Harris v. Prudential Insurance Co. of America

MEMORANDUM^*

Plaintiff William Harris appeals the dismissal of his action against the Prudential Insurance Company of America. The issue is when the applicable statutes of limitation governing Harris’ breach of contract and bad faith claims were triggered.¹

California courts have long held that an insured’s cause of action against an insurer accrues upon receipt of the insurer’s unconditional denial of liability to the insured.² See, e.g., Neff v. New York Life Ins. Co., 30 Cal.2d 165, 170, 180 P.2d 900 (1947) (holding that “an unconditional denial of liability to the insured [gives] rise to an immediate cause of action”); Love v. Fire Ins. Exchange, 221 Cal.App.3d 1136, 1143, 271 Cal.Rptr. 246 (1990) (holding that insureds’ causes of action accrued when they “were aware of the factual predicate to their suit and were aware their claim had been unconditionally denied”) (citation omitted).

It is undisputed that on January 11, 1996, Prudential informed Harris that it had considered his long-term disability claim, determined that the company was not liable beyond December 14, 1993, and terminated the claim. This was “unequivocal language that no further payment on the claim would be made.” Migliore v. Mid-Century Ins. Co., 97 Cal.App.4th 592, 605, 118 Cal.Rptr.2d 548 (2002). Thus, Harris’ cause of action against Prudential accrued, and the statute of limitations began to run, on January 11, 1996. Under California law, the statute of limitations for breach of contract claims is four years. Cal.Code Civ. Proc. § 337(1). The statute of limitations for bad faith claims is two years. See id. at § 339(1); see also Smyth v. USAA Property & Casualty Ins. Co., 5 Cal.App.4th 1470, 1477, 7 Cal.Rptr.2d 694 (1992). Harris’ lawsuit, filed on February 9, 2001, is time barred.

Harris, citing to California Insurance Code §§ 10350.11 and 10350.7, as well as to the terms of Prudential’s policy, argues that the statutes of limitation in this case have not been triggered.³ However, the statutory and policy provisions Harris relies upon are simply inapplicable. We have previously held that § 10350.11 “is not itself a statute of limitations.” Wetzel v. Lou Ehlers Cadillac Group Long Term Disability Ins. Program, 222 F.3d 643, 648 (9th Cir.2000) (en banc). Consequently, “it also does not supply an accrual date for purposes of applying a statute of limitations.” Id. at 649. “To the contrary, this statute simply establishes a contractual claim and proof of loss framework to be included in an insurance policy.” Id.

Harris cites several out of circuit cases in support of his argument. See Panepinto v. New York Life Ins. Co., 90 N.Y.2d 717, 723, 665 N.Y.S.2d 385, 688 N.E.2d 241 (1997) (holding that “proof of loss requirements, and, by extension, the three-year limitations period in the policies, commence upon the termination of the disability as an objective, medical fact”); see also Hofkin v. Provident Life and Accident Ins. Co., 81 F.3d 365, 367 (3rd Cir.1996) (holding that insured must “submit proofs of loss within ninety days after the termination of a continuous period of disability, rather than on a monthly basis during the entire period of the disability”); Murphy v. Metropolitan Life Ins. Co., 152 F.Supp.2d 755, 760 (E.D.Pa.2001) (same). These cases, however, are not only nonbinding, but directly contradict our prior en banc holding on this very issue. We are bound by our prior precedent to adhere to the statutes of limitation set forth in the California Code of Civil Procedure, rather than those set forth in the California Insurance Code. See Wetzel, 222 F.3d at 648 (recognizing that under California law, “contractual limitations periods ... operate distinct and apart from the statutory limitations period set by the state legislature”) (emphasis in the original) (citation omitted). A three-judge panel must follow the ruling of an en banc panel. Osband v. Woodford, 290 F.3d 1036, 1043 (9th Cir.2002) (“[A]n appellate panel simply cannot modify an En banc decision”) (citations omitted) (alteration in the original).

AFFIRMED.

* This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by Ninth Circuit Rule 36-3.

1 . Because we affirm the district court's ruling that Harris' action is untimely, we need not decide Prudential's cross-appeal from the district court's denial of its summary judgment motion.

2 . It is undisputed that California is the forum state in this case and that Califorinia law is to be applied.

3 . Cal. Ins.Code § 10350.11 provides: "A disability policy shall contain a provision which shall be in the form set forth herein. Legal Actions: No action at law or in equity shall be brought to recover on this policy prior to the expiration of 60 days after written proof of loss has been furnished in accordance with the requirements of this policy. No such action shall be brought after the expiration of three years after the time written proof of loss is required to be furnished." Cal. Ins.Code § 10350.7 provides in pertinent part: "A disability policy shall contain a provision which shall be in the form set forth herein. Proofs of Loss: Written proof of loss must be furnished to the insurer ... within 90 days after the termination of the period for which the insurer is liable ...” Prudential has incorporated the statutory language into its disability policies as required by law.