Nikchemny v. Allstate Insurance Company

Filing 12

MEMORANDUM & ORDER re 11 Motion to Dismiss. For the reasons discussed above. Defendant's motion to dismiss is GRANTED as the statute of limitations has run on Plaintiffs lone claim. Plaintiffs Complaint is DISMISSED WITH PREJUDICE. So Ordered by Judge Nicholas G. Garaufis on 10/14/2016. (fwd'd for jgm) (Lee, Tiffeny)

D/^

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
-X

TSILIANIKCHEMNY,
Plaintiff,

MEMORANDUM & ORDER

l:16-CV-00407(NGG)
(CLP)

-againstALLSTATE INSURANCE COMPANY,

Defendant.
X

NICHOLAS G. GARAUFIS,United States District Judge.

Plaintiff Tsilia Nikcheniny ("Plaintiff) brought this breach of contract action against

Defendant Allstate Insurance Company("Defendant") based on a denied insurance claim related

to damage her property, located at 105 Oceana Dr. East, Brooklyn, NY (the "Brighton Beach
property"), sustained on October 29,2012. (Compl.(Not. of Removal Ex. A
(Dkt. 11))

7, 11.) On June 6,2016, Defendant filed a motion to dismiss pursuant to

Rule 12(b)(6) ofthe Federal Rules of Civil Procedure ("Federal Rules")on the grounds that
Plaintiffs sole claim is time-barred. (Mem,ofLaw in Supp. of Def.'s Mot. to Dismiss the

Compl.("Def.'s Mot.to Dismiss")(Dkt. 11-1) at 5-8.) For the reasons set forth below.
Defendant's motion is GRANTED and Plaintiffs claim is DISMISSED WITH PREJUDICE.
1.

BACKGROUND

A.

Facts Alleged

Plaintiff alleges that her Brighton Beach property suffered a "covered loss ... on or about
October 29, 2012." (Compl.111.) The subject property was insured by Defendant under a
policy issued to David and Tsilia Nikchemny (the "Policy") which was in effect from
January 10, 2012,to January 10,2013. (Compl. H 8.) After Defendant"was given notice ofthe
1

loss, inspected and estimated the damage,[and] was shown post loss photographs," Defendant
denied Plaintiffs insurance claim on January 30, 2013. (Compl.

18-19.)

The Policy contained the following provision designed to limit the conditions under
which Plaintiff could bring legal claims against Defendant:
Suit Against Us

No suit or action may be brought against us unless there has been full compliance with all

policy terms. Any suit or action must be brought within two years after the inception of
loss or damage.

(Ex. A ("Policy")(Defs Mot. to Dismiss(Dkt. 11-3)) at 18, H 12.)
Plaintiff contends that this two year statute oflimitations does not apply, or, alternatively,

that the two year statute of limitations did not begin to run until the date Defendant denied
Plaintiff's insurance claim, January 30, 2013. (PL's Mem.in Opp'n to Def.'s Mot.to Dismiss

("PL's Mem.in Opp'n)(Dkt. 11-5) at 4-6.) Defendant argues that the two year statute of
limitations does apply and that the limitations period began to run on the date the Brighton Beach

property was damaged, October 29,2012.^ (Def.'s Mot.to Dismiss at 5-8.)
B.

Procedural History

On January 11,2016,Plaintiff commenced this action by filing a Complaint in the

Supreme Court ofthe State ofNew York, County of Kings, alleging a single breach of contract
cause of action arising from Defendant's denial of her insurance claim. (Compl.

17,27.)

Defendant removed the action to this court on January 26,2016,on diversity grounds pursuant
to 28 U.S.C. § 1332(a)(1). (Not. of Removal(Dkt. 1)H 3.)

On June 6,2016, Defendant moved to dismiss the Complaint under Rule 12(b)(6) ofthe

Federal Rules alleging that Plaintiffs claim is time-barred because Plaintifffailed to file the
claim within two years of the date that the Brighton Beach property was damaged. (Def.'s Mot.
'The parties do not dispute that the Brighton Beach property was damaged on this date.
2

to Dismiss at 6-8.) Plaintifffiled an opposition brief to Defendant's motion to dismiss on

July 15, 2016. (PL's Mem.in Opp'n.) Defendant filed a reply memorandum in support ofits

position on July 22, 2016. (Reply Mem.of Law in Supp. of Def.'s Mot. to Dismiss(Dkt 11-8).)
II.

