New York State Court of Claims

New York State Court of Claims

NORTH COUNTRY INSURANCE COMPANY v. THE STATE OF NEW YORK, #2006-028-544, Claim No. 108466, Motion Nos. M-68816, CM-69007


A subrogee’s cause of action against a tortfeasor, who allegedly caused the injury for which the subrogee has made payment, is subject to the same Statute of Limitations (or time limitation found in section 10 of the Court of Claims Act) as would apply to a claim brought directly by the injured party.

Case Information

Claimant short name:
Footnote (claimant name) :

Footnote (defendant name) :

Third-party claimant(s):

Third-party defendant(s):

Claim number(s):
Motion number(s):
M-68816, CM-69007
Cross-motion number(s):

Claimant’s attorney:
LAW OFFICE OF ALAN R. LEWISBY: Patricia S. Perez, Esq.
Defendant’s attorney:
BY: Mary A. Walsh, Esq.Assistant Attorney General
Third-party defendant’s attorney:

Signature date:
April 12, 2006

Official citation:

Appellate results:

See also (multicaptioned case)


The following papers were read on Claimant’s motion for an order striking Defendant’s first affirmative defense and on Defendant’s cross-motion for an order of dismissal:

1. Notice of Motion and Supporting Affidavit of Patricia S. Perez, Esq, with annexed Memorandum of Law

2. Notice of Cross-Motion and Supporting Affirmation of Mary A. Walsh, AAG, with annexed Affidavits of Linsley Piper and Mary Cuzo, Exhibits, and Memorandum of Law

3. Reply Affidavit of Patricia S. Perez, Esq. with exhibit and annexed Memorandum of Law

4. Letter Reply of Mary A. Walsh, AAG

Filed papers: Claim; Answer

This claim was commenced by Claimant North Country Insurance Company as subrogee of Elizabeth Sinkler, a homeowner who served as a caretaker for patients of the New York State Department of Mental Hygiene (DMH), housing them in her home. On December 23, 2001, one of the patients put a partially-lit cigarette in a wastebasket, and the resulting fire totally destroyed Sinkler’s home and its contents. Claimant insurance company, which insured the home, paid to Sinkler a total of $191,000 in connection with this loss ($110,000 for property damage, $65,000 for the contents of the home, $6, 000 for living expenses of the insured immediately after the fire, and $10,000 for debris removal). Payments were made by Claimant in installments, with the last payment being issued on June 4, 2003. The instant claim was served and filed on October 27, 2003 and October 30, 2003, respectively.

The claim alleges that there was an agreement between Sinkler and DMH “where the State agrees to be responsible for any damages caused by its patients” (Claim, ¶ 6). Claimant insurer has the right to sue the alleged tortfeasor in this instance because the insurance contract between it and Sinkler provided that where payment to the insured has been made “Claimant would be subrogated to all of the rights that [Sinkler] would otherwise have to pursue the party at fault for the loss” (id.). It is also alleged that “Claimant’s subrogation claim arose when subrogee’s obligation to the insured was satisfied” (i.e., on June 4, 2003).

In its answer, Defendant alleged as its first affirmative defense the following:
The claim alleges an erroneous accrual date of June 4, 2003; the claim, however, since claimant is a subrogee of its insured (Ms Sickler)(sic), the actual date of accrual is December 23, 2001. Pursuant to Court of Claims Act § 10, the claim had to be filed and served within 90 days of the accrual date. To be timely, the claim had to have been served and filed by no later than March 23, 2002. The claim was filed on October 30, 2003, and was received by the Office of the Attorney General on October 27, 2003, and, as such, was not filed and served within 90 days of the accrual date. Claimant’s failure to file and serve his (sic)claim within the time limit set forth in the Court of Claims Act deprives this Court of jurisdiction over the claim.
By this motion, Claimant has moved to strike that defense, and Defendant has cross-moved for an order dismissing the claim on the ground that it is untimely.
Applicable Law
“Rooted in equity, the purpose of the subrogation doctrine is to afford a person who pays a debt that is owed primarily by someone else every opportunity to be reimbursed in full” (Chemical Bank v Meltzer, 93 NY2d 296, 304 [1999]). Frequently, of course, the subrogee is an insurance company that pays money to its insurer for loss or injury that was caused by a third party tortfeasor. When this occurs, subrogation entitles the insurer to “stand in the shoes” of its insured and to seek indemnification from the tortfeasor who caused the loss (North Star Reins. Corp. v Continental Ins. Co., 82 NY2d 281, 294 [1993]; see also Kaf-Kaf, Inc. v Rodless Decorations, Inc., 90 NY2d 654 [1997]; Winkelmann v Excelsior Ins. Co., 85 NY2d 577 [1995]). “By subrogation a person acquires all the rights, securities, and remedies which were available to the person for whom he or she is substituted” (23 NY Jur 2d, Contribution, Indemnity & Subrogation, §128, p 264)

The right of subrogation arises when the subrogee (here, the Claimant insurer) pays the subrogor (here, the insured Sinkler) for the injury or loss caused by the third party tortfeasor (here, allegedly, the State) (Winkelmann v Excelsior Ins. Co., supra at 582; North Star Reins. Corp. v Continental Ins. Co., supra at 294). If Sinkler had previously commenced her own claim against Defendant, her receipt of full payment from the insurer would not result in a transfer of the cause of action against the tortfeasor. The cause of action still belongs to the insured, but because the insurer has paid part or all of the claim, it is entitled to stand in the place of its insured (Liberty Mut. Fire Ins. Co. v Perricone, 54 AD2d 975 [2d Dept 1976]).

