Herbert Construction Co. v. Continental Insurance Co., 93 N.Y.2d 40 (1999)
The statute of limitations for negligence claims against insurance agents and brokers is three years, while claims for fraud or misrepresentation have a six-year statute of limitations, and neither falls under the ‘malpractice’ statute of limitations.
Summary
Herbert Construction Co. sued Continental Insurance, who then filed a third-party complaint against Essential Brokerage, alleging negligence, errors, omissions, material misrepresentation, and fraud. The Court of Appeals addressed whether the claim against Essential was time-barred. The court held that the alleged misfeasance of insurance agents and brokers toward their clients is not “malpractice” under CPLR 214(6). Negligence claims are subject to a three-year statute of limitations, while fraud and misrepresentation claims have a six-year limit. The court remitted the case for a factual determination as to whether the action was timely commenced based on these statutes of limitations.
Facts
Herbert Construction Co. sued Continental Insurance Co.
Continental Insurance Co. then filed a third-party complaint against Essential Brokerage Corp.
The third-party complaint alleged “negligence and/or errors or omissions” and “negligence, material misrepresentation or fraud” on the part of Essential Brokerage.
Procedural History
The case reached the Court of Appeals of New York after proceedings in the lower courts.
The Appellate Division made a ruling, which the Court of Appeals reviewed.
The Court of Appeals modified and affirmed the Appellate Division’s order.
Issue(s)
Whether the alleged misfeasance of insurance agents and brokers towards their clients constitutes “malpractice” under CPLR 214(6), thus triggering a specific statute of limitations.
Whether the applicable statute of limitations for claims against insurance agents and brokers for negligence is three years, and for fraud and misrepresentation is six years.
Holding
No, because the alleged misfeasance of insurance agents and brokers is not considered “malpractice” within the meaning of CPLR 214(6).
Yes, because negligence claims are governed by the three-year statute of limitations under CPLR 214(4), while fraud and misrepresentation claims are governed by the six-year statutes of limitations under CPLR 213(8) and CPLR 213(1), respectively.
Court’s Reasoning
The court reasoned that the term “malpractice” in CPLR 214(6) does not extend to the alleged misfeasance of insurance agents and brokers toward their clients. Referencing *Chase Scientific Research v NIA Group*, the court affirmed this understanding. The court emphasized that the nature of the claim dictates the applicable statute of limitations.
The court explicitly distinguished between negligence claims, which are subject to a three-year statute of limitations, and fraud/misrepresentation claims, which have a six-year statute of limitations. The third-party complaint contained allegations of both negligence and fraud/misrepresentation.
Because the third-party complaint asserted claims with different statutes of limitations, the court determined that a factual determination was necessary to ascertain whether the action was timely commenced. The court explicitly directed the lower court to determine whether the claims were timely based on whether the alleged actions constituted negligence or fraud/misrepresentation. This is a key practical consideration for attorneys.
The court did not address issues regarding contribution and indemnification, as they were not raised before the Court of Appeals.