Opinion ID: 2141110
Heading Depth: 1
Heading Rank: 1

Heading: The Applicable Statute of Limitations and the Date of Its Commencement

Text: The no-fault scheme embodied in article 51 and the rights given MVAIC under article 52 of the Insurance Law to avail itself of the no-fault carrier responsibility-shifting features of sections 5105 and 5221 (b) (6), as implemented by the Insurance Department regulations ( see , 11 NYCRR 65.10, 65.15), statutorily set forth the basis of its right to recover against an insurer who wrongfully denies coverage or is found primarily obligated to pay first-party benefits to the injured party. Section 5105 provides that, [a]ny insurer liable for the payment of first-party benefits to or on behalf of a covered person    which another insurer would otherwise be obligated to pay pursuant to [sections 5103 (a) or 5221] of this chapter has the right to recover the amount paid from the insurer of any other covered person to the extent that such other covered person would have been liable    to pay damages in an action at law (Insurance Law § 5105 [a] [emphasis supplied]). ( See also , Insurance Law § 5105 [b]; § 5221 [b] [6] [directing compulsory arbitration where a dispute arises between insurers as to which of them is responsible for providing no-fault benefits]; § 5221 [b] [1] [stating that MVAIC shall also provide for the payment of first party benefits to a qualified person for basic economic loss arising out of the use or operation in this state of an uninsured motor vehicle]; § 5221 [b] [3] [specifically equating MVAIC to an insurer for purposes of article 51 of the Insurance Law].) MVAIC contends that, despite the statutory basis for its obligations and remedies under the no-fault system, the six-year contract action Statute of Limitations (CPLR 213 [2]) is applicable to this action because MVAIC has stepped in to fulfill Aetna's obligations under its contract of insurance covering the accident vehicle, i.e., payment of first-party benefits to the injured passengers in that vehicle. MVAIC also argues that CPLR 213 (2) governs because its rights against Aetna are grounded in quasi-contract indemnification. There are precedents for applying the six-year breach of contract Statute of Limitations under both rationales ( see , Hanover Ins. Co. v Fleisher , 96 AD2d 881; Aetna Cas. & Sur. Co. v Merchants Mut. Ins. Co. , 78 AD2d 176). Aetna contends that the applicable Statute of Limitations is set forth under either CPLR 214 (2) (three-year limitations period arising out of liabilities created or imposed by statute) or CPLR 214 (5) (three-year limitations period for actions to recover damages for a personal injury). In either case, Aetna maintains that MVAIC's right to recover its payments of no-fault benefits is in the nature of subrogation, and MVAIC may only assert the rights each injured party is entitled to assert against the primary insurer. Thus, since the covered parties' claims arose as a result of the injuries they sustained in the accident, Aetna's position is that MVAIC's cause of action accrued upon the date of the accident. Precedent also exists to support this reasoning ( see , Matter of Nationwide Mut. Ins. Co. v Motor Vehicle Acc. Indem. Corp. , 198 AD2d 358; Transamerica Ins. Co. v Lumbermen's Cas. Ins. Co. , 77 AD2d 5, lv denied 53 N.Y.2d 602). The issue of the applicable Statute of Limitations here is largely governed by the rationale of our decision in Aetna Life & Cas. Co. v Nelson (67 N.Y.2d 169). Aetna Life & Cas. Co. involved an insurer's assertion of the right to recover payment of no-fault benefits as a lien upon the proceeds of its insured's recovery in a personal injury action against the third-party tortfeasor. Such a lien was one of the statutory recoupment remedies provided in former Insurance Law § 673 (2). In Aetna Life & Cas. Co. , we contrasted: (1) claims which, although provided for in a statute, merely codify or implement an existing common-law liability, which are not governed by CPLR 214 (2) but by the Statute of Limitations applicable to their common-law sources; with (2) claims which, although akin to common-law causes, would not exist but for the statute (67 NY2d, at 174, supra ), in which case CPLR 214 (2) applies. We held in Aetna Life & Cas. Co. that the no-fault insurance carrier's statutory lien fell into the latter category, so that the three-year Statute