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finding that generic "date of loss" language "does not evince an unmistakable intention that the one-year limitations period be measured from the occurrence underlying the event," and therefore tying the limitations period to the date of denial of coverage
Summary of this case from Polcom U.S., LLC v. Affiliated FM Ins. Co.Opinion
525734
06-07-2018
MERCEDES–BENZ FINANCIAL SERVICES USA, LLC, Appellant, v. ALLSTATE INSURANCE COMPANY, Respondent.
Law Offices of Rudolph J. Meola, Albany (Rudolph J. Meola of counsel), for appellant. Rupp Baase Pfalzgraf Cunningham, LLC, Buffalo (Adam M. Brasky of counsel), for respondent.
Law Offices of Rudolph J. Meola, Albany (Rudolph J. Meola of counsel), for appellant.
Rupp Baase Pfalzgraf Cunningham, LLC, Buffalo (Adam M. Brasky of counsel), for respondent.
Before: Garry, P.J., Lynch, Clark, Aarons and Rumsey, JJ.
MEMORANDUM AND ORDER
Clark, J.
Appeal from an order of the Supreme Court (Melkonian, J.), entered July 27, 2017 in Albany County, which granted defendant's motion to dismiss the complaint.
In August 2015, pursuant to an automobile insurance policy, defendant agreed to insure a particular 2015 Mercedes–Benz vehicle—over which plaintiff held a security interest—against loss caused by theft, subject to certain terms, conditions and exclusions. According to the complaint, the vehicle was rendered a total loss due to theft on or about February 15, 2016, and a claim for loss was filed with defendant. On May 3, 2016, allegedly as a result of the vehicle owner's noncooperation, defendant denied the claim. Thereafter, on February 16, 2017, plaintiff commenced this breach of contract action seeking to recover the value of the insured vehicle. In lieu of answering, defendant moved to dismiss the complaint on the basis that it was not timely commenced within the shortened, one-year limitations period set forth in the insurance policy. Finding that the action was untimely, Supreme Court granted defendant's motion and dismissed the complaint, prompting this appeal by plaintiff.
We reverse. While the statute of limitations period applicable to a breach of contract claim is ordinarily six years (see CPLR 213[2] ), parties to an insurance contract may agree in writing to shorten the period of time in which to commence an action against an insurer for the nonpayment of claims (see CPLR 201 ; John J. Kassner & Co. v. City of New York, 46 N.Y.2d 544, 550–551, 415 N.Y.S.2d 785, 389 N.E.2d 99 [1979] ; New Medico Assoc. v. Empire Blue Cross & Blue Shield, 249 A.D.2d 760, 761–762, 671 N.Y.S.2d 788 [1998] ). Here, there is no dispute that the insurance policy shortened the period of time within which plaintiff had to commence this action. Indeed, defendant's policy stated: "No one may bring an action against us in any way related to the existence or amount of coverage, or the amount of loss for which coverage is sought, under Part V—Protection Against Loss of the Auto, unless there is full compliance with all policy terms and such action is commenced within one year after the date of loss " (emphasis added). However, the term "date of loss" is not defined in the policy, and the parties disagree as to its meaning and, thus, when the one-year limitations period began to run. In particular, plaintiff contends that the "date of loss" is the date on which defendant denied the insurance claim, thereby giving rise to its breach of contract claim. In contrast, defendant asserts that the "date of loss" is the date on which the vehicle was stolen. We agree with plaintiff.
