Chase Scientific Research, Inc.,
Appellant,
v.
NIA Group, Inc., a/k/a NIA-KLT,
et al.,
Respondents.
Giuseppe Gugliotta,
Appellant,
et al.,
Plaintiff,
v.
Apollo Roland Brokerage, Inc.,
et al.,
Respondents,
et al.,
Defendants.
2001 NY Int. 24
Under CPLR 214 (6), a three-year statute of limitations is
applicable in nonmedical malpractice actions, regardless of
whether the underlying theory is based in contract or tort. The
appeals now before us raise the novel issue of what malpractice
means in this statute. Put another way, given that malpractice
is professional misfeasance toward one's client, who is a
professional within the section? The question arises in the
context of insurance agents and brokers.
I.
In the first case, Chase Scientific Research, Inc. v The NIA Group, Inc., plaintiff Chase, a manufacturer of precision rotors, in May 1995 engaged defendants -- insurance brokers -- to procure property insurance for its business; on May 31, 1995, defendants procured such a policy for plaintiff. Some months later, on January 19, 1996, a severe storm damaged plaintiff's warehouse and inventory. In response to plaintiff's insurance claim, the carriers acknowledged the incident as a covered occurrence under the policy but offered only $50,000 despite plaintiff's demand for the policy limit of $550,000 on claimed losses exceeding $1 million. Plaintiff later settled a case against the carriers for $275,000.
On January 7, 1999, plaintiff filed suit against defendants,
asserting one cause of action for negligence and one for breach
of contract based on defendants' failure to secure coverage
adequate to indemnify plaintiff against losses to its highly
specialized inventory. Defendants moved to dismiss the entire
action as time-barred under CPLR 214 (6), contending that the
claim was one for malpractice, that it accrued on the policy
date, and that more than three years had elapsed before this
action was commenced. Plaintiff countered that the action was
governed by the six-year statute of limitations applicable to
contract actions (CPLR 213 [2]), and that, even applying the
three-year statute of limitations (CPLR 214 [6]), the claim was
In the second case, Gugliotta v Apollo Roland Brokerage
Inc., et al., defendant Apollo through its insurance agent
(defendant Thomas Loveter) in December 1994 procured insurance
for plaintiff's commercial building from defendant New York
Merchant Bankers Insurance Company. In February 1995, Herman
Fermin slipped and fell in the building, and in December 1995
commenced an action against plaintiff for personal injuries.
Only after the accident did plaintiff discover that he lacked
general liability coverage. With the assistance of Loveter,
plaintiff engaged attorneys Charles L. Emma and Harry Cardillo to
defend the Fermin action. After counsel failed to appear, a
default judgment was entered for $767,900. Claiming both
negligence and breach of contract, on March 6, 1998 plaintiff
commenced the present action for failure to procure adequate
insurance coverage, which defendants Apollo and Loveter sought to
dismiss as time-barred under CPLR 214 (6).[1]
As in Chase, Supreme
II.
While a malpractice action may be grounded in negligence -- subject generally to a three-year statute of limitations -- it can theoretically also rest on breach of contract to obtain a particular bargained-for result (see, Kenneth R. Kirby, The Six- Year Legal Malpractice Statute of Limitations: Judicial Usurpation of the Legislative Prerogative?, 66 NY State Bar Journal, December 1994, at 14). Breach of contract actions are subject generally to a six-year statute of limitations. When the Legislature amended CPLR 214 (6) to apply a three-year limitations period to all nonmedical malpractice actions, whether based on tort or contract (L 1996, ch 623), it ended one quandary but exposed another: who are the professionals whose misfeasance toward clients is subject to the shortened limitations period?
Malpractice has for more than a century appeared in our
statutes of limitation, without definition of the term (see, Code
of Civil Procedure § 384 [two-year limitations period for
malpractice]; Civil Practice Act § 50 [same]). Initially, the
In 1962, the Legislature replaced the two-year limitations
period contained in Civil Practice Act § 50(1) with CPLR 214 6),
bringing the statute of limitations for malpractice actions in
line with the limitations period for negligence generally. The
revisers noted that the new statute was added on the suggestion
When this Court subsequently confronted nonmedical
malpractice claims based on a breach of contract theory, it
applied the six-year contract statute of limitations (see, Sears,
Roebuck & Co v Enco Assocs, , 43 NY2d 389; Video Corp of America v
Frederick Flatto Assocs, , 58 NY2d 1026; National Life Ins Co v
Frank B. Hall & Co, , 67 NY2d 1021; Santulli v Englert, Reilly &
McHugh, PC, , 78 NY2d 700). In all of these contractual
Most recently, in response to Sears and its progeny, the Legislature amended 214(6)to clarify that the limitations period in nonmedical malpractice claims is three years, whether the underlying theory is based in contract or tort (CPLR 214 [6], as amended by L 1996, ch 623). This change was intended not only to remediate the Sears line of cases but also to reduce potential liability of insurers and corresponding malpractice premiums, and to restore a reasonable symmetry to the period in which all professionals would remain exposed to a malpractice suit (Letter from NY State Ins Dept [July 16, 1996], Bill Jacket, L 1996, ch 623, at 9-10 [The Courts have applied (a contract) theory to architect and legal malpractice]; Legis Rep No 76-B of NY State Bar Assn, Bill Jacket, at 13-14 [there is no rationale for subjecting professional malpractice by an architect, engineer, lawyer, or accountant to a statute of limitations over twice as long as that applied to doctors, dentists and podiatrists]).
As a final link in the statute's litigation chain, barely
five months ago, in Brothers v Florence and its companion cases
III.
