Greene v. Stevens Gas Service

Greene v. Stevens Gas Service (2003-221); 177 Vt. 90; 858 A.2d 238

2003-221

[Filed 30-Jul-2004]


       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any errors in order that corrections may be made before this opinion goes
  to press.


                                 2004 VT 67

                                No. 2003-221

       	
  Gary Greene	                                 Supreme Court

                                                 On Appeal from
       v.	                                 Chittenden Superior Court


  Stevens Gas Service and	                 January Term, 2004
  CI Co-operative Fire Insurance


  Dennis R. Pearson, J.

  Thomas C. Nuovo of Bauer, Anderson & Gravel, Burlington, for
    Plaintiff-Appellant.

  Richard P. Foote of Conley & Foote, Middlebury, for Defendant-Appellee.

  William H. Sorrell, Attorney General, and David B. Borsykowsky, Assistant
    Attorney General, Montpelier, for Amicus Curiae State of Vermont.


  PRESENT:  Amestoy, C.J., Dooley, Johnson, Skoglund and Reiber, JJ.


       ¶  1.  DOOLEY, J.   Plaintiff, Gary Greene, appeals a grant of
  summary judgment dismissing claims against his insurer, Co-operative
  Insurance Company (Co-op), for breach of contract, breach of implied
  covenant of good faith and fair dealing, and also for consumer fraud under
  Vermont's Consumer Fraud Act, 9 V.S.A. §§ 2451-2480g.  The Vermont
  Attorney General filed a brief amicus curiae in support of plaintiff,
  arguing that the 1985 amendments to the Consumer Fraud Act have broadened
  the act's scope such that it now applies to insurance, and Wilder v. Aetna
  Life & Cas. Ins. Co., 140 Vt. 16, 433 A.2d 309 (1981) is no longer
  controlling law.  Without reaching whether the consumer fraud law now
  extends to insurance, we affirm.

       ¶  2.  The facts before us are in the summary judgment record and
  plaintiff's complaint.  In September 1995, plaintiff obtained homeowner's
  insurance from defendant through its local agent, Williston Insurance
  Agency.  The policy covered a log home plaintiff intended to build at his
  site in Underhill, Vermont.  Construction began that fall, but was not
  complete by winter.  In order to ensure that construction could continue
  through the winter, plaintiff hired Stevens Gas Service (FN1) to provide
  propane space heaters at the building site.

       ¶  3.  According to plaintiff's complaint, on December 7 or 8, 1995,
  an employee of Stevens Gas Service left the heaters on at full power for
  over 12 hours, causing the interior of the house to reach a temperature of
  approximately 192_F.  As a result, the logs split, cracked, and twisted
  causing the walls to become uneven, twisted and bowed.  Also, the
  superheating caused an ice build-up on the exterior of the house that
  ruined windows and other components of the building.  Shortly thereafter,
  plaintiff filed a claim on the homeowner's policy.   On December 23,
  defendant sent two builders, both of whom had some experience with solid
  wood wall buildings, to investigate the damage.  The investigators reported
  that the excessive heat had accelerated the natural process of the wood
  beams "checking," that is, cracking that normally occurs through drying of
  the wood over time.  In a letter dated January 8, 1996, a claims
  representative for defendant notified plaintiff that defendant had denied
  the claim because it "fails to see any monetary loss as the cracks to the
  center of the logs are a natural process occurring over several years . . .
  [and the] excessive heat within the home sped up the natural drying and
  shrinking process of the logs."  It concluded that the inspection found "no
  signs or evidence indicating any structural damage to your log home due to
  the accelerated process which occurred."  

