New York Law Review

Tag: Insurance

  • Hahn Automotive Warehouse, Inc. v. American Zurich Ins. Co., 21 N.Y.3d 765 (2013): Statute of Limitations on Contract Claims Accrues When Right to Demand Payment Arises

    Hahn Automotive Warehouse, Inc. v. American Zurich Ins. Co., 21 N.Y.3d 765 (2013)

    In a breach of contract claim for payment of money owed, the statute of limitations begins to run when the party has the legal right to demand payment, not necessarily when the demand is actually made.

    Summary

    Hahn Automotive sued American Zurich Insurance, seeking a declaration that Zurich’s claims for unpaid insurance premiums were time-barred by the statute of limitations. Zurich counterclaimed for breach of contract, arguing the statute of limitations began when it invoiced Hahn for the unpaid amounts. The New York Court of Appeals held that the statute of limitations began to run when Zurich had the contractual right to demand payment, regardless of when it actually sent the invoices. This prevents a party from indefinitely extending the statute of limitations by delaying billing. The court affirmed the lower court’s ruling, finding some of Zurich’s claims were indeed time-barred.

    Facts

    Hahn Automotive obtained various insurance policies from Zurich between 1992 and 2003, including general liability, automotive liability, and workers’ compensation. These policies fell into four categories: retrospective premium agreements, adjustable deductible policies, deductible policies, and claim services contracts. Under the retrospective premium and adjustable deductible policies, Zurich was required to recalculate premiums based on actual claims experience. For deductible policies, Zurich would pay claims and then seek reimbursement from Hahn. Zurich performed an internal audit in 2005 and discovered it had not billed Hahn for certain deductibles and adjustments. Zurich issued invoices to Hahn in April 2005, March 2006, and March 2006, which Hahn did not pay.

    Procedural History

    Hahn sued Zurich, seeking a declaration that claims for debts arising more than six years before the suit were time-barred. Zurich counterclaimed for breach of contract. The Supreme Court granted partial summary judgment to Hahn, finding that the statute of limitations ran from when Zurich had the right to demand payment. The Appellate Division modified, dismissing some of Hahn’s claims but agreeing that Zurich’s counterclaims for debts arising more than six years prior were time-barred. Zurich appealed to the New York Court of Appeals.

    Issue(s)

    Whether the six-year statute of limitations for Zurich’s breach of contract counterclaims began to run when Zurich possessed the legal right to demand payment from Hahn, or when Zurich actually issued invoices to Hahn?

    Holding

    Yes, the statute of limitations on Zurich’s counterclaims began to run when Zurich had the contractual right to demand payment from Hahn because in contract actions, a claim generally accrues at the time of the breach, which in this case is when Zurich had the right to demand payment.

    Court’s Reasoning

    The Court of Appeals applied CPLR 213(2), which governs the six-year statute of limitations for breach of contract claims. The court stated, “[A] claim generally accrues at the time of the breach.” The court reasoned that a cause of action accrues “when all of the facts necessary to the cause of action have occurred so that the party would be entitled to obtain relief in court.” The court also relied on Appellate Division precedent, which held that “where the claim is for payment of a sum of money allegedly owed pursuant to a contract, the cause of action accrues when the [party making the claim] possesses a legal right to demand payment.” To hold otherwise would allow Zurich to extend the statute of limitations indefinitely by simply failing to make a demand. The Court distinguished this case from cases where the right to payment is expressly conditioned on a specific event, noting that Zurich could not point to any contract language unambiguously conditioning its right to payment on its own demand. The court stated, “[T]he contracts contain specific references to the applicable time periods when Zurich was entitled to calculate adjustments and bill Hahn for the amounts owed. Such provisions contradict the open-ended arrangement now proposed by Zurich.”

