Summary
finding no basis for application of continuous-treatment doctrine to action against insurance broker for malpractice, on grounds that the case did not involve uninterrupted course of reliance and services related to particular duty breached, and that policy considerations underlying adoption of discovery rule for foreign or implanted objects did not call for application of the rule to the case
Summary of this case from Matthews and Fields Lumber v. New England Ins. Co.Opinion
Argued March 24, 1986
Decided May 13, 1986
Appeal from the Appellate Division of the Supreme Court in the First Judicial Department, Allen Murray Myers, J.
Richard R. Lutz and Michael S. Belohlavek for appellant.
Anthony Genovese, Michael F. Fitzgerald and Dennis J. Crossley for respondent.
MEMORANDUM.
The order of the Appellate Division should be affirmed, with costs.
We agree with the Appellate Division that the Statute of Limitations applicable to this action against an insurance broker for malpractice in the performance of contractual obligations is six years (see, Video Corp. v Flatto Assoc., 58 N.Y.2d 1026), and that the limitation period commenced to run upon defendant's failure to timely notify the fidelity insurers (see, Kassner Co. v City of New York, 46 N.Y.2d 544, 550; Davis v City of New York, 38 N.Y.2d 257, 259) and not upon the insurers' disclaimer of liability for late notification (see, Gilbert Props. v Millstein, 40 A.D.2d 100, 105, affd 33 N.Y.2d 857). There is no basis for application of the continuous treatment doctrine inasmuch as this case does not involve an uninterrupted course of reliance and services related to the particular duty breached (cf. Richardson v Orentreich, 64 N.Y.2d 896, 898-899). The policy considerations underlying adoption of the discovery rule for foreign objects and implanted objects (see, Flanagan v Mount Eden Gen. Hosp., 24 N.Y.2d 427, 430-431; Martin v Edwards Labs., 60 N.Y.2d 417, 427) do not call for the application of the rule here (cf. Goldsmith v Howmedica, Inc., 67 N.Y.2d 120). In any event, it appears that the facts pertaining to the late notification were fully known or discoverable more than six years prior to commencement of the instant action when plaintiff started its lawsuit against the fidelity insurers in Federal court in September 1976 (see, Gilbert Props. v Millstein, supra, at p 104). Accordingly, the complaint was properly dismissed as untimely.
Judges MEYER, SIMONS, KAYE, ALEXANDER and HANCOCK, JR., concur; Judge TITONE dissents and votes to reverse in an opinion in which Chief Judge WACHTLER concurs.
Order affirmed, with costs, in a memorandum.
The sole issue on this appeal is whether an action by an insured party against its insurance broker to recover for losses sustained because of untimely notification of loss to the insurers by the broker accrues at the time of the alleged "wrongdoing" or at the time the insurers disclaim liability. I cannot agree that such a cause of action accrues before any injury is suffered and, therefore, dissent.
"When limitations begin to run `depends on a nice balancing of policy considerations'" (Martin v Edwards Labs., 60 N.Y.2d 417, 425, quoting Victorson v Bock Laundry Mach. Co., 37 N.Y.2d 395, 403). On the one hand, a defendant should not be called to defend a claim when the "`"evidence has been lost, memories have faded, and witnesses have disappeared"'" (Duffy v Horton Mem. Hosp., 66 N.Y.2d 473, 476, quoting Flanagan v Mount Eden Gen. Hosp., 24 N.Y.2d 427, 429, quoting Developments in the Law: Statutes of Limitations, 63 Harv L Rev 1177, 1185), while, on the other hand, a wronged party should not be deprived of his claim before he has had a reasonable chance to assert it (Martin v Edwards Labs., supra, p 425; Caffaro v Trayna, 35 N.Y.2d 245, 250-252; Flanagan v Mount Eden Gen. Hosp., supra, pp 429-431).
The general rule is that the Statute of Limitations in an action sounding in contract accrues at the time of the breach (Fourth Ocean Putnam Corp. v Interstate Wrecking Co., 66 N.Y.2d 38; Kassner Co. v City of New York, 46 N.Y.2d 544, 550; Stage v Village of Owego, 39 N.Y.2d 1017, affg on mem at App. Div. 48 A.D.2d 985; Victorson v Bock Laundry Mach. Co., supra, p 403; 1 Weinstein-Korn-Miller, N Y Civ Prac ¶ 201.02, at 2-10). It is also axiomatic, however, that an action does not accrue until "all of the facts necessary to the cause of action have occurred so that the party would be entitled to relief in court" (Aetna Life Cas. Co. v Nelson, 67 N.Y.2d 169, 175; see, City of New York v State of New York, 40 N.Y.2d 659; Sosnow v Paul, 36 N.Y.2d 780). "The same test must be applied to a challenge that the action is stale as to a challenge that the action has been brought prematurely" (Schmidt v Merchants Desp. Transp. Co., 270 N.Y. 287, 301). A cause of action is incomplete until the loss is suffered (McDermott v City of New York, 50 N.Y.2d 211, 217; Cutro v Sheehan Agency, 96 A.D.2d 669). Therefore, where the breach and the loss suffered are not simultaneous, the cause of action does not accrue until the earliest date of injury (Martin v Dierck Equip. Co., 43 N.Y.2d 583, 591; Brooklyn Union Gas Co. v Interboro Surface Co., 87 A.D.2d 833-834, appeal dismissed 57 N.Y.2d 673, citing Ryan Ready Mixed Concrete Corp. v Coons, 25 A.D.2d 530; cf. Matter of Queensborough Community Coll. v State Human Rights Appeal Bd., 49 A.D.2d 766, affd 41 N.Y.2d 926).
The question of when the injury occurs has presented difficulties. This court has held on numerous occasions that injury, no matter how insignificant and regardless of the injured party's knowledge, in almost all cases, causes an action to accrue immediately (see, e.g., Fleishman v Lilly Co., 62 N.Y.2d 888, cert denied ___ US ___, 105 S Ct 967; Thornton v Roosevelt Hosp., 47 N.Y.2d 780; Schmidt v Merchants Desp. Transp. Co., supra; Video Corp. v Flatto Assoc., 85 A.D.2d 448, mod 58 N.Y.2d 1026). Here, it is clear, however, that prior to October 1976 when the excess carriers denied liability based upon the defendant's alleged failure to timely report plaintiff's claims, plaintiff had sustained not even the smallest of damages. Through its alleged breach, defendant set in motion forces which later touched plaintiff's property only through new, fortuitous conditions involving the intervening discretionary conduct of the insurance companies (see, Schmidt v Merchants Desp. Transp. Co., supra, p 300).
Thus, as this action would have been prematurely brought before the excess carriers denied liability and the action was brought within six years (CPLR 213) of the earliest injury suffered, all of the causes of action were timely (Video Corp. v Flatto Assoc., 58 N.Y.2d 1026, supra).