Monthly Archives: April 2017

New State Construction Notices Directory: A Valuable Tool for Owners

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David B. Lipnor | Cozen O’Connor | April 20, 2017

Effective December 31, 2016, Pennsylvania’s Mechanics’ Lien Law of 1963 (lien law) was amended to allow for an online State Construction Notices Directory (directory) to provide notice to parties involved in projects costing a minimum of $1,500,000 (searchable projects). This Alert provides an overview of the directory and offers suggested provisions to be included in construction contracts for searchable projects.

Background

In the absence of the directory, owners are left to rely on general or primary contractors to disclose the identity of the subcontractors1 working on a project. However, the general contractor or primary contractors might not know the identity of all the subcontractors working on the project. This lack of knowledge presents a problem for owners who want to make sure that the subcontractors are being timely paid and signing releases of liens when progress payments are received.

The directory provides a modern way for owners to ascertain the identity of subcontractors working on the project. It also gives subcontractors an easy way to let the owner know if they are experiencing payment issues so that the owner can quickly address the issues with the general contractor or primary contractors. If subcontractors do not timely identify themselves by making the appropriate filing with the directory (as discussed below), they risk their lien rights being cut off.

Notices Transmitted via the Directory

The directory provides for four different notices: (1) Notices of Commencement, (2) Notices of Furnishing, (3) Notices of Completion, and (4) Notices of Nonpayment. These notices will be discussed in further detail below.

Notices of Commencement

Prior to the commencement of labor, work, or the furnishing of materials for a searchable project, the searchable project owner (or its agent) may file a Notice of Commencement with the directory. A contractor may file a Notice of Commencement as agent for the searchable project owner if: (1) specifically authorized to do so by contract and (2) if the searchable project owner assumes responsibility for the contractor’s actions. However, given the ease of filing a Notice of Commencement, it is recommended that the searchable project owner file on its own behalf (or have an attorney act as its agent).

Although the statute does not require a searchable project owner to file a Notice of Commencement, it is advantageous to do so. Specifically, filing a Notice of Commencement allows a searchable project owner to potentially benefit from the cutting off of a subcontractor’s lien rights if the subcontractor does not timely file a Notice of Furnishing and also allows the searchable project owner to learn who is furnishing work on the project.

After filing for and receiving a copy of the Notice of Commencement, a searchable project owner has two additional obligations: (1) conspicuously post a copy of the Notice of Commencement, including the project’s directory-assigned unique identifying number, at the project site prior to physical work commencing and take reasonable measures to ensure that the Notice of Commencement remains posted at the site until completion of the project;2 and (2) along with contractors, make reasonable efforts to ensure that the Notice of Commencement is made part of contract documents provided to all subcontractors awarded work on searchable projects.

Notices of Furnishing

If a searchable project owner has opted to use the directory by filing a Notice of Commencement, and assuming the owner has provided appropriate notice of this decision to subcontractors by including the required statutory notice language discussed below in its construction contracts and posting the Notice of Commencement at the project site, subcontractors performing work or services or furnishing materials to the searchable project must file a Notice of Furnishing within 45 days after first performing work or services or furnishing materials to the job site.

Subcontractors that fail to file a Notice of Furnishing substantially compliant with the requirements set forth in the lien law forfeit the right to file a lien claim.

Notices of Completion

A searchable project owner may file a Notice of Completion within 45 days of the actual completion of work (as defined in the amended lien law) on a searchable project. Upon filing, the Notice of Completion is sent, via the directory, to all subcontractors who have filed Notices of Furnishing. The Notice of Completion is purely informational, not mandatory, and is not dispositive as to when completion actually occurred. It is not clear what purpose the Notice of Completion serves, and it is debatable whether filing the notice carries any benefit to a searchable project owner. It is recommended that a searchable project owner not file a Notice of Completion without careful consideration because it could potentially complicate warranty issues and make it more likely for a subcontractor to remember to perfect its rights under the lien law.

Notices of Nonpayment

Subcontractors on searchable projects who have not received full payment for their work, goods, or services may file a Notice of Nonpayment with the searchable project owner (or agent) in the directory for informational purposes only. A subcontractor’s failure to file a Notice of Nonpayment will not affect or limit the subcontractor’s rights under the lien law. Additionally, filing a Notice of Nonpayment does not relieve subcontractors from complying with other written notice requirements set forth in the lien law. Similar to the Notice of Completion, the filing of a Notice of Nonpayment is purely informational, not mandatory, provides for improved communication between owners and subcontractors, and will likely give the owner quicker notice of payment issues with subcontractors than the owner would have received in the absence of the directory.

