New York State Court of Claims

New York State Court of Claims

BAYER CORPORATION v. THE STATE OF NEW YORK, #2006-036-569, Claim No. 112414, Motion No. M-72150


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):
Cross-motion number(s):

Claimant’s attorney:
Heidell, Pittoni, Murphy & Bach LLPBy: Scott M. Zimmerman, Esq.
Defendant’s attorney:
By: Anne C. Leahey, Esq. Assistant Attorney General
Third-party defendant’s attorney:

Signature date:
December 1, 2006
New York

Official citation:

Appellate results:

See also (multicaptioned case)


Claimant Bayer Corporation seeks to recover approximately $400,000 from the State Insurance Fund pursuant to a claim filed June 8, 2006 alleging breach of contract, unjust enrichment, and bad faith/breach of duty. Defendant moves to dismiss the claim as barred by the statute of limitations and for failing to state a cause of action.[1] The damages represent premiums paid for a workers’ compensation insurance policy defendant issued on April l, 200l to Ruco Polymer Corporation to cover Ruco’s Hicksville, Long Island facility. After the policy was issued, claimant acquired all of Ruco’s shares, Ruco merged into Bayer on October l, 200l and, according to claimant, “ceased to exist.” Claimant paid premiums on the policy from the time it issued until defendant canceled the policy on May 6, 2003.[2]

Claims were filed against the policy arising from two incidents at the Hicksville facility in 2002. Defendant assumed coverage under the policy issued to Ruco and paid the employee benefits until May ll, 2004 and June, 2004. It was then, however, that defendant informed the Workers’ Compensation Board it disputed its obligation to provide coverage under the policy because Ruco had no employees to insure after it merged with Bayer on October l, 200l. Defendant maintained that claimant’s third-party insurer was the appropriate carrier to assume coverage after the merger.

The dispute continued before the Workers’ Compensation Board until defendant and claimant’s third-party insurer settled the matter. By letter agreement dated December l3, 2005, the parties informed the Board they had agreed to a finding of dual coverage with each insurer assuming fifty percent of the liability, and they requested formal findings to reflect the agreement. The Board issued decisions in both proceedings on January 25, 2006, finding equal liability.

Section 10 (4) of the Court of Claims Act requires a claim for breach of contract to be filed within six months after the claim accrues unless the attorney general is served with written notice of intention to file a claim, in which case, the claim must be filed and served within two years. A claim accrues in the Court of Claims when damages are “reasonably ascertainable.” (Inter-Power of New York, Inc. v State of New York, 230 AD2d 405, 408 [3d Dept l997].)

Claimant argues its claim accrued when the Board issued its decisions on January 25, 2006 and, accordingly, that the June 8, 2006 filing is timely. Defendant argues the claim accrued on October l, 200l, when Ruco “ceased to exist” and its employees became covered under Bayer’s third-party insurance, or on May 6, 2003, when defendant canceled the policy.

Defendant relies on Hudson Envelope Corp. v Klausner (249 AD2d 31 [1st Dept l998]), and similar authority for the proposition that a claim for the return of premiums accrues at the time the premiums are paid. (e.g. St. George Hotel Associates v Shurkin, 12 AD3d 359 [2nd Dept 2004].) These cases concern claims where brokers and/or insurers are alleged to have breached their duty by procuring or issuing insurance which differed from the coverage requested or duplicated existing coverage. Defendant’s argument that these cases apply is predicated on its characterization of the claim before the court as one seeking the return of premiums paid on a “problematic policy.” That is not what this claim is about, however. The claim here alleges defendant refused to pay benefits, that is, defendant “failed to provide full workers compensation insurance coverage . . . despite the payment of premiums.”[3]

Defendant concedes that a claim for an insurer’s refusal to pay benefits accrues when liability is denied (see Niagara Frontier Transportation Authority v ENCON Underwriting Agency, l85 AD2d 642 [4th Dept l992]). But defendant argues that even if this claim is treated in this way, it must be viewed as having accrued when defendant disputed its liability before the Workers’ Compensation Board in May and June of 2004. The court is not persuaded. Damages here did not become “reasonably ascertainable” (Inter-Power of New York, Inc. v State of New York, supra) when defendant denied coverage in 2004 because defendant subsequently rescinded its denial[4] and ultimately agreed to a finding of fifty percent liability. The extent of claimant’s damages was determined when defendant fixed its liability under its December l3, 2005 agreement with claimant’s third-party insurer. Since the June 8, 2006 claim was filed within six months of December l3, 2005, the contract claim is timely and the motion to dismiss is denied.[5]
Defendant also seeks dismissal of the claim for unjust enrichment where claimant alleges defendant was unjustly enriched by providing “no or less than full” coverage. Unjust enrichment implies a binding obligation at law in the absence of an express agreement between the parties (see Goldman v Metropolitan Life Insurance Co., 5 NY3d 561 [2005]). Defendant correctly notes a claim for unjust enrichment is subject to dismissal where the terms of an express agreement govern the parties’ dispute. (see id.) The dispute here is governed by an express agreement of insurance. The motion to dismiss the second cause of action is granted.[6]

December 1, 2006
New York, New York

Judge of the Court of Claims

[1].The Court read and considered the following papers on the motion: Notice of Motion, Affirmation and Exhibits, and Affirmation in Opposition and Exhibits.
[2].The claim apparently includes premiums paid prior to the October l, 200l merger.

[3].On a motion to dismiss, the court must read the complaint broadly and accept the facts as alleged to determine whether they fit within an accepted legal theory.  (e.g. Leon v Martinez, 84 NY2d 83 [1994].) The claim for unjust enrichment similarly alleges that defendant provided “no or less than full” insurance.
[4].The Board directed defendant and claimant’s third-party insurer to brief the coverage issues by decision filed on September 27, 2005.
[5].Because the claim is timely, the court need not consider claimant’s contention that the claim accrued with the Board’s issuance of formal findings on January 25, 2006.

[6].Old Salem Development Group v Town of Fishkill (30l AD2d 639 [2nd Dept 2003]), upon which claimant relies, is inapposite. In Old Salem, the court permitted a claim for unjust enrichment to proceed with a claim for breach of contract because defendant was not a party to the contracts it allegedly breached and a threshold issue was whether defendant assumed any obligations under the contracts.