Contact Chiropractic, P.C., as Assignee of Girtha Butler, Respondent,v.New York City Transit Authority, Appellant.BriefN.Y.March 21, 2018To be Argued by: AGNES NEIGER (Time Requested: 30 Minutes) Court of Appeals of the State of New York O CONTACT CHIROPRACTIC, P.C. as assignee of GIRTHA BUTLER, Plaintiff-Respondent, – against – NEW YORK CITY TRANSIT AUTHORITY, Defendant-Appellant. REPLY BRIEF FOR DEFENDANT-APPELLANT JONES JONES LLC Attorneys for Defendant-Appellant 5 Hanover Square, Suite 1001 New York, New York 10004 Tel: (212) 776-1808 Fax: (212) 776-1809 aneiger@jonesjonesllc.com Dated: August 14, 2017 Appellate Division Docket No.: 2014-05446 Appellate Term Docket No.: 2011-02967 QC Queens County Clerk’s Index No.: 03291/2007 APPELLATE INNOVATIONS (914) 948-2240 11229 Court of Appeals No. APL-2016-00111 i TABLE OF CONTENTS TABLE OF CONTENTS…………………………………………………….i TABLE OF AUTHORITIES……………………………………………......ii PRELIMINARY STATEMENT...…………………………………………..1 ARGUMENT I. Appellant’s obligation to provide No-Fault benefits does not arise from an implied contract……………….….…..1 II. There is no contract between Appellant and the City of New York for the provision of No-Fault coverage………………………………………………....4 III. The common carrier-passenger relationship does not constitute an implied contract to provide No-Fault coverage…………………………………………………7 IV. A comparison of the relative rights and obligations of insurers and self-insurers and the legislative intent behind the authorization of self-insurance is irrelevant to the issue before this Court……….......................................11 V. Case law stating that a self-insurer’s obligation to provide Uninsured Motorist benefits is “contractual in nature” is erroneous, irrelevant, and should not persuade this Court………………………………………………13 VI. Elrac v. Exum is distinguishable from the instant action…………………………………………………..17 VII. Application of the three-year statute of limitations to the instant action is supported by Court of Appeals authority……………………………………………….21 CONCLUSION…………………………………………………………….23 ii TABLE OF AUTHORITIES CASES Adams v. New York City Transit Authority, 88 N.Y.2d 116 (1996) ........... 10 Aetna Cas. and Surety Co. v. World Wide Rent-a-Car, Inc., 28 A.D.2d 286, 288 (1st Dept. 1967) .............................................................. 2 Aetna Life and Cas. Co. v. Nelson, 67 N.Y.2d 169 (1986) .......................... 21 Danner v. Hertz Corp., 584 F. Supp. 293 (D. Del. 1984) ............................... 3 Duffy v. Horton Memorial Hospital, 66 N.Y.2d 473 (1985) ....................... 12 ELRAC, Inc. v. Suero, 38 A.D.3d 544 (2nd Dept. 2007) ............ 13, 14, 15, 17 Gelfand v. Tanner Motor Tours, 339 F.2d 317 (2nd Cir. 1964) .................... 10 Guercio v. Hertz Corp., 40 N.Y.2d 680 (1976) .............................................. 3 Hartnett v. New York City Transit Authority, 86 N.Y.2d 438 (1995) ................................................................................... 22 Leeds v. Metropolitan Transp. Authority, 117 Misc.2d 329 (App. Term, 1st Dept. 1983) ................................................ 9 Lefkowitz v. Cohen, 286 N.Y. 499 (1941) ..................................................... 5 M.N. Dental Diagnostics, P.C. v. New York City Tr. Auth., 82 Ad3d 409 (1st Dept. 2011) ......................................................................... 1 Martin v. Home Bank, 160 N.Y. 190 (1899) .................................................. 5 Matter of Allstate Ins. Co. v Shaw, 52 NY2d 818 (1980) ............................ 20 iii Matter of Country-Wide Ins. Co. (Manning), 96 A.D.2d 471 (1983), aff’d 62 NY2d 748 (1984) .................................................................................... 14, 15 Matter of De Luca (Motor Veh. Acc. Indem. Corp.), 17 N.Y.2d 76 (1966) ............................................................................... 15, 16 Matter of Elrac, Inc. v. Exum, 18 N.Y.3d 325 (2011) ................ 17, 18, 19, 20 Matter of Manhattan and Bronx Surface Tr. Operating Auth. v. Evans, 95 A.D.2d 470 (2nd Dept. 1983) .................................................................... 15 Matter of Medical Socy. of State of N.Y. v Serio, 100 NY2d 854, 860 (2003) ........................................................................... 13 Matter of New York City Health & Hosps. Corp. (Degorter), 133 Misc.2d 93 (Sup. Ct., New York 1986) ..................................................................... 16, 17 Matter of New York City Transit Auth. v. Hill, 107 A.D.3d 897 (2nd Dept. 2013) ....................................................................................................... 13, 17 Ortiz v. New York City Transit Auth., 30 Misc.3d 1208(A) (Sup. Ct. New York 2010) ......................................................................................... 5, 6, FN1 Matter of New York City Transit Auth. v. Powell, 126 A.D.3d 705 (2nd Dept. 2015) ............................................................ 13, 17 MVAIC v. Aetna Cas. & Sur. Co., 89 N.Y.2d 214 (1996) .................... 21, 22 Persky v. Bank of America Nat'l Ass'n, 261 N.Y. 212 (1933) ....................... 