policies that are the subject of this dispute. Id. at 5.
A. CPLR 213(2)
Defendants argue that plaintiff's breach of contract claims should be dismissed pursuant to section 213(2) ("CPLR 213(2)") of New York's Civil Practice Law and Rules. N.Y. Civ. Prac. L. & R. 213(2) (McKinney 1990). Plaintiff's claims relate to settlements that were paid more than six years prior to the date that plaintiff's action was filed. Therefore, defendants maintain, plaintiff's breach of contract claims are time barred under CPLR 213(2). We disagree.
CPLR 213(2) states that the statute of limitations on an action on a contractual obligation in New York is six years. N.Y. Civ. Prac. L. & R. 213(2). In breach of contract actions, this six-year period generally begins to run upon the defendant's breach. See Marathon Enterprises, Inc. v. Feinberg, 595 F. Supp. 368, 372 (S.D.N.Y 1984); John J. Kassner & Co. v. City of New York, 46 N.Y.2d 544, 389 N.E.2d 99, 102, 415 N.Y.S.2d 785 (N.Y. 1979).
New York law treats insurance contracts similarly to other contracts, in that a plaintiff's claim accrues "in the absence of any provision regarding accrual in the contract of insurance . . . upon breach." Medical Facilities, Inc. v. Pryke, 62 N.Y.2d 716, 717, 476 N.Y.S.2d 532, 465 N.E.2d 39 (N.Y. 1984). See Niagara Frontier Transp. Auth. v. Encon Underwriting Agency, Inc., 185 A.D.2d 642, 586 N.Y.S.2d 53, 54 (N.Y. App. Div. 1992) ("the six-year Statute of Limitations in an action for breach of an insurance contract commences to run when the contract is breached."); see also Campo v. New York City Employees' Retirement Sys., 843 F.2d 96, 103 n.7 (2nd. Cir.) (citing Pryke), cert. denied, 488 U.S. 889, 102 L. Ed. 2d 211, 109 S. Ct. 220 (1988). In the context of insurance contracts, "breach" does not occur until an insured party makes demand upon the insurer and the insurer refuses to pay. It is only when an insurer declines to pay a covered loss for which the insured has requested payment that the insurer has breached the insurance agreement by failing to perform its contractual obligations. See Niagara Frontier, 586 N.Y.S.2d at 54 ("The breach in the instant case occurred on March 27, 1984, when the insurer denied liability under the contract.").
"Reinsurance is simply an insurance policy issued to an insurer." Employers Ins. v. American Centennial Ins. Co., 1989 U.S. Dist. LEXIS 563, No. 86 Civ. 8576, 1989 WL 6631, at *1 (S.D.N.Y. Jan. 24, 1989). See also Christiana Gen. Ins. Corp. v. Great Am. Ins. Co., 745 F. Supp. 150, 152 (S.D.N.Y. 1990) (citing American Centennial). It is another form of insurance, whereby an insurance company cedes to others part or all of certain insurance risks it has assumed. See Colonial Am. Life Ins. Co. v. Commissioner, 491 U.S. 244, 246-47, 105 L. Ed. 2d 199, 109 S. Ct. 2408 (1989); Christiana, 745 F. Supp. at 152. Therefore, in determining when a cause of action for breach of a reinsurance contract accrues, it makes sense to treat reinsurance agreements like ordinary insurance contracts. We hold that, in the absence of any contractual provision to the contrary, the six-year limitations period set forth in CPLR 213(2) applies to reinsurance contracts and that this period begins to run at the moment the reinsurer declines to pay the insurer's claim under the reinsurance contract.
Defendants would have us characterize a reinsurance agreement not as another form of insurance contract, but as a "contract of indemnity." They argue that the statute of limitations on a such contracts begins to run "when the would-be indemnitee makes the payment for which it seeks indemnity." Defendants' Memorandum Dated Dec. 20, 1993 at 2. However, the cases that defendants incorrectly cite for this proposition did not actually involve indemnity contracts, but rather common law implied indemnification claims, in which the issue was whether the defendant was ultimately liable for injuries to a non-party that were attributed initially to the plaintiff. See, e.g., McDermott v. City of New York, 50 N.Y.2d 211, 406 N.E.2d 460, 462, 428 N.Y.S.2d 643 (N.Y. 1980) (after settling personal injury suit filed against it, city brought implied indemnification claim against manufacturer of allegedly defective product). By contrast, insurance contracts and other "contracts of indemnity" are treated no differently than other contracts for statute of limitations purposes. See Pryke, 62 N.Y.2d at 717. Therefore, even if we accept defendants' characterization of the agreements here as contracts of indemnification, such a characterization does not affect the outcome of this motion.
Here, Continental sought to be reimbursed for its payments of three claims pursuant to its insurance policies. Defendants denied the Osczapinski claim in August 1990, the Clark claim in February 1987, and the Del Molvetto claim in October 1989. Because Continental commenced its breach of contract action arising out of these claims on November 14, 1991, within six years of defendants' denial of Continental's claims, its action was timely. We therefore deny defendants' motion.
B. CPLR 206(a)
Alternatively, defendants argue that if "breach" of a reinsurance contract does not occur until a reinsured party has made an unsatisfied demand upon the reinsurer, then section 206(a) ("CPLR 206(a)") of New York's Civil Practice Law and Rules applies and bars plaintiff's claims. See N.Y. Civ. Prac. L. & R. 206(a) (McKinney 1990). We reject this argument as well.
CPLR 206(a) states that "where a demand is necessary to entitle a person to commence an action, the time within which the action must be commenced shall be computed from the time when the right to make the demand is complete . . . ." N.Y. Civ. Prac. L. & R. 206(a). If this section were to apply to the facts of this case, then Continental's claims would be time barred because more than six years elapsed between the dates that Continental settled its three insurance claims -- and thus had a right to make demand upon its reinsurers -- and the date that Continental filed its breach of contract action against defendants. See, e.g., State v. City of Binghamton, 72 A.D.2d 870, 421 N.Y.S.2d 950, 952 (N.Y. App. Div. 1979) ("The statute of limitations begins to run when the right to make the demand for payment is complete, and the plaintiff will not be permitted to prolong the statute of limitations simply by refusing to make demand.").
However, CPLR 206(a) does not apply here. New York courts and other courts applying New York law have held that this section applies only where a demand requirement is a procedural as opposed to a substantive element of the cause of action.
Where the demand requirement is substantive, that is, where a demand and refusal are requisite elements of the cause of action, it accrues and the statute of limitation begins to run only after such demand and refusal. On the other hand, where the demand is merely procedural, that is, where demand and refusal are not requisite elements of the cause of action and the defendant's actionable conduct was complete prior to demand, s 206(a) of the N.Y.C.P.L.R. governs and the limitation period begins to run when the "right to make the demand is complete."