DISCUSSION

A.

Legal Standard

"An argument that the statute oflimitations bars a claim is properly raised in a motion to
dismiss under Rule 12(b)(6)." Vasconcellos v. City of N.Y., No. 12-CV-8445(CM),2014
WL 4961441,at *2(S.D.N.Y. 2014)(citing Adams v. Crystal City Marriott Hotel. No. 02CV-10258(PKL),2004 WL 744489, at *2-3(S.D.N.Y. 2004); Harriman v. IRS,233

F. Supp. 2d451,455(E.D.N.Y. 2QQ2^L see also Bastien v. Samuels, No. 14-CV-1561 (JFB)

(AKT),2014 WL 5306016, at *3(E.D.N.Y. 2014)("Although the statute oflimitations is an
affirmative defense, it'may be raised by a pre-answer motion to dismiss under Rule 12(b)(6)
without resort to summary judgment procedure,ifthe defense appears on the face ofthe

complaint.'" (quoting Pani v. Empire Blue Cross Blue Shield, 152 F.3d 67,74(2d Cir. 1998))).
This principle is significant "because the [cjourt may only consider the complaint and documents
attached thereto or incorporated by reference when deciding a motion to dismiss pursuant to

Rule 12(b)(6)." Harriman.233 F. Supp. 2d at 455. In reviewing a complaint,the court must

accept as true all allegations offact and draw all reasonable inferences from these allegations in
favor ofthe plaintiff. ATSI Commc'ns.Inc. v. Shaar Fund. Ltd.,493 F.3d 87,98(2d Cir. 2007).
B.

Statute of Limitations Period

The parties dispute whether the contractual statute oflimitations contained in the Policy

applies to this action. (PL's Mem.in Opp'n at 6; Def.'s Mot.to Dismiss at 6-8.) Ifthe provision
does apply, the parties also disagree as to when the statute oflimitations began runrung. (PL's
Mem.in Opp'n at 3-6; Def.'s Mot. to Dismiss at 7-8.)
3

1.

Applicabilitv of Contractual Limitations Period

Defendant is correct that the contractual statute of limitations provision applies to this
action. The default rule in New York is that an action for breach of contract must be commenced

within six years ofthe breach. N.Y. C.P.L.R. § 203(2). However, parties may contract to a
shorter statute of limitations as long as the shortened term is "prescribed by written agreement."

N.Y. C.P.L.R. § 201; John J. Kassner & Co. v. Citv ofN.Y..46 N.Y.2d 544,551 (1979).

Although these prescriptions are unenforceable when they provide for limitations periods which
are unreasonably short. New York coui-ts have consistently enforced provisions prescribing two

year, and even one year, statutes of limitations in breach of contract actions. See Pfeffer v.
Harlevsville Group. Inc.. No. lO-CV-1619(ALC),2011 WL 6132693 at *7(E.D.N.Y.2011)

('TSlew York courts have upheld a two-year statute oflimitations period for insurance contracts.")
(citing Snvder v. Allstate Ins. Co., 70 A.D.3d 690,671 (N.Y. App. Div. 2010); Minichello v.
Northern Assur. Co. of Am.,304 A.D.2d 731,732(N.Y. App. Div. 2003); Varga v. Liberty Mut.

Ins. Co., 157 A.D.2d 1007(N.Y. App. Div. 199011: see also Gilbert Frank Corp. v. Federal Ins.

Co.. 520 N.E.2d 512(N.Y. 1988)(granting summaryjudgment based on twelve month statute of
limitations provision in insurance contract); Blitman Constr. Corp. v. Ins. Co. of N. Am..489
N.E.2d 236, 237(N.Y. 1985)("Plaintiff does not, as indeed it could not, suggest that the 12month limitation period of the policy is invalid.").

Here,the unambiguous terms ofthe Policy provide that,"[a]ny suit or action must be

brought within two years after the inception of loss or damage." (Policy at 18, 12.) Plaintiff
does not allege any defect that would render the prescribed statute oflimitations void or
unenforceable. Therefore, this provision is plainly enforceable and a two year statute of
limitations applies to tliis action. As detailed below,the parties dispute the date on which the
statute of limitations began to accrue; however, under either of their positions this action falls

outside ofthe two year statute of limitations. As a result, Defendant's motion to dismiss must be
granted.
2.