5 Rosado v. Eveready Ins. Co., 34 N.Y.2d 43 (1974) ..................................... 11 State Farm Mut. Auto Ins. Co. v Basile, 48 A.D.2d 868 (2nd Dept. 1975) .............................................................. 15, 16 STATUTES Article 2 of the CPLR ................................................................................... 13 iv CPLR § 213(2) ................................................................................................ 1 CPLR § 214(2) .................................................................................... 1, 12, 22 Ins. Law § 167(2) ........................................................................................ 3, 4 Ins. Law 167(2-a) ........................................................................................ 3, 4 Insurance Law § 3420(f)(1) .............................................................. 19, 20, 21 Insurance Law § 5103 ................................................................... 4, 13, 19, 20 Insurance Law § 5105 ............................................................................. 20, 22 Pub. Auth. Law § 1200 .............................................................................. FN1 Public Authorities Law § 1200 et. seq. ........................................................... 5 Pub. Auth. Law § 1200(13) ....................................................................... FN1 Public Authorities Law § 1200(15) ....................................................... 5, FN1 Pub. Auth. Law § 1202 ................................................................................... 9 Pub. Auth. Law § 1203 ............................................................................... 5, 6 Pub. Auth. Law § 1203(1)(a) .................................................................. 5, 6, 7 VTL § 316 ....................................................................................................... 2 VTL § 370(1) .................................................................................................. 3 VTL § 370(3) .................................................................................................. 3 VTL § 321 ....................................................................................................... 4 Workers' Compensation Law § 11 ................................................................ 18 v SECONDARY SOURCES David D. Siegel, New York Practice §33, 39 (3rd Ed. 1999) ...................... 12 1 PRELIMINARY STATEMENT The issue on this appeal is simple, either the Transit Authority’s obligation to provide first-party No-Fault benefits is contractual in nature, subject to the six- year statute of limitations set forth in CPLR § 213(2), or statutory, subject to the three-year statute of limitation set forth in CPLR § 214(2). As the Appellate Division, First Department has held, application of the three-year statute of limitations is proper in accordance with the language of the CPLR and this Court’s prior decisions. See, M.N. Dental Diagnostics, P.C. v. New York City Tr. Auth., 82 Ad3d 409, 410 (1st Dept. 2011). ARGUMENT APPELLANT’S OBLIGATION TO PROVIDE NO-FAULT BENEFITS DOES NOT ARISE FROM AN IMPLIED CONTRACT The Civil Court and Appellate Division applied the six-year statute of limitation to the instant action based on their determination that No-Fault coverage is essentially contractual in nature [4-5, 11], while the Appellate Term applied the six-year limitation period simply based on its conclusion that insurers and self- insurers should be treated alike. [15-18] In its brief to this Court, Respondent raises, for the first time, a third theory – that Appellant’s obligation to provide No- Fault coverage arises from an implied contract. Respondent’s argument is essentially that a certificate of self-insurance filed by a common carrier is tantamount to an implicit contract to provide coverage, 2 including No-Fault coverage. That argument is based on a fundamental misunderstanding of self-insurance. Respondent’s arguments proceed with the assumption that a certificate of self-insurance is something “issued” by a self- insurer whereby it “agrees” to provide the same minimum terms of coverage that insurers are required to include in their policies and therefore constitutes an implied contract. However, a certificate of self-insurance is not issued by a self- insurer, is not an agreement, and does not contain any terms of coverage. Rather, a certificate of self-insurance is issued by the Commissioner of Motor Vehicles certifying an individual or corporation’s financial ability to satisfy any judgments against it. See, VTL § 316. By self-insuring, an individual or corporation does not promise or agree to do anything or provide any coverage, it merely warrants that it has the financial security necessary to satisfy any judgments that may be obtained against it. As the Appellate Division succinctly and accurately stated “[a] certificate of self-insurance can in nowise be equated with an insurance contract or policy.” Aetna Cas. and Surety Co. v. World Wide Rent-a-Car, Inc., 28 A.D.2d 286, 288 (1st Dept. 1967). This Court has therefore held that “self-insurance is no insurance at