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Chase Scientific Research3/22/2001
Under CPLR 214(6), a three-year statute of limitations is applicable in non-medical malpractice actions, regardless of whether the underlying theory is based in contract or tort. The appeals now before us raise the novel issue of what "malpractice" means in this statute. Put another way, given that malpractice is professional misfeasance toward one's client, who is a "professional" within the section? The question arises in the context of insurance agents and brokers.
I.
In the first case, Chase Scientific Research, Inc. v The NIA Group, Inc., plaintiff Chase, a manufacturer of precision rotors, in May 1995 engaged defendants -- insurance brokers -- to procure property insurance for its business; on May 31, 1995, defendants procured such a policy for plaintiff. Some months later, on January 19, 1996, a severe storm damaged plaintiff's warehouse and inventory. In response to plaintiff's insurance claim, the carriers acknowledged the incident as a "covered occurrence" under the policy but offered only $50,000 despite plaintiff's demand for the policy limit of $550,000 on claimed losses exceeding $1 million. Plaintiff later settled a case against the carriers for $275,000.
On January 7, 1999, plaintiff filed suit against defendants, asserting one cause of action for negligence and one for breach of contract based on defendants' failure to secure coverage adequate to indemnify plaintiff against losses to its highly specialized inventory. Defendants moved to dismiss the entire action as time-barred under CPLR 214(6), contending that the claim was one for malpractice, that it accrued on the policy date, and that more than three years had elapsed before this action was commenced. Plaintiff countered that the action was governed by the six-year statute of limitations applicable to contract actions (CPLR 213 ), and that, even applying the three-year statute of limitations (CPLR 214 ), the claim was timely because it accrued on the date of loss. Supreme Court agreed with defendants and dismissed the complaint. The Appellate Division affirmed.
In the second case, Gugliotta v Apollo Roland Brokerage Inc., et al., defendant Apollo through its insurance agent (defendant Thomas Loveter) in December 1994 procured insurance for plaintiff's commercial building from defendant New York Merchant Bankers Insurance Company. In February 1995, Herman Fermin slipped and fell in the building, and in December 1995 commenced an action against plaintiff for personal injuries. Only after the accident did plaintiff discover that he lacked general liability coverage. With the assistance of Loveter, plaintiff engaged attorneys Charles L. Emma and Harry Cardillo to defend the Fermin action. After counsel failed to appear, a default judgment was entered for $767,900. Claiming both negligence and breach of contract, on March 6, 1998 plaintiff commenced the present action for failure to procure adequate insurance coverage, which defendants Apollo and Loveter sought to dismiss as time-barred under CPLR 214(6) As in Chase, Supreme Court determined that CPLR 214(6) was the applicable statute of limitations, rendering plaintiff's claims untimely, and the Appellate Division affirmed. We now reverse in Chase, reinstating both causes of action, and modify in Gugliotta, reinstating the breach of contract claim.
II.
While a malpractice action may be grounded in negligence -- subject generally to a three-year statute of limitations -- it can theoretically also rest on breach of contract to obtain a particular bargained-for result (see, Kenneth R. Kirby, The Six-Year Legal Malpractice Statute of Limitations: Judicial Usurpation of the Legislative Prerogative?, 66 NY State Bar J
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