February 06 2007
The Supreme Court has recently ruled on the consequences of an insurer's tacit waiver of the two-year limitation period established by Article 114(1) of the Insurance Code.(1)
A statutory limitation period may not be waived in advance; it may be waived only after it has expired (Article 2220 of the Civil Code). The waiver may be explicit or tacit (Article 2221 of the Civil Code).
The Samda ruling clarifies the logical consequences of such a waiver.
Furniture company Mobilier Campagnard - which held fire insurance under a policy taken out with Samda Assurances Groupama Rouergue Gévaudan - suffered two fires within a six-month period in 1990. After the second fire, Samda suspected arson and asked Mobilier Campagnard to lodge a criminal complaint. Mobilier Campagnard did so on July 8 1991.
On July 22 1992 Mobilier Campagnard's adjuster asked Samda to state its position on coverage. On July 30 1992 Samda replied that since a criminal investigation was underway, further payments of compensation for both fires would be suspended pending the outcome of the investigation.
On October 30 1995 Samda issued a certificate attesting to the payment of certain amounts and stating that neither of the claim files was closed at that time. On November 30 1995 the investigating judge found that there was no case to answer and issued a dismissal order. On September 14 1998 Samda notified Mobilier Campagnard that it was closing the files because the claims were time barred under Article 114(1) of the Insurance Code. Mobilier Campagnard filed suit against Samda on April 1 1999 and lost on appeal. The case was subsequently referred to the Supreme Court, which hears appeals on points of law.
In a decision dated April 5 2005 the Montpellier Court of Appeal ruled that the action brought by Mobilier Campagnard on April 1 1999 was time barred. The court found that the insurers had waived the limitation period by stating in the October 30 1995 certificate that they were awaiting the outcome of the criminal investigation before making further payments; however, a new two-year limitation period began to run on November 30 1995 (ie, the date of the investigating judge's dismissal order) and was not interrupted. Therefore, the time limit for Mobilier Campagnard to bring suit against Samda had expired on November 30 1997.
The Supreme Court quashed the judgment on the grounds that the court of appeal had improperly applied Article 2220 of the Civil Code and Article 114(1) of the Insurance Code.
The Supreme Court upheld the appeal court's finding that the insurer had tacitly waived the statute of limitation by stating that it was awaiting the outcome of the criminal investigation before expressing its position on coverage of the claims. However, the Supreme Court ruled that the waiver was final and that no new limitation period began to run.
The Supreme Court ruling is consistent with its precedents under which insurers are deemed to waive the limitation period by making payments conditional on the outcome of a criminal investigation. However, the court went a step further by ruling that a waiver of the limitation period is final and thus cannot be followed by a new limitation period.
A waiver of the limitation period under Article 114(1) of the Insurance Code should not be confused with an interruption or suspension of that period.
For further information on this topic please contact Carole Sportes at BOPS (SCP Bouckaert Ormen Passemard Sportes) by telephone (+33 1 70 37 39 00) or by fax (+33 1 70 37 39 01) or by email (email@example.com).
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