all. Rather, self-insurance, in this context, is a convenient shorthand for describing the manner in which a class of vehicle owners may comply with the requirements of 3 the Financial Security Act… By undertaking to assure payment of judgments, the owner does not become an ‘insurer’ of anything other than his own ability to pay for damages for which he is legally responsible.” Guercio v. Hertz Corp., 40 N.Y.2d 680, 684 (1976). Guercio dealt with the issue of whether Ins. Law § 167(2), which required the inclusion of certain provisions in all insurance policies issued in the State of New York, applied to Hertz, as a self-insurer. The court held that Hertz was subject to Ins. Law § 167(2) only because it had entered into a lease agreement in which it agreed to provide coverage equivalent to that provided by a policy of insurance which it had initially maintained but had cancelled prior to the subject accident in favor of self-insurance. The court found that absent such a provision in the lease agreement, Hertz would not, by virtue of its status as a self-insurer, have been subject to Ins. § Law 167(2). See, Id. Similarly, in Danner v. Hertz Corp., 584 F. Supp. 293 (D. Del. 1984). the court, applying New York law, was called upon to determine whether Hertz, by virtue of its status as a self-insurer under VTL § 370(3), was required to offer supplementary uninsured motorist coverage in its leases. The court noted that Ins. Law § 167(2-a), which required insurers to give their insured the option of purchasing supplementary uninsured motorists insurance, was applicable to authorized insurers. The court rejected the plaintiff’s arguments that VTL § 370(1) 4 should be liberally construed as requiring all common carriers to provide the same coverage required of insurers or, in the alternative, that Hertz’s lease should be construed as an insurance policy subject to Ins. Law 167(2-a) and found that Hertz was not required to offer supplementary uninsured motorist coverage to its customers. Ins. Law § 167(2) and Ins. Law § 167(2-a) mandated that any insurance policy written within the State include specific provisions set forth by the Insurance Law. Similarly, the No-Fault Law requires all insurance policies issued in New York to include the Mandatory Personal Injury Protection Endorsement. Just as Hertz was not subject to the liabilities set forth in the policy provisions mandated by Ins. Law § 167(2) and Ins. Law § 167(2-a) simply by virtue of its status as a self-insurer, the Transit Authority is not subject to the Mandatory Personal Injury Protection Endorsement on that basis. Rather, the Transit Authority’s obligation to provide No-Fault coverage is expressly mandated by statute in VTL § 321 and Ins. Law § 5103 and would not exist but for those statutes. THERE IS NO CONTRACT BETWEEN APPELLANT AND THE CITY OF NEW YORK FOR THE PROVISION OF NO-FAULT COVERAGE As an alternative basis for finding Appellant’s obligation to provide No- Fault coverage (to parties such as the Respondent) to be contractual, Respondent argues that “the Authority’s promise to the City of New York to provide coverage 5 originates back to its 1953 lease agreement with the City when the City first transferred its transit facilities, including the omnibus line [Public Authorities Law § 1200(15)] to the Authority. Said lease agreement was codified as Public Authorities Law § 1200 et. seq.” [Respondent’s brief at page 39.] Citing Ortiz v. New York City Transit Auth., 30 Misc.3d 1208(A) (Sup. Ct. New York 2010), Respondent alleges that the above-referenced lease contains a provision whereby the Authority agreed to be responsible for “the payment of…any claims, actions or judgments, including compensation claims and awards and judgments on appeal, resulting from any accident or occurrence arising out of or in connection with the operation, management and control by the Authority of the Leased Property.” Id. Questions as to the existence of any such lease and the nature of the terms contained therein are questions of fact that are improperly raised for the first time on appeal and should not be considered by this Court. See, Lefkowitz v. Cohen, 286 N.Y. 499 (1941); Persky v. Bank of America Nat'l Ass'n, 261 N.Y. 212 (1933); Martin v. Home Bank, 160 N.Y. 190 (1899). Even if this Court were to consider this argument, it is deeply flawed. First, although Pub. Auth. Law § 1203 authorizes the transfer of transit facilities to the Authority “by deed, lease, license, or other arrangement” (Pub. Auth. Law § 1203[1][a]) and mandates the inclusion of specific terms in the agreement whereby 6 such transfer is effectuated, nothing in the Public Authorities Law constitutes a codification of the terms of such agreement. In fact, Pub. Auth. Law § 1203(1)(a) authorizes, but does not mandate, the making of such lease. As such, the existence of any such lease is a question of fact that has not been established. Even assuming the existence of such a lease, aside from the provisions mandated under Pub. Auth. Law § 1203, there is no evidence of the specific terms contained therein. Notably, there is nothing in the Public Authorities Law whereby the Authority is required to assume liability