Defining professional is a task engaging many courts, for many purposes (see, Michael J. Polelle, Who's on First, and What's a Professional?, 33 USF L Rev 205 [1999]). While the term has myriad applications in law -- as, for example, in insurance policy exclusions, and peer negligence standards -- we underscore that our definition is limited to the context presented: CPLR 214 (6). Moreover, our objective, as always in matters of statutory interpretation, is to effectuate the will of the Legislature. Here, that task is complicated by the fact that, in CPLR 214 (6), malpractice is undefined and professional unmentioned.
Professional is a term in wide usage, commonly understood
to have several meanings. For example, it denotes a measure of
quality, as in professional dry cleaners; a distinction from
trade or businesspeople, and from amateur status, as in
professional golfers; a lifework as opposed to pastime, as in
Nor does the law defining professional for other purposes
necessarily resolve the statute of limitations issue before us
(see, e.g., People v Kelly, 255 NY 396 [music a profession, not a
trade, under zoning resolution]); People ex rel. Tower v State
Tax Commn, 282 NY 407 [customhouse broker not a professional for
purposes of unincorporated business tax exclusion]; Business Corporation Law § 1501; Education Law, Title VIII, art 130 et
seq. [The Professions]). An abbreviated statute of limitations
bars claims of allegedly injured parties, and should therefore
reflect the Legislature's intent that the particular defendant
groups receive such a benefit. In Karasek v LaJoie (, 92 NY2d 171), for example, we refused, absent legislative clarification,
The term professional is also commonly understood to refer to the learned professions, exemplified by law and medicine, which have particular relevance to the history of CPLR 214 6). The two- and three-year malpractice statutes of limitation, after all, began with doctors, enlarged soon after to encompass attorneys and accountants. In 1996, when CPLR 214 (6) was before the Legislature for amendment, the report of the New York State Bar Association referred specifically to those categories in speaking of professional malpractice: an architect, engineer, lawyer or accountant (Legis Rep No 76-B of NY State Bar Assn, Bill Jacket, L 1996, ch 623, at 13-14).
The qualities shared by such groups guide us in defining the
term professional. In particular, those qualities include
extensive formal learning and training, licensure and regulation
indicating a qualification to practice, a code of conduct
imposing standards beyond those accepted in the marketplace and a
system of discipline for violation of those standards (see,
This definition, we believe, implements the Legislature's
intention to benefit a discrete group of persons affected by the
concerns that motivated the shortened statute of limitations
(see, Alexander, Supplementary Practice Commentaries [2000]
McKinney's Cons Laws of NY, Book 7B, CPLR C:214[6] 2001
Cumulative Pocket Part, at 211). We are mindful as well that our
definition ideally should establish a bright line, so that,
absent legislative clarification, it can be fairly and uniformly
applied. Moreover, with the rise of large numbers of skilled
semi-professions (see, Polelle,
Applying these criteria, we conclude that insurance agents
and brokers are not within the ambit of CPLR 214 (6).[3]
While
Nor are insurance agents and brokers bound by a standard of
conduct for which discipline might be imposed (see, e.g., 22
NYCRR 603 [attorney discipline]; Education Law §§ 6509, 6510,
6511 [professional misconduct, proceedings and discipline for
accountants, architects, engineers and others, but not insurance
agents or brokers]). Moreover, as this Court recently made
clear, an insurance agent has a common-law duty to obtain
Thus, in both cases we conclude that the actions against defendant agents and brokers are governed not by CPLR 214 (6), but by the limitations periods applicable to negligence actions (CPLR 214 [4]) and breach of contract actions (CPLR 213 [2]). In Chase (but not Gugliotta) plaintiff argues that -- even applying CPLR 214 (4) -- its negligence cause of action should be reinstated, and we agree. Plaintiff's action was commenced on January 7, 1999, within three years of what both parties agree was the accrual date for the negligence claim, January 19, 1996. In both cases the continuous treatment doctrine is inapplicable. Finally, while plaintiffs' contract claims were indisputably brought within six years of accrual and thus must be reinstated, we note that the sole issue before us is the applicable statute of limitations. No challenge has been made to the viability of the breach of contract claims, and we do not pass on them.
Accordingly, in Chase the order of the Appellate Division
should be reversed, with costs, and the complaint reinstated. In
Footnotes
1 The only defendant before us is Apollo, and the only remaining claims are for negligence and breach of contract. Plaintiff's fraudulent misrepresentation claim against Apollo was dismissed for failure to state a cause of action, and has not been raised in this appeal. Supreme Court severed the action against additional defendants Andrew J. Corsa & Son (an insurance broker assisting Apollo in procuring the policy), New York Merchant Bankers Insurance Co, Charles L. Emma and Harry Cardillo, and dismissed additional causes of action. Plaintiff's motion for leave to appeal as against defendant Thomas Loveter was dismissed for nonfinality (Gugliotta v Apollo Roland Brokerage, Inc., et al., , 95 NY2d 917).
2 The Legislature did not, at that time, adopt the Law Revision Commission recommendation that the statute cover malpractice actions based on tort, contract or any other theory (1962 Report of NY Law Rev Comm, pp 232, 233). In effect, that amendment was enacted in 1996 (L 1996, ch 623).
3 Other states have divided as to whether insurance agents and brokers are professionals for malpractice purposes (see, e.g., Pierce v AALL Ins, 531 So 2d 84 [FL] [no]; Plaza Bottle Shop v Al Torstrick Ins Agency, 712 SW2d 349 [Ky] [no]; Flemens v Harris, 915 SW2d 685 [Ark] [yes]; Burns v Connecticut Mutual Life Ins, 743 A2d 566 [RI] [yes]).