United National Insurance v. J.H. France Refractories Co.

DEL SOLE, Judge,

dissenting.

Because Appellant/insurer’s action accrued in 1982 prior to enactment of the of the two year limitation period adopted in 42 Pa.C.S.A. § 5524, I would hold that Appellant’s action is governed by the six year limitation provisions of 42 Pa.C.S.A. § 5527 and is not time barred.

The Majority correctly recounts the three elements necessary to make a claim for rescission of an insurance policy based on fraud. Further, it appropriately accepts the trial court’s conclusion that the insurer was able to establish all the requisite elements. The Majority errs, in my view, when it then applies the discovery rule to Appellant’s cause of action.

It is clear from the facts that Appellant was harmed and that its cause of action accrued in 1982 when its insured made material misrepresentations in bad faith or which it knew to be untrue. Appellant’s right to institute and maintain its suit against the insured arose at that time, and it had a duty to use all reasonable diligence to be properly informed of the facts and circumstances upon which it could seek recovery and to then institute suit within the applicable statutory period. Appellant succeeded in meeting this threshold when it filed the underlying action in 1987, within the six year statutory period from the time when it had a right to institute suit. “The statute of limitations begins to run as soon as the right to institute and maintain a suit arises; lack of knowledge, mistake or misunderstanding do not toll the running of the statute of limitations.” Pocono International Raceway v. Pocono Produce, 503 Pa. 80, 468 A.2d 468, 471 (1983).

The discovery rule operates as an an exception to the general rule “and arises from the inability of the injured, despite the exercise of due diligence to know of the injury or its cause.” Id. The discovery rule, thus, acts as an aid to claimants, to enable the courts to apply its equitable principles where, despite the exercise of diligence, parties are unaware of their injury. Before applying this exception the court must be “presented with an assertion of applicability of the ‘discovery rule’ ” and then seek to determine whether the parties have satisfied the requirements of due diligence in ascertaining their cause of action. Id.

The Majority acknowledges the above principles, and dismisses Appellant’s argument by stating that “[o]nly a diligent party may benefit from the discovery rule.” The Majority concludes that because Appellant admits that if it had exercised diligence in 1982, when the statements were made by its insured, it would have discovered the misrepresentation, then it was not diligent and should not benefit from the discovery rule. Appellant, however, does not seek the equitable exception of the discovery rule to extend the time in which it can commence its action; rather, it seeks to apply the general rule which requires an action to be brought within the statutory period from the time when the right to institute and maintain the suit arose. Because Appellant had that right in 1982 and did use diligence in instituting its suit within the statutorily required 6 year period, Appellant’s claim should not be time barred. Appellant is not, as the Majority suggests, seeking to accelerate the commencement of the limitation period; it only seeks to apply the general rule without requesting an equitable exception for an extension. The Majority recognizes that the discovery rule was developed to aid Plaintiffs, yet it turns this shield, which operates to protect plaintiffs’ interests, into a sword to be used against a plaintiff who never sought its application.

Because I conclude that Appellant’s cause of action arose in 1982 when its insured made knowing material misrepresentations when applying for coverage that resulted in the issuance of the insurance policy, I cannot join in the Majority’s decision.