   
       ¶  4.  Over the next six months, plaintiff obtained at least two
  repair estimates.  However, he never provided these estimates to defendant
  or notified the company that he disputed its decision not to pay the claim.
  (FN2)  The next exchange between the parties did not occur until nearly a
  year after the heating incident, on December 5, 1996, when plaintiff's
  roommate called defendant's claims representative to request information
  from the company's file.  The representative mailed a letter to plaintiff
  the following day providing the requested information.  It reiterated that
  Co-op had found no monetary loss, but also stated that plaintiff's claim
  would not be covered in any case because the policy's Errors, Omissions,
  and Defects exclusion applied. (FN3)   
                                    
       ¶  5.  In January 1997, plaintiff obtained two more repair estimates. 
  Two months later, on March 25, 1997, plaintiff's attorney left a message
  with the claims representative, who returned the call the next day.  The
  attorney requested information concerning a possible suit by plaintiff
  against Stevens Gas Service.  According to the facts available in the
  record, there was no further contact between plaintiff or his attorney and
  defendant until December 3, 2001, when the present suit was filed.  

       ¶  6.  Plaintiff's complaint alleged three counts: (1) violation by
  defendant of the Consumer Fraud Act; (2) negligence by Stevens Gas Service;
  and (3) breach of contract and breach of implied covenants of good faith
  and fair dealing by defendant and Stevens Gas Service.  Because Stevens Gas
  Service is not a party to this appeal, we do not consider the second issue
  here. 

       ¶  7.  In February 2002, defendant filed a motion to dismiss counts
  one and three - that is, all counts against it - because (1) all the claims
  against it were barred by the suit time limitation provision in the
  insurance contract; and (2) the Consumer Fraud Act violation claim could
  not be sustained because the act does not apply to insurance transactions. 
  In response to plaintiff's answer that the motion to dismiss was based on
  facts beyond the complaint, defendant converted it to a motion for summary
  judgment on the same grounds, attaching an affidavit of the claims
  representative and a statement of undisputed material facts consistent with
  our recitation of the facts above.  Plaintiff filed his affidavit, a
  statement of disputed facts and a memorandum arguing that the limitation
  period in the insurance contract could not be enforced because defendant
  failed to give notice of it pursuant to a state insurance regulation, that
  defendant's denial of coverage was wrong and that the complaint stated a
  valid consumer fraud claim.  
   
       ¶  8.  Initially, the court granted summary judgment with respect to
  the consumer fraud claim, on the basis that the act did not cover insurance
  transactions, but denied defendant's motion with respect to plaintiff's
  claim that defendant breached the insurance contract and violated the
  covenants of good faith and fair dealing because there was a question of
  fact relating to whether defendant should have notified plaintiff of the
  imminent expiration of the notice period.  The court refused to reconsider
  its dismissal of the consumer fraud claim, adding as an additional ground
  that the undisputed facts do not show consumer fraud as alleged in
  plaintiff's complaint.  It did reconsider its denial of the summary
  judgment motion with respect to plaintiff's claim in the complaint that
  defendant breached the insurance contract and violated the covenants of
  good faith and fair dealing, dismissing that count because the contract
  time limitation applied and had expired before the complaint was filed and
  defendant had no obligation to inform plaintiff of the imminent expiration
  of the limitation period.  Because no claims remained against defendant,
  the superior court awarded it final judgment under V.R.C.P. 54(b) to allow
  this appeal to go forward.  Plaintiff now appeals the trial court's
  dismissal of his claims against defendant.

       ¶  9.  We review a grant of summary judgment using the same standard
  of review applied by the trial court.  Al Baraka Bancorp (Chicago), Inc. v.
  Hilweh, 163 Vt. 148, 153, 656 A.2d 197,  200-01 (1994).  "Summary judgment
  is appropriate only where the moving party establishes that there is no
  genuine issue of material fact and that the party is entitled to judgment
  as a matter of law."  Samplid Enters., Inc. v. First Vt. Bank, 165 Vt. 22,
  25, 676 A.2d 774, 786 (1996); V.R.C.P. 56(c)(3).  Although the nonmoving
  party is entitled to the benefit of all reasonable doubts and inferences, 
  City of Burlington v. Nat'l Union Fire Ins. Co., 163 Vt. 124, 127, 655 A.2d 719, 721 (1994), according to V.R.C.P. 56(e),

    [w]hen a motion for summary judgment is made and supported as
    provided in this rule, an adverse party may not rest upon the mere
    allegations or denials of the adverse party's pleading, but the
    adverse party's response, by affidavits or as otherwise provided
    in this rule, must set forth specific facts showing that there is
    a genuine issue for trial. If the adverse party does not so
    respond, summary judgment, if appropriate, shall be entered
    against the adverse party.                           
        
