Ebbets v. State, 47 N.Y.2d 973 (1979)
A contractual provision shortening the statute of limitations period is valid and enforceable, even against claims arising from state actions.
Summary
This case concerns whether a contractual agreement shortening the statutory time limit for filing a claim against the State of New York is enforceable. The claimants, after entering into an advance payment agreement with the State that included a clause requiring claims to be filed within the statutory time limit set forth in the Court of Claims Act, failed to file their claim within the three-year period. The Court of Appeals affirmed the lower court’s decision, holding that the contractual provision was valid and barred the claimants’ untimely claim. The decision underscores the principle that parties can contractually agree to shorten the limitation period for filing claims.
Facts
The claimants entered into an advance payment agreement with the State of New York. This agreement contained a provision stating that any claim for additional money would be released if a claim was not filed within the statutory time limit set forth in the Court of Claims Act.
The claimants subsequently filed a claim for additional money after the three-year statutory time limit had expired.
The State argued that the claim was time-barred due to the contractual provision and the claimants’ failure to comply with the statutory time limit.
Procedural History
The Court of Claims initially dismissed the claim as untimely.
The Appellate Division affirmed the Court of Claims’ decision.
The Court of Appeals affirmed the Appellate Division’s order, upholding the dismissal of the claim.
Issue(s)
Whether a contractual provision shortening the statutory time limit for filing a claim against the State in the Court of Claims is valid and enforceable.
Holding
Yes, because a contract provision shortening the period of limitations is valid as parties are free to agree to a shorter period than that provided by statute.
Court’s Reasoning
The Court of Appeals, in affirming the lower court’s decision, relied on the principle that contractual provisions shortening the period of limitations are generally valid. The court cited Kassner & Co. v. City of New York, 46 N.Y.2d 544, as precedent for this principle. The court emphasized that the statutory time limit in the Court of Claims Act is three years (§ 10, subd 1), and the six-year period in subdivision 6 of section 10 is not a statutory time limit on filing a claim, but rather a limit on the time within which a court may permit a claim to be filed notwithstanding the three-year statutory time limit was not met.
Judge Meyer, in his concurring opinion, highlighted that the claimants entered into an agreement that explicitly required them to file their claim within the statutory time limit to preserve their right to seek additional money. Since they failed to do so, their claim was barred by the contractual provision.
The court also rejected the argument that the notice of appropriation served by substituted service saved the claim. The court found the factual basis for such service beyond review, as the Appellate Division had affirmed the findings of fact made by the Court of Claims.
Moreover, Judge Meyer expressed that the notice called for by subdivision 1 of section 10 of the Court of Claims Act is not “process” within the meaning of section 102 (subd [a], par [11]) of the Business Corporation Law because it is not “for the purpose of acquiring jurisdiction of such corporation”.
The court’s decision reinforces the importance of adhering to contractual terms, especially those related to limitation periods, when dealing with claims against the State.