New York Law Review

Tag: CPLR 202

  • Norex Petroleum Ltd. v. Access Industries, Inc., 23 N.Y.3d 604 (2014): Interplay of Borrowing and Savings Statutes

    23 N.Y.3d 604 (2014)

    When a nonresident plaintiff’s timely action in New York federal court is terminated on non-merits grounds, the plaintiff can refile the claims in state court within six months under New York’s savings statute, even if the claim would be untimely in the jurisdiction where the cause of action accrued.

    Summary

    Norex, a Canadian company, initially sued in federal court in New York, alleging RICO violations and state law claims related to the takeover of a Russian oil company. The federal case was dismissed on jurisdictional grounds after years of litigation. Norex then refiled the state law claims in New York state court within six months. The defendants argued the state claims were time-barred under CPLR 202 because Alberta, where Norex’s economic injury occurred, has a shorter statute of limitations and no savings statute. The New York Court of Appeals held that because the initial federal action was timely, CPLR 205(a) allowed the refiling in state court, regardless of Alberta’s laws.

    Facts

    Norex, a Canadian company, claimed the defendants illegally took control of a Russian oil company in 2002, causing economic harm to Norex in Alberta. Norex sued in the Southern District of New York in February 2002, alleging RICO violations and adding state law claims later. The federal district court initially dismissed on forum non conveniens, but the Second Circuit reversed. After further proceedings and an intervening Supreme Court decision (Morrison v. National Australia Bank Ltd.), the Second Circuit ultimately affirmed dismissal for failure to state a claim in December 2010. Norex then filed in New York State Supreme Court in March 2011.

    Procedural History

    Norex initially filed in the U.S. District Court for the Southern District of New York. The District Court granted a motion to dismiss based on forum non conveniens, but the Second Circuit reversed. The District Court then dismissed for lack of subject matter jurisdiction, which was affirmed by the Second Circuit. Norex then commenced an action in New York Supreme Court. The Supreme Court dismissed the complaint as time-barred. The Appellate Division affirmed. The New York Court of Appeals granted leave to appeal and reversed the Appellate Division’s order.

    Issue(s)

    Whether CPLR 205(a), New York’s savings statute, permits a nonresident plaintiff to refile claims in state court within six months of a federal action’s non-merits termination, when the suit would be untimely in the jurisdiction where the claims accrued, due to CPLR 202, New York’s borrowing statute.

    Holding

    Yes, because once the initial action was timely commenced in federal court in New York, the borrowing statute’s purpose of preventing forum shopping was fulfilled, and CPLR 202 had no further role to play.

    Court’s Reasoning

    The Court of Appeals reasoned that CPLR 202’s purpose is to prevent forum shopping by nonresidents seeking to take advantage of New York’s longer statute of limitations. Once Norex filed a timely action in federal court in New York, that purpose was served. The court emphasized that CPLR 205(a) is designed to ensure a diligent suitor the right to a hearing on the merits. Quoting Gaines v. City of New York, the court stated, “The important consideration is that by invoking judicial aid, a litigant gives timely notice to his adversary of a present purpose to maintain his rights before the courts.” Because the initial federal action was timely under CPLR 202, the subsequent state court action was also considered timely commenced at the time of the initial action under CPLR 205(a). The Court rejected the argument that Alberta’s lack of a savings statute affected the analysis, emphasizing that CPLR 202 had already been satisfied by the timely filing of the initial action. The Court distinguished Besser v Squibb & Sons, noting that the revival statute in that case was explicitly intended to benefit only New York residents, whereas CPLR 205(a) contains no such limitation. The Court concluded that its interpretation best comports with the statutory language and honors both the borrowing statute’s purpose and the savings statute’s goal of resolving actions on their merits.

  • Portfolio Recovery Associates, LLC v. King, 14 N.Y.3d 410 (2010): Application of Borrowing Statute to Assigned Debt

    Portfolio Recovery Associates, LLC v. King, 14 N.Y.3d 410 (2010)

    When a nonresident assignee of a cause of action accruing outside of New York brings suit in New York, the borrowing statute, CPLR 202, requires the action to be timely under the statute of limitations of both New York and the jurisdiction where the cause of action accrued; the court must also borrow the tolling provisions of the jurisdiction where the cause of action accrued.

    Summary

    Portfolio Recovery Associates, LLC, as assignee of Discover Bank, sued Jared King in New York to recover on a credit card debt. The credit card agreement contained a Delaware choice-of-law clause. King argued that Delaware’s three-year statute of limitations barred the action under New York’s borrowing statute (CPLR 202). The New York Court of Appeals held that CPLR 202 applied, requiring consideration of Delaware’s statute of limitations and its tolling provisions. Because the cause of action accrued in Delaware and Delaware’s tolling statute did not apply to King, a nonresident, the action was time-barred.