       ¶  10.  We begin with the appeal of plaintiff's consumer fraud
  complaint.  As stated above, the superior court dismissed this claim
  because it held both that the Consumer Fraud Act did not apply to insurance
  transactions and that plaintiff failed to demonstrate a consumer fraud case
  even if the act applied.  The court's first ground is based on our decision
  in Wilder, 140 Vt. 16, 433 A.2d 309.  Plaintiff and amicus curiae, the
  Vermont Attorney General, argue that Wilder is no longer good law after the
  1985 amendments to the Consumer Fraud Act.  We do not reach this argument. 
  We conclude, instead,  that the court's second ground was correct.  Thus,
  we do not decide whether the Consumer Fraud Act applied, but hold that even
  if the act applied, the superior court properly granted summary judgment
  for defendant on the consumer fraud count.

       ¶  11.  We note that the court's analysis of this issue was made
  difficult by plaintiff's shifting positions.  Plaintiff's complaint stated
  that plaintiff "is a consumer who contracted for goods and services in
  reliance upon false or fraudulent representations or practices prohibited
  by the Consumer Fraud Act and sustained damages as a result of that fraud." 
  Exactly what the "false and fraudulent" representations were is not
  specified.  In response to defendant's motion for summary judgment,
  plaintiff indicated that one of the material facts in dispute was that
  plaintiff believed that his insurance policy would cover damages caused by
  contractors.  His affidavit stated he was not informed that the policy
  contained an exclusion for loss that results from construction of property
  and had he known so he would "have requested a different policy."  His
  memorandum argued that defendant should have known plaintiff needed
  coverage during the construction process and if an exclusion applied,
  should have "offered additional coverage or explained what would be
  excluded." 

       ¶  12.  After the court granted summary judgment on the Consumer Fraud
  Act count, plaintiff shifted his argument.  He argued that the Consumer
  Fraud Act violation occurred after he incurred the loss:

         In the present case Cooperative engaged in actions which were
    intended to deceive the plaintiff as to his right to pursue a
    claim under his contract for benefits.  This is evident since
    originally Cooperative denied the claim stating there was no
    damage to the property as a result of the action of Steven's Gas. 
    However, after the plaintiff provided Cooperative with estimates
    dealing with the extent of the damages, it was then that
    Cooperative claimed plaintiff did not have coverage for the
    damages he suffered.  This creates a question of fact for the jury
    as to whether or not Cooperative deceived Mr. Greene into
    believing he could not pursue a claim under his insurance policy.  

         Under the Act, a "deceptive act or practice" is any material
    representation, practice or omission likely to mislead a
    reasonable consumer.  . . . Mr. Greene was deceived because he
    believed that his only recourse was to pursue a claim against
    Stevens Gas because he had been told his insurance did not cover
    the damages claimed.

  The court apparently addressed this argument in finding that plaintiff had
  not demonstrated an arguable violation of the Consumer Fraud Act. 
  Plaintiff made this same argument in his brief to this Court, never
  mentioning any claim that defendant committed consumer fraud in issuing the
  policy to him with the exclusion. In response to defendant's brief,
  however, he reiterated the factual assertions made in his affidavit and
  complaint.

