Colpan Realty Corp. v. Great Am. Ins. Co.

• Decision Date: 06 October 1975
• Citation: 83 Misc.2d 730,373 N.Y.S.2d 802
• Parties: COLPAN REALTY CORP., Plaintiff, v. GREAT AMERICAN INSURANCE COMPANY, Defendant.
• Court: New York Supreme Court

Page 802

373 N.Y.S.2d 802

83 Misc.2d 730

COLPAN REALTY CORP., Plaintiff, v. GREAT AMERICAN INSURANCE COMPANY, Defendant.

Supreme Court, Westchester County.

Oct. 6, 1975.

Nayor & Edmiston, Yonkers, for plaintiff.

Gottesman, Wolgel & Smith, New York City, for defendant.

ANTHONY J. FERRARO, Justice.

Defendant moves to dismiss the complaint herein pursuant to CPLR 3211 upon the grounds (1) that the cause of action is barred by the statute of limitations and (2) that the complaint does not state facts sufficient to constitute a cause of action.

The complaint seeks to recover attorneys fees of $3,295.00 incurred by plaintiff to defend an action covered by defendant's policy. Plaintiff alleges breach by defendant of its covenant to defend its insured.

This action was instituted on April 29, 1975 by service of a summons and notice upon the Superintendent of Insurance of the State of New York.

Plaintiff herein was sued during the year 1966 by an adjoining property owner for causing property damage. Plaintiff notified the defendant of the suit but the latter refused to accept the claim and defend the action.

On April 4, 1968 judgment was rendered against plaintiff in the amount of $93,861.66.

Thereafter plaintiff again requested defendant to afford him legal representation and more specifically, to prosecute an appeal from the judgment. Defendant again refused alleging that the action was not covered by the policy.

On December 15, 1971 plaintiff wrote to the defendant advising it that a motion was being made to dismiss the appeal and requesting defendant to oppose it. Defendant again refused, now ascribing as an additional reason that plaintiff in the original action was now suing this defendant upon the judgment pursuant to Section 167(1)(b) of the Insurance Law.

On January 19, 1972 the appeal was dismissed by the Appellate Division, Second Department.

In March 1975 the Court of Appeals determined that defendant was liable for the entire judgment rendered against plaintiff herein (36 N.Y.2d 358, 368 N.Y.S.2d 485, 329 N.E.2d 172).

Defendant here contends that the cause of action for attorneys fees accrued when the defense of the action was refused on March 1, 1967 or at the latest when the defense was terminated by judgment on April 4, 1968. Defendant hence argues that more than six (6) years have elapsed between the accrual and commencement of the action which is consequently barred by the Statute of Limitations.

Plaintiff contends that the cause of action did not accrue until January 19, 1972 when the action was finally terminated by a dismissal of the appeal and that this action was instituted within six (6) years of said date.

An action upon a contractual obligation must be commenced within six (6) years. CPLR 213(2). This action predicated upon the breach by defendant of its contractual obligation to defend its insured comes within the purview of Section 213(2) CPLR.

In an action for breach of contract the cause of action accrues and the Statute of Limitations begins to run when the contract is breached or when one omits the performance of an obligation. Edlux Construction Corp. v. State of New York, 252 App.Div. 373, 300 N.Y.S. 509, aff'd, 277 N.Y. 635, 14 N.E.2d 197; Campbell v. Culver, 56 App.Div. 591, 67 N.Y.S. 469; Bank of Utica v. Child, 6 Cow. 238; Argall v. Bryant, 1 Sandf. 98.

In the instant case defendant is in effect an 'institutionalized substitute' for an attorney and the obligation to afford legal representation continued until the case was concluded. Kandel v. Tocher, 22 A.D.2d 513, 256 N.Y.S.2d 898. The obligation did not cease when judgment was rendered but continued beyond until final disposition on appeal. Kaste v. Hartford Accident & Indemnity Co., 5 A.D.2d 203, 170 N.Y.S.2d 614. The refusal of the defendant to step in constituted a continuous breach and a persistent omission to perform its obligation until the dismissal of the appeal sounded the final death knell to the action. The breach was not complete until final dismissal for until such event defendant could have assuaged plaintiff's grief, sealed the breach and redeemed its wrong by taking up the cudgels of the action. Although...