Steven Zannini v. Phenix Mutual Fire Insurance Company

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THE SUPREME COURT OF NEW HAMPSHIRE

___________________________

Merrimack
No. 2018-0702

STEVEN ZANNINI & a.

v.

PHENIX MUTUAL FIRE INSURANCE COMPANY

Argued: November 6, 2019
Opinion Issued: December 17, 2019

Bernstein, Shur, Sawyer & Nelson, P.A., of Manchester (Roy W. Tilsley,
Jr. and Hilary Holmes Rheaume on the brief, and Mr. Tilsley orally), for the
plaintiff.

Primmer Piper Eggleston & Cramer, PC, of Manchester (Gary M. Burt
and John D. Prendergast on the brief, and Mr. Burt orally), for the defendant.

DONOVAN, J. The plaintiffs, Steve and Pamela Zannini, appeal an order
of the Superior Court (Kissinger, J.) granting summary judgment to the
defendant, Phenix Mutual Fire Insurance Company, on the plaintiffs’ breach of
contract and declaratory judgment claims. The plaintiffs argue that: (1) a
provision in the insurance policy at issue requiring that suits be brought
within one year of the date of loss is unenforceable because it violates public
policy; and (2) genuine issues of material fact exist as to whether the
defendant’s communications tolled the one-year period, the defendant is
estopped from asserting it as a defense, or the defendant waived it as a
defense. We affirm. The one-year limitation period does not violate the public
policy underlying statutes of limitations. Further, the communications
between the parties did not create issues of material fact as to whether the one-
year period was tolled or whether the defendant waived or was otherwise
estopped from asserting the provision as a defense.

I. Facts

The following facts are drawn from the evidence presented to the trial
court. On March 4, 2016, the plaintiffs’ Ashland residence sustained
“significant flooding” as the result of burst pipes. The house was insured by
the defendant, and the plaintiffs filed a claim for water damage. The defendant
sent an adjuster to investigate, who instructed the plaintiffs to remove the floor
of the house so that he could investigate the area underneath. After they did
so, the house began to collapse, and the plaintiffs repaired its framing to
prevent it from collapsing completely. As a result of removing the floor, the
plaintiffs “suffered a complete loss [of the house] and direct physical loss of
[their] personal property and use of the [house] for a substantial amount of
time.” On May 3, 2016, the defendant sent the plaintiffs a letter denying
coverage of the damage caused by the collapse.1

The insurance policy included the following “Suit Against Us” provision:
“No action can be brought unless the policy provisions have been complied
with and the action is started within one year after the date of loss.” Following
the defendant’s denial notice, the parties attempted to negotiate a resolution to
the claim. On February 9, 2017, defendant’s counsel sent plaintiffs’ counsel a
communication requesting “all documentation” relating to the collapse.
Defendant’s counsel sent plaintiffs’ counsel another communication on March
19, 2017, stating that the defendant “would like to resolve the claim if
possible.” On September 8, 2017, plaintiffs’ counsel sent defendant’s counsel a
letter with photographs of the damaged floor. On January 15, 2018,
defendant’s counsel sent plaintiffs’ counsel a communication stating that the
defendant’s position had not changed.

On February 23, 2018, nearly two years after the pipes burst, the
plaintiffs filed a breach of contract and declaratory judgment action against the
defendant. The defendant moved for summary judgment, on the basis that the
plaintiffs’ suit was barred by the policy’s one-year time-limitation provision.2
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The letter states that the additional damage was not covered because the defendant was “not
given the opportunity to inspect the additional damages prior to tear down.” Mr. Zannini
maintained that he and his wife “never denied [the adjuster], or any representative of [the
defendant] . . . , access to the [house].”
2
The record does not indicate the date of collapse. However, assuming that the date of collapse

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The plaintiffs opposed summary judgment, arguing that the provision is
unenforceable because it violates the public policy underlying the statute of
limitations, that the defendant’s conduct tolled the time limit, and that genuine
issues of material fact exist as to whether the defendant either waived or is
estopped from asserting the time limit as a defense.