of Limitations of CPLR 214 (2) applied (67 NY2d, at 173-175, supra ). Even though the no-fault insurer's means of recoupment in that case bore aspects of a restitution rationale, we reasoned that the No-Fault Law does not codify common-law principles; it creates new and independent statutory rights and obligations in order to provide a more efficient means for adjusting financial responsibilities arising out of automobile accidents ( id. , at 175). So too here. MVAIC's obligation to pay no-fault benefits to an injured party where the accident vehicle's insurer denies such coverage is purely statutory, established under the no-fault scheme. MVAIC itself is a statutory creation ( see , Insurance Law § 5203 [a]-[c]) and the rights conferred upon it under articles 51 and 52 of the Insurance Law to avail itself of the loss-transfer and responsibility-shifting provisions of the No-Fault Law arise only by statutory enactment or departmental regulations ( see , Insurance Law §§ 5105, 5221 [b] [6]; 11 NYCRR 65.10, 65.15). MVAIC's ability to recover benefit payments and its duty to pay the same rests on predicates independent of the fault or negligence of the injured party ( see , Aetna Life & Cas. Co. v Nelson , supra , at 175). Thus, MVAIC's obligation to pay the claimants' first-party benefits and its entitlement to reimbursement from Aetna were both created or imposed by statute, but for which they would not exist. Hence, the three-year Statute of Limitations (CPLR 214 [2]) applies. We also conclude that, when as here, MVAIC is entitled to recover payments of no-fault benefits from the primary insurer, the three-year limitations period in CPLR 214 (2) begins to run upon the initial payment to the claimants. Generally, the applicable Statute of Limitations is triggered once a cause of action accrues (CPLR 203 [a]; see also , 1 Weinstein-Korn-Miller, NY Civ Prac ¶ 203.01, at 2-83). A cause of action accrues, for the purpose of measuring the period of limitations, 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 ( Aetna Life & Cas. Co. v Nelson , supra , at 175). Moreover, an action to recover for a liability created or imposed by statute is required to be instituted according to the language of the statute generating the liability ( Safeco Ins. Co. v Jamaica Water Supply Co. , 83 AD2d 427, 432, affd 57 N.Y.2d 994). Contrary to the apparent determination of the arbitrator, explicitly adopted by the courts below, we conclude that MVAIC's right to recover from Aetna accrued not when MVAIC rendered the last of its payments to the claimants but, rather, when the first payment was made. By its terms, the No-Fault Law grants MVAIC a statutory right to recover the amount paid from the insurer of another covered person to the extent that such other covered person would have been liable to pay damages ( see , Insurance Law § 5105 [a]). Here, when MVAIC made its first payment to the claimants, all of the facts necessary to afford MVAIC a right to recovery were in existence ( see , Aetna Life & Cas. Co. v Nelson , supra ). Thus, when MVAIC undertook its statutory obligation to provide compensation and thereafter made the first payment of no-fault benefits to each of the claimants as a result of Aetna's wrongful disclaimer, its cause of action accrued at that point, and with it the period of limitations commenced ( see , Safeco Ins. Co. v Jamaica Water Supply Co. , 83 AD2d, at 432, supra ). Our determination that MVAIC's cause of action accrued when it made the first payment to the claimants is consistent with the legislative policy reflected in the numerous provisions of the No-Fault Law which provide for the prompt disposition of claims and the swift resolution of priority of payment issues ( see , Insurance Law § 5208 [a]; 11 NYCRR 65.12, 65.10 [d] [1] [authorizing insurer seeking reimbursement of first-party benefits from another insurer under sections 5105 or 5221 (b) to make such request as soon as reasonably practicable]; see also , 12A Couch, Insurance 2d § 45:673, at 300-301 [rev ed]; 70 NY Jur 2d, Insurance, § 1556). Therefore, since MVAIC made the first payment to each claimant on August 11, 1989, and did not make its demand for compulsory arbitration until October 20, 1992, the three-year Statute of Limitations had actually run as to that payment and as to all other payments made more than three years before the date of the demand.