Mandatory and Recommended Construction Contract Provisions

The statute requires the following provision to be included in construction contracts for searchable projects to put subcontractors on notice that failing to file a Notice of Furnishing will result in the loss of their lien rights:

“A subcontractor that fails to file a Notice of Furnishing on the Department of General Services publicly accessible Internet website as required by the act of August 24, 1963 (P.L. 1175, No. 497), known as the Mechanics’ Lien Law of 1963, may forfeit the right to file a mechanics lien. It is unlawful for a searchable project owner, searchable project owner’s agent, contractor or subcontractor to request, suggest, encourage, or require that a subcontractor not file the required notice as required by the Mechanics’ Lien Law of 1963.”3

In addition to including the required statutory notice language in searchable project contracts, searchable project owners should include the following four covenants in contracts with searchable project contractors requiring that the contractor:

(1) Include the required statutory notice language in all contracts for the searchable project. It is important that a searchable project owner includes this provision in its contract with the contractor because the statute is ambiguous as to whether there are consequences to a searchable project owner (i.e., not being able to benefit from the cutting off of a subcontractor’s lien rights) if its contractor fails to include the required statutory notice language in its contract with any subcontractor.

(2) Provide a copy of the Notice of Commencement to all subcontractors. It is important for a searchable project owner to include this provision in its contract with the contractor because searchable project owners and the contractor are required to use reasonable efforts to ensure that the Notice of Commencement is made part of contract documents for subcontractors awarded work on the searchable project. A searchable project owner who does not use this provision is at risk of not benefitting from the new amendments to the lien law that can ultimately result in the forfeiture of a subcontractor’s right to file a lien claim.

(3) Include in any contract with a subcontractor a requirement for the subcontractor to: (a) include the required statutory notice language in any contracts subcontractors may enter into with sub-subcontractors for the searchable project and (b) attach a copy of the Notice of Commencement to any contracts subcontractors may enter into for the searchable project. Searchable project owners are required to take reasonable measures to ensure that the Notice of Commencement is made part of contract documents provided to all subcontractors awarded work on searchable projects. While the lien law does not set forth what “reasonable measures” are, the inclusion of this provision is our recommended best practice to maximize compliance. There is no requirement that sub-subcontractors include any of these provisions or provide a Notice of Commencement to any person with whom the sub-subcontractor contracts with on the searchable project.

(4) Notify the searchable project owner if the Notice of Commencement is not posted at the searchable project site and make commercially reasonable efforts to replace the Notice of Commencement after noticing that it is not posted. Searchable project owners are required to take reasonable measures, such as reposting the notice within 48 hours after becoming aware of or being notified that the notice is not posted, to ensure that the Notice of Commencement remains at the site until completion of the project.

Conclusion

The directory can be accessed at https://apps.pa.gov/scnd and promises to be a valuable tool for searchable project owners who use it properly, by housing in one location valuable information that owners previously had to track down from general and primary contractors.

3 Things Contractors Should Do Now to Ensure “Buy American” Compliance in the Wake of Trump’s Executive Order

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Eleanor M. Yost | Carlton Fields | April 21, 2017

“Buy American, Hire American” is no longer just a campaign slogan. It is the subject of an Executive Order signed by President Trump on April 19. The order details the Trump administration’s policy of ensuring compliance with existing domestic preference requirements, including by:

  • requiring all federal agencies to assess compliance with Buy American laws and develop policies to ensure that federally-funded projects “maximize the use of materials produced in the United States,” in accordance with guidance to be issued by the Secretary of Commerce;
  • requiring the Secretary of Commerce and the U.S. Trade Representative to assess “the impacts of all United States free trade agreements and the World Trade Organization Agreement” on domestic procurement preferences and create specific recommendations “to strengthen implementation” of Buy American requirements; and
  • limiting public interest waivers to ensure “the maximum utilization of goods, products, and materials produced in the United States,” and requiring agency heads take into account whether a significant portion of the cost advantage of a foreign-sourced product is the result dumping or the use of injuriously subsidized goods before granting a waiver.

Although the order does not change existing Buy American laws, compliance has become more important than ever for companies that sell products or provide services in connection with federally-funded projects. Below are three steps these companies should take now. 

  1. Know Which Domestic Preference Rules Apply to Your Projects

Many contractors do not understand that there are actually several different “Buy American” regimes — and some of them, unhelpfully, have very similar names. It is critical to understand which domestic preference regime applies to each of your federally-funded projects.

