Pennsylvania District Court Denies Mortgagee’s Late Suit Against Homeowner’s Insurer as Barred by Policy’s Limitations Clause

The U.S. District Court for the Middle District of Pennsylvania recently granted summary judgment in an insurance coverage dispute between intervenor LoanDepot.com LLC and Allstate Insurance Co., holding that LoanDepot’s suit was filed outside the contractual limitations period set forth in the Allstate policy. The court reasoned in Balint v. Allstate Insurance Co. that to get the benefits of an insurance policy, even mortgagees must fully comply with the policy’s terms.

In April 2022, the owner of a property located in Scranton, Pennsylvania, passed away. Two days later, the property was destroyed by a fire intentionally set by the deceased’s son, Christopher Havin. That same day, Havin died from a self-inflicted gunshot wound. Havin’s brother and son of the property owner (the plaintiff) became administratix of the property.

The property was insured by Allstate through a homeowners insurance policy, under which the plaintiff sought coverage for the fire. The Allstate policy was effective from July 18, 2021, to July 18, 2022, and contained a limitations clause stating that any “suit or action must be brought within one year after the inception of the loss damage.” In August 2022, after investigating the loss, Allstate denied the plaintiff’s claim on the ground that the property was destroyed by an intentional act of a resident of the household. Later that same month, LoanDepot provided notice to Allstate of its own claim under the policy, stating that it was a mortgagee of the property and therefore covered by the policy to the extent of its interest in the property. Allstate denied LoanDepot’s claim.

The plaintiff filed this lawsuit against Allstate in April 2023 for failure to pay on the insurance policy. In August 2023, more than 15 months later, LoanDepot filed a motion to intervene in the lawsuit, arguing it had an independent claim under the policy and was entitled to payment regardless of what happens with the plaintiff’s separate claim. The motion to intervene was granted.

Allstate filed a motion for summary judgment, arguing that LoanDepot’s claims in the lawsuit were barred by the limitations clause. LoanDepot failed to put forth a substantive response, arguing only that Allstate cited purportedly “irrelevant” legal authorities. The district court disagreed, finding Allstate cited relevant and controlling Pennsylvania authorities, including World of Tires Inc. v. American Insurance Co., in which the policy at issue had a substantially similar limitations clause. The mortgagee in World of Tires, like LoanDepot, argued that rights conferred to mortgagees under a policy’s mortgagee clause essentially supersede contractual limitations clauses. But the court disagreed and held that a mortgagee clause cannot be construed as overriding the unambiguous language of the limitations clause, requiring denial of claims or suits brought outside the contractual limitations period.

In the instant case, the district court applied the same reasoning set forth in World of Tires, finding LoanDepot, as mortgagee of the property, cannot ignore time limitations incorporated into the Allstate policy, even if the insurable interests of a property owner and a mortgagee may be distinct. Because LoanDepot’s motion to intervene (i.e., a “suit or action”) was filed three months after the one-year limitations period set forth in the Allstate policy’s limitation’s clause, the court found the clause barred LoanDepot’s suit. The court therefore granted Allstate’s motion for summary judgment and denied LoanDepot’s cross-motion.