Frequently, as happened here, the injured party does not sue the tortfeasor but, rather, seeks only to receive their insurance benefits. Because the insurer, as subrogee, may “stand in the shoes” of its insured, it is then entitled to pursue the insured’s cause of action against the tortfeasor. In doing so, however, the insurer/subrogee is subject to the same requirements and the same defenses that would have been applicable to its insured/subrogor. This includes complying with the Statute of Limitations or other time constraints for commencing such an action. “It is well settled that since the nature of subrogation is derivative of the underlying tort action, the cause of action [against the tortfeasor] accrues from the date of the accident, not the date of payment” (Liberty Mut. Ins. Co. v Clark, 296 AD2d 442 [2d Dept 2002], citing to Matter of Nationwide Mut. Ins. Co. v Motor Vehicle Acc. Indem. Corp., 190 AD2d 798, 800 [2d Dept 1993].)

This ruling was recently reiterated by the Court of Appeals in Allstate Ins. Co. v Stein (1 NY3d 416 [2004]). There, an accident against a tortfeasor was commenced by an insurance company as subrogee of an accident victim to whom the insurer had paid benefits due under the policy of insurance. As here, the insurer in Allstate Ins. Co. v Stein argued that its cause of action against the alleged tortfeasor commenced when it fully paid the injured party, while the tortfeasor asserted that any claim against it accrued on the date of injury. The accident had occurred in 1995, but it was not until 2001 that the insurer’s payments were completed and an action was commenced against the tortfeasor.

Observing that the situation was one of “traditional equitable subrogation” (id. at 422), the Court of Appeals held that the three-year Statute of Limitations that would have been applicable to any action brought by the injured party (CPLR 214) also applied to any claim brought by her subrogee, the insurance company. In response to the insurer’s protest that its claim “may be time-barred before the right of subrogation exists, so that the subrogee would never have an opportunity to bring suit on the claim,” the high court stated that that is a risk inherent in subrogation: “the subrogee acquires only the rights that the subrogor had, and so any subrogee may find its claim defeated by a defense based on the subrogor's action or inaction” (id. at 423). The Court further defined the relationship between the parties by repeating this statement from the Appellate Division decision:
[Holding that the same Statute of Limitations applied to both actions] is consistent with the principles that a subrogation claim is derivative of the underlying claim and that the subrogee possesses only such rights as the subrogor possessed, with no enlargement or diminution. It is likewise consistent with the principle that a defendant in a subrogation action has against the subrogee all defenses that he would have against the subrogor, including the same statute of limitations defense that could have been asserted against the subrogor"
(id. at 420, 421, quoting Walker v Stein, 305 AD2d 972, 974 [4th Dept 2003] [citations omitted]).

The two decisions cited by Claimant for the proposition that a cause of action based on the right of subrogation does not accrue until payment is made do not, in fact, support that conclusion. In Matter of Aetna Casualty & Surety Co. (Opalecky) v State of New York (92 Misc 2d 249 [Ct Cl 1977]), the holding – that a claim received by the Court on the 93rd day after a cause of action accrued – was based on the assumption that a claim brought by a subrogee insurer accrued on the date of injury. In that decision, the judge merely queried, in dicta, whether “a later accrual date may be warranted” because the claimant’s right to subrogation did not arise until payment was fully made, and the only decision cited in support of that tentative view was Bay Ridge Air Rights Inc. v State of New York (57 AD2d 237 [3d Dept 1977], affd 44 NY2d 49 [1978]), which dealt with causes of action for indemnification or contribution.[1] St. Paul Fire and Marine Insurance Co. v State of New York (99 Misc 2d 140 [Ct Cl 1979]) dealt with a claim to enforce a statutory trust, and its references to Matter of Aetna Casualty & Surety Co. (supra) and Bay Ridge Air Rights Inc. (supra) make it clear that the analogy is made to the causes of action for indemnification and contribution (99 Misc 2d, at 147).

While the insurer’s right to commence a subrogation claim accrues upon payment to the insured (in this case, on June 4, 2003), the time period in which suit must be commenced against the tortfeasor begins to run on the date of injury (in this case, December 23, 2001) and is governed by the Statute of Limitations (or in this Court, the time limitation) applicable to the type of claim. Thus, if the claim against the State in this case is viewed as being based on an unintentional tort, it would have to be filed and served (or a notice of intention served) within 90 days, or by March 23, 2002 (Court of Claims Act §10[3]). If the claim is viewed as being based on contract, it would have to be filed and served (or a notice of intention served) within six months after accural, or by June 23, 2002. As noted above, this claim was filed and served in October 2003.

Claimant’s motion is DENIED; Defendant’s cross-motion is GRANTED and Claim No. 108466 is dismissed.

April 12, 2006
Albany, New York

Judge of the Court of Claims

[1]. The differences between indemnification (where one party has discharged a duty “owed by him but which as between himself and another should have been discharged by the other”) and subrogation (where one party has fulfilled its duty to pay compensation for a loss and is then substituted in place of the injured party to assert that party’s rights against those who caused the loss) are discussed at length in Seven Sixty Travel, Inc. v American Motorists Ins. Co. (98 Misc 2d 509, affd on opn below 73 AD2d 761 [3d Dept 1979]) and cases citing thereto. Seven Sixty Travel, Inc. also holds that an insurer’s claim by subrogation is subject to the same Statute of Limitations as would be applicable to an action commenced by the insured party.