arising out of the transit facilities transferred to it by the City. 1 Moreover, even assuming that the agreement referenced by the court in Ortiz v. New York City Transit Auth., supra, does apply to the operation of buses and bus lines, said agreement does not constitute an agreement to maintain or provide insurance covering the liabilities referenced therein. The agreement embodied in the lease language cited by the Ortiz court constitutes nothing more than an assumption of liability. The manner in which the Authority satisfies any such 1 Respondent’s reliance on Ortiz v. New York City Transit Auth., supra, as evidence of such an agreement is misplaced. That case dealt with the Authority’s obligations with respect to maintenance of a manhole cover as part of the New York Rapid Transit System. There is no indication that the language referenced in Ortiz applies to liabilities arising from operation of a bus line. As the actual lease is not in evidence on the record before this Court, the definitions of the terms used therein cannot be definitively known. However, it should be noted that the definitions set forth in Pub. Auth. Law § 1200 define the term “property” as “[r]eal estate, real property, lands, rights, terms, interests, privileges, franchises or easements of owners, abutting owners or others.” (Pub. Auth. Law § 1200[13]), while an omnibus line is defined as a “transit facility” (Pub. Auth. Law § 1200[15]) and an omnibus is defined as “equipment”. As such, if one looks to the Public Authorities Law for insight into the meaning of the lease purportedly made under its authority, the agreement referenced in Ortiz v. New York City Transit Auth., supra, whereby the authority agreed to assume liability for claims, actions, and judgments arising from the operation, management, and control of leased property clearly does not extend to buses or bus lines. 7 liability is not referenced in said agreement. Indeed, in Ortiz, the Authority’s alleged obligation to the City is discussed purely in terms of defense and indemnification. There is no mention of the Authority providing insurance coverage or having a duty to obtain insurance covering the liabilities referenced in its purported agreement with the City. With regard to No-Fault coverage specifically, it is worth noting that the alleged lease in question pre-dates the enactment of the No-Fault law. Pub. Auth. Law § 1203(1)(a) authorized the transfer of transit facilities to the Authority “[o]n or before June first, nineteen hundred fifty-three”, while the No-Fault law did not take effect until 1974. Thus, the lease cannot possibly have included a provision requiring the Authority to provide coverage for first-party No-Fault benefits. As such, even viewing Respondent’s allegations in the most favorable light possible, any lease agreement between the Authority and the City of New York cannot be construed as including an agreement by the Authority to provide or obtain any particular type of coverage and there is certainly no evidence that it contained an agreement to maintain or provide No-Fault coverage in particular. THE COMMON CARRIER-PASSENGER RELATIONSHIP DOES NOT CONSTITUTE AN IMPLIED CONTRACT TO PROVIDE NO-FAULT COVERAGE In support of its argument that Appellant’s obligation to provide No-Fault coverage arises from an implied contract based on its status as a common carrier, 8 Respondent also references the relationship between Appellant and its customers. Respondent argues that “[a] contract to provide no-fault benefits is implied within the parties [sic] transaction even in the absence of a written or oral agreement.” [Respondent’s Br. at page 42.] Respondent argues that “[a]s it is public knowledge that Authority insures its busses in case of accidents, it is reasonable for a passenger to assume that said insurance is included as part of the transportation service provided.” [Respondent’s Br. at page 42.] That argument relies on two totally unfounded assumptions: 1) that the general public is aware that there is a system of insurance requiring the insurer (or self-insurer) of a vehicle to compensate eligible injured persons for their basic economic loss regardless of fault (i.e. – the “No-Fault” law), and 2) that the general public is aware that the Transit Authority self-insures its vehicles. It is far more likely that the average individual is entirely unaware of the existence of the No- Fault law. Furthermore, there is no reason to believe that the average person is aware that the Transit Authority is self-insured. To the extent that bus passengers have any expectation of being compensated for any injuries suffered as a passenger on the bus, that expectation is far more likely to arise from a general understanding of tort law (i.e. – that an injured party may sue the responsible party to recover 9 damages). Finally, the mere expectation that another will abide by the law does not render the obligation to do so contractual in nature. In any event, the courts have generally rejected the theory that the common carrier-passenger relationship gives rise to any special obligations in the nature of an implied contract. Where a plaintiff sought a refund due