New York Court Upholds Suit Limitation Period, Ruling Appraisal Is Not A Condition Precedent To Filing Suit

Courts will generally uphold reasonable suit limitation periods in property insurance policies, if the insurer does not affirmatively waive or extend them. In MZM Real Estate Corp. v. Tower Ins. Co. of New York, No. 452741/2015 (N.Y. Sup. Ct. April 11, 2017), a New York court followed the general rule. In enforcing a suit limitation period, the court was unpersuaded by the insured's argument that once appraisal is demanded it becomes a condition precedent to filing suit.

Appraising Property Damage After Super Storm Sandy

MZM Real Estate Corp. v. Tower Ins. Co. of New York involved a property insurance dispute over the extent of coverage for wind damage caused by Superstorm Sandy, which blew through the greater New York area on October 29, 2012. In November 2012, following MZM's notice of claim for "hurricane" damage, the insurer paid the "undisputed portion" of $4,000.

One year after the storm, on October 28, 2013, MZM invoked appraisal under the policy, and identified its appraiser. Tower then identified its appraiser, and the umpire was selected on February 3, 2014. By letters dated December 9, 2013 and January 13, 2014, Tower advised MZM that the claim was not finalized because it was waiting for the appraisal. In both letters, Towers reserved all rights under the policy.

On February 2, 2015, MZM served Tower with an Appraisal Award signed by MZM's appraiser and the umpire. The Appraisal Award identified $170,129.96 as the total amount of windstorm damage to the property, including amounts for property damage and business interruption. Tower denied MZM's claim because the Appraisal Award failed to "state separately the value of the property and the amount of loss" under the building coverage provisions, and to "state separately the amount of Net Income and operating expense and the amount of loss" for a business income loss award.

On June 19, 2015, MZM filed a motion for summary judgment in lieu of complaint pursuant to NY CPLR § 3213. Tower moved to dismiss based on the policy condition requiring that any action against the insurer be "brought within 2 years after the date on which the direct physical loss or damage occurred."

An Appraisal Award Does Not Qualify for Accelerated Treatment Under NY CPLR § 3213

As a procedural matter, the court determined that the insured's effort to seek accelerated treatment under NY CPLR § 3213 was improper. NY CPLR § 3213 provides: "When an action is based upon an instrument for the payment of money...