       ¶  13.  Assuming they were properly raised, neither theory was
  sufficiently supported to withstand summary judgment.  The essential
  problem with plaintiff's position is that defendant denied liability
  primarily because it concluded, based on the investigation it performed,
  that plaintiff had suffered no compensable loss.  Although plaintiff
  asserts that he obtained independent estimates showing loss, he never
  provided them to defendant or contested in any way defendant's assessment
  regarding coverage until this litigation.  Thus, even if defendant had
  provided plaintiff a policy with no exclusions related to how the loss was
  incurred, it would have made no difference to defendant's coverage decision
  because defendant understood there to be no loss.  In a damage action under
  the Consumer Fraud Act, the consumer must demonstrate that he sustained
  "damages or injury as a result of any false or fraudulent representations
  or practices" of the "seller, solicitor or other violator."  9 V.S.A. §
  2461(b); see Carter v. Gugliuzzi, 168 Vt. 48, 52, 716 A.2d 17, 21 (1998). 
  Although we read broadly the requirement that there be injury, see Peabody
  v. P.J.'s Auto Village, Inc., 153 Vt. 55, 58, 569 A.2d 460, 462-63 (1989),
  there must be some cognizable injury caused by the alleged consumer fraud.
   
       ¶  14.  Plaintiff's theory of a Consumer Fraud Act violation
  connected with the denial of coverage is also based on the inaccurate
  statement that defendant raised the coverage exclusion only to avoid paying
  plaintiff's claim once he demonstrated a compensable loss.  However,
  plaintiff never demonstrated a compensable loss to defendant.

       ¶  15.  There is, however, a broader reason why his claim based on
  defendant's refusal to pay cannot get beyond a summary judgment motion even
  if the Consumer Fraud Act applies to insurance transactions.    The
  Consumer Fraud Act makes unlawful  "[u]nfair methods of competition in
  commerce, and unfair or deceptive acts or practices in commerce."  9 V.S.A.
  § 2453(a).  The requirements of a claim under the Consumer Fraud Act are
  set out in Peabody : "(1) there must be a representation, practice, or
  omission likely to mislead the consumer; (2) the consumer must be
  interpreting the message reasonably under the circumstances; and (3) the
  misleading effects must be 'material,' that is, likely to affect the
  consumer's conduct or decision with regard to a product."  153 Vt. at 57,
  569 A.2d  at 462 (citing Poulin v. Ford Motor Co., 147 Vt. 120, 124?25, 513 A.2d 1168, 1171?72 (1986).  We fail to see how plaintiff meets the first
  requirement of the test.  His argument is that by denying coverage
  defendant deceived plaintiff into believing his only recourse was against
  Stevens Gas Service.  Under that logic, any denial of coverage becomes
  consumer fraud.  As we held in Winey v. William E. Dailey, Inc., 161 Vt.
  129, 136, 636 A.2d 744, 749 (1993), a mere breach of contract cannot be
  sufficient to show consumer fraud.
   
       ¶  16.  We are left here with a coverage dispute.   There is no
  evidence to support plaintiff's  position that defendant acted in bad faith
  in hiring the persons who evaluated plaintiff's alleged damages, in relying
  upon their report, and in claiming that a policy exclusion applied to the
  circumstances that created plaintiff's alleged damages.  In those states
  that recognize Consumer Fraud Act applicability to insurance transactions,
  a mere coverage dispute is insufficient to show consumer fraud.  See Barr
  Co. v. Safeco Ins. Co. of America, 583 F. Supp 248, 257-58 (N.D. Ill. 1984)
  (Consumer Fraud Act count that alleged defendant had a practice of not
  paying valid claims promptly and completely  could go forward because it
  was not "merely a contract action at heart"); Showpiece Homes Corp. v
  Assurance Co. of America, 38 P.3d 47, 59 (Colo. 2002) (holding that bad
  faith handling of an insured's claim fell within the act); Gray v. N. C.
  Ins. Underwriting Ass'n, 529 S.E.2d 676, 683 (N.C. 2000) (holding that "not
  attempting in good faith to effectuate prompt, fair and equitable
  settlements of claims in which liability has become reasonably clear,"
  constitutes unfair conduct and is thus a violation of consumer protection
  law) (internal quotation marks omitted); Myint v. Allstate Ins. Co., 970 S.W.2d 920, 926 (Tenn. 1998) (although Tennessee Consumer Protection Act
  applies to insurance transactions, mere good faith denial of a claim is not
  actionable under the act); Salois v. Mutual of Omaha Ins. Co., 581 P.2d 1349, 1351 (Wash.1978) (holding that an insurer's violation of covenant of
  good faith and fair dealing was actionable under the consumer protection
  act).