  • The Buy American Act of 1933 (41 U.S.C. §§ 8301-8305) applies to all U.S. federal government agency purchases of goods valued over the micro-purchase threshold. It establishes a price preference for domestic offers. When the low offer is not domestic, the procuring agency must add a certain percentage of the low offer’s price (6 to 50 percent) before determining which offer is the best value. The Buy American Act is often waived pursuant to the Trade Agreements Act.
  • The Buy America Act (49 U.S.C. 5323(j)) applies to certain purchases related to transportation, such as the construction of highways, railways, or rapid transit systems by the Federal Transit Administration and the Federal Highway Administration. Unlike the Buy American Act, the Buy America Act operates to restrict foreign purchases, even from countries like Canada.
  • The Trade Agreements Act (19 U.S.C. §§ 2501-2581) opens some procurements to products from “designated countries” to meet certain requirements under the General Agreement on Tariffs and Trade (GATT). Importantly, China and India are not designated countries.
  • The Berry Amendment (10 U.S.C. § 2533a) requires the Department of Defense to give preference to domestically produced, manufactured, or homegrown products, most notably food, clothing, fabrics, and specialty metals.
  • It is important to remember that domestic preferences may apply even if the project is administered by a state government, and many localities have their own “Buy American” requirements.

Domestic preference requirements change from contract to contract and agency to agency, depending on what is being purchased and the contract’s total value. Understanding the applicable regime on a project-by-project basis is the first step to ensuring compliance.

  1. Do Not Permit Just Anyone to Certify Buy American Compliance

The government often requires its contractors to sign “Buy American” certification forms. Prime contractors, in turn, ask all of their subcontractors and suppliers to certify compliance as well. But many prime contractors issue informal certification requests (often via email) that are sometimes defective — reciting the wrong procurement regime applicable to the project (“Buy American” vs. “Buy America”), failing to provide any details about the award itself, or identifying a subcontractor’s salesperson or project manager as the proposed certifier.

Contractors must make independent determinations about whether to sign a certification. In conjunction with your legal team, investigate which domestic preference regime applies to a given project, and whether a certification can even be made in a particular case. Salespeople and managers should not make Buy American certification decisions on their own.

  1. Create Buy American Compliance Processes and Audit Your Projects

Compliance in this field is challenging. Training employees and creating internal processes now will help avoid running afoul of Buy American rules in the future.

  • Training. Employees involved in bidding on or managing projects that involve federal funding must be trained in Buy American requirements. This is particularly important for companies in countries outside of the United States that sell products to prime contractors working on federal projects. Invite your U.S. government contracts counsel to your office to present to your legal, sales, and project management teams on a regular basis.
  • Recordkeeping. Collect price and place of manufacture information for product components in a central location, which will help keep records up-to-date and easy to access.
  • Supply Chain. Regularly review your supply chain. If your product includes components from countries that are not on the “designated countries” list like China or India, an investigation should be conducted to ensure Buy American compliance. Make sure subcontractors and vendors certify their compliance and indemnify you; collect and maintain compliance certifications.
  • Audit. Periodically audit your most important projects to ensure compliance. Over time, components, parts, and even suppliers, may change.

In the months and years to come, contractors should expect and prepare for changes in the law, an uptick in enforcement, and an increase in False Claims Act claims. Contact your Carlton Fields lawyer to stay abreast of the latest changes.

Can an Insurer Avoid Bad Faith by Waiting to Pay Until Court Rules the Policy Covers the Loss?

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Kevin Pollack | Property Insurance Coverage Law Blog | April 20, 2017

After denying claims, insurers sometime seek to avoid bad faith liability by taking their chances that a court will rule in their favor, and then, if the court rules otherwise, immediately tendering the monies owed under the insurance policy to the insured.

A recent unpublished California appellate decision reaffirmed that an insurer cannot avoid bad faith liability by attempting to belatedly pay what is owed under the insurance policy.1

In Saddleback Inn v. Certain Underwriters at Lloyd’s London, Saddleback Inn (“Saddleback”) sought an insurance policy naming it as the named insured and naming JK Properties, Inc. as an additional insured. Instead, when the policy was issued by Certain Underwriters at Lloyd’s London (“Lloyds”), Saddleback was
replaced as the named insured with J.K. Properties, so that the policyholder was listed as J.K. Properties dba Saddleback Inn. Saddleback did not identify the mistake when the policy was issued.

