Divided New York High Court Finds 6-Year Statute of Limitations Against Contractors

In most New York subrogation cases, the statute of limitations runs three years from the date of loss (i.e., the date of the fire, water damage, automobile accident, etc.).  This “three years from date of loss” rule governs in product liability cases against the makers and distributors of defective products, for example.

New York courts have traditionally treated lawsuits against contractors and architects differently than product liability cases, for purposes of the statute of limitations. The law has been clear for years that the statute of limitations for suits against contractors/architects starts to run from the date the “work is substantially completed,” not from the date of loss.  In cases involving the construction of houses, several courts have held that the work is deemed “completed” when the municipality issues a Certificate of Occupancy, ostensibly certifying that the house is safe to be occupied.

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Court Reviews New York Products Liability Law

Where a defective product causes a loss, you traditionally had to prove one of three things in New York State:  (a) manufacturing defect (i.e., the particular unit that caused the loss was a “bad apple” that deviated from the rest of the units); (b) design defect (i.e., the whole batch of units contained a design flaw that made them all dangerous; (c) failure to warn (i.e., the product would have been safe to use had it been accompanied by better instructions for its use and/or clearer warnings about dangers accompanying use of the product). Generally speaking, a “manufacturing defect” is easier to prove since you are only claiming that the particular product that caused your loss was deficient and you need not show that all products were poorly designed.

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Court Denies Insureds’ Attempt to “Piggyback” Claims Onto Carrier’s Subrogation Action

Mr. and Mrs. Erlich purchased a water cooler from Greenway in April 2008 and installed it in the basement of their Brooklyn residence.  A few days later, the water cooler malfunctioned and caused a fire, which damaged their home and contents.  Their carrier, NHIC, paid $124,123.81, to or on behalf of the Erliches as the actual cash value (“ACV”) of their damages and the Erliches suffered a $1,000 deductible.   NHIC held back $11,167.20 in replacement cost, which was available if the Erliches timely rebuilt and/or replaced contents.

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