       ¶  17.  In summary, we agree with the superior court that, even if the
  Consumer Fraud Act applies, plaintiff failed to make out a case of consumer
  fraud sufficient to withstand summary judgment.  The court correctly
  dismissed this count of plaintiff's complaint.

       ¶  18.  We now turn to the court's decision to grant defendant summary
  judgment on plaintiff's breach of contract and breach of implied covenants
  of good faith and fair dealing allegations.  Plaintiff alleged that
  defendant failed to provide him the insurance coverage he specifically
  contracted for, failed to pay for the damages caused by Stevens Gas as
  provided in the insurance contract, and breached "the covenant of good
  faith by not performing services in a professional manner or consistent
  with the requests or known expectations of the plaintiff."  The trial court
  dismissed these claims finding that they were untimely under the "Suit
  Against Us" provision in the insurance contract.  The relevant portion of
  this clause of the policy states:

    9. Suit Against Us - No suit may be brought against us unless all
    the terms of this policy have been complied with and 
            a. Property Coverages - The suit is brought within two years 
            after the loss.

    If a law of the state where the premises is located makes this
    time period invalid, the suit must be brought within the time
    period allowed by the law.

  (Emphasis added).  We have held that such a contractual limitation clause
  is valid if it complies with statutory restrictions.  See  Gilman v. Maine
  Mut. Fire Ins. Co., 2003 VT 55, ¶ 9, 830 A.2d 71, 75 (mem.); Springfield
  Coop. Freeze Locker Plant, Inc. v. Wiggins, 115 Vt. 445, 447, 63 A.2d 182,
  184 (1949).  The applicable statute prohibits such limitation clauses only
  if they set a time limit less than a year from the date of the loss: 

    Minimum limitation on actions; void policy provisions

         A policy of fire, life, accident, liability or burglary
    insurance, or an indemnity, surety or fidelity contract or bond
    issued or delivered in this state by an insurance company doing
    business herein shall not contain a condition or clause limiting
    the time of commencement of an action on such policy or contract
    to a period less than twelve months from the occurrence of the
    loss, death, accident or default  . . .  Any such conditions or
    clauses shall be null and void. 

  8 V.S.A. § 3663 (Emphasis added).  On its face, the statute would not
  invalidate the two-year limitation clause before us, at least with respect
  to actions "on such policy or contract." Thus, the question narrows to
  whether this clause applied to plaintiff's claims in the complaint, and if
  it did, whether plaintiff's complaint was untimely under that clause. 

       ¶  19.  Answering this question is a two-step process.  First, we must
  determine from the language of the policy's clause whether it applies to
  the claim before us.  Second, we must determine as a matter of law whether
  § 3663 bars application of the clause to plaintiff's claims.  The latter is
  a question of public policy, informed by the Legislature's action in
  adopting § 3663.

       ¶  20.  The language of the suit limitation clause before us is very
  broad.  With respect to coverage for property damage, the subject of this
  lawsuit, it purports to cover any suit against the insurance company. 
  Thus, it covers the allegations in plaintiff's complaint.
   
       ¶  21.  The public policy question requires more analysis.  Because §
  3663 is expressed as a restriction on suit limitation clauses, rather than
  an authorization for them, we take it as an indication of the Legislature's
  policy direction.  The language of § 3663 restricts the applicability of
  suit limitation clauses to actions "on such policy or contract."  This
  narrowing is consistent with the developing law around the country on the
  proper use of suit limitation clauses.  See Warmka v. Hartland Cicero Mut.
  Ins. Co., 400 N.W.2d 923, 925 (Wis. 1987) (because the broad policy
  language and the regulatory statute "relate to actions to recover for
  property damages due to losses covered by the policy . . . [the]
  limitations govern actions that are 'on the policy'"); 16 Couch on
  Insurance 3d. § 235:100 (2000).  The courts have uniformly applied them to
  suits "on the policy," but frequently refused to apply them to other
  litigation between an insurer and insured.  See, e.g., Emenyonu v. State
  Farm Fire & Cas. Co., 885 P.2d 320, 323 (Colo. Ct. App. 1994) (limitation
  provision applies only to "contract claims which arise under the policy
  itself"); Warmka, 400 N.W.2d  at 925.

