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GRAINGROWERS WAREHOUSE CO. v. CENTRAL NATL. INS. C

January 17, 1989

GRAINGROWERS WAREHOUSE CO., et al., Plaintiffs,
v.
CENTRAL NATIONAL INSURANCE CO. OF OMAHA, NEBRASKA, et al., Defendants



The opinion of the court was delivered by: MCNICHOLS

 ROBERT J. McNICHOLS, UNITED STATES DISTRICT Chief JUDGE

 Defendants have moved this Court for an order granting summary judgment in their favor on the ground that the contractual limitation provisions in the insurance policies bar suit. Plaintiffs have also moved for summary judgment on the grounds that the action was commenced within the limitations period provided by Washington's general statute of limitations on contracts. For the reasons discussed below, the Court grants defendants' motion and concludes that plaintiffs' action is barred by the contractual limitations period.

 FACTS and PROCEEDINGS

 Plaintiffs, Graingrowers Warehouse ("Graingrowers") and Odessa Union Warehouse ("Odessa"), are cooperatives engaged in the business of buying, storing, and selling grain. In 1983, plaintiffs had a manufacturer build temporary, outdoor grain storage facilities to protect temporarily stored grain. In the Summer and Fall of 1984, plaintiffs discovered that the storage facilities were defective and that water had leaked through the protective coverings and caused damage to the grain. On February 11, 1985, plaintiffs, through their present attorney, sued the manufacturer and installer of the temporary storage facilities for the damage to the grain stored. Plaintiffs eventually settled that action on June 9, 1987.

 During the time in question, defendants insured plaintiffs against property damage. Defendant Aetna Insurance Co., presently doing business as CIGNA Property and Casualty Insurance Co. ("Cigna"), insured both plaintiffs. Defendant Central National Insurance Co. of Omaha, Nebraska ("CNI") coinsured Odessa, and Lexington Insurance Co. ("Lexington") was an additional insurer for Graingrowers.

 Around November 1986, plaintiffs informed their insurance carriers of the property loss, but did not submit a formal proof of loss. The insurance carriers denied coverage, claiming the policies contained a one-year limitations period that barred plaintiffs' coverage. Then, after plaintiffs commenced suit against the defendant insurance carriers in state court for breach of contract, defendants removed the action to this Court on July 11, 1988.

 The CIGNA and CNI policies contained the following contractual limitations period provision:

 
"PART D: GENERAL PROVISIONS IN THE EVENT OF LOSS
 
. . . .
 
5. SUIT AGAINST THE COMPANY: No suit on this Policy shall be valid unless the Insured has complied with all Policy requirements and the suit is commenced within one (1) year (unless a longer period is provided by applicable statute):
 
a. Following the date of loss; or
 
b. After the Insured's legal liability for property of others in its actual custody is determined by final judgment after trial or by written agreement signed by the ...

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