to the “unsanitary, unsafe, and overcrowded conditions” on a Transit Authority train, the Appellate Term has found that “however the relationship between the Transit Authority and the subway rider may be defined, it does not easily fit within the mold of familiar contract concepts. Leeds v. Metropolitan Transp. Authority, 117 Misc.2d 329 (App. Term, 1st Dept. 1983). The court further explained that because the consideration charged the customer for passage bears no relationship to the cost of the services provided, as well as the Transit Authority’s status as a public authority providing services to the public in general rather than a particular individual, the Transit Authority’s obligations are “not owed to any specific individual and individual relief may therefore not be granted.” Id.; see also Pub. Auth. Law § 1202, stating that the services provided by the Authority “are in all respects for the benefit of the people of the state of New York and the Authority shall be regarded as performing a governmental function in carrying out its corporate purpose.” 10 More recently, the Court of Appeals stated that “Modern authorities have recognized that the special duty of a common carrier to its passengers is a tort- based duty rather than an obligation derived from an implied contract between the carrier and the passenger.” Adams v. New York City Transit Authority, 88 N.Y.2d 116, 119-120 (1996). Furthermore, “‘the tickets [issued by a carrier to a passenger] do no more than evidence a relation of common carrier and passenger for hire; it is the law of torts that imposes the standard of care and responsibility appropriate to the carrier-passenger relationship, but that standard, and any consequent liability, are not creatures of contract’” Id. at 120, citing Gelfand v. Tanner Motor Tours, 339 F.2d 317, 322) (2nd Cir. 1964). It is therefore clear that a common carrier’s obligation to provide safe, comfortable, and efficient facilities is not a contractual obligation as asserted by Respondent, but a duty owed under the common law. The primary service provided by a common carrier is passage to a destination. If a common carrier’s basic duty to transport a customer from point A to point B under reasonably safe conditions is not implied by the payment of the fare then certainly an entitlement to No-Fault coverage, which entails the implementation of a complex system of statutes and regulations also does not arise from the simple act of paying a fare or purchasing a ticket. Furthermore, just as the 11 fare bears no relation to the cost of transportation services, it bears even less relation to the cost of coverage under the No-Fault law. A COMPARISON OF THE RELATIVE RIGHTS AND OBLIGATIONS OF INSURERS AND SELF-INSURERS AND THE LEGISLATIVE INTENT BEHIND THE AUTHORIZATION OF SELF-INSURANCE IS IRRELEVANT TO THE ISSUE BEFORE THIS COURT Appellant does not dispute that “[t]he whole object of compulsory automobile insurance is to assure the protection of members of the public, who are innocent victims of motor vehicle accidents, by providing compensation for and protection from tortious wrongs committed against them.” Rosado v. Eveready Ins. Co., 34 N.Y.2d 43 (1974). Appellant also recognizes that in furtherance of that legislative goal the courts have generally found that a self-insurer’s substantive obligations under the insurance law are no less than those of an insurer. Accordingly, the cases cited by Respondent in support of its position that insurers and self-insurers must be treated alike relate to the extent of self-insurer’s liability. However, the issue now before this Court does not involve the substantive right of an injured party to obtain reimbursement from a self-insurer and is not a question of the proper application of the Insurance Law. Rather, the issue presently before this Court is a procedural question involving the proper application of the Civil Practice Law and Rules. As such, the case law cited by Respondent is 12 inapplicable and it is the language and legislative goals of the CPLR, not those of the Insurance Law that are relevant. This Court has stated that: the primary purpose of a limitations period is fairness to a defendant [citation omitted]. A defendant should "'be secure in his reasonable expectation that the slate has been wiped clean of ancient obligations, and he ought not to be called on to resist a claim where the “evidence has been lost, memories have faded, and witnesses have disappeared”’” [Citations omitted.]