       ¶  22.  An action for breach of the insurance contract is a suit "on
  the policy" and thus can be subject to a suit limitation clause.  Martin v.
  Liberty Mut. Fire Ins. Co., 293 N.W.2d 168, 171 (Wis. 1980).  Thus, to the
  extent plaintiff has alleged that defendant breached the insurance contract
  between them, this claim must be brought within the two-year limit
  contained in the clause. 
   
       ¶  23.  The more difficult questions arise with respect to plaintiff's
  claim that defendant violated the covenant of good faith and fair dealing. 
  These allegations are clearly within the scope of the policy's suit
  limitation clause, but it is less clear whether these allegations
  constitute a complaint "on the policy."  Plaintiff contends that these
  claims are not "on the policy" because they are tort claims  not based on a
  breach of any of the policy provisions.  Defendant, in turn, argues that
  plaintiff's claim that it violated the covenant of good faith and fair
  dealing is an action "on the policy" because these covenants arise out of
  the insurance contract and are defined by the contract's terms.  

       ¶  24.  We note at the outset that we have decided the question of
  whether allegations of a violation of the covenant of good faith and fair
  dealing is an action "on the policy," at least implicitly, in Gilman, 2003
  VT 55, at ¶ 9.  In that case, we affirmed a summary judgment decision
  dismissing, as barred by a policy limitation clause, claims including
  breach of the covenant of good faith and fair dealing.  We did not,
  however, explicitly address whether this action was "on the policy,"
  apparently because plaintiff in that case failed to argue that it was not. 
  We conclude that Gilman was correctly decided and use this opportunity to
  further explain its reasoning.

       ¶  25.  Plaintiff is correct that we have labeled a claim that a
  defendant violated a covenant of good faith and fair dealing as one
  sounding in tort.  In Carmichael v. Adirondack Bottled Gas Corp. of Vt.,
  161 Vt. 200, 208, 635 A.2d 1211, 1216 (1993), we stated that "an action
  [for breaching covenant of good faith] is really no different from a tort
  action, because the duty of good faith is imposed by law and is not a
  contractual term that the parties are free to bargain in or out as they see
  fit."  In Bushey v. Allstate Ins. Co., 164 Vt. 399, 402, 670 A.2d 807, 809
  (1995), we explicitly recognized "a cause of action for bad faith failure
  of an insurer to pay a claim filed by its insured" and labeled this cause
  of action as a tort.  Holding that plaintiff's complaint alleges a form of
  tort does not, however, necessarily mean that the action is not "on the
  policy."  As defendant argues, even though the implied covenant is not
  negotiable, it arises solely because of the presence of the insurance
  contract, and the insurer's obligation to pay a claim is defined by that
  contract. 
   
