Contractor missed deadline to file legal action for repairs to storm damaged church

A bankruptcy filing did not stop the clock from meeting North Carolina’s three-year statutory deadline to file a lawsuit for insurance coverage, a 4th Court panel ruled on Wednesday. ‘circuit call.

The appeals court upheld the decision to dismiss a lawsuit brought by Skyline Restoration Inc. against Church Mutual Insurance Co. The Illinois company was seeking to recover $ 692,735.90 for mitigation work after the Lumberton’s FirstBaptist Church was damaged by Hurricane Matthew, but the appeal board ruled Skyline had filed its complaint more than a month too late.

The panel said that although Section 108 (a) of the Bankruptcy Code allows a trustee in bankruptcy to extend a limitation period, this right does not extend to a creditor seeking to collect an insurance debt under ‘a transfer of rights.

“Regardless of the merits of Skyline’s claims, those claims are barred under the applicable statute of limitations and Section 108 (a) simply does not extend the time limit for an assignee,” the notice reads.

On October 7, 2016, Hurricane Matthew caused extensive damage to the First Baptist Church and several affordable housing units it owned through a non-profit affiliate. The church filed a claim with Church Mutual shortly after the hurricane and hired Skyline for wind and flood damage repairs.

Skyline eventually billed First Baptist a total of $ 2.4 million for its work on three church buildings and the affordable housing units the church owned. She filed a lawsuit in Chicago federal court in November 2017. In 2018, the church filed for Chapter 11 bankruptcy.

Bankruptcy court records show Skyline settled its dispute with the church in January 2020, accepting $ 173,930.93 in cash, a $ 50,000 promissory note and six plots of real estate with an estimated value of $ 150,000. The church also ceded its rights to Church Mutual insurance coverage to Skyline.

But Skyline did not file any complaints against Church Mutual until November 22, 2019. The company sought to recover the nearly $ 700,000 it had billed the church for the refurbishment of church buildings and Also sought damages for the insurer’s alleged violations of the Unfair and Deceptive Marketing Practices Act.

Church Mutual filed a motion to dismiss the lawsuit because it was filed more than three years after the date of the loss. Skyline argued that the limitation period did not begin until November 28, 2016, when Church Mutual informed the company that part of its claim was not covered.

U.S. District Judge Terrence W. Boyle in Wilmington has ruled that North Carolina laws require Skyline to take legal action within three years of the loss. The bankruptcy filing did not meet the statute of limitations, the judge ruled.

On appeal, the 4th circuit panel accepted. The notice says that in North Carolina, breach of contract claims are subject to a three-year limitation period. Separate laws also allocate a three-year limitation period for property insurance claims, measured from the “onset of loss”.

While it is true that bankruptcy trustees can add two years to this period, this privilege is not granted to creditors in bankruptcy proceedings. The notice says the Bankruptcy Code allows the extension because trustees have a duty to represent the interests of all creditors who attempt to collect debts.

Skyline does not represent all creditors, the court said.

On the contrary, Skyline’s breach of contract claims could not improve the assets of the bankruptcy estate because it is trying to recover monetary redress, not as a trustee of the bankrupt or for the benefit of the mass, but for herself, “he added. opinion says. “Therefore, if Skyline, as the assignee of First Baptist, were allowed to use this toll provision to assert its claims, it would be against the interests of creditors.”

About the photo: Floodwaters from Hurricane Matthew engulf homes and businesses in Lumberton, North Carolina on Wednesday, October 12, 2016. AP file photo.

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Jerry B. Hatch