. There is also the need to protect the judicial system from the burden of adjudicating stale and groundless claims [Citations Omitted]. Duffy v. Horton Memorial Hospital, 66 N.Y.2d 473, 476-477 (1985). Furthermore, the statutes of limitations set forth in the CPLR “represent what the legislature deems a sufficient period in a particular kind of case.” David D. Siegel, New York Practice §33, 39 (3rd Ed. 1999). While it is the clear intent of the Insurance Law to provide sufficient to coverage to injured parties regardless of whether coverage is afforded by an insurer or self-insurer, it is by no means clear that the legislature intended for insurers and self-insurers to be subject to the same statute of limitations. If that were the case, the legislature could have written into Ins. Law Art. 51 a limitation period applicable to all No-Fault actions. Application of a three-year statute of limitations to the instant action pursuant to CPLR 214(2) is mandated by the plain language of the CPLR and is 13 consistent with the legislative intent of said statute. Furthermore, such application of the law would not undermine the legislative goals of the Insurance Law, as it would in no way diminish the substantive protection available to eligible injured persons under Insurance Law § 5103. In contrast, a decision artificially converting the statutory obligation to provide No-Fault coverage into a contractual obligation would frustrate the stated intent of Article 2 of the CPLR to protect defendants against stale claims. Insofar as the legislative intent behind the Insurance Law is relevant, such artificial inflation of the statute of limitations would also undermine the objective of the No- Fault law “to ensure prompt compensation for losses incurred by accident victims without regard to fault or negligence, to reduce the burden on the courts and to provide substantial premium savings to New York motorists” See, Matter of Medical Socy. of State of N.Y. v Serio, 100 NY2d 854, 860 (2003). CASE LAW STATING THAT A SELF-INSURER’S OBLIGATION TO PROVIDE UNINSURED MOTORIST BENEFITS IS “CONTRACTUAL IN NATURE” IS ERRONEOUS, IRRELEVANT, AND SHOULD NOT PERSUADE THIS COURT In support of its position that actions for reimbursement under self-insurance are subject to a six-year statute of limitations, Respondent cites ELRAC, Inc. v. Suero, 38 A.D.3d 544, 831 N.Y.S.2d 475 (2nd Dept. 2007), Matter of New York City Transit Auth. v. Hill, 107 A.D.3d 897 (2nd Dept. 2013), and Matter of New York City Transit Auth. v. Powell, 126 A.D.3d 705 (2nd Dept. 2015). 14 The Appellate Division’s decision in ELRAC v. Suero, supra, misapplies the precedent upon which it relies. A brief review and analysis of such precedent reveals that the Second Department’s conclusion in ELRAC v. Suero does not follow from the case law cited therein. The ELRAC v. Suero Court’s decision relies rather heavily on the statement, taken from Matter of Country-Wide Ins. Co. (Manning), 96 A.D.2d 471, 472 (1983), aff’d 62 NY2d 748 (1984), that ‘[t]he right to obtain uninsured motorist protection from a self-insurer is no less than the corresponding right under a policy issued by an insurer’. The statement, however, had nothing to do with the statute of limitations applicable to self-insurers. Rather, it addressed a self-insurer’s obligation to provide uninsured motorist coverage although the applicable statutes do not expressly impose such an obligation. The Court’s decision in Matter of Country-Wide Ins. Co. (Manning), was based largely on its determination that “permission to ‘self-insure’ was not intended by the Legislature as a diminution of the uninsured motorist protection afforded users of insured vehicles or other persons.” Thus, the court’s decision was based on the legislative intent of the Insurance Law which, as set forth above, should not have been relied upon in determining the proper application of the CPLR. 15 ELRAC v. Suero, supra, also relied on Matter of Manhattan & Bronx Surface Tr. Operating Auth. v. Evans, 95 AD2d 470, 472 (2nd Dept. 1983) which, like Matter of Country-Wide Ins. Co. (Manning), addressed an injured motorists right to substantive protection under the uninsured motorist law. The aspect of ELRAC v. Suero and Matter of Manhattan & Bronx Surface Tr. Operating Auth. v. Evans that the within Respondent presents as significant is the statement that, although statutorily mandated, the obligation to provide uninsured motorist benefits remains “contractual rather than statutory in nature.” ELRAC v. Suero at 545. However, the characterization of uninsured motorist coverage as “contractual in nature” even though it is statutorily mandated arises from cases in which one of the parties was covered by an insurance policy that incorporated the statutorily mandated uninsured motorist endorsement into an insurance contract. See, State Farm Mut. Auto Ins. Co. v Basile, 48 A.D.2d 868 (2nd Dept. 1975); Matter of De Luca (Motor Veh. Acc. Indem. Corp.), 17 N.Y.2d 76 (1966). In fact, the court in Matter of De Luca (Motor Veh. Acc. Indem. Corp.), Id., specifically states that “[t]he claim asserted in arbitration against MVAIC exists solely by reason of the coverage provided by the insurance policy, for which the insured paid an additional premium. Absent the provision in the contract of insurance, there could and would be no conceivable basis for recovery against 16 MVAIC and, accordingly, the claim asserted is governed by the contract Statute of Limitations.” Id. At 79. State Farm Mut. Auto Ins. Co. v Basile, supra, likewise involved a claim arising from an insurance policy. Indeed, the court’s decision therein begins by identifying the respondent therein as “an insured” under the terms of a motor vehicle policy which contained an endorsement pursuant to subdivision 2-a of section 167 of the Insurance Law providing coverage against injury caused by an