The insured property was damaged by a fire. Saddleback submitted a claim to Lloyds for $2.15 million in damages. Lloyds denied the claim on the basis that Saddleback owned the hotel and J.K. Properties, the named insured, did not have an insurable interest in the property.

Saddleback sued Lloyds for breach of contract and bad faith. Through the litigation Saddleback sought to reform the insurance policy to meet the original intentions of the parties to name Saddleback as the named insured.

In the first phase of the trial, the Superior Court reformed the policy after finding that Saddleback and Lloyds had intended that Saddleback be named as the insured under the policy. Before the second phase of the trial (addressing liability for bad faith) began, Lloyds paid Saddleback $2.9 million for the fire damage and interest.

In the second phase of the trial, a jury determined Lloyds had acted in bad faith by unreasonably denying coverage and awarded Saddleback $50,000 in punitive damages.

On appeal, one of Lloyds’ arguments regarding bad faith was that its payment to Saddleback for money owed under the insurance policy (plus interest) for the fire damage negated its bad faith liability. The Court of appeal disagreed, finding that:

Ultimately, a claim for bad faith liability hinges on whether the insurer’s refusal to pay policy benefits was reasonable at the time. (R & B Auto, supra, 140 Cal.App.4th at p. 354.) The insurer must fully investigate the claim and then evaluate the investigation’s outcome objectively. (Egan v. Mutual of Omaha Ins. Co. (1979) 24 Cal.3d 809, 817-819.) The jury’s finding [that Lloyds] failed to act reasonably by denying Saddleback’s claim was supported by substantial evidence. Such evidence included the following: [The coverage attorney for Lloyds] did not include the insurance application and related documents that showed an intent of the parties to insure Saddleback in his denial letter; [the underwriter] placed the risk based on the application listing the named insured as Saddleback; [the coverage lawyer] failed to investigate [the underwriter’s] intent in underwriting the policy or interview her regarding the application process; and [the coverage attorney] failed to interview [the insured’s broker].

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1 Saddleback Inn v. Certain Underwriters at Lloyd’s London, 2017 WL 1180419 (Cal. Ct. App. Mar. 30, 2017).

Essential Property Insurance Coverage Information Withheld from Consumers

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Nicole Vinson | Property Insurance Coverage Law Blog | April 23, 2017

An April 2017 report by United Policyholders reveals the state rankings of homeowner insurance protections that impact buying insurance. The research revealed that many major insurance companies and many states withhold coverage and policy provisions from consumers during the purchase. These same companies and states also withhold payment information.

No states were awarded the five-star ranking.

Florida and California earned three-star rankings with New York and New Jersey hitting the two-star level. The report measured just how well states themselves provide information to consumers and how their laws mandate insurance companies to disclose and provide to the public consumer.

Jay Feinman, the author of Delay, Deny, Defend, of Rutgers Law and the co-director of the Rutger Center for Risk and Responsibility at Rutgers Law School sent over the report. Looking nationwide at homeowners insurance, Coverage, Quality, and Price are all important when buying insurance no matter the state. Homeowners need to have more information when purchasing or renewing insurance. The report notes that disclosure will create more competition between the companies resulting in better products and a fairer price.

After a loss, many policyholders hold on to their one key understanding of their policy: “I remember I bought a replacement cost policy.” Many policyholders are impressed with the term “replacement cost” before the loss but it is later revealed that after reading and re-reading all the exclusions and limitations there are more issues to deal with before replacement even comes into play. How depreciation factors into a claim matters a whole lot less if the carrier is citing a provision that no coverage is afforded on the claim. This is not to say that the carrier is appropriately applying an exclusion or interpreting the policy in the proper way, but these hurdles of coverage must be addressed before getting to numeric figures.

Here is how the Rutgers report explains and addresses the hidden coverage information:

“Insurance is the only product for which consumers don’t know what they are buying before they buy it.”

This is shocking when you think about it, but true. The quote and the application give us virtually nothing when it comes to the details of the actual policy.

Insurance companies almost never provide copies of policy language or complete summaries of policy terms to prospective policyholders. And what homeowners are buying can vary widely from one insurance company to another, with some major insurance companies providing coverage that offers much less protection than coverage provided in standard homeowner insurance policies.

We deal with this day in and day out in Florida because carriers are sending off new forms for “self-approval” with the Department of Financial Services. Often, it appears the department governing insurance is shocked to learn about how gutted the policy forms have become when you read them in conjunction with the other provisions that are implicated.

