The Subrogation Strategist

In City of N. Tonawando v. Penn Power Group, LLC, 77 CA 24-01685, 2026 N.Y. App. Div. LEXIS 1800 (4^th Dept. Mar. 20, 2026), the Supreme Court of New York, Appellate Division, Fourth Department (Appellate Court), considered whether the defendant’s motion to dismiss should be granted on the grounds that the breach of warranty was time-barred by the statute of limitations and the plaintiff’s negligence claims were barred by the economic loss doctrine (ELD). The Appellate Court agreed with the defendant that the breach of warranty claim was barred by the statute of limitations and that the ELD barred the plaintiff’s negligence claims.

With respect to the breach of warranty claim, the Appellate Court found that the defendant met its initial burden of establishing that the 4-year statute of limitations in the Uniform Commercial Code (UCC) 2-725 had expired. The burden then shifted to the plaintiff to establish that the statute of limitations had not expired. The court found that the plaintiff failed to allege – beyond speculation and conjecture – that an express warranty of future performance was a made. Thus, the Appellate Court found that plaintiff failed to allege evidentiary facts showing that this case fell within an exception to the 4-year statute of limitations.

Considering the economic loss question, the court stated that pursuant to the ELD, “a plaintiff may not recover in tort against a manufacture for economic loss that is contractually based, whether due to injury to the product itself or consequential damages flowing therefrom.” In this case, the plaintiff alleged only economic loss arising out of damage to the product itself and consequential damages, i.e., damage to the truck and the truck’s replacement cost. The Appellate Court, therefore, found that the plaintiff’s negligence causes of action were barred by the ELD.

The case reminds subrogation professionals that, when in New York, they should consider not only the UCC’s statute of limitations for breach of warranty claims and whether an exception applies based on further performance. They should also consider the impact of the ELD on a subrogor’s negligence claims.