uninsured motorist…” Id. at 585. Thus, these cases did not involve self-insurers such as the Transit Authority and the concept that uninsured motorist coverage is “contractual rather than statutory in nature” was intended to apply in cases where the obligation to provide uninsured motorist coverage arose from an actual contract of insurance. The language in question was clearly meant to repudiate the theory that the insurer’s obligation was not contractual because the terms of the uninsured motorist endorsement were mandated by statute. The above-referenced concept appears to have first been misapplied by the Supreme Court in Matter of New York City Health & Hosps. Corp. (Degorter), 133 Misc.2d 93 (Sup. Ct., New York 1986), wherein the court relied on Matter of De Luca (Motor Veh. Acc. Indem. Corp.), supra, in reaching its determination and erroneously applying the six year statute of limitations to self-insurers although, as 17 stated above, the precedent upon which it relied only addressed the issue of uninsured motorist claims in which an actual policy of insurance existed. Elrac v. Suero, supra, relied on Matter of New York City Health & Hosps. Corp. (Degorter) in support of the application of the six-year statute of limitations to self- insurers. The subsequent decisions in Matter of New York City Transit Auth. v. Hill, supra, and Matter of New York City Transit Auth. v. Powell, supra, simply followed Elrac v. Suero. Thus the concept that a self-insurer’s obligation to provide coverage can be considered “contractual in nature” despite the lack of any contractual relationship between the parties is the direct result of taking an isolated phrase out of context and misapplying it to circumstances to which it was not intended to apply. Indeed, when one closely examines the relevant case law, none of the cases finding a self- insurer’s obligation to be “contractual in nature” provides any rational basis for that conclusion. As such, this Court should not be persuaded by the Second Department case law upon which Respondent relies. ELRAC v. EXUM IS DISTINGUISHABLE FROM THE INSTANT ACTION This Court’s decision in Matter of Elrac, Inc. v. Exum, 18 N.Y.3d 325 (2011), should have no bearing whatsoever on this Court’s determination of the issues presented on this appeal. The issue before this Court is whether the instant 18 No-Fault action is subject to the six-year statute of limitations applicable to contract disputes or the three-year limitation period for actions arising out of liabilities created or imposed by statute. Elrac, Inc. v. Exum addresses the obligation of a self-insured employer to provide uninsured motorist benefits to its employee, who was injured in the course of his employment. As such, the instant action is clearly distinguishable from Elrac, Inc. v. Exum. In Elrac, Inc. v. Exum, Elrac argued that as an employee entitled to recover workers’ compensation benefits, Exum was barred by Workers' Compensation Law § 11 from pursuing a claim against Elrac for uninsured motorist benefits. This Court determined that Elrac was liable for the provision of uninsured motorist coverage because Workers' Compensation Law § 11 does not bar all recovery against an employer, citing the example of an action based on breach of contract. The Court reasoned that “[t]he situation [was] as though the employer had written an insurance policy to itself, including the statutorily-required provision for uninsured motorist coverage” and the claim for uninsured motorist benefits therefore was not barred by Workers' Compensation Law § 11. Elrac, Inc. v. Exum, at 327. As such, this Court’s decision in Elrac v. Exum simply reflects the fact that just as the legislature did not intend to diminish the substantive rights of injured parties when it permitted self-insurance, it likewise did not intend to bar 19 injured workers from asserting claims against their employers simply by virtue of the employer’s status as a self-insurer. It is clear that nothing in the Elrac, Inc. v. Exum decision has any direct bearing on the matter presently before the Court. Unlike the instant action, Elrac, Inc. v. Exum addresses neither the No-Fault law, nor the applicability of statutes of limitations. Although this Court in Elrac, Inc. v. Exum states that it is essentially as if the self-insured employer wrote a contract to itself, Appellant respectfully submits that the Court chose to resort to the use of such an analogy in order to enforce the self-insurer’s obligation to provide coverage because uninsured motorist law, unlike No-Fault law, does not expressly impose such liability on self-insurers. See, Insurance Law § 3420(f)(1) and Insurance § Law 5103. There is no basis to extend this Court’s interpretation of self-insurance in Elrac v. Exum beyond the specific circumstances of that case. It is not even clear that this Court intended for that interpretation to extend to all situations involving self-insurers’ obligation to provide uninsured motorist coverage, or that this Court would apply the same reasoning in evaluating the statute of limitations applicable to uninsured motorist claims against self-insurers, much less that it is applicable in the No-Fault context. 