply prospectively.”  The District Court held that a prospective application of the regulations was also reinforced by the rule in Georgia that “’laws prescribe only for the future; they cannot impair the obligation of contracts nor, usually, have a retrospective operation, and the settled rule for the construction of statues is not to give them a retrospective operation, unless their language imperatively requires it.’” (citing Choo Choo Tire Serv. v. Planter’s Nat’l Bank, 231 Ga. App. 346, 347 (Ga. Ct. App. 1998).

            In this case before the District Court, the insured’s loss occurred November 4, 2005 while his February 23, 2005 to February 23, 2006 policy was in effect.  Accordingly, the District Court held that the policy’s requirement that the insured file suit within one year of the loss was not affected by the subsequent insurance commissioner’s regulations.  The Court found the insured’s lawsuit, filed on October 27, 2007 was untimely and granted summary thus on Travelers’ behalf.

The Journal is a publication for the clients of Drew Eckl & Farnham, LLP. It is written in a general format and is not intended to be legal advice to any specific circumstance. Legal Opinions may vary when based upon subtle factual differences. All rights reserved. 

Editorial Board:

H. Michael Bagley