The trial court granted the summary judgment motion, concluding that
allowing parties to contract for a shorter period to initiate an action than the
statutorily prescribed limitation period does not violate the public policy
underlying the statute of limitations. It also concluded that the provision was
not unreasonable, and not unenforceable because the plaintiffs did not show
that it was impossible for them to comply with the provision. Finally, the court
concluded that the communications between the parties’ counsel did not create
an issue of material fact as to whether the defendant tolled the one-year period,
was estopped from asserting it as a defense, or waived it. The plaintiffs filed a
motion for reconsideration, which the trial court denied. This appeal followed.

II. Standard of Review

We review a trial court’s grant of summary judgment de novo. Clark v.
N.H. Dep’t of Emp’t Sec., 171 N.H. 639, 650 (2019). When reviewing a trial
court’s grant of summary judgment, we consider the affidavits and other
evidence, and all inferences properly drawn from them, in the light most
favorable to the non-moving party. Id. If our review of that evidence reveals no
genuine dispute of material fact, and if the moving party is entitled to judgment
as a matter of law, we will affirm the grant of summary judgment. Id.

III. Analysis

A. Public Policy

The plaintiffs first argue that the insurance policy’s one-year time-
limitation provision is unenforceable because it violates the public policy
underlying the statute of limitations. In general, parties to a contract are
bound by the terms of an agreement freely and openly entered into and courts
cannot improve the terms or conditions of an agreement that the parties
themselves have executed or rewrite contracts merely because they might
operate harshly or inequitably. Rizzo v. Allstate Ins. Co., 170 N.H. 708, 713
(2018). However, we will not enforce a contract or contract provision that
contravenes public policy. Id.

occurred prior to the May 3, 2016 denial letter, whether the one-year time-limitation provision was
triggered on the date of the initial water damage or the date of collapse does not affect our
decision.

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 The declaration of public policy is primarily a matter for the legislature.
Id. We have recognized two legislative public policy goals underlying statutes
of limitations. See City of Rochester v. Marcel A. Payeur, Inc., 169 N.H. 502,
508 (2016); West Gate Village Assoc. v. Dubois, 145 N.H. 293, 298 (2000).
“Such statutes . . . represent the legislature’s attempt to achieve a balance
among State interests in protecting both forum courts and defendants
generally against stale claims and in insuring a reasonable period during which
plaintiffs may seek recovery on otherwise sound causes of action.” Payeur, 169
N.H. at 508 (quotation omitted); see Dubois, 145 N.H. at 298. The plaintiffs
argue that the time-limitation provision is unenforceable because it violates
both public policies described above: first, because parties may not contract to
shorten the statutory time period to file suit and, second, because a one-year
limitation period that accrues from the date of loss or includes a condition
precedent is unreasonable. We address each argument in turn.

The plaintiffs contend that New Hampshire law prohibits parties from
contracting for a shorter limitations period than the statutory period
established by the legislature. In support of this proposition, they rely
primarily upon our decisions in Dubois and Payeur. In Dubois, 145 N.H. at
298-99, we concluded that a party could not “circumvent the legislature’s
declaration of public policy . . . by contractually extending the three-year
statute of limitations [to six years] before any cause of action exists.” Similarly,
in Payeur, 169 N.H. at 508, we declined to allow a municipality to file suit
alleging a breach of contract after the statute of limitations had expired
because doing so would, in part, contravene the public policy underlying the
statute of limitations. Our analysis in both cases centered upon the public
policy implications of allowing parties to bring claims after, not before, the
statute of limitations expired. See id.; Dubois, 145 N.H. at 298-99.

The plaintiffs draw from these decisions the principle that parties may
not contractually alter the statutory time period to file suit, equating the public
policy implications of contracting for a period that is longer than the statutory
period to the implications of contracting for a period that is shorter than the
statutory period. But the plaintiffs’ reasoning is flawed, given that the public
policy implications of the two propositions are fundamentally different. The
statute of limitations reflects the legislature’s determination that a cause of
action brought after the statutory time period has expired is stale and unfit for
judicial consideration. See Payeur, 169 N.H. at 508. Allowing parties to
contract to bring a cause of action after the statutory period has expired thus
opens courts and defendants to stale claims. See id. A cause of action brought
within the period established by the statute of limitations, on the other hand, is
not considered stale. Allowing parties to agree that a cause of action must be
brought before the expiration of the statutory period does not raise similar
concerns over stale claims and does nothing to undermine the policy objectives
of protecting parties and courts from stale claims. See id.; see also John J.
Kassner & Co. v. City of New York, 389 N.E.2d 99, 103 (N.Y. 1979) (noting that

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allowing parties to agree that a “suit must be commenced within a shorter
period than is prescribed by law . . . more effectively secures the end sought to
be attained by the statute of limitations” (quotation omitted)).

