Insureds’ Submission of Signed Sworn Proof of Loss Triggers Tolling Period to File Suit against Insurer
In Ornoff v. Westfield National Ins. Company, Steven Ornoff and Neil Ornoff (“the Ornoffs”) filed a complaint against Westfield National Insurance Company (‘Westfield”). The insurance policy at issue listed Neil as the named insured and Steven as an additional insured; the policy period extended from June 6, 2008, to June 6, 2009. The policy covered the property located at 2225 West Charleston in Chicago, Illinois (the Property). Neil has represented that he and Steven owned the Property. On February 25, 2009, a fire at the Property resulted in significant damage and destruction to the Property, including the structure thereon and Neil’s possessions therein. At the time of the fire, Neil was on an airplane traveling for business. Upon landing and learning of the fire, Neil returned to Chicago to view the damage, and he immediately reported the loss to Westfield. Neil completed and signed a document dated June 3, 2009, captioned “Sworn Statement in Proof of Loss.” The document was notarized. The document included nine numbered paragraphs wherein Neil supplied information relating to, among other things, the time and origin of the loss, the nature of his interest in the Property, and the amount of the “whole loss and damage.” In “Schedule B,” Neil listed the “Dwelling Repair (Agreed Value)” as $368,353.11 and the “Personal Property (Total Loss Items)” as $166,279.50. Westfield rejected and returned “an instrument purported to be a Sworn Statement in Proof of Loss” and denied “any and all liability” in connection with the loss caused by the fire. The denial letter stated, among other things, that Westfield’s investigation determined the fire was intentionally set and that Neil intentionally misrepresented and/or concealed material facts and circumstances concerning prior criminal history, financial condition at the time of the loss, and other matters material to the denial of the claim. The letter also references a provision of the policy captioned “Suit Against Us,” which states that “no legal action shall be brought against us unless there has been compliance with all the provisions of the policy.” In addition, “no legal action shall be brought against us…unless the action is started within two years after the date of loss or damage.” However, this two-year period was extended by the number of days between the date proof of loss is submitted and the date the claim is denied in whole or in part. The letter then stated that “you are hereby notified that the above-mentioned time period has been extended from June 3, 2009, until the date of this correspondence. You have until March 24, 2012, to comply with this condition.” Steven was mailed a copy of this letter.
The court addressed the question of whether the submission of a signed sworn proof of loss by the insureds triggers the tolling period for purposes of determining the time period for filing suit against the insurer. After reviewing the policy as a whole, the court concluded that the “proof of loss” referenced in the “Suit Against Us” section (“the Suit section”) of the policy is the same “signed sworn proof of loss” described in the “Duties After Loss” section (“the Duties section”). Under the Duties section, the Ornoffs were required to submit their “signed sworn proof of loss” which set forth, to the best of their knowledge and belief, enumerated categories of information, including but not limited to, the “time and cause of the loss,” “the interest of the insured and all others in the property involved, and all liens on the property” and “[c]hanges in title or occupancy of the property during the term of the policy.” They read the Duties section as requiring a proof of loss to be “signed” by the insured and “sworn,” i.e., notarized, and to contain the specified types of information. Although not formally defined within the policy, the nature and requirements of the “proof of loss” are described in detail in the Duties section. “That a term is not defined by the policy does not render it ambiguous, nor is a policy term considered ambiguous merely because the parties can suggest creative possibilities for its meaning.” The court disagreed with the Ornoffs’ contention that the policy does not specify the particular form of the proof of loss required. The Suit section of the policy provides that the two-year period for suit is extended by the “number of days between the date proof of loss is submitted and the date the claim is denied in whole or in part.” Westfield contends that the triggering of the tolling period is not dictated by this tolling provision in the policy, but instead by Section 143.1 of the Insurance Code, which provides, in pertinent part: § 143.1. Periods of limitation tolled. Whenever any policy or contract for insurance, except life, accident and health, fidelity and surety, and ocean marine policies, contains a provision limiting the period within which the insured may bring suit, the running of such period is tolled from the date proof of loss is filed, in whatever form is required by the policy, until the date the claim is denied in whole or in part.” 215 ILCS 5/143-1 (West 2012). The court did not view the policy’s tolling provision and Section 143.1 as inconsistent. The intent of Section 143.1 is to prevent an insurance company from sitting on a claim, allowing the limitation period to run, and depriving an insured of the opportunity to litigate her claim in court. In sum, the court read the policy such that the “proof of loss” in the Suit section of the policy is the same “signed sworn proof of loss” detailed in the Duties section; the court did not view the relevant policy language as ambiguous. The policy’s tolling language and Section 143.1 of the Insurance Code were not determined to be inconsistent. Finally, the case law made clear that the Ornoffs’ filing of the June 3, 2009, signed sworn document in the form established by the policy triggered the commencement of the tolling period.
The court held that the submission of a signed sworn proof of loss by the insureds, not the earlier submission of repair estimates by the building contractor, triggered the commencement of the tolling period for purposes of determining the time period for filing suit against the insurer.
Ornoff v. Westfield National Ins. Company, 2013 WL 3972162 (Ill.App. 1 Dist.). (This order was filed under Supreme Court Rule 23 and may not be cited as precedent by any party except in the limited circumstances allowed under Rule 23(e)(1).).
