Statute of Limitations for Claims Against Contractors

In New York, most subrogation actions must be filed within three (3) years from the date of loss.  However, there are some important exceptions.  The most important one is work that was done by contractors or architects.  In such cases, the lawsuit must be filed no later than three years from the date the work was completed.   The lead case is a 1995 decision from NY’s high court.  [1]  A construction company built a new library for the City of Newburgh.  Construction was completed in 1975.   In October 1990, a water pipe burst in the library, causing $1.5 million in damage.  Plaintiff alleged that a steel plug caused a gradual chemical corrosion on copper piping.  The high court affirmed the dismissal of this lawsuit, finding that the clock started to run in 1975 – even though the pipe did not burst until fifteen years later! 

As a general rule, construction on a house is considered “completed” when the certificate of occupancy is issued.  However, this rule may not always apply, such as where they is a delay in the issue of the CO due solely to the homeowner.

In another lawsuit, Commerce & Industry brought a subrogation action arising from the collapse of the roof of a building leased by Caldor in Mahopac, NY. [2]  The store was constructed in 1978 and 1979.  The roof collapsed in January 1996.  Commerce alleged both that the steel girders were defective and that the contractors were negligent in the manner in which the girders were installed.  The Court ruled that product liability claims (i.e., claims that the girders were inherently defective) were timely and could continue.  However, claims that the contractors negligently performed their work were not timely, since the clock on those claims began to run when the work was completed in 1979.  The court noted that many states recognize a distinction in law between the furnishing of services (i.e., work by a contractor) as opposed to the furnishing of a product.  Product liability claims generally run three years from the date of loss.  In contrast, claims of contractor negligence run from the date work was completed – which means your subrogation claim may already be untimely as of the day the loss occurs!

Bottom Line:  The statute of limitations applicable to your case may be much shorter than three years from date of loss.  If any questions, consult your attorney and – when in doubt put the matter into suit as soon as possible or obtain a “tolling agreement” from the adverse carrier as soon as possible.

[1]  City School Dist of Newburgh v. Stubbins, 85 NY2d 535 (1995).
[2] Commerce & Industry Insurance Co. v. Vulcraft el al., 1998 WL 823055 (SDNY 1998)

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