The report recommendations for all states are clear and concise:

Insurance departments should post online the homeowner insurance policies of all insurance companies doing business in the state, or at least those companies that have a significant market share.

A step further that is necessary from a practitioner standpoint is that all variations and options of coverage should be highlighted for each company so one can see that not all of an insurance company’s policies are the same. Don’t be fooled just because you have a policy from the same company as your neighbor.

State departments of  insurance should provide a comparison tool that enable consumers to easily compare key terms of insurance policies.

States should require insurance policies to be clearly organized and written in plain language.

Merlin Law Group constantly asks carriers if they understand the policies they have written. Often, claim managers and supervisors admit they aren’t sure or don’t know. Writing a better policy is a simple request but will likely never happen because the apparent desire for carriers to escape indemnity is now the cornerstone of how business is done by many.

Transitioning to another missing portion of the insurance buying process, for “quality,” all consumers have to rely on now is perhaps their own experience in an auto claim (wholly unrelated) and media ads about the service from an insurance company. Wouldn’t you really like to know when push comes to shove how your loss would be handled for various problems? The measure for quality is the financial stability of the company along with their record of paying claims promptly and fairly. That is not too much to ask.

Consumers should be told the average time it takes to pay a claim, the proportion of claims denied, and the number of the policyholders who had to sue the insurance company for payment. The request is for insurance companies to post online information about insurance company practices in paying claims for consumers to view and compare.

Again, it sounds like something that should already be in place in every state, but no state makes claim payment information available to consumers and no state requires the companies to provide clear summaries of policy terms to consumer shopping for insurance.

Want to see how your state stacks up? The report is available here.

The more information a policyholder has about insurance at the time of purchase and at the onset of coverage can only help the industry and consumers. Why is this information so hidden? All signs point to this benefiting the company and its bottom line—to the detriment of policyholders.

For other posts on United Policyholders and their phenomenal work for insureds see:

  • Rutgers Law School and United Policyholders Launch Essential Protections for Policyholders Project
  • United Policyholders Sues FEMA Over Withheld Sandy Claims Documents
  • United Policyholders Continues its Good Work

More on Jay Feinman is posted in:

  • Jay Feinman Interview at First Party Claims Conference
  • New Report from Rutgers Calls Out Insurance Companies and Asks States to Help Policyholders

New York Court Upholds Suit Limitation Period, Ruling Appraisal is Not a Condition Precedent to Filing Suit

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Heidi Hudson Raschke | PropertyCasualtyFocus | April 21, 2017

Courts will generally uphold reasonable suit limitation periods in property insurance policies, if the insurer does not affirmatively waive or extend them. In MZM Real Estate Corp. v. Tower Ins. Co. of New York, No. 452741/2015 (N.Y. Sup. Ct. April 11, 2017), a New York court followed the general rule. In enforcing a suit limitation period, the court was unpersuaded by the insured’s argument that once appraisal is demanded it becomes a condition precedent to filing suit.

Appraising Property Damage After Super Storm Sandy

MZM Real Estate Corp. v. Tower Ins. Co. of New York involved a property insurance dispute over the extent of coverage for wind damage caused by Superstorm Sandy, which blew through the greater New York area on October 29, 2012. In November 2012, following MZM’s notice of claim for “hurricane” damage, the insurer paid the “undisputed portion” of $4,000.

One year after the storm, on October 28, 2013, MZM invoked appraisal under the policy, and identified its appraiser. Tower then identified its appraiser, and the umpire was selected on February 3, 2014. By letters dated December 9, 2013 and January 13, 2014, Tower advised MZM that the claim was not finalized because it was waiting for the appraisal. In both letters, Towers reserved all rights under the policy.

On February 2, 2015, MZM served Tower with an Appraisal Award signed by MZM’s appraiser and the umpire. The Appraisal Award identified $170,129.96 as the total amount of windstorm damage to the property, including amounts for property damage and business interruption. Tower denied MZM’s claim because the Appraisal Award failed to “state separately the value of the property and the amount of loss” under the building coverage provisions, and to “state separately the amount of Net Income and operating expense and the amount of loss” for a business income loss award.

On June 19, 2015, MZM filed a motion for summary judgment in lieu of complaint pursuant to NY CPLR § 3213. Tower moved to dismiss based on the policy condition requiring that any action against the insurer be “brought within 2 years after the date on which the direct physical loss or damage occurred.”

