Insurance Provisions Created Result Judges Call 'Unreasonable'
According to the state court, there is nothing inherently unfair about two years as a limitations period. Provisions in policies setting one-year or even six-month limitations periods have been upheld by courts, Smith noted.
"The problem with the limitation period in this case is not its duration, but its accrual date," he said.
Nothing compelled Peerless to insure Executive Plaza for the replacement costs of the building, Smith noted. But once the insurer did, it "may not insist on a 'limitation period' that renders the coverage valueless when the repairs are time-consuming" and the two-year time limit is missed.
"A 'limitation period' that expires before suit can be brought is not really a limitation period at all, but simply a nullification of the claim," he said.
Chief Judge Jonathan Lippman (See Profile) and Judges Victoria Graffeo (See Profile), Susan Phillips Read (See Profile), Eugene Pigott Jr. (See Profile), Jenny Rivera (See Profile) and Sheila Abdus-Salaam (See Profile) joined in the ruling.
David Jaroslawicz of Jaroslawicz & Jaros in Manhattan argued for Executive Plaza.
John Love of Robins, Kaplan, Miller & Ciresi in Boston represented Peerless.
In an amicus curiae brief, the New York Public Adjusters Association urged the court to reject Peerless' position.
The group, which advocates for policyholders, said that if the Peerless position was affirmed, "plaintiff and other policyholders across this state will have purchased purely illusory coverage resulting in no opportunity to obtain the benefit of the bargain that they paid for."
"By offering replacement cost coverage and then reneging, Peerless acts like a confidence man, patting you on the back with one hand and picking your pocket with the other," Mark Friedman of Wilkofsky, Friedman, Karel & Cummins wrote on behalf of the adjusters' group. "The insuring public of this State deserve more."
Also Thursday, the Court of Appeals decided in New York Hospital Medical Center of Queens v. Microtech Contracting Corp., 1, that an employer's protections against a suit filed by two of its injured workers are not affected by their status as Ecuadorian citizens who were illegally employed when they were hurt.
The two brothers sued their employer, Microtech, for the injuries they suffered when a metal chimney or flue broke off and struck them as they were working on a demolition job at the New York Hospital Medical Center in Flushing in March 2008.
The Court of Appeals agreed unanimously with lower courts that the suits must be dismissed. Under the 1996 changes to the Workers Compensation system, employers exposure to third-party liability was limited to situations where workers were killed or suffered "grave" injuries.
In this case, the court noted, the injuries suffered by brothers Gerardo and Luis Lema did not qualify as "grave" under the §11 of the Workers' Compensation Law and Microtech is entitled to "safe harbor" from a third-party suit filed by the hospital.