Furthermore, a contractual provision allowing parties to file a cause of
action after the statute of limitations has expired in essence renders the statute
a nullity. A contractual provision providing for less than the statutory time to
file a cause of action, on the other hand, does not render that statute
superfluous because the cause of action must still comply with the statute.
Thus, for example, if the defendant waived the one-year limitations period set
forth in the policy, any cause of action pursued by the plaintiffs would still be
required to comply with the statute of limitations. Allowing parties to agree to
a time period that is shorter than the statute of limitations, therefore, does not
allow parties to “circumvent” the public policy underlying the statute. Cf.
Dubois, 145 N.H. at 298-99. Accordingly, we conclude that the one-year
limitation provision does not violate the public policy of protecting courts and
defendants from stale claims.

The plaintiffs next argue that the provision violates public policy because
it provides plaintiffs less than a full year to file suit and is therefore
unreasonable. They rely upon Clark v. Truck Insurance Exchange, 598 P.2d
628 (Nev. 1979), to support this argument. In Clark, the Nevada Supreme
Court noted that a one-year time limitation could “represent a reasonable
balance between the insurer’s interest in prompt commencement of action and
the insured’s need for adequate time to bring suit.” Id. at 629. However, the
court ruled that an insurance policy provision requiring that a suit be brought
within one year of the date of loss would run from the date the insurer denied
the claim, because the policy had “built-in delays” that allowed the insurer to
delay denial of the claim until the one-year period had expired. Id.

Even assuming, without deciding, that, as held by the Clark Court, the
one-year limitation period was triggered by the defendant’s denial of the
plaintiffs’ claim, rather than the date of their loss, the plaintiffs’ action is still
time-barred. Cf. id. at 629. The defendant denied the insurance claim on May
3, 2016, yet the plaintiffs did not file suit until February 23, 2018, more than
one year after the date of denial. We therefore find Clark unavailing to the
plaintiffs.

The plaintiffs also contend that the one-year limitation provision is
unreasonable because it prevents an insured party from filing suit unless “the
policy provisions have been complied with.” They argue that this “condition
precedent” renders the policy unreasonable. They do not argue that this
condition renders the one-year time-limitation provision unreasonable as
applied to them. Rather, they argue that it is conceivable that an insured
could not comply with the policy provisions within one year.

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 As support for this argument, the plaintiffs rely upon Executive Plaza,
LLC v. Peerless Insurance Co., 5 N.E.3d 989 (N.Y. 2014). In Executive Plaza,
the New York Court of Appeals concluded that a two-year time-limitation
provision was unreasonable as applied because it included a condition
precedent that could not be met within two years. Id. at 990. The provision
thus functioned as a “nullification of the claim,” and not a limitation period.
Id. at 992. The court noted that there was nothing “inherently unreasonable”
about a two-year limitation period, and that it had upheld one-year and six-
month limitation periods. Id. at 991. Here, by contrast, there is nothing in the
record that shows, and the plaintiffs do not contend, that they could not
comply with the policy provisions within the one-year period. The time-
limitation provision thus did not function as a “nullification” of their claim. Cf.
id. at 992. Furthermore, the court in Executive Plaza explained that time-
limitation provisions should be examined under the facts of a particular case.
Id. This observation also renders Executive Plaza inapposite, because the
plaintiffs do not argue that they could not comply with the provision’s condition
within one year, only that it could theoretically happen. Cf. id.

Accordingly, we conclude that the one-year limitation is not
unreasonable as applied to the plaintiffs. They point to no evidence in the
record which suggests that, based upon the application of the time-limitation
provision to their factual circumstances, they did not have sufficient time to
initiate a suit. We therefore conclude that the one-year limitation provision as
applied here is not unreasonable.3

B. Tolling, Estoppel, and Waiver

The plaintiffs next argue that there are genuine issues of material fact as
to whether the defendant’s communications tolled the limitation period, the
defendant is estopped from asserting the limitations provision as a defense, or
the defendant waived it. We address each argument in turn.

