In Sethi v. Citizens Ins. Co., the United States District Court was asked to decide whether Virginia’s tolling provision, Va. Code § 8.01-229 (E)(3), applies to a contractual limitation period contained within a home owner’s insurance policy.  The court held that it did not, stating that the Virginia Supreme Court made clear in Allstate Property & Casualty Co. v. Ploutis, that a contractual limitations period is not the equivalent of a Statute of Limitations, and Code § 8.01-229 (E)(3) only applies to the latter. 

In Sethi, the plaintiff’s home, located in Radford, Virginia, was covered by a policy issued by Citizens.  On August 16, 2012, a water leak in the plumbing of the house caused damage to Sethi’s personal property.  Suit was first filed for damages under the insurance policy on August 9, 2013.  Due to Sethi failing to comply with multiple Motions to Compel, on March 6, 2015, the court entered a judgment allowing Sethi to take a voluntary dismissal pursuant to Rule 41(a)(2) of the Federal Rules of Civil Procedure.

Sethi re-filed on September 4, 2015 and Citizens moved to dismiss, arguing that the action is barred by the two-year contractual limitations period in the insurance policy, which reads:

“No action can be brought unless the policy provisions have been complied with
and the action is started within two years after the date of loss.”

Sethi relies on Va. Code § 8.01-229 (E)(3) which states, in part:

 
“If a plaintiff suffers a voluntary nonsuit as prescribed in § 8.01-380, the statute of
limitations with respect to such action shall be tolled by the commencement of the
nonsuited action . . . “

Thus, Sethi contends, the March 6, 2015 order which granted the voluntary dismissal triggered the tolling provision of § 8.01-229 and therefore his claim remains timely.  The high court’s ruling in Allstate made the decision easy for the District Court.  In Allstate, the Court dealt with very similar facts and found that the tolling provision contained in § 8.01-229 (E)(3) does not apply to a contractual limitations period. 

The Court went on to add that since an insurance policy is a contract entered into by the parties, they are bound by said contract.  In this case, the contract itself does not contain a tolling provision or incorporate § 8.01-229 (E)(3), thus, one cannot be read and created into it.