       ¶  26.  We note that courts in other jurisdictions are split on
  whether a count that defendant insurer failed to pay an insured's claim in
  good faith is a count "on the policy" and subject to a contractual
  limitation clause, even among courts that label the underlying action as
  one sounding in tort.  At one extreme, some courts hold that a bad faith
  claim is collateral to the policy and never subject to a policy limitation
  clause.  See, e.g., Warkma, 400 N.W.2d  at 925.  At the other extreme,
  courts hold that the nexus between the action and the policy is so strong
  that a bad faith failure to pay claim is always subject to a policy
  limitation clause.  See, e.g., Modern Carpet Indus., Inc. v. Factory Ins.
  Ass'n, 186 S.E.2d 586, 587 (Ga. Ct. App. 1971).  We conclude that the
  better reasoned decisions lie between the two extremes and are persuaded by
  the Iowa Supreme Court's reasoning in Stahl v. Preston Mutual Ins. Ass'n,
  517 N.W.2d 201, 203-04 (Iowa 1994).  In Stahl, the court considered whether
  a tort action is "on the policy."   Id. at 203.  The court rejected the
  bright-line extremes, and instead explained that determining whether a tort
  action is "on the policy" requires a case-by-case analysis of the nature of
  the tort claim, the timing of the relevant events, and the type of damages
  requested.  Id.  The court noted that decisions from other courts applying
  a case-by-case analysis exempted bad faith claims from policy limitation
  clauses where the "bad faith occur[ed] either before or after the loss
  which triggers policy coverage."  Id. at 204.  Bad faith claims that
  occurred either before or after the loss included situations where
  plaintiff alleged fraud and negligence during policy purchase negotiations,
  Hearn v. Rickenbacker, 400 N.W.2d 90, 93 (Mich.1987), and where plaintiff's
  claim related to the insurer's conduct with respect to repair of previously
  damaged property, Murphy v. Allstate Ins. Co, 83 Cal. App. 3d 38, 44 (Cal.
  Ct. App. 1978).  It contrasted these situations with cases "where denial of
  the claim in the first instance is the alleged bad faith and the insured
  seeks policy benefits" and noted that these cases generally upheld the
  application of the policy limitation clause.  Id. (quoting Velasquez v.
  Truck Ins. Exchange, 5 Cal. Rptr. 2d 1, 5-6 (Cal. Ct. App. 1991)).  
   
       ¶  27.  The Stahl Court then went on to specifically consider the
  case before it.  The court held that the plaintiff's bad faith claim was
  subject to the policy limitation clause because it was "a disguised attempt
  to resolve a dispute as to [defendant's] ... liability for his loss and is
  therefore an action 'on this policy.'" Id.; see also Ingrim v. State Farm
  Fire & Cas. Co., 249 F.3d 743, 746 (8th Cir. 2001) (applying Iowa law).  
  The Couch on Insurance treatise summarizes Stahl and other like cases as
  holding:

    For purposes of determining whether actions against the insurer
    are collateral, such that suit limitation clauses do not apply, an
    action is collateral if the elements of a tort are satisfied in a
    manner distinct from breach of contract, but if the action is
    nothing more than a breach of contract "disguised" as a tort, the
    action is not collateral and the policy's suit limitation clause
    applies.   

  16 Couch on Insurance 3d. § 235:100, at 235-100 (2000).  The Stahl analysis
  is consistent with our decision in Gilman, and we adopt it.

       ¶  28.  Applying the  Stahl analysis to plaintiff's complaint, we must
  hold that the claim that defendant violated the covenant of good faith and
  fair dealing is subject to the policy limitation clause.  In his complaint,
  plaintiff set out the claim of breach of implied covenant of good faith and
  fair dealing in the same count as the claim for breach of contract. 
  Moreover, the substance of the allegations are so conflated that the claims
  are almost indistinguishable.  Plaintiff never alleged the elements of a
  bad faith claim as set out in Bushey.  See 164 Vt. at 402, 670 A.2d  at 809
  (to recover on bad faith claim, plaintiff must show that insurer "had no
  reasonable basis to deny benefits of the policy" and "knew or recklessly
  disregarded the fact that no reasonable basis existed").  He alleged only
  that defendant did "not perform[] services in a professional manner or
  consistent with the requests or known expectations of the plaintiff."    As
  in Stahl, we conclude that plaintiff's bad faith claim is merely a
  disguised attempt to resolve a dispute as to liability for his loss and is
  therefore subject to the policy limitation clause.  Because plaintiff did
  not file suit within the two-year period from the loss specified in that
  clause, his count for breach of the covenant of good faith and fair dealing
  was barred by the clause.   

