Private Limitation of Action Enforced in Oregon

Insurer’s Consistent Requirement that Insured Follow Policy Conditions Honored

Insurance contracts – to protect against stale claims – contain a private limitation of action provision that requires filing of suit within a set period of time, usually one or two years.

In Brockway v. Allstate Property and Casualty Insurance Company, Court of Appeals of Oregon, — P.3d —-, 284 Or.App. 83, A155335 (March 1, 2017), after a theft at their home, plaintiffs filed claims with Allstate, their insurer, under two policies. More than two years after the loss, Allstate denied coverage for the loss and plaintiffs sued Allstate relating to that denial seeking, among other things, damages for breach of contract and for breach of the implied covenant of good faith and fair dealing.

Allstate moved for summary judgment, arguing that the action was untimely in light of a two-year suit-limitation provision contained in the insurance contracts. The trial court agreed and granted the motion.


On September 6, 2009, plaintiffs discovered that a hole had been cut in their fence, and that property had been stolen from their backyard. They reported the theft and after their first report discovered that additional property was missing (some from their boat and some from their travel trailer).

On September 17, 2010, Allstate sent a letter to plaintiffs regarding its investigation of their claims. The letter informed plaintiffs that they were required to provide Allstate with a sworn statement in proof of loss, and to include “documentation that supports the ownership and value of any stolen items claimed.”  Allstate also informed plaintiffs that the “statute of limitations on this claim expires 2 years from the date of loss,” insisted on “complete compliance with all of the terms of the [insurance] policy and the laws of Oregon,” reserved all of its rights and defenses in conjunction with the policy, and stated that “[n]o waiver or estoppel of any kind is intended, nor may any be inferred.” Thereafter, Allstate sent plaintiffs a number of letters seeking additional documentation or information and stating that it was continuing to investigate the claimed loss. In September 2011, Allstate requested that plaintiffs participate in examinations under oath. After those examinations, Allstate again sought additional information and documents and continued to investigate the loss until February 2012.

Plaintiffs sued Allstate on September 5, 2012. In its answer, Allstate raised as an affirmative defense the suit-limitation provision of the insurance policies.


Plaintiffs raised two assignments of error on appeal. It is undisputed in this case that the insurance contracts contain a clause providing that no one may bring an action against Allstate “related to the existence or amount of coverage or the amount of loss for which coverage is sought” for a claimed loss such as the one at issue in this case unless, among other things “the action is commenced within two years after the date of the loss.” It is also undisputed that plaintiffs’ action was commenced more than two years after the date of loss in this case.

Under the doctrine of equitable estoppel, a person may be precluded by his act or conduct, or silence when it is his duty to speak, from asserting a right which he otherwise would have had. The elements of equitable estoppel are as follows:

  1. There must be a false representation;
  2. it must be made with knowledge of the facts;
  3. the other party must have been ignorant of the truth;
  4. it must have been made with the intention that it should be acted upon by the other party;
  5. the other party must have been induced to act upon it.
  6. Furthermore, there must be justifiable reliance by the party seeking to invoke estoppel, and
  7. that reliance must be reasonable.

There is no evidence that Allstate made a misrepresentation to plaintiffs regarding the suit-limitation provision. Instead, the evidence is that Allstate informed plaintiffs that their time to file an action relating to their claims and that, although the insurer was not required to “remind” the plaintiff of “the suit limitation provision in her policy,” it nonetheless did so.

Allstate’s numerous communications with plaintiffs stated that it was continuing to investigate their claim. Allstate’s investigation of plaintiffs’ claims cannot be used to estop Allstate from asserting the suit limitation. In sum, the appellate court concluded that, on the facts in the summary judgment record, viewed in the light most favorable to plaintiffs, no objectively reasonable factfinder could conclude that Allstate should be estopped from raising the suit-limitation provision as a defense in this case.

In their second assignment of error, plaintiffs argue that, in any event, the trial court erred in granting summary judgment as to their claim for breach of an implied covenant of good faith. They contend that that claim is not covered by the Section I suit-limitation provision and is, instead, governed by a different suit limitation provision in the insurance contracts.

Allstate asserted before the trial court that plaintiffs could not maintain a claim for breach of the duty of good faith and fair dealing. The appellate court began by observing that plaintiffs’ claim for breach of the duty of good faith and fair dealing in this case sounds in contract. The duty of good faith and fair dealing is to be applied in a manner that will effectuate the objectively reasonable expectations of the parties to the contract.

There was no genuine issue of material fact with respect to a breach of the duty of good faith and fair dealing. Allstate was, therefore, entitled to judgment as a matter of law.

Allstate repeatedly informed plaintiffs that it insisted on compliance with all policy terms, reserved its rights and defenses, and that no waiver or estoppel of any kind was intended or should be inferred. In short, none of the conduct plaintiffs assert on Allstate’s part contravened plaintiffs’ reasonable expectations based on the terms of the contracts.


Oregon applied the contract as written. California, and other states, hold that the private limitation of action is tolled – held in abeyance – from the date the claim was made until it was denied. If this case was brought in California Allstate would have lost. Oregon, refusing to rewrite the policy, properly applied the limitation.

ZALMA-INS-CONSULT                      © 2017 – Barry Zalma

This article and all of the blog posts on this site summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant and expert witness specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 49 years in the insurance business.

Mr. Zalma is the first recipient of theLEGEND-TROPHY-2 first annual Claims Magazine/ACE Legend Award.

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About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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