An Appraisal Award Does Not Qualify for Accelerated Treatment Under NY CPLR § 3213

As a procedural matter, the court determined that the insured’s effort to seek accelerated treatment under NY CPLR § 3213 was improper. NY CPLR § 3213 provides: “When an action is based upon an instrument for the payment of money only or upon any judgment, the plaintiff may serve with the summons a notice of motion for summary judgment and the supporting papers in lieu of a complaint.” Cases following this procedure generally involve “some variety of commercial paper in which the party to be charged has formally and explicitly acknowledged an indebtedness. Where the instrument requires something in additional to defendant’s explicit promise to pay a sum of money, CPLR 3213 is unavailable” (quoting Weissman v. Sinorm Deli, 669 N.E.2d 242 (N.Y. 1996) (citation omitted)).

The court determined that an Appraisal Award is not an “instrument for the payment of money only” under NY CPLR § 3213. “Summary judgment based on an instrument for the payment of money only ‘does not apply where the contract and the instrument are inextricably intertwined’” (quoting Montecalvo v. Cat E., LLC, 128 A.D.3d 783, 784 (N.Y. Sup. Ct. App. Div. 2015) (citation omitted)). Because the Appraisal Award is intertwined with the policy and cannot be read without reference to policy provisions, the Appraisal Award does not qualify as an “instrument for the payment of money only.” Moreover, the court determined that the Appraisal Award did not qualify for accelerated treatment because Tower had not “formally and explicitly acknowledged an indebtedness” (quoting Interman Indus. Prods. v. R.S.M. Electron Power, 332 N.E.2d 859 (N.Y. 1975)).

Procedurally, when a plaintiff fails to make a prima facie showing of entitlement to summary judgment in lieu of complaint under NY CPLR § 3213, “the moving and answering papers shall be deemed the complaint and answer, respectively, unless the court orders otherwise.” In this case, the court ordered otherwise, finding that Tower’s motion to dismiss was due to be granted.

A Demand for Appraisal Does Not Make Appraisal a Condition Precedent to Filing Suit

Tower moved to dismiss on the basis that the action was not brought within two years of the date of loss. It was undisputed that the loss occurred on October 29, 2012, and MZM commenced the action on June 19, 2015 – over two and one half years later. MZM argued, however, that it was required to comply with the terms and conditions of the policy, and that completion of an appraisal became a condition precedent to suit once MZM demanded appraisal. Tower responded by stating that appraisal is elective, and that the policy does not indicate that appraisal is a condition precedent to filing suit.

The court agreed with Tower, holding that it “has established a defense as a matter of law by demonstrating with documentary evidence that the subject policy included a two year suit limitation period and that MZM commenced this action after expiration of that period.” The court rejected MZM’s argument that once appraisal is demanded, it becomes a condition precedent to filing suit:

“MZM cites no authority and the Court has not found any to support the proposition that under facts similar to this case, once an appraisal is demanded, the completion of the appraisal serves as a condition precedent to the commencement of an action.”

In reaching its decision, the court distinguished Executive Plaza, LLC v. Peerless Ins. Co., 5 N.E.3d 989 (N.Y. 2014), where the insurer required proof of completion of repairs in order for the insured to make a replacement cost claim. The insurer successfully moved to dismiss the insured’s suit as premature when it was filed on the last day of the suit limitation period because the repairs were not completed. When the insured later filed suit, the court held that the insurer could not then enforce the suit limitation period when the repairs could not be completed within two years. “The Court held that it was ‘neither fair nor reasonable to require suit within two years from the date of the loss while imposing a condition precedent to suit — in [that] case, completion of replacement of the property — that cannot be met within the two-year period’” (quoting Executive Plaza, 5 N.E.3d at 989). In this case, unlike in Executive Plaza, MZM failed to commence suit before the two-year limitation period expired.

In sum, nothing in the policy indicates that once appraisal is demanded, it must be completed before suit is commenced. In addition, MZM never received a waiver of the suit limitation period or requested an extension of time to file suit. Moreover, Tower never relinquished its right to rely on the suit limitation period. In its letters, Tower consistently reserved all of its rights under the policy. Under these circumstances, the court found the suit limitation enforceable, ruling that the insured’s action was untimely and due to be dismissed.

The case serves as an important reminder of suit limitation periods, both for policyholders, whose failure to timely file suit against an insurer can have drastic results, as well as insurers, who should bear in mind the importance of that contractual right, which courts frequently uphold, even where it may result in a disproportionate forfeiture.

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