One of the most common obstacles in commercial litigation is not the facts of a case; it is the clock. Under CPLR 213(2), the default statute of limitations for contract-based claims is six years. But as a recent decision issued by the Second Department demonstrates, contracting parties can choose to shorten that six-year period, which the courts will enforce those provisions, barring any contract claims, as long as certain conditions are met.
The Case: 95 Crescent, LLC v. Certified Restoration Services, Inc., No. 2023-10424 (2d Dep’t Aug. 6, 2025)
In 2017, the Dorothy B. Hensel Revocable Living Trust (the “Trust”) filed a homeowner’s insurance claim with Allstate for water damage. Repairs were made, and later that year, the plaintiff, 95 Crescent, LLC, purchased the property from the Trust. Two years later, in 2019, the plaintiff sued Allstate and others, claiming mishandled repairs and poor oversight.
But there was a problem: the Allstate policy contained a clause requiring any lawsuit under the policy to be filed within two years of the inception of loss. By the time the plaintiff filed suit, that window had closed. The Supreme Court dismissed the case against Allstate and the Second Department affirmed.
On appeal, the Second Department noted that parties may agree under a contract to shorten the six-year statutory period within which an action must be commenced. The shorter limitations period will be enforced so long as the period is reasonable, in writing, and not the product of overreaching or adhesion. In this case, the Court upheld the policy’s two-year limitation, finding the plaintiff failed to raise a triable issue of fact that the provision was inapplicable or unenforceable. Notably, the Court enforced the provision against the plaintiff, a non-party to the policy, and notwithstanding the fact that the limitations period in a residential property insurance policy may not be subject to negotiation between insurer and homeowner.
Takeaway
This case illustrates how contractual provisions reign supreme in the Second Department, including those that significantly shorten the statute of limitations for claims under the contract. For clients and practitioners, the key lessons are:
- Do not assume the statutory default applies. In New York, the standard limitations period for breach of contract is six years, but many contracts reduce that dramatically.
- Identify limitations provisions early. When disputes arise, review the contract immediately for any shortened filing deadlines.
- Act well before deadlines. Courts enforce these clauses strictly; once the window closes, claims are typically barred regardless of merit.
- Engage counsel promptly. Early legal review can preserve claims and avoid the trap of an expired limitations period.
