STATUTE OF LIMITATIONS
- C.P.L.R. § 214(6) - INSURANCE BROKERS - INSURANCE AGENTS - PROFESSIONAL
MALPRACTICE - MEDICAL MALPRACTICE - TORT - CONTRACT
The three-year statute of
limitations for non-medical malpractice claims set forth in C.P.L.R. §
214(6) does not apply in actions against insurance agents and brokers because
they do not qualify as professionals under the statute's implied requirement.
SUMMARY
The Court examined two cases in this appeal. In Chase, Plaintiff contracted with Defendants, insurance brokers, for property insurance on May 31, 1995. On January 19, 1996, a heavy storm damaged Plaintiff's warehouse and inventory. Plaintiff initially claimed the full policy amount but eventually settled with the policy carriers for only half the policy's value. Plaintiff sued Defendants on January 7, 1999, claiming negligence and breach of contract for failure to obtain adequate insurance. In dismissing the case the trial court relied on C.P.L.R. § 214(6) in holding that the three-year statute of limitations for non-medical malpractice claims had lapsed. The Appellate Division affirmed.
In Gugliotta, Plaintiff secured insurance for commercial real estate from Defendant, an insurance broker, in December 1994. Soon after, an individual slipped on the insured property and succeeded in a personal injury suit against Plaintiff. Plaintiff then discovered that despite contracting for general liability insurance, it was not included in his policy. On March 6, 1998, Plaintiff brought a claim against Defendant for negligence and breach of contract based on Defendant's failure to obtain the insurance specified in the contract. As in Chase, the trial court here dismissed the case as time-barred under C.P.L.R. § 214(6), finding that the three-year statute of limitations applied to suits against insurance brokers. The Appellate Division affirmed.
On appeal to the Court of Appeals, Plaintiffs both asserted that the limitations period of § 214(6) was not applicable to their claims. Plaintiffs argued that the word "malpractice," as it appears in the statute, refers to professional malfeasance, and that since insurance brokers and agents are not professionals, § 214(6)'s three-year statute of limitations should not bar their suits. Instead, Plaintiffs argued, their suits should be subject to the six-year statute of limitations for general breach of contract claims. Although the word "professional" does not appear in § 214(6), the Court granted leave to define the term as a necessary step in resolving the issue of what malpractice means within the statute.
ISSUE & DISPOSITION
Issue(s)
Disposition
No. Insurance agents and brokers are not professionals for purposes of C.P.L.R. § 214(6), and therefore the three-year non-medical malpractice statute of limitations does not apply.
AUTHORITIES CITED
- Brothers v. Florence, 95 N.Y.2d 290 (N.Y. 2000).
- Karasek v. LaJoie, 92 N.Y.2d 171 (N.Y. 1998).
- Murphy v. Kuhn, 90 N.Y.2d 266 (N.Y. 1997).
- Santulli v. Englert, Reilly & McHugh, P.C., 78 N.Y.2d 700 (N.Y. 1992).
- National Life Ins. Co. v. Frank B. Hall & Co., 67 N.Y.2d 1021 (N.Y. 1986).
- Bleiler v. Bodnar, 65 N.Y.2d 65 (N.Y. 1985).
- Gilbert Props., Inc. v. Millstein, 33 N.Y.2d 857 (N.Y. 1973).
- Flanagan v. Mount Eden Gen. Hosp., 24 N.Y.2d 427 (N.Y. 1969).
- Tower v. State Tax Comm'n, 282 N.Y. 407 (N.Y. 1940).
- Glens Falls Ins. Co. v. Reynolds, 3 A.D.2d 686 (N.Y. App. Div. 1957).
- Port Auth. of New York & New Jersey v. Evergreen Int'l Aviation, Inc., 179 Misc.2d 674 (N.Y. Sup. Ct. 1999).
- Bus. Corp. Law § 1501.
- C.P.L.R. § 213(2).
- C.P.L.R. § 214-a.
- C.P.L.R. § 214(4).
- C.P.L.R. § 214(6).
- Educ. Law § 7206(2).
- Educ. Law § 7304(2).
- Educ. Law § 7404(2).
- Ins. Law § 2103.
- Ins. Law § 2104.
- Kenneth R. Kirby, The Six-Year Legal Malpractice Statute of Limitations: Judicial Usurpation of the Legislative Prerogative?, 66 N.Y. St. B.J. 14 (Dec. 1994).
- Richard B. Lillich, The Malpractice Statute of Limitations in New York and Other Jurisdictions, 47 Cornell L. Q. 339 (1962).
- Michael J. Polelle, Who's on First, and What's a Professional?, 33 U.S.F. L. Rev. 205 (1999).
RELATED SOURCES
- R.I. Gen. Laws § 9-1-14.1(2) (2000).
- Garden v. Frier, 602 So.2d 1273 (Fla. 1992).
- Plaza Bottle Shop, Inc. v. Al Torstrick Ins. Agency, Inc., 712 S.W.2d 349 (Ky. Ct. App. 1986).
- Light v. Roney, No. CA 951414, 1995 WL 1280766 (Mass. Supp. 1995).
- Tylle v. Zoucha, 412 N.W.2d 438 (Neb. 1987).
- Kuntz v. Muehler, 603 N.W.2d 43 (N.D. 1999).
COMMENTARY
State of the Law Before Chase Scientific Research, Inc.
