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Insurance brokers are capable of committing malpractice, New York’s Appellate Division, 2nd Department ruled this week, pointedly disagreeing with the Appellate Division, 1st Department, which declared last year that insurance brokers and agents were not professionals. The distinction determines whether the three-year statute of limitations that applies to non-medical malpractice actions, or the six-year statute that applies to a breach of contract action, is applicable in a Westchester County corporation’s suit against its former insurance brokers. Justice William D. Friedmann, writing for the unanimous five-judge 2nd Department panel in Chase Scientific Research Inc. v. NIA Group Inc., 1999-05335, agreed with Justice W. Denis Donovan who had dismissed the proceeding in Supreme Court, Westchester County, as time-barred. Justice Donovan ruled in 1999 that Chase Scientific Research’s claim against the insurance brokers, NIA Group, alleging NIA had not obtained adequate insurance to cover damage to Chase Scientific’s warehouse suffered in a 1995 storm, had accrued in May 1995 when NIA procured the policy for Chase Scientific. New York’s Civil Procedure Law and Rules �214(6) was amended in 1996 to provide that a three-year statute of limitations applies to malpractice actions — other than medical, dental or podiatric malpractice — regardless of whether the underlying theory of the claim was based on contract or tort. Therefore, said the 2nd Department, when Chase Scientific filed its suit on Jan. 7, 1999, the three-year statute of limitations had already expired. However, a similar claim in Manhattan or the Bronx would have six years to be filed under a 1st Department ruling issued last September in Santiago v. 1370 Broadway Associates, 264 AD2d 624. There the appellate court reinstated a third-party complaint against a broker and flatly stated, “an insurance broker is not capable of committing ‘professional malpractice’ in accordance with CPLR �214(6).” Thus the six-year statute of limitations was appropriate based on the contractual relationship of the parties, the court said. The 1st Department would limit the three-year time limit for non-medical malpractice to such “learned professions” as law, accountancy, architecture and engineering, it said in Santiago. Friedmann, however, noted that the 2nd Department last year had applied CPLR �214(6) to bar a malpractice claim against a real estate appraiser in Early v. Rossback, 262 AD2d 601. “There is no reason why the three-year statute of limitations should apply to a malpractice action against a real estate appraiser, but not to such an action against an insurance broker,” he wrote. Justices Lawrence J. Bracken, Fred T. Santucci, Myriam J. Altman and Howard Miller concurred with Friedmann’s opinion. Roger E. Barton and Hillary H. Hughes of Barton & Zasky appeared for Chase Scientific Research Inc. Gil A. Isidro of Lustig & Brown handled the appeal for NIA Group.

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