Pandemic Executive Orders Do Not Toll Contractual Limitations Periods in New York
An issue of substantial importance to sureties and insurers, but about which little (if anything) has been written, is whether the Executive Orders issued during the pandemic that extended limitations periods for civil actions in New York apply to private contractual limitations periods, such as those contained in bonds and insurance policies. A recent federal court decision along with an unreported state court decision from early last year appear to establish that the Executive Orders did not extend the time for suit against insurance policies or bonds that contain a limitations period different from the otherwise applicable statute of limitations.
On March 7, 2020, as the COVID-19 pandemic began to unfold in New York, Andrew Cuomo, the state’s former governor, issued Executive Order (EO) No. 202, declaring New York to be in a state of emergency. Following this declaration, Cuomo issued a series of EOs to address the pandemic’s impact. Among these was EO 202.8, issued on March 20, 2020, which provided, in relevant part:
In accordance with the directive of the Chief Judge of the State to limit court operations to essential matters during the pendency of the COVID-19 health crisis, any specific time limit for the commencement, filing, or service of any legal action, notice, motion, or other process or proceeding, as prescribed by the procedural laws of the state, including but not limited to the criminal procedure law, the family court act, the civil practice law and rules, the court of claims act, the surrogate's court procedure act, and the uniform court acts, or by any other statute, local law, ordinance, order, rule, or regulation, or part thereof, is hereby tolled from the date of this executive order until April 19, 2020 (1).
In the months that followed, Governor Cuomo issued several successive EOs that purported to extend and continue the “tolling” described in EO 202.8. These extensions continued through EO 202.72, issued on November 3, 2020, which provided (in pertinent part):
Pursuant to Executive Order 202.67, the suspension for civil cases in Executive Order 202.8, as modified and extended in subsequent Executive Orders, that tolled any specific time limit for the commencement, filing, or service of any legal action, notice, motion, or other process or proceeding as prescribed by the procedural laws of the state . . . is hereby no longer in effect as of November 4, 2020, provided any criminal procedure law suspension remains in effect and provided that all suspensions of the Family Court Act remain in effect until November 18, 2020 . . . .> (2)
Two threshold questions arose in post-EO 202.8 litigation. The first was whether EO 202.8 and the subsequent EOs “tolled” or “suspended” limitations periods. There is a critical difference between a “toll” and a “suspension”. A “toll” stops the clock on the applicable limitations period, with the tolling period excluded from calculating whether the limitations period expired. A “suspension” does not stop the limitations period from running; it merely extends the date that the limitations period will expire to the day after the suspension is lifted (if the limitations period otherwise would have expired during the period of suspension). (3) In other words, the question was whether limitations periods were extended for 228 days, no matter when the limitations period otherwise would have expired, or were extended to and expired on November 4, 2020, if the limitations period otherwise would have expired between March 20, 2020, and November 3, 2020.
The issue arose because of the EOs’ reference to both a “toll” and a “suspension”. Defendants also argued that the law that authorizes the governor to extend limitations periods in an emergency allows the governor only to “suspend” and not to “toll”. To date, all judges but a trial court judge in Brooklyn (who appears to have completely misread the Appellate Division decision binding on her) and a trial court judge in Manhattan (whose decision does not contain any analysis of the relevant issues) have held that the EOs tolled limitations periods and did not merely suspend them. (4)
Having determined that the EOs resulted in a 228-day toll, the second critical question is whether this tolling period applies not only to statutory limitations periods but to contractual limitations periods as well. The answer to this question is particularly important to sureties and insurers, as most bonds and insurance policies contain contractual limitations periods that are shorter than the corresponding statutory limitations period. If the EOs apply to toll private contractual limitations periods, claimants against bonds and insurance policies would have an additional 228 days to bring suit – and might have the same additional amount of time to take other actions required by the bond or policy, such as to provide notice required by a performance or payment bond or to submit a sworn proof of loss.
