June 2003
I. IN AN APIP SUBROGATION ACTION, THE STATUTE OF LIMITATIONS BEGINS TO RUN FROM THE DATE OF THE ACCIDENT.
In Walker v. Stein, __ A.D.2d ___, 2003 WL 2008172 (N.Y.A.D. 4th Dept.), a case wherein Gregory Pajak from our office represented the insurer, the issue presented to the Appellate Division, Fourth Department, was whether the APIP subrogation action of the no-fault carrier was barred by a three-year statute of limitations applicable to recovery for damages arising from a bodily injury negligence claim. Significantly, in Walker, the insurer did not begin making APIP payments to the plaintiff's subrogee until more than three years following the accident.
The lower court denied the motion of the tort-feasor to dismiss the subrogation action as time barred.
On appeal, the Appellate Division, Fourth Department, by a 3-2 majority, reversed, dismissing the claim. The Appellate Division majority relied upon precedent that an insurance carrier, i.e. subrogee, possesses only such rights as are possessed by the insurer, i.e. subrogor. The majority concluded that since the rights of the subrogor are limited by a three-year statute of limitations the rights of a subrogee should be similarly limited. The majority held the APIP subrogation action of the insurer must be dismissed as time barred by a three-year statute of limitations.
In Walker, the majority opinion, in response to the fact that APIP payments did not begin until more than three years following the accident, rationalized that the insurer could have insisted that its subrogation rights be resolved against the tort-feasor as part of a global settlement of the personal injury claims. Yet, the majority in Walker does not address the dilemma which would occur if the insured did not commence a personal injury action prior to the expiration of a three-year statute of limitations.
Since the Appellate Division Decision in Walker was 3-2, the appellant-insurer is entitled to appeal as a matter of right to the New York State Court of Appeals. We, on behalf of the appellant-insurer, will pursue an appeal of the Walker decision to the New York State Court of Appeals. Of course we will advise of the outcome of the appeal to the Court of Appeals.
II. A CAUSE OF ACTION ASSERTED IN "INDEMNIFICATION"
WILL NOT CIRCUMVENT THE THREE-YEAR STATUTE OF
LIMITATIONS APPLIED IN WALKER V. STEIN.
In Liberty Mutual Insurance Company v. Clark, 296 A.D.2d 442, 745 N.Y.S.2d 64 (2nd Dept. 2001), a Liberty Mutual insured was injured as a result of a motor vehicle accident. Liberty's insured never sued the tort-feasor. Instead, she sought arbitration against Liberty seeking uninsured motorist benefits. Although Liberty was aware of the identity of the tort-feasor and the tort-feasor's insurance carrier, Liberty never petitioned to stay arbitration. As against Liberty, the Liberty insured received an arbitration award in the amount of $35,000.00. The arbitration award came six years after the accident.
In an attempt to recoup the award Liberty's insured received, Liberty brought action against the tort-feasor. Liberty styled its cause of action as one of indemnity rather than subrogation to avoid the applicable three-year statute of limitations applied in negligence actions. (See above comment.) The lower court granted the tort-feasor's motion to dismiss. The Appellate Division affirmed holding that no express or implied duty to indemnify extended from the tort-feasor to Liberty and that indemnification was not an appropriate cause of action.
In short, the Liberty case confirms that an "indemnification" cause of action which is founded in contract and which is subject to a six-year statute of limitations cannot be utilized to circumvent the three-year tort statute of limitations applicable to negligence actions. The potential dilemma raised in the Walker decision discussed above remains unresolved.
Jennifer A. Hemming