  • People v. Kim, 91 N.Y.2d 407 (1998): Restitution to Insurers and Joint & Several Liability

    People v. Kim, 91 N.Y.2d 407 (1998)

    Under New York law, a crime victim’s insurer can be a recipient of restitution for medical expenses paid, and courts can impose joint and several liability for restitution on perpetrators of a crime.

    Summary

    Kim pleaded guilty to attempted murder, robbery, and weapons possession after shooting the victim during a failed robbery. The trial court ordered him to pay restitution for the victim’s medical expenses. Kim appealed, arguing that the court should have held a hearing on the restitution amount, that restitution cannot be ordered to reimburse the victim’s insurer, and that he should only be responsible for a portion of the total medical expenses, not the entire amount. The New York Court of Appeals affirmed the restitution order, holding that no hearing was required because the presentence report provided sufficient evidence of the expenses, insurers can be considered victims for restitution purposes, and imposing joint and several liability is appropriate in such cases.

    Facts

    Defendant Kim and two accomplices attempted to rob the victim at his home. During the robbery, Kim shot the victim three times. The victim incurred $37,754.07 in medical expenses as a result of the shooting. The victim’s health insurer paid $35,301.35 of those expenses. Kim pleaded guilty to attempted murder, attempted robbery, and criminal possession of a weapon.

    Procedural History

    The County Court convicted Kim based on his guilty plea and sentenced him. The Appellate Division affirmed the conviction and sentence. The New York Court of Appeals granted Kim leave to appeal.

    Issue(s)

    1. Whether the trial court erred in failing to hold a hearing to determine the actual amount of the victim’s medical expenses before ordering restitution.
    2. Whether the trial court erred in ordering restitution to reimburse the victim’s health insurer for medical expenses it paid.
    3. Whether the trial court erred in imposing joint and several liability on Kim for the full amount of the victim’s medical expenses, rather than dividing the amount among Kim and his accomplices.

    Holding

    1. No, because the record contained sufficient evidence to support the finding of the amount of loss, and the defendant did not request a hearing.
    2. No, because the statute authorizes restitution for actual out-of-pocket loss, and includes a crime victim’s representative, which includes an insurer.
    3. No, because imposing joint and several liability is consistent with the purposes of restitution and with tort principles.

    Court’s Reasoning

    Regarding the hearing, the Court of Appeals noted that Penal Law § 60.27(2) mandates a hearing only if the record lacks sufficient evidence or if the defendant requests one. Here, the presentence report itemized the medical expenses, and Kim’s attorney conceded the accuracy of the amount. Thus, the court had a sufficient evidentiary basis. The court cited People v. Consalvo, 89 N.Y.2d 140, 145 (1996), stating that a defendant’s concessions may furnish the facts necessary to establish the amount of restitution.

    Addressing restitution to the insurer, the court pointed to Penal Law § 60.27(1), which authorizes restitution for “actual out-of-pocket loss caused” by the offense, and § 60.27(4)(b), which includes a crime victim’s “representative” as defined in Executive Law § 621(6). Executive Law § 621(6) defines representative broadly. The court cited People v. Hall-Wilson, 69 N.Y.2d 154, 157 (1986), emphasizing the legislative policy favoring restitution for all actual monetary losses caused by criminal conduct. The insurer, being legally obligated to pay the victim’s expenses, can be classified as a victim in its own right. The court referenced People v. Cruz, 81 N.Y.2d 996, 997-998 (1993) and People v. Hall-Wilson, 69 N.Y.2d 154, 157-158 (1986).

    On joint and several liability, the court observed the statute’s silence but stated that imposing such liability aligns with the goals of restitution: to make victims whole and to rehabilitate offenders. The court stated that requiring all defendants to take responsibility for the entire harm promotes these goals. The court cited People v. Hall-Wilson, 69 N.Y.2d 154, 157 (1986) and People v. Turco, 130 A.D.2d 785, 786 (2d Dept. 1987). Furthermore, the court noted the consistency with tort principles of liability for actors in concert.