Statute of Limitations Accrual

Next,the parties disagree as to when the statute of limitations began running. Plaintiff
argues that the clock did not start until her insurance claim was denied on January 30,2013.
(PL's Mem.in Opp'n at 3-6.) Defendant disagrees, arguing that the limitations period
commenced when the event that gave rise to the insurance claim,the flooding, caused physical

damage to the property on October 29, 2012. (Def.'s Mot. to Dismiss at 7-8.) Under both dates
the present action,filed on January 11, 2016,falls outside the two year period of limitations.
However, Defendant's position as to accrual is correct.

New York courts have consistently held that where there is generic language in a

contractual limitations period provision, the statute oflimitations begins runmng on the date that

the legal claim accrues—in insurances cases, at the denial ofthe insurance claim. Fabozzi v.
Lexington Ins. Co.. 601 F.3d 88, 91 (2d Cir. 2010)(citing Steen v. Niagara Fire Ins. Co.,89
N.Y. 315, 322-23 (1882); Marguiles v. Quaker Citv. Fire & Marine Ins. Co.,97

N.Y.S.2d 100,103-04(1950)). However,the use of specific terms of art can upset this default
rule and fix the statute of limitations at the date ofthe insured injury. "After the inception ofthe
loss" is one such term of art. Fabozzi. 601 F.3d at 91;s^ also Proc v. Home Ins. Co.. 217

N.E.2d 136,138(N.Y. 1966)(holding that the language "within twelve months next after
inception ofthe loss" means the statute of limitations ran from the date ofthe fire).

The Policy requires that suit be brought within two years "after the inception ofloss or
damage." (Policy at 18,1] 12(emphasis added).) Because this clause contains the exact term of
art that New York courts have consistently held to commence limitations periods at the date of

the insured injury, the court holds that the limitations period began running not when Plaintiffs
insurance claim was denied, but rather when her property was damaged by the flood waters.
Plaintiff contends that the "loss or damage" language contained in the Policy is

ambiguous because it attempts to fix the point at which the statute oflimitations begins running
at two different dates, the date of the "loss" and the date ofthe "damage." (PL's Mem.in Opp'n

at 3-4.) This position finds no support in law and New York courts have consistently interpreted
contracts containing "loss or damage" language to refer to only one date. Pfeffer, 2011

WL 6132693 at *7(holding that "witliin two years after the date on which the direct physical
loss or damage"fixes accrual date at date of the insured loss); Myers,647 N.E.2d 1348

(N.Y. 1995)(calculating the limitations period from the date ofthe insured loss under insurance
policy containing identical language).

Finally, Plaintiff argues that Defendant's position is unreasonable because it would allow
insurers to delay review of insurance claims until the statute oflimitations had run on any

potential claims. (PL's Mem.in Opp'n at 2-3.) This policy argument is imavailing due to the
longstanding practice in New York of allowing parties to contractually change the date at which

the limitations period begins to run from the date a legal claim accrues to the date ofthe insured
injury.

e.g., Fabozzi,601 F.3d at 91-92. In any event,"[i]f conduct or action on the part of

the insurer is responsible for the insured's failure to comply in time with conditions precedent,
injustice is avoided and adequate reliefinsured ... by resort to traditional principles of waiver
and estoppel." Proc,217 N.E.2d at 139. Plaintiff has not argued that Defendant is responsible

for her delay in bringing this action.^ Pfeffer, 2011 WL 6132693 at *7("When a defendant
meets its initial burden of establishing, prima facie, that the two-year limitations period found in
^ Nor, indeed, could Plaintiff, as Defendant denied Plaintiffs insurance claim only three months after the flooding
occurred. (PL's Mem.in Opp'n at 1-2.)

the insurance policy expired before the commencement ofthe action, the burden then shifts to
the plaintiff to establish that an exception to the limitation period applies."). Accordingly, the
court finds no basis to apply the principles of waiver or estoppel.
III.

CONCLUSION

For the reasons discussed above. Defendant's motion to dismiss is GRANTED as the
statute oflimitations has run on Plaintiffs lone claim. Plaintiffs Complaint is DISMISSED
WITH PREJUDICE.

s/Nicholas G. Garaufis

Dated: Brooklyn, New York
October

,2016

NICHOLAS 0. GARAlyFIS
United States District Judge