Generally, the statute of limitations on a breach of contract claim begins to run at the time that the breach occurs (see Ely–Cruikshank Co. v. Bank of Montreal, 81 N.Y.2d 399, 402, 599 N.Y.S.2d 501, 615 N.E.2d 985 [1993] ; Medical Facilities v. Pryke, 62 N.Y.2d 716, 717, 476 N.Y.S.2d 532, 465 N.E.2d 39 [1984] ; John J. Kassner & Co. v. City of New York, 46 N.Y.2d at 550, 415 N.Y.S.2d 785, 389 N.E.2d 99 ), which, in this case, would be the date on which defendant disclaimed coverage. Naturally, parties to an insurance contract may depart from the general rule and stipulate that the occurrence of the underlying catastrophe starts the clock for the applicable limitations period, but the agreement must include "distinct language" demonstrating that such departure was intended by the parties ( Steen v. Niagara Fire Ins. Co., 89 N.Y. 315, 324 [1882] ; see Medical Facilities v. Pryke, 62 N.Y.2d at 717, 476 N.Y.S.2d 532, 465 N.E.2d 39 ; Proc v. Home Ins. Co., 17 N.Y.2d 239, 243, 270 N.Y.S.2d 412, 217 N.E.2d 136 [1966] ). In our view, the generic "date of loss" language employed here, in the context of the policy as a whole, does not evince an unmistakable intention that the one-year limitations period be measured from the occurrence of the underlying event (see Steen v. Niagara Fire Ins. Co., 89 N.Y. at 324 ; see also Fabozzi v. Lexington Ins. Co., 601 F.3d 88, 93 [2d Cir.2010] ). Significantly, in shortening the limitations period, the insurance policy did not use the term of art "inception of loss" or other similarly specific language indicating that the limitations period was to be measured from the event giving rise to the claim (see Lobello v. New York Cent. Mut. Fire Ins. Co., 152 A.D.3d 1206, 1209, 58 N.Y.S.3d 842 [2017] ; Medical Facilities v. Pryke, 95 A.D.2d 692, 693, 463 N.Y.S.2d 804 [1983], affd 62 N.Y.2d 716, 476 N.Y.S.2d 532, 465 N.E.2d 39 [1984] ; compare Proc v. Home Ins. Co., 17 N.Y.2d at 244–245, 270 N.Y.S.2d 412, 217 N.E.2d 136 ). Moreover, although "date of loss" could be reasonably interpreted to mean the date of theft, as defendant contends, ambiguities in an insurance policy must be construed against the insurer (see Lend Lease [US] Constr. LMB Inc. v. Zurich Am. Ins. Co., 28 N.Y.3d 675, 682, 49 N.Y.S.3d 65, 71 N.E.3d 556 [2017] ; Steen v. Niagara Fire Ins. Co., 89 N.Y. at 324 ; Wangerin v. New York Cent. Mut. Fire Ins. Co., 111 A.D.3d 991, 992, 974 N.Y.S.2d 631 [2013] ). In view of the foregoing, we hold that the one-year limitations period set forth in the insurance policy began to run on the date that defendant denied the claim for coverage (see Steen v. Niagara Fire Ins. Co., 89 N.Y. at 324–325 ; Lobello v. New York Cent. Mut. Fire Ins. Co., 152 A.D.3d at 1209, 58 N.Y.S.3d 842 ; see also Fabozzi v. Lexington Ins. Co., 601 F.3d at 93 ). In so holding, we decline to follow the conflicting line of cases cited by defendant in support of its assertion that the "date of loss" is the date of the underlying theft (see e.g. D'Angelo v. Allstate Ins. Co., 126 A.D.3d 931, 931–932, 6 N.Y.S.3d 135 [2d Dept. 2015] ; Roberts v. New York Prop. Ins. Underwriting Assn., 253 A.D.2d 807, 807, 677 N.Y.S.2d 621 [2d Dept. 1998] ; Costello v. Allstate Ins. Co., 230 A.D.2d 763, 763, 646 N.Y.S.2d 695 [2d Dept. 1996] ).
As defendant denied the claim on May 3, 2016 and plaintiff commenced this action within one year of that date, the action was timely commenced and Supreme Court should have denied defendant's pre-answer motion to dismiss. Accordingly, we reverse Supreme Court's order and the complaint is reinstated.
ORDERED that the order is reversed, on the law, with costs, motion denied and matter remitted to the Supreme Court to permit defendant to serve an answer within 20 days of the date of this Court's decision.
Garry, P.J., Lynch, Aarons and Rumsey, JJ., concur.