Opinion
No. 07-1267-bk.
January 30, 2009.
AFTER ARGUMENT AND UPON DUE CONSIDERATION of the appeal from the United States District Court for the Northern District of New York (Scullin, Jr., J.), it is hereby ORDERED, ADJUDGED, and DECREED that the judgment of the district court is AFFIRMED.
APPEARING FOR DEFENDANT-APPELLANT: DANIEL E. SARZYNSKI, ESQ., Rupp, Baase, Pfalzgraf, Cunningham Coppola LLC, Buffalo, NY.
APPEARING FOR PLAINTIFF-APPELLEE: RICHARD CROAK, ESQ., Albany, NY.
PRESENT: HON. WILFRED FEINBERG, HON. JOHN M. WALKER, JR., HON. DEBRA ANN LIVINGSTON, Circuit Judges.
Defendant-Appellant New York Central Mutual Fire Insurance Company ("NY Central") appeals from a decision of the United States District Court for the Northern District of New York affirming the decision of the United States Bankruptcy Court for the Northern District of New York entering judgment in the amount of $48,625 in favor of Plaintiff-Appellee Gail L. Edwards ("Edwards"). The Bankruptcy Court concluded that NY Central had breached its obligations under its contract with Edwards and that NY Central was estopped from asserting a limitations defense as a result of its prior tender of a check, which remained valid beyond the expiration of the limitations period set forth in that contract, for the full amount owed Edwards. The District Court, while agreeing that NY Central had breached its contractual obligations, determined instead that NY Central, by tendering the check described above to Edwards in exchange for her sacrifice of her claims under the contract, had entered into a new contract subject only to the statutory limitations period, which had not expired when Edwards commenced the current action. See N.Y. Cent. Mut. Fire Ins. Co. v. Edwards, No. 1:06-cv-1041 (FJS), 2007 WL 655916, at *2-*4 (N.D.N.Y. Feb. 26, 2007). On appeal, NY Central challenges the decisions of the Bankruptcy Court and the District Court on the following grounds: Edwards commenced her action to recover under an insurance contract after the expiration of the limitations period set forth therein; NY Central's earlier tender of full payment to Edwards in relation thereto was insufficient to support any finding of waiver, equitable estoppel, or the formation of a new contract; and, regardless, NY Central did not breach any contractual obligation. We assume the parties' familiarity with the remaining underlying facts, procedural history, and issues presented for review.
The doctrine of equitable estoppel "preclude[s] a person from asserting a right after having led another to form the reasonable belief that the right would not be asserted, and loss or prejudice to the other would result if the right were asserted." Shondel J. v. Mark D., 853 N.E.2d 610, 613 (N.Y. 2006); see also Nassau Trust Co. v. Montrose Concrete Prods. Corp., 436 N.E.2d 1265, 1269 (N.Y. 1982) (noting that equitable estoppel "is imposed by law in the interest of fairness to prevent the enforcement of rights which would work fraud or injustice upon the person against whom enforcement is sought and who, in justifiable reliance upon the opposing party's words or conduct, has been misled into acting upon the belief that such enforcement would not be sought"). In the specific context of the assertion of a limitations defense, the two elements that a plaintiff must show to support a finding of equitable estoppel are "reliance . . . on the alleged misrepresentations as the cause of [the] failure sooner to institute the action . . . and . . . justification for such reliance." Simcuski v. Saeli, 377 N.E.2d 713, 716 (N.Y. 1978). A party may be estopped even if its conduct was entirely innocent. See Triple Cities Constr. Co. v. Md. Cas. Co., 151 N.E.2d 856, 858 (N.Y. 1958) ("A party may not, even innocently, mislead an opponent and then claim the benefit of his deception." (internal quotation marks omitted)); Brady v. Metro. Life Ins. Co., 14 N.Y.S.2d 581, 586 (Sup.Ct. Monroe County 1939) ("[E]stoppel . . . is a doctrine of equitable origin that imposes a result regardless of intent and sometimes in definance [sic] of it."), aff'd sub nom. In re Masterton's Estate, 20 N.Y.S.2d 988 (App.Div. 4th Dep't 1940).
In this case, we conclude that Edwards's failure to commence the current action prior to the expiration of the contractual limitations period was caused by NY Central's conduct and that her reliance upon such conduct was justified. Without any apparent reservation, NY Central tendered two separate checks to her, each representing full payment. The second of these checks explicitly noted that it remained valid until a date beyond the expiration of the contractual limitations period. There is no indication that NY Central ever raised any objection to the validity of Edwards's claim or provided any indication that, having already acquiesced completely to its liability, it would assert a limitations defense in the event Edwards neglected to present a check for payment before the period expired. A reasonable person, considering these actions, almost certainly would assume that NY Central had abandoned all defenses and had no intent to ever assert a limitations defense. Cf. Mass v. Great Am. Ins. Co., 282 N.Y.S.2d 144, 145 (App.Div. 2d Dep't 1967) (concluding that reliance upon repeated assurances that a claim will be settled without the need to resort to litigation is justified); Ilic v. Peerless Ins. Co., 670 N.Y.S.2d 1006, 1008 (Sup.Ct. Monroe County 1998) (determining reliance upon partial payment, at least when coupled with a statement that final settlement would be forthcoming, to be justified). As a result, NY Central is estopped from asserting a limitations defense in the current action.
In addition, it is indisputable that NY Central is in breach of its obligations under its contract with Edwards. Under New York law, tender of a check alone does not constitute payment. Hutzler v. Hertz Corp., 347 N.E.2d 627, 630 (N.Y. 1976). Rather, payment is effected "[o]nly when the drawee bank pays on the check." Id.; see also Demerritt v. Levitt, 419 N.Y.S.2d 319, 320 (App.Div. 3d Dep't 1979) ("A check is not absolute payment until it is paid by the drawee bank in due course."). As Edwards never cashed either of the checks that she received, NY Central has not, as a matter of law, paid her the amount she is owed.
For the foregoing reasons, the judgment of the District Court is AFFIRMED.