Starikovsky v. State Farm Fire and Casualty Company

Background

Arkady Starikovsky sued the issuer of his homeowner’s insurance policy, State Farm Fire and Casualty Company, after water allegedly flooded the first floor, basement, and garage of the home he owned with his wife on January 15, 2022. Starikovsky claimed that State Farm improperly denied his insurance claim. His claims included breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, and violation of New York General Business Law § 349. He also sought a declaratory judgment that State Farm was required to pay the claim.

State Farm moved for summary judgment, which asks the court to rule without a trial when there is no genuine dispute about a fact that could affect the result. The court had jurisdiction under the federal diversity statute, 28 U.S.C. § 1332.

Proof-of-Loss Requirement

The policy required the insured to provide sworn proofs of loss within 60 days after an applicable loss. State Farm sent a reservation-of-rights letter on February 14, 2022. On July 25, 2022, State Farm’s counsel sent Starikovsky’s counsel a written demand for sworn proofs of loss and six blank forms. Starikovsky signed completed forms on August 2, 2022, but his counsel did not send them to State Farm’s counsel until October 19, 2022.

The court applied New York law because both parties relied on it. Under that law, an insured’s failure to provide proofs of loss within 60 days after an insurer’s demand is an absolute defense to an action on the policy unless the insurer waived the requirement or is prevented from asserting it through estoppel. The court found that Starikovsky’s submission came 86 days after State Farm’s demand and was therefore untimely.

Arguments About State Farm’s Conduct

Starikovsky argued that State Farm had breached the policy first by waiting until July 25 to demand the proofs of loss. The court rejected that argument, finding no policy language requiring State Farm to demand the forms promptly after receiving notice of the flood. The court also explained that New York Insurance Law § 3407(a) allowed Starikovsky to satisfy the policy’s timing requirement by submitting the proofs within 60 days after receiving State Farm’s demand.

Starikovsky argued that sending the demand to his attorney did not satisfy § 3407(a). The court rejected that argument because the attorney represented him in connection with the insurance claim, Starikovsky actually received notice, and he signed the forms only eight days after the demand. The court therefore found that service on his counsel was sufficient.

Starikovsky also argued that State Farm should be prevented from relying on the late proofs because it acted in bad faith by waiting about six months to demand them. The court found no evidence that State Farm’s statements or conduct reasonably led Starikovsky to believe he could ignore the deadline. It also noted that State Farm repeatedly reserved its rights and stated that its actions did not waive the policy’s terms or defenses. The court concluded that the investigation of the claim did not establish waiver or estoppel.

Disposition

The court held that Starikovsky had not raised a genuine factual dispute about his failure to provide timely proofs of loss. It granted State Farm’s motion for summary judgment and instructed the Clerk to terminate the motion and close the case.