A recent decision from the Southern District of New York is the first reported decision addressing the issue, and it holds that the EOs do not toll (or suspend) contractual limitations periods. In Ventilla v. Pacific Indemnity Co., (5) the plaintiff-insured sued to recover under an insurance policy for vandalism that occurred to her property more than two years earlier. The defendant-insurer moved to dismiss the suit as untimely under the policy’s two-year limitations period. The insured sought to avoid a dismissal by arguing that the EOs tolled the policy’s limitations period. The court rejected this argument, applying the clear language of the EOs, which unambiguously state that they apply to limitations periods “prescribed by the procedural laws of the state”, which EO 202.8 describes as arising under “statute, local law, ordinance, order, rule, or regulation.” The court concluded:
Plaintiff essentially asks this Court to read into the Governor’s order additional language that would toll self-imposed, bargained-for time-limiting language in private contracts. If the Governor wanted, or meant, to include such language, he could have done so. The omission is dispositive, and the Court will not rewrite the result of an exercise of Executive power with which Plaintiff apparently disagrees. (6)
Ventilla, however, is not the first decision to so hold. Almost a year earlier, in Printvision, Inc. v. Travelers Casualty Insurance Co. of America (7), one of the two judges who (subsequently) held that the EOs provided a suspension and not a toll, in granting an insurer’s motion to dismiss an action as untimely, also concluded that the EOs do not apply to contractual limitations periods. In granting the insurer’s motion to dismiss on limitations grounds, the court held that the EOs “specifically apply to specific time limits for the commencement of an action as prescribed by the CPLR. . . . [C]ontractually agreed upon limitation periods are not tolled by the relevant Executive Orders.” (8) Printvision is unreported and does not appear to have been cited by any other courts, but it is no less important. To date, it appears to be the only state court decision addressing the issue.
The recent Ventilla decision and the unreported Printvision decision should establish firmly that the EOs do not extend limitations periods in either surety bonds or insurance policies. Like the insurance policies in Ventilla and Printvision and all other contracts, surety bonds are to be construed in accordance with their terms. There does not appear to be any reason that the result reached in Ventilla and Printvision would by any different had the suit involved a surety bond instead of an insurance policy.
(1) Exec. Order No. 202.8 (Mar. 20, 2020) (emphasis added).
(2) Exec. Order No. 202.72 (Nov. 3, 2020) (emphasis added).
(3) See, e.g., Brash v. Richards, 149 N.Y.S.3d 560, 561 (2d Dep’t 2021).
(4) See, e.g., id.; Foy v. N.Y., 144 N.Y.S.3d 285 (Ct. Cl. 2021); Gordon Law Firm, P.C. v. Doha, No. 650866/2019, 2022 WL 222404 (Sup. Ct. N.Y. Cty. Jan 25, 2022); Person v. PSI Sys., Inc., 155 N.Y.S.3d 306 (Sup. Ct. N.Y. Cty. 2021); Bastell v. Vill. of Rye Brook, 144 N.Y.S.3d 556 (Sup. Ct. Westchester Cty. 2021); State v. Spectra Eng’g, Architecture & Surveying P.C., 155 N.Y.S.3d 541 (Sup. Ct. Albany Cty. 2021); In re 701 River St. Assocs., 148 N.Y.S.2d 365 (Sup. Ct. Rensselaer Cty. 2021); In re Estate of Powell, 154 N.Y.S.3d 301 (Sur. Ct. Erie Cty. 2021). The “suspension” decisions consist of two from the same judge sitting in Brooklyn – Baker v. 40 Wall St. Holdings Corp., No. 513153/2019, 2022 WL 70014 (Sup. Ct. Kings Cty. Jan 5. 2022) (where the court appears to misread the holding in Brash), and B&H Flooring, LLC v. Folger, No. 510108/2019, 2022 WL 344341 (Sup. Ct. Kings Cty. Jan. 31, 2022) (where the court relies upon Baker and says that it is the plaintiff who “misinterprets the Brash decision”) – and an unreported decision from Manhattan – Emerald Servs. Corp. v. Empire Core Group LLC, No. 652744/2020, 2021 WL 465978 (Sup. Ct. N.Y. Cty. Feb. 9, 2021) – which was one of the first decisions involving the issue and which simply referred to the EOs as providing for a suspension, without any analysis. It is no surprise that the plaintiff in Baker has filed a Notice of Appeal; for procedural reasons particular to the case, the plaintiff in B&H Flooring may be barred from appealing.
(5) No. 1:20-cv-08462 (MKV), 2021 WL 5234404 at *1-3 (S.D.N.Y. Nov. 10, 2021).
(6) Id. at *2.
(7) No. 655152/2020, 2021 WL 306347 (Sup. Ct. N.Y. Cty. Jan. 26, 2021).
(8) Id. at *2. The court denied the plaintiff’s reargument motion several months later, rejecting the plaintiff’s arguments that not applying the toll to contractual limitations periods “would eviscerate the intent of the Executive Orders” and that “[t]he consensus view is that these executive orders hold in abeyance the timeliness of all litigants’ claims as they existed on March 20, 2020”. Printvision, Plaintiff’s Memorandum of Law in support of its motion for reargument at 3. The plaintiff filed a Notice of Appeal in late February 2021 but does not appear to have taken any steps to proceed and, presumably, is now precluded from doing so.
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