20 When considering the application of the decision in Elrac, Inc. v. Exum, it must be noted that there is a subtle but important difference between the No-Fault statute and regulations and the uninsured motorist statute. Insurance Law § 5103, which makes the provision of No-Fault coverage mandatory, expressly states that insurers and self-insurers are both obligated to provide No-Fault coverage. In contrast, Insurance Law § 3420(f)(1) requires that all automobile liability insurance policies issued provide uninsured motorist coverage, but does not expressly address the obligation of self-insurers to provide such coverage. This apparent oversight on the part of the legislature has placed the judiciary in a very difficult position with respect to interpreting the Insurance Law as it applies to uninsured motorist coverage. As the Court of Appeals stated in Matter of Allstate Ins. Co. v Shaw, 52 NY2d 818 (1980), it clearly was not the intent of the legislature to exempt self-insurers from the obligation to provide uninsured motorist coverage as it would be unreasonable to do so in light of the clear legislative intent to provide all persons injured in accidents involving uninsured motor vehicles with an opportunity to be made whole. The legislature’s omission from Insurance Law § 3420(f)(1) of any reference to the liability of self-insurers has forced the courts to fill the loophole inadvertently created by the legislature. In actuality, the basis for imposing the obligation to provide uninsured motorist coverage on self-insurers despite the lack of an express statutory mandate is not some phantom contract, but 21 the clear legislative intent that Insurance Law § 3420(f)(1) apply to both insurers and self-insurers. APPLICATION OF THE THREE-YEAR STATUTE OF LIMITATIONS TO THE INSTANT ACTION IS SUPPORTED BY COURT OF APPEALS AUTHORITY Respondent attempts to distinguish the present case from this Court’s prior precedent cited by Appellant (Aetna Life and Cas. Co. v. Nelson, 67 N.Y.2d 169 [1986] and MVAIC v. Aetna Cas. & Sur. Co., 89 N.Y.2d 214 [1996]). Appellant does not dispute that the above-referenced cases are factually distinguishable from the instant action. The issue on this appeal is one of first impression for this Court and as such any precedent cited must necessarily be distinguishable in some manner. Here, however, the cases cited by Appellant are relevant for the purpose of establishing that the rights and obligations established by the No-Fault law are statutory in nature. Respondent attempts to distinguish the above-referenced cases from the instant action because they did not involve a claim by an injured party against a self-insurer for the recovery of No-Fault benefits. However, that fact does not invalidate or otherwise qualify this Court’s unequivocal statement that “the No- Fault Law does not codify common-law principles; it creates new and independent statutory rights and obligations…” Aetna Life and Cas. Co. v. Nelson, 67 N.Y.2d 169, 175 (1986). 22 Likewise, although MVAIC v. Aetna involved the statute of limitations in inter-company arbitration pursuant to Insurance Law § 5105, this Court’s statement that “MVAIC's obligation to pay no-fault benefits to an injured party where the accident vehicle's insurer denies such coverage is purely statutory, established under the no-fault scheme” (MVAIC v. Aetna Cas. & Sur. Co., 89 N.Y.2d 214, 221 [1996]) obviously refers not only to any right of recovery under Insurance Law § 5105, but also to the obligation to provide No-Fault benefits to injured parties. As such, regardless of any factual distinctions between the above-cited cases and the instant action, the above-cited cases are relevant to the present issue insofar as they establish that the No-Fault law creates and imposes new statutory rights and obligations not know at common law. Based on the statutory nature of the liabilities imposed by the No-Fault law, an action arising from such liabilities clearly falls squarely under the three year statute of limitations set forth in CPLR 214(2). Hartnett v. New York City Transit Authority, 86 N.Y.2d 438 (1995). CONCLUSION Based on all of the foregoing, the order appealed from should be reversed and the instant action dismissed as time-barred. Dated: New York, New York August 14, 2017 M> 'J=ÿ Agnes Neiger, Esq. Jones Jones LLC Attorneys for New York City Transit Authority 5 Hanover Square, Suite 1001 New York, New York 10004 (212) 776-1808 File #: 1-1863 To: Law Office of Cohen & Jaffe LLP 2001 Marcus Avenue, Suite W295 Lake Success, NY 11042 Attention: Tricia Smith 23 CERTIFICATE OF COMPLIANCE PURSUANT TO 22 NYCRR § 670.10.3(f) The foregoing brief was prepared on a computer. A proportionally spaced typeface was used, as follows: Name of typeface: Times New Roman Point size: 14 Line spacing: Double The total number of words in the brief, inclusive of point headings and footnotes and exclusive of pages containing the table of contents, table of citations, proof of service, certificate of compliance, or any authorized addendum containing statutes, rules, regulations, etc., is 5,299. Dated: New York, New York August 14, 2017 ly Esq.Agnes Neige: 24