Motor Vehicle Accident Indemnification Corp. v. Aetna Casualty & Surety Co.
674 N.E.2d 1349 · New York Court of Appeals · 1996
Facts
Following a two-car collision in New York City, Aetna denied no-fault coverage to injured passengers, claiming policy cancellation. MVAIC then paid no-fault benefits to the passengers and later sought reimbursement from Aetna through compulsory arbitration. Aetna raised a Statute of Limitations defense, arguing MVAIC's claim was untimely, but the arbitrator ruled in favor of MVAIC.
Issue
First, what Statute of Limitations applies to MVAIC's cause of action for reimbursement of no-fault benefits from an insurer who denied coverage, and when does that period begin to run? Second, what is the effect of Aetna raising its Statute of Limitations defense in arbitration, rather than seeking preliminary judicial review, on its ability to vacate the arbitration awards?
Holding
The three-year Statute of Limitations (CPLR 214[2]) applies to MVAIC's reimbursement claims, and it begins to run upon MVAIC's initial payment to the claimants. The arbitrator's rejection of Aetna's Statute of Limitations defense, though based on an erroneous application of the law, was not arbitrary and capricious and thus cannot be overturned.
Rule
Claims that would not exist but for a statute are subject to the three-year Statute of Limitations under CPLR 214(2), and for MVAIC's reimbursement claims, accrual occurs at the first payment. In compulsory arbitration, an arbitrator's determination on issues of law, including the Statute of Limitations, will be upheld unless it is arbitrary and capricious or unsupported by any reasonable hypothesis.
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