  • Carnegie Hall Corp. v. Beinner Waterproofing, 74 N.Y.2d 907 (1989): Interpreting Subrogation Waivers in Construction Contracts

    Carnegie Hall Corp. v. Beinner Waterproofing, 74 N.Y.2d 907 (1989)

    A subrogation waiver in a construction contract, where the owner agrees to waive rights against the contractor for damages covered by insurance, typically applies only to the specific “Work” defined in the contract, not to damages to other parts of the property.

    Summary

    Carnegie Hall Corp. contracted with Beinner Waterproofing for corrective work on its building. A fire caused damage beyond the scope of the contracted work. Carnegie Hall’s insurer, as subrogee, sued Beinner for negligence. The central issue was whether a subrogation waiver clause in the contract barred the insurer’s claim for damages to areas outside the “Work.” The New York Court of Appeals held that the waiver applied only to damages within the defined “Work,” allowing the insurer to pursue claims for damages to other parts of the building. The Court emphasized interpreting the contract to reflect the parties’ allocation of risk and insurance responsibilities.

    Facts

    Carnegie Hall Corp. (owner) contracted with Beinner Waterproofing (contractor) for corrective work on the exterior walls and parking garage floor of Carnegie Towers.
    The contract, a standard AIA form, defined the “Work” as corrective work to masonry and concrete portions of exterior walls and the parking garage floor.
    The contract included insurance provisions requiring the contractor to maintain liability insurance for damages *other than to the Work itself,* and the owner to maintain property insurance *upon the entire Work at the site.*
    A fire occurred in a shed constructed by the contractor, causing damage to interior hallways, apartments, and the building’s exterior, totaling approximately $140,000.

    Procedural History

    Carnegie Hall’s insurer paid for the loss and sued Beinner as subrogee.
    Beinner moved to dismiss based on the subrogation waiver clause in the contract.
    Supreme Court granted the motion and dismissed the complaint.
    The Appellate Division modified, reinstating the complaint to the extent it sought damages outside the contractual work. The Appellate Division certified the question to the Court of Appeals.

    Issue(s)

    Whether the subrogation waiver clause in the construction contract bars the subrogation claim of the owner’s insurer for damages caused by the contractor to areas of the building outside the defined limits of the “Work.”

    Holding

    No, because the subrogation waiver clause only applies to damages to the specific “Work” defined in the contract, not to other parts of the building, as indicated by the plain language of the agreement and the intended allocation of risk between the parties.

    Court’s Reasoning

    The Court interpreted Article 17.6, the waiver clause, which waived rights for damages caused by fire “to the extent covered by insurance obtained pursuant to this Article or any other property insurance applicable to the Work.”
    The Court reasoned that the waiver applied only to insurance the owner obtained for the “Work” itself, protecting the contractor’s limited interest in that specific part of the building.
    “It makes no difference whether the policy under which subrogation is sought is one which the owner purchased specifically to insure the Work pursuant to article 17.3 or some other policy covering the owner’s property in which the owner has also provided coverage for the Work. In either event, the waiver clause, if given its plain meaning, bars subrogation only for those damages covered by insurance which the owner has provided to meet the requirement of protecting the contractor’s limited interest in the building — i.e., damages to the Work itself.”
    The Court emphasized that the contractor was required to obtain liability insurance for damages *other than to the Work itself* (Article 17.1).
    The Court distinguished *Trump-Equitable Fifth Ave. Co. v H.R.H. Constr. Corp.*, where the contract involved the construction of an entire building, requiring the owner to procure insurance for the entire building, thus extending the subrogation waiver to all damages.
    The dissenting judge argued that the waiver should bar any action by the owner or its subrogee for property damage covered by the owner’s first-party coverage, regardless of whether it was directly part of the “Work”, to promote certainty and avoid litigation. The dissent cited cases where similar clauses were interpreted to bar subrogation actions, emphasizing the intention to have one party provide insurance for all parties involved.