       ¶  29.  While, as we stated above, plaintiff does not dispute that he
  failed to file his complaint within the two-year limitation period
  specified in the policy, he argues that defendant waived the limitation
  because it failed to notify plaintiff that the time for suit had nearly
  run.  In making this argument, plaintiff relies upon Fair Claims Practices
  Act Regulation 79-2 S 6 (FN4) of the Vermont Department of Banking,
  Insurance and Securities, as enacted pursuant to 8 V.S.A. § 4812.  This
  exact argument was raised and rejected in Gilman, and we reject it for the
  same reason in this case. See Gilman, 2003 VT 55, at ¶ 10.  As we noted in
  Gilman, the regulation applies only when the insurer and insured are in
  active negotiation, the negotiations were continuing and insured was not
  represented by an attorney.  Id.  Plaintiff, however, did not provide
  evidence that negotiations were ongoing, that he communicated to defendant
  his dissatisfaction with the result, or that defendant had reason to
  believe he was not represented by an attorney.  According to the record,
  after it denied his claim, defendant received no communications from
  plaintiff until nearly a year had passed.  Even then, there was no
  negotiation; defendant received only inquiries, one from plaintiff's
  roommate, and one from plaintiff's attorney.  The next exchange on the
  record occurred four years later, well after the limitation period had
  expired.  As there are no disputed material facts that could satisfy the
  elements of the regulation, we affirm the trial court's determination that
  the regulation is inapplicable.  See id.; see also Hebert v. Jarvis & Rice
  & White Ins., Inc., 134 Vt. 472, 475, 365 A.2d 271, 273 (1976) (when
  defendant raises policy limitation clause and shows by affidavit that the
  time limit has expired, plaintiff must show by affidavit or otherwise
  specify facts demonstrating a genuine issue of fact to avoid summary
  judgment).  Because plaintiff's allegations in his complaint for breach of
  contract and breach of the implied covenants of good faith and fair dealing
  were subject to the policy limitation clause and was not filed within its
  two-year limit, and defendant did not waive reliance on the clause, the
  complaint was properly dismissed. 

       Affirmed.   



                                       FOR THE COURT:



                                       _______________________________________
                                       Associate Justice




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                                  Footnotes


FN1.  Stevens Gas Service is a defendant in the trial court, but the summary
  judgment decisions on appeal did not affect plaintiff's claim against
  Stevens.  As a result, Stevens did not appear in this appeal.

FN2.  Plaintiff claimed in his brief and at argument that he provided the
  estimates to defendant, but we can find no demonstration of the fact
  anywhere in the record.  In fact, defendant itemized all its contacts with
  plaintiff in the claims representative's affidavit and included in its
  statement of undisputed material facts that "[n]o other communication
  occurred between Co-op and Mr. Greene or anyone representing Mr. Greene"
  until the suit.  Plaintiff admitted this statement and is bound by this
  admission.  See V.R.C.P. 56(c)(2).

FN3.  The Errors, Omissions, and Defects exclusion provides:
  12. Errors, Omissions and Defects - We do not pay for the following:
       a. an act, error, or omission (negligent or not) relating to:
             1) land use;
             2) the design, specification, construction, workmanship or 
                installation of property;
             3) planning, zoning, development, surveying, siting, grading, 
                compaction; or
             4) maintenance of property (including land, structures or 
                improvements);

       whether on or off the insured premises;
       b. a defect, a weakness, the inadequacy, a fault or unsoundness in
       materials used in construction or repair whether on or off the 
       insured premises.

       We do not pay for an ensuing loss unless the ensuing loss itself 
       is excluded.


FN4.  Regulation 79-2 S 6 provides:

    E.  Insurers shall not continue negotiations for settlement of a
    claim directly with a claimant who is neither an attorney nor
    represented by an attorney until the claimant's rights may be
    affected by a statute of limitations or a policy or contract time
    limit, without giving the claimant written notice that the time
    limit may be expiring and may affect the claimant's rights. Such
    notice shall be given to first party claimants thirty (30) working
    days and to third party claimants sixty (60) working days before
    the date on which such time limit may expire.