92 N.Y.2d 421 (1998)

In toxic tort cases involving property damage, the cause of action accrues upon initial exposure to the toxic substance, not when the contamination exceeds regulatory standards or when abatement is undertaken.

Summary

MRI Broadway Rental, Inc., owned a building constructed in 1971 with asbestos-containing materials. MRI sued the asbestos manufacturer in 1990, alleging continuous physical damage to the building from asbestos fibers and seeking damages for abatement costs and loss of value. The New York Court of Appeals held that the cause of action accrued when the asbestos was initially installed in the building, not when the building became “contaminated” or when MRI discovered the contamination. The court emphasized the need for a bright-line rule to provide certainty for potential defendants and avoid stale claims, and rejected basing accrual on fluctuating regulatory standards or an unascertainable date of contamination.

Facts

MRI owned a building constructed in 1971 using asbestos-containing fireproofing and insulation. MRI purchased the building in 1976 and retained Paramount Group, Inc. (PGI) as managing agent. By the early 1980s, MRI became aware of potential asbestos dangers, and tenants began expressing concerns. In 1983, MRI hired an environmental consultant to assess the asbestos. From 1986-1987, MRI conducted abatement work due to tenant complaints and to comply with local laws.

Procedural History

MRI sued the asbestos manufacturer on August 28, 1990. The Supreme Court initially denied the defendant’s motion for summary judgment. The Appellate Division reversed, granting summary judgment to the defendant, holding that the cause of action accrued before August 28, 1987. The Court of Appeals affirmed the Appellate Division’s decision.

Issue(s)

1. Whether the cause of action for property damage due to asbestos accrues upon the initial installation of the asbestos-containing materials or when the building becomes “contaminated” with friable asbestos.
2. Whether CPLR 214-c, New York’s discovery rule for toxic torts, applies to revive MRI’s claim.

Holding

1. No, because the injury occurs when the asbestos is installed in the building.
2. No, because the injury was discoverable before July 1, 1986, precluding application of the discovery rule under CPLR 214-c (6)(b).

Court’s Reasoning

The Court of Appeals relied on its precedent in Schmidt v. Merchants Desp. Transp. Co., which held that a cause of action arising from toxic exposure accrues upon initial exposure. The Court acknowledged that the “actual physical damage” rationale in Schmidt may be flawed, but reaffirmed its holding for practical and policy reasons. The court stated, “a bright line, readily verifiable rule was adopted in which, as a matter of law, the tortious injury is deemed to have occurred upon the introduction of the toxic substance into the body.” The Court found the Second Circuit’s reasoning in Maryland Cas. Co. v. Grace & Co. persuasive, noting that “the damage that building owners are seeking to `undo’ is not the fact that they discovered asbestos, but the fact of its incorporation in their buildings.” The Court rejected the “contamination” standard proposed by MRI, finding it difficult to define and subject to ever-changing regulatory standards. The Court also held that CPLR 214-c did not apply because MRI was or should have been aware of the presence of asbestos and its dangers before July 1, 1986. The court emphasized the need for predictability and certainty in assessing liability risks. “In keeping with the important purposes of avoiding stale claims and providing defendants with a degree of certainty and predictability in risk assessment, our precedents have rejected accrual dates which cannot be ascertained with any degree of certainty, in favor of a bright line approach.”