On November 26, 2024, the Court of Appeals issued a decision in Farage v. Associated Ins. Mgt. Corp., 2024 NY Slip Op. 05875, holding that a claim should be dismissed as untimely because the plaintiff failed adequately to allege that a contractual limitations period was unreasonable, explaining:
When deciding a motion to dismiss, the court must accept the facts as alleged in the complaint as true, accord plaintiffs the benefit of every possible favorable inference, and determine only whether the facts as alleged fit within any cognizable legal theory. Under CPLR 3211(a) (1), a party may move to dismiss a cause of action asserted against them on the ground that a defense is founded upon documentary evidence. Such a motion may be appropriately granted only where the documentary evidence utterly refutes the plaintiff’s factual allegations, conclusively establishing a defense as a matter of law. Unambiguous contracts that can be interpreted only in one manner may be the basis for a dismissal pursuant to CPLR 32111(a)(1).
Suit limitation provisions that specify a reasonable period, shorter than the statute of limitations, within which an action must be commenced are generally enforceable. We have held that there is nothing inherently unreasonable about a two-year period of limitation in a case involving the same provisions at issue here: a two-year suit limitation provision and a condition precedent to the suit requiring complete replacement of the damaged property. Nevertheless, the period of time within which an action must be brought should be fair and reasonable, in view of the circumstances of each particular case.
In Executive Plaza, the plaintiff alleged that it acted reasonably to replace the damaged building, but was not able to do so within the two-year limitation period, detailing several steps taken within that period to restore the property. Answering a certified question from the United States Court of Appeals for the Second Circuit, this Court held that a suit limitation provision in an insurance policy is unreasonable where the policy requires total replacement before an action may be commenced but the damaged property cannot reasonably be replaced within the limitation period. Accordingly, a plaintiff seeking to nullify a suit limitation provision under Executive Plaza must demonstrate that the damaged property could not reasonably be replaced within the limitation period.
On this motion to dismiss, the Tower/AmTrust defendants met their burden of establishing, by reference to the contract’s two-year suit limitation provision, that the action was time-barred because plaintiff did not commence it within two years of the fire, utterly refuting plaintiff’s factual allegations. Nothing in plaintiff’s response raised any issue as to whether the provision should bar her claims. Plaintiff’s allegation that given the massive structural damage wrought by the fire, the restoration of plaintiff’s property would have been a multi-year process under even the best of circumstances is a conclusory statement that the suit limitation provision was unreasonable and is not logically inconsistent with the replacement of the property within the two-year limitation period. Here, plaintiff failed to allege actions that she took to complete the repairs within two years; she did not provide any details regarding the extent of the damage, other than that the damage was massive and the fire set off four alarms, or why complete restoration within two years was an impossibility. This bare-bones allegation stands in stark contrast to the plaintiff’s factual assertions in Executive Plaza. There, the plaintiff pleaded the specific remedial actions taken to restore the property, including retaining an architect and construction company, submitting a variance application, and seeking and obtaining building permits, which were not issued until 20 months after the property damage. Most importantly, that plaintiff provided that these remedial actions were taken within the limitation period. All of this information is notably absent from plaintiff’s pleadings and motion response here.
Plaintiff’s attribution of the lengthy restoration to Tower/AmTrust’s conduct does not provide the requisite specificity as to whether the property could be reasonably restored within two years. Plaintiff’s allegation that because of Tower/AmTrust’s misconduct, it was not possible for plaintiff to complete the restoration of the property until July 2020 is patently conclusory. In asserting that Tower/AmTrust’s conduct allegedly delayed the restoration, plaintiff’s submissions offer no factual specificity as to the length of the resultant delay except for one allegation that the assignment of a succession of claims adjusters resulted in months of delay. As such, plaintiff failed to sufficiently allege that Tower/AmTrust’s conduct made it impossible for her to reasonably complete restoration within two years of the fire.
Moreover, plaintiff does not assert that she informed the Tower/AmTrust defendants at the expiration of the limitation period that the repairs could not be completed within the term specified in the contract, further undermining her claim that she could not do so. In Executive Plaza, by contrast, the plaintiff had filed an action prior to the expiration of the limitation provision, and before the restoration had been completed, detailing the efforts taken to restore the property. By doing so, the plaintiff demonstrated that it was diligently, but unsuccessfully, working to satisfy the condition precedent. Here, plaintiff asserts that she promptly submitted a claim to the Tower/AmTrust defendants after the fire and otherwise suggests that she was in contact with them during some of the restoration process. But critically, plaintiff is silent as to when any of this contact allegedly occurred or what information she relayed to defendants regarding the circumstances giving rise to the impossibility of timely restoration. We do not suggest that a plaintiff seeking to defeat a suit limitation provision need file a premature action, but had plaintiff here informed the insurer of the relevant circumstances during the limitation period and detailed that communication in her motion papers, she would have provided support to her claim that the suit limitation provision was unreasonable under these circumstances.
(Internal quotations and citations omitted).