The plaintiffs first argue that communications between the parties’
counsel create an issue of material fact as to whether the one-year period was
tolled. The statute of limitations may be tolled by a party’s acknowledgment of
a subsisting debt accompanied by a direct and unqualified admission that the
party is liable and willing to pay. A&B Lumber Co. v. Vrusho, 151 N.H. 754,
756 (2005). On February 9, 2017, defendant’s counsel requested “all
documentation” relating to the collapse from plaintiffs’ counsel. On March 19,
3
We note that other courts have upheld one-year time-limitation provisions. See, e.g., Thornton v.
Georgia Farm Bureau Mut. Ins. Co., 695 S.E.2d 642, 643 (Ga. 2010) (commenting that “courts
have . . . enforced . . . contractual periods of limitation, including the one-year limitation in
insurance policies”); Eagle Fire Corp. v. First America Ins., 678 A.2d 699, 704 (N.J. 1996) (noting
that the New Jersey Supreme Court “has routinely upheld contract provisions that create a one-
year time limitation in which claimants may bring suit”).

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2017, defendant’s counsel sent plaintiffs’ counsel a communication stating that
the defendant “would like to resolve this claim if possible.”

Assuming, without deciding, that a contractual limitation period may be
tolled in the same manner as a statutory period, we conclude that the
communications do not create an issue of material fact as to whether the
defendant acknowledged a debt or made a direct or unqualified admission of
liability or willingness to pay. In the communications, the defendant merely
requested information about the damage and expressed a desire to “resolve”
the claim “if possible.” The defendant did not acknowledge any obligation to
the plaintiffs, nor did its communication suggest that the policy provided
coverage for the damage caused by the collapse. See Soper v. Purdy, 144 N.H.
268, 270-71 (1999) (“‘[I]f the expressions be equivocal, vague and
indeterminate, leading to no certain conclusion, . . . we think they ought not to
go to a jury as evidence of a new promise to revive the cause of action.’”
(quoting Shepherd v. Thompson, 122 U.S. 231, 237 (1887)).

The plaintiffs next argue that the communications between the parties’
counsel create a dispute of material fact as to whether the defendant is
estopped from asserting the time-limitation provision as a defense. The
plaintiffs assert that the defendant told the plaintiffs it intended to resolve the
dispute through negotiations, thereby inducing them to rely upon that
representation until the one-year period elapsed. A party asserting equitable
estoppel must prove four elements: (1) a representation or concealment of
material facts made with knowledge of those facts; (2) the party to whom the
representation was made must have been ignorant of the truth of the matter;
(3) the representation must have been made with the intention of inducing the
other party to rely upon it; and (4) the other party must have been induced to
reasonably rely upon the representation to his or her injury. Sunapee
Difference v. State of N.H., 164 N.H. 778, 792-93 (2013).

We conclude that the communications do not create an issue of material
fact as to whether the defendant intended to induce the plaintiffs to believe
that it would resolve the claims through negotiations. Again, the February 9
communication merely requested documentation regarding the collapse, while
the March 19 communication noted that the defendant sought to resolve the
claim, “if possible.” Neither communication contains a representation, explicit
or implicit, about resolving the dispute solely through negotiation. At best,
these communications demonstrate that the defendant remained willing to
consider the plaintiffs’ claim.

Finally, the plaintiffs argue that these same communications create a
dispute of material fact as to whether the defendant waived the time-limitation
provision as a defense. To establish waiver, the plaintiff must point to explicit
language indicating the defendant’s intent to forgo a known right, or conduct
from which it may be inferred that the defendant abandoned this right. Forbes

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Farm P’ship v. Farm Family Mut. Ins. Co., 146 N.H. 200, 204 (2001). We
conclude that the communications do not create an issue of material fact as to
whether they demonstrate the defendant’s intent to abandon its right to assert
the time-limitation as a defense. See id. Merely requesting more information
or expressing a desire to resolve a claim is insufficient to establish a waiver of a
time-limitation provision. Id.

IV. Conclusion

For the reasons stated above, we affirm the trial court’s grant of
summary judgment to the defendant on the plaintiffs’ breach of contract and
declaratory judgment claims.

Affirmed.

HICKS, BASSETT, and HANTZ MARCONI, JJ., concurred.

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