Palisades Safety & Ins. Assn. v Martinez (2005 NY Slip Op 51366(U))

Supreme Court, Kings County

28371/04

Yvonne Lewis, J.

Mr. Richard Martinez and Geico Insurance Company have moved this court, pursuant to CPLR 3211 (a) (5), for an order to dismiss the within action on the ground that the action is barred by the applicable three year statute of limitations for personal injury and subrogation actions (CPLR 214[5]). The defendants contend that the accident underlying the within action unquestionably occurred on August 17, 2001, and that “[t]he present action [against Mr. Martinez] was commenced on September 8, 2004, well over three years past from the date of the accident on [said] August 17, 2001.” Mr. Martinez received the summons and complaint in the mail on September 25, 2004. Geico was served on October 12, 2004. The defendants also assert that the subrogation action is fatally flawed inasmuch as “[t]he complaint only alleges that the defendant GEICO provided insurance coverage to the defendant Martinez on the date of the accident[;] and New York State Insurance Law section 3420 (b) states that no action can be brought on the liability portion of a policy against an insurer until a judgment has been entered against the covered party.” In this instance, Palisades Insurance Company, not Geico, paid Grigory Belovskiy ($61,500.00) under the uninsured (sic) provisions of his policy. Lastly, the defendants state that the action against Mr. Martinez should additionally be dismissed since he was only served by regular mail, and not as specified for proper service in CPLR 308.

In opposition, the plaintiff (Palisades) notes that prior to settling with its insured (Mr. Belovskiy’s), Mr. Martinez’ insurer, Geico, had offered to settle Mr. Belovskiy’s personal injury claims for twenty-five thousand dollars; however, the “. . .same was not accepted so that PALISADES would preserve its subrogation rights.” With regards to the remaining points raised by the defendants, the plaintiff asserts that 1. “[b]ased.on the tolling provisions of CPLR §204 (b), this action was tolled on November 11, 2002 when Mr. Belovskiy’s attorney, Barry Feldman, filed and served his demand for arbitration. . . .until September 17, 2003 when the underinsured arbitration was held and an award was rendered (citing, Joseph Francese, Inc. v. Enlarged City School District of Troy, 95 NY2d 59, 710 NYS2d 315 [2000])[;] ” 2. Mr. Martinez was served with process pursuant to CPLR §308(4) on September 24, 2004 and January 5, 2005; and,

3. “. . .an insurer’s subrogation rights accrue upon payment of the loss and at that point the insurer who has paid the policy limits possesses derivative and limited rights of the insured and may proceed directly against the negligent third-party to recoup the amount paid.” [*2]

The defendants’ reply to the foregoing points out that CPLR 204(b) is herein inapplicable inasmuch as the parties and claims in the New Jersey arbitration proceeding to which the plaintiff referred were different from those present in the within action. A fortiori, the defendants assert that not only were they not parties to the arbitration, but the “[p]laintiff’s own papers clearly show that there was a judicial determination that there was no jurisdiction over defendant Martinez in

New Jersey.” In other words, since the demand to arbitrate between Gregory Belovskiy (the insured) and Palisades (his insurer) is different from the now subrogated common-law negligence action by Mr. Belovskiy against Mr. Martinez, the tolling provisions of CPLR 204(b) do not apply. Lastly, the defendants argue that Geico’s offer of settlement was of no consequence herein since the Court of Appeals has made it clear that it is “. . .incumbent on a carrier to pay its insured so as to commence any subrogation action before the statute of limitations passes or to be sure that its subrogation rights are protected in any action already brought by its subrogor” (citing, Allstate Ins. Co. v. Stein, 1 NY3d 416, 775 NYS2d 219).

The matter of Allstate Ins. Co. v. Stein, supra, is dispositive of the main issue herein presented, inasmuch as the Court of Appeals’ aptly noted therein that “a subrogatin 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.” The court went on to elucidate between traditional equitable subrogation [governed by the three (3) year statute of limitation for personal injury actions pursuant to CPLR 214(5)] in contrast to entitlements established or imposed by statute (eg. No-fault MVIAC benefits) which create new and independent statutory rights and obligations [governed by the three (3) year statute of limitations for an action to recover upon a liability, penalty, or forfeiture created or imposed by statute, pursuant to CPLR 214(2)]. Finally, the court made the following caveat; to wit, that “. . .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. In such case, the subrogee’s remedy is against the subrogor, for conduct that has prejudiced the subrogee’s right.

In the matter sub judice, the defendants have clearly established that the plaintiffs are seeking common law subrogation relief, not any statutorily derived benefit. Since it is a matter of general construction that a statute of limitations begins to run the day after a cause of action accrues (Gen. Const. L. §20), and since a cause of action for personal injury that is predicated on negligence accrues when the injury is sustained (Vigilant Ins. Co. of America v. Housing Authority of El Paso, 87 NY2d 36), it irrefutably follows that the plaintiffs’ claims are indeed time barred by the three year statute of limitations which commenced to run as of the date of the underlying accident [CPLR 214(5)].

The assertion by the plaintiffs that the statute of limitations was tolled is also unavailing.

“The purpose of the CPLR 204(b) tolling statute is to preserve a remedy to a litigant who has [*3]mistaken his forum (See D’Angiolillo v. Singh, 2002 WL 31940753 (NY Supp App. Term), 2002 NY Slip Op. 450511, citing Francese, Inc. v. Enlarged City School Dist. Of Troy, supra). Therefore a claimant who makes a demand concerning her contractual rights to uninsured motorist benefits under her insurer’s policy, who thereafter commences a common law negligence action against the defendant tortfeasor and/or his insurer cannot be said to be pursuing an action upon such [initial] claim within the meaning of CPLR 204(b) [See D’Angiolillo v. Singh,, supra, citing Bright v. Pagan, 236 AD2d 350, 653 NYS2d 645]. Lastly, the plaintiffs’ have neither offered nor has this court uncovered any legal or equitable basis to support their contention that an offer of settlement would somehow invoke the tolling provisions of CPLR 204(b).

WHEREFORE, Mr. Richard Martinez and Geico Insurance Company’s motion, pursuant to CPLR 3211 (a) (5), for an order to dismiss the within action on the ground that the action is barred by the applicable three year statute of limitations for personal injury and subrogation actions (CPLR 214[5]) is granted. This constitutes the decision and Order of this Court.

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