Global Financial Services Corp. v. Tri-State Auto Auction, Inc., 3 N.Y.3d 951 (2006)
When a cause of action accrues outside of New York, CPLR 202 requires courts to apply the limitations period of the foreign jurisdiction; furthermore, the foreign jurisdiction’s tolling statute is also borrowed, but only where the defendant’s absence from that jurisdiction made service a practical impossibility.
Summary
A Tennessee plaintiff sued New York defendants in New York for legal malpractice, arguing that Tennessee’s statute of limitations, including its tolling provision, should apply because the defendants were allegedly absent from Tennessee. The New York Court of Appeals held that while CPLR 202 requires borrowing the foreign statute of limitations, the tolling provision is only applicable if the defendant’s absence from the foreign jurisdiction made service impossible. Since the defendants were amenable to suit in New York, the tolling provision did not apply, and the action was time-barred.
Facts
A Tennessee company, Global Financial Services, brought a legal malpractice claim in New York against Tri-State Auto Auction, Inc., a New York entity, and other New York resident defendants. The malpractice allegedly occurred in Tennessee. The plaintiffs argued that Tennessee’s statute of limitations should apply, and because the defendants were not present in Tennessee, the Tennessee statute should be tolled.
Procedural History
The Supreme Court granted the defendants’ motion for summary judgment, holding that the matter was untimely. The Appellate Division unanimously affirmed, stating that the Tennessee tolling provision was unavailable. The plaintiffs appealed to the New York Court of Appeals.
Issue(s)
Whether the Tennessee tolling provision is applicable in a New York action when the defendants, although potentially not subject to personal jurisdiction in Tennessee, were at all times amenable to suit in New York.
Holding
No, because the purpose of a tolling statute is to allow a plaintiff additional time to serve a defendant when the defendant’s absence from the jurisdiction has made service a practical impossibility. Since the defendants were residents of New York and amenable to suit there, the Tennessee tolling provision did not apply.
Court’s Reasoning
The court relied on its prior decision in Insurance Co. of N. Am. v. ABB Power Generation, Inc., 91 N.Y.2d 180 (1997), which held that a cause of action accrues outside the state when it comes into existence, not when the defendant is subject to suit in that other state. The court emphasized that “CPLR 202 requires that a court, when presented with a cause of action accruing outside New York, should apply the limitation period of the foreign jurisdiction if it bars the claim.” The court also cited Childs v. Brandon, 60 N.Y.2d 927 (1983), noting that when borrowing the foreign statute of limitations, its tolling statute is also borrowed.
The court reasoned that the tolling statute’s purpose is to aid plaintiffs in serving defendants who are absent from the jurisdiction, making service practically impossible. In this case, the defendants were New York residents and amenable to suit in New York. Applying the Tennessee tolling provision would indefinitely toll the statute of limitations, a result the legislature did not intend when enacting CPLR 202. The court stated, “This action was commenced in New York and, as such, it was not necessary to toll the statute of limitations since defendants— residents of New York—were amenable to suit in New York for the entire period of Tennessee’s statute of limitations.”
The court concluded that it was irrelevant whether the defendants were subject to suit in Tennessee, as the key consideration was their amenability to suit in New York. Therefore, the Tennessee tolling provision was not applicable.