Mound Cotton Wins Pre-Answer Dismissal

MPJ Enterprises, Inc. d/b/a Surfside Motel v. Great American Insurance Company
(Queens Co. Sup. Ct., November 24, 2009)

In this matter, Mound Cotton won pre-answer dismissal of all claims in a first-party property coverage action on the grounds that the insured failed to bring the action within the two-year suit limitation period.

The insured, MPJ Enterprises, operates a motel that allegedly sustained significant property damage and loss of income as a result of construction activities on a neighboring site that  commenced in October 2006.  In May 2007, the exterior roof overhang of the insured's premises partially collapsed and several interior rooms sustained damage.  MPJ notified its broker of the property damage on May 14, 2007.   Great American received notice of the claim on February 29, 2008. 

On July 1, 2008, following Great American's denial of coverage, MPJ filed an action against the contractor on the neighboring site, but did not file suit against Great American until June 23, 2009.

In moving to dismiss, Mound Cotton argued that the suit, brought more than two years from the date the loss was reported (May 14, 2007), was barred by the policy's two-year suit limitation provision, which provided that "[n]o one may bring legal action . . . unless . . . the action is brought within 2 years after the date on which the direct physical loss or damage occurred."  While the damage likely occurred earlier, Mound Cotton relied on the facts alleged in the complaint for purposes of the motion.

In response to the motion, MPJ did not dispute that the action was filed more than two years after the damage occurred.  Rather, MPJ made several technical arguments, from the timing of Great American's motion (pre-answer) to the admissibility of the policy as evidence.  MPJ also contended that that the suit limitation provision of the policy was unenforceable as a matter of law.

The Court rejected MPJ's arguments, noting that the New York Civil Practice Law and Rules permitted parties to a written agreement to shorten the prescribed statute of limitations, and that  such shortened limitation periods, if reasonable length, were enforceable absent duress, fraud or misrepresentation.  The parties to a contract are expected to know its contents and to have consented to the shortened suit limitation period.   Accordingly, the Court held that MPJ's action was time-barred and dismissed all claims against Great American.

For inquiries about this case, please contact Philip C. Silverberg (psilverberg@moundcotton.com).