Prior to the 1962 enactment of C.P.L.R. § 214(6), different statutes of limitations applied to malpractice actions depending on whether they were based in tort or contract. In 1962, the New York Legislature adopted C.P.L.R. § 214(6), creating a standard six-year statute of limitations for malpractice actions. In 1975 the Legislature shortened the statute of limitations for medical malpractice to 2 1/2 years (in response to the rising cost of medical malpractice insurance), but left § 214(6) intact to apply to other malpractice actions. Consequently, courts faced with non-medical malpractice claims applied the six-year statute of limitations period, but they did not address the question of which "professionals" were capable of the malpractice referred to in § 214(6). See, e.g., Sears, Roebuck & Co. v. Enco Assocs., 43 N.Y.2d 389 (N.Y. 1977).
In 1996, the Legislature amended C.P.L.R.
§ 214(6), reducing the statute of limitations for non-medical malpractice
claims to a three-year period. This amendment made the issue of "who was
capable of malpractice within the contemplation of § 214(6)" an important
one, because the professionals in that group would now enjoy an abbreviated
limitation period for suits filed against them. The 1996 amendment did not,
however, clarify who was in § 214(6)'s undefined group of "professionals."
In a 2000 case involving alleged malpractice by lawyers and real estate appraisers,
the Court of Appeals concluded that the 1996 amendment to § 214(6) applied
retroactively to bar certain claims from accruing prior to the effective date
of the statute. However, the Court failed to directly address whether lawyers
and real estate appraisers were "professionals" under § 214(6).
See Brothers
v. Florence, 95
N.Y.2d 290, 298 (N.Y. 2000).
Effect of Chase Scientific Research, Inc. on Current Law
In Chase, the Court of Appeals, set forth for the first time a set of specific criteria for determining which "professionals" could commit the malpractice referred to in C.P.L.R. § 214(6), and thus claim the protection of the statute's three-year limitation period. According to the Court, the limitation period of § 214(6) can be asserted by learned professions that share common qualities, including: 1) extensive formal learning and training; 2) licensure and regulation; 3) a code of conduct imposing standards beyond those imposed by the marketplace; and 4) a system of discipline to address violations of those standards. In addition, the Court held that inherent to professional relationships are the elements of trust and confidence and the duty to counsel and advise clients. By listing the qualities found in such groups, the Court sought to create a bright-line rule that would lead to fair and uniform judicial application of § 214(6). Additionally, the Court enumerated certain groups for whom § 214(6)'s shortened statute of limitations clearly applies, including architects, engineers, lawyers, and accountants.
In clarifying the scope of § 214(6), the Court sought to prevent the proliferation
of semi-professionals improperly seeking the protection of § 214(6)'s abbreviated
limitations period. In addition, the Court sought a clear standard that would
guide parties outside of the courtroom. For example, in the wake of Chase,
insurance brokers will presumably be able to more accurately assess liability
exposure and to set their rates accordingly.
Unanswered Questions
Does the Court definition of "professional" create the intended bright-line rule? How much weight is to be given to each of the listed factors? Is "learned study" the defining factor? What role should licensure play? What role should the existence of a regulatory code of conduct and a system of discipline play?
If the Court's definition of "professional" does not create a standard in the courts, but instead creates an area of litigation, will members of fields not specifically mentioned have less guidance in their out-of-court activities?
Does the criteria further the Legislator's intent? Are there groups of semiprofessionals excluded from the list that the Legislature intended to include?
Survey of the Law in Other Jurisdictions
Many states have professional malpractice statutes of limitations similar to C.P.L.R. § 214(6). Overwhelmingly, state legislatures have been reluctant to define "professional" when writing malpractice legislation. But see R.I. Gen. Laws § 9-1-14.1 (2) (2000). Consequently, state courts have been left to define the category, relying upon their own criteria to determine who is a "professional" for the purposes of malpractice statutes of limitations.
Most courts rely upon a single requirement to determine whether an occupation is a profession. Florida uses a "bright-line" test with an education requirement. See Garden v. Frier, 602 So. 2d 1273, 1275 (Fla. 1992) (requiring all within an occupation to have a four-year specialized college degree to qualify as a professional). Some courts have turned to the dictionary for a definition, which often stresses the educational training of professionals. See Tylle v. Zoucha, 412 N.W.2d 438, 440 (Neb. 1987); see also Kuntz v. Muehler, 603 N.W.2d 43, 47 (N.D. 1999). Other states have focused upon the nature of the professional-client relationship. See Light v. Roney, No. CA 951414, 1995 WL 1280766, at *3 (Mass. Supp. 1995).
A minority of courts have base their definitions upon the historical evolution of professions, which dates back to medieval guilds. Such definitions refer to multiple factors including extensive education or training requirements, state license requirements, a professional code of conduct, and a mechanism to sanction those who violate that code. Kentucky courts give credence to this definition, although they have not expressly applied this test. See Plaza Bottle Shop v. Al Torstrick Ins. Agency, 712 S.W.2d 349, 351 (Ky. Ct. App. 1986) (holding that insurance agents are not professionals because they lack professional education requirements).
For an in-depth analysis of how courts define professions, see Michael J. Polelle, Who's on First, and What's a Professional?, 33 U.S.F. L. REV. 205 (1999).
Prepared by:
Terence McGuire '03
Delcy Reyna '03
Jennifer Schultz '03
Jeremy Winer '03
Charline Wright '03