Appellate: Civil; Insurance. Litigation; Personal Injury; Procedure

Via Net v. TIG Insurance Co.

12/22/2006 – 05-0785

Per Curiam

Limitations. Discovery Rule Inapplicable to Actions for Failure to provide Insurance Coverage. Contracts.

Nine months after being assured it had been added as an additional insured to a vendor’s insurance policy, Safety Lights was denied coverage. After an unsuccessful suit on the policy, Safety Lights sued its vender for breaching the promise to provide additional-insured coverage. That suit was filed less that four years after coverage was denied, but more than four years after the promise to provide coverage was breached. The trial court held the claim was barred, but the court of appeals reversed. Held: Reversed and rendered. The discovery rule in inapplicable to defer accrual of the claim asserted here. Normally a cause of action accrues when a wrongful act causes some legal injury. But accrual may be deferred if the nature of the injury incurred is inherently undiscoverable and the evidence of injury is objectively verifiable. Whether the failure to add is inherently undiscoverable is a legal question to be decided on a categorical rather than case-specific basis; the focus is on whether a type of injury, rather than a particular injury, was discoverable. It is well-settled law that a breach of contract claim accrues when the contract is breached. The Court does not hold that the discovery rule can never apply to breach of contract claims. The Court’s focus is on types of injury, not causes of action. Some contract breaches may be inherently undiscoverable and objectively verifiable. But those cases should be rare, as diligent contracting parties should generally discover any breach during the relatively long four-year limitations period provided for such claims.

Summary Judgment Motion, Based on Limitations, need not Negate Discovery Rule unless the Plaintiff has Pleaded it.

A defendant’s motion for summary judgment, based on limitations, need not negate the discovery rule unless the plaintiff has pleaded it. Defendants are not required to guess what unpleaded claims might apply and negate them.

Summary Judgment. Issue Raised for the First Time in the Response. Options.

When Safety Lights, the plaintiff (non-movant) asserted the discovery rule for the first time in its summary judgment response, Via Net (the movant) had two choices: it could object that the discovery rule had not been pleaded, or it could respond on the merits and try the issue by consent. By choosing the latter course, the discovery rule’s applicability was placed squarely before the trial and appellate courts.