    Facts

    Jared King, while a resident of Connecticut, opened a credit card account with Greenwood Trust Company (later Discover Bank) in 1989. The agreement had a Delaware choice-of-law provision. King canceled the card in 1999 and made no payments after December 1998. In August 2000, Discover assigned King’s debt to Portfolio Recovery Associates, LLC. Portfolio sued King in New York in 2005, asserting breach of contract and account stated.

    Procedural History

    The Supreme Court granted summary judgment to Portfolio. The Appellate Division affirmed. The New York Court of Appeals reversed, holding that Portfolio’s claim was time-barred under the borrowing statute.

    Issue(s)

    Whether New York’s borrowing statute, CPLR 202, requires application of Delaware’s statute of limitations and tolling provisions to a debt collection action brought in New York by an assignee of a Delaware corporation against a New York resident, where the cause of action accrued in Delaware.

    Holding

    Yes, because CPLR 202 mandates that when a nonresident sues on a cause of action accruing outside New York, the action must be timely under the limitations periods of both New York and the jurisdiction where the cause of action accrued. Moreover, in determining whether the action would be barred in the other state, the court must also borrow that state’s tolling provisions.

    Court’s Reasoning

    The Court of Appeals reasoned that choice-of-law provisions generally apply to substantive issues, while statutes of limitations are procedural. Therefore, the Delaware choice-of-law clause did not automatically incorporate Delaware’s statute of limitations. However, CPLR 202 dictates that the statute of limitations of both New York and the state where the cause of action accrued must be considered. Since Discover Bank sustained the economic injury in Delaware, the cause of action accrued there. As such, Delaware’s three-year statute of limitations applied. The court then addressed Delaware’s tolling statute, which tolls the statute of limitations when a defendant is out of state. However, the court interpreted Delaware law as intending its tolling provision to apply only where the defendant had a prior connection to Delaware, meaning the defendant would at some point return to the state or be subject to service there. Since King had no prior connection to Delaware, the tolling provision did not apply. The court noted that its holding was consistent with the purpose of CPLR 202, “namely, to prevent forum shopping by nonresidents attempting to take advantage of a more favorable statute of limitations in this state.” Because the action was time-barred in Delaware, it was also time-barred in New York. The court reversed the grant of summary judgment to Portfolio, but noted that it could not grant summary judgment to King because King did not cross-move for that relief.

  • Global Financial Services Corp. v. Tri-State Auto Auction, Inc., 3 N.Y.3d 951 (2006): Borrowing Statute and Tolling Provisions

    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.

  • Credit Suisse First Boston v. Utrecht-America Finance Co., 80 F.3d 537 (1996): Accrual of Contract Claims for Statute of Limitations Purposes

    Credit Suisse First Boston v. Utrecht-America Finance Co., 80 F.3d 537 (1996)

    For purposes of New York’s borrowing statute (CPLR 202), a contract cause of action accrues where the plaintiff sustains the economic injury, typically the plaintiff’s place of residence or principal place of business.

    Summary

    Credit Suisse First Boston sued Utrecht-America Finance Co. in New York, alleging breach of contract and quantum meruit. Utrecht sought dismissal based on New York’s borrowing statute, arguing that Delaware or Pennsylvania’s shorter statutes of limitations applied because Credit Suisse was incorporated in Delaware and had its principal place of business in Pennsylvania. Credit Suisse argued that the cause of action accrued in New York, where the contract was negotiated, performed, and breached. The court held that the cause of action accrued where Credit Suisse sustained the economic injury, which was either Delaware or Pennsylvania, thus the action was time-barred.

    Facts

    Credit Suisse, a Delaware corporation, contracted with Utrecht-America Finance Co. on February 1, 1988, to provide consulting services.

    In March 1989, Credit Suisse located an investment company to purchase Utrecht’s outstanding shares.

    From February 1988 to August 1989, Credit Suisse advised Utrecht on corporate planning.

    On November 6, 1989, Credit Suisse demanded over $9 million for services, which Utrecht refused the following week.

    Credit Suisse filed suit in federal court in New York on November 9, 1995, but it was dismissed for lack of subject matter jurisdiction.

    Credit Suisse then filed a similar suit in New York Supreme Court.

    Procedural History

    The Supreme Court dismissed the complaint, holding that the cause of action accrued where Credit Suisse suffered injury, i.e., its place of residence.

    The Appellate Division affirmed.

    The New York Court of Appeals granted leave to appeal.

    Issue(s)

    Whether, for purposes of CPLR 202, a nonresident plaintiff’s contract claim accrues in New York, where most of the relevant events occurred, or in the plaintiff’s state of residence, where it sustained the economic impact of the alleged breach.

    Holding

    No, because for purposes of New York’s borrowing statute, a contract cause of action accrues where the plaintiff sustains the economic injury, which is typically the plaintiff’s place of residence or principal place of business.

    Court’s Reasoning

    The court reasoned that CPLR 202 requires a cause of action to be timely under both New York’s limitations period and the jurisdiction where the cause of action accrued. This prevents nonresidents from forum shopping in New York.

    The court rejected the argument to apply a “grouping of contacts” approach, typically used in substantive choice-of-law questions, to determine accrual under CPLR 202. The court stated that the legislature intended the term “accrued” in CPLR 202 to mean the time when and the place where the plaintiff first had the right to bring the cause of action.

    The court noted that prior cases have consistently employed the traditional definition of accrual in tort cases: a cause of action accrues at the time and in the place of injury. The court used Martin v. Dierck Equip. Co., 43 NY2d 583 as an example.

    When an alleged injury is purely economic, the place of injury is usually where the plaintiff resides and sustains the economic impact of the loss. As the court noted, “For purposes of the New York borrowing statute, a cause of action accrues where the injury is sustained. In cases involving economic harm, that place is normally the state of plaintiffs residence.”(Gorlin v Bond Richman & Co., 706 F Supp 236, 240)

    The court distinguished Insurance Co. v. ABB Power Generation, 91 NY2d 180, stating that in ABB Power, the place of injury and the place where all operative facts occurred were the same (California), so the court did not have to decide between a choice-of-law analysis and a place-of-injury rule.

    The court emphasized that “CPLR 202 is designed to add clarity to the law and to provide the certainty of uniform application to litigants” (Insurance Co. v ABB Power Generation, 91 NY2d 180, 187). A rule requiring determination of the plaintiff’s residence better serves this goal than a rule dependent on a litany of events relevant to the “center of gravity” of a contract dispute.

  • Antone v. General Motors Corp., 64 N.Y.2d 20 (1984): Defining ‘Residence’ Under New York’s Borrowing Statute

    64 N.Y.2d 20 (1984)

    For the purpose of New York’s borrowing statute (CPLR 202), ‘residence’ is not equivalent to ‘domicile’; instead, it requires a significant connection to a locality within the state through living there for a substantial period during the year.

    Summary

    Samuel Antone sued General Motors (GM) for injuries sustained in a car accident in Pennsylvania, alleging negligence and strict liability. GM moved for summary judgment, arguing the suit was time-barred under New York’s borrowing statute (CPLR 202) because Antone was not a New York resident when the cause of action accrued in Pennsylvania, which has a two-year statute of limitations. The New York Court of Appeals held that ‘residence’ under CPLR 202 is distinct from ‘domicile’ and requires a significant connection to a New York locality. Because Antone was not a New York resident at the time of the accident, the Pennsylvania statute of limitations applied, barring his claim.

    Facts

    Antone, while employed at a nursing home in Rossiter, Pennsylvania, was injured in a one-car accident on September 12, 1977. He had moved to Pennsylvania from Olean, New York, in May 1977. Prior to living in Olean he had lived in Jamestown, New York. At the time of the accident, he maintained a post office box in Jamestown, New York, but had no place of residence in New York. In June 1980, Antone received a recall letter from GM regarding his 1975 Buick Skyhawk due to potential wheel-bearing problems. He commenced the lawsuit against GM on August 27, 1980.

    Procedural History

    Antone filed suit in New York. The trial court held a hearing and found that Antone failed to prove he was a resident of New York at the time of the accident. Special Term granted GM’s motion for summary judgment dismissing the complaint. The Appellate Division affirmed the trial court’s decision without opinion. Antone appealed to the New York Court of Appeals.

    Issue(s)

    Whether the term ‘resident’ in CPLR 202 is equivalent to ‘domiciliary,’ such that Antone, who claimed to be domiciled in New York, could take advantage of New York’s statute of limitations despite the cause of action accruing outside the state.

    Holding

    No, because ‘resident’ as used in CPLR 202 is not synonymous with ‘domiciliary’; it requires a substantial connection to a locality within New York demonstrated by living there for a meaningful period during the year.

    Court’s Reasoning

    The Court of Appeals reasoned that New York law has long distinguished between ‘residence’ and ‘domicile,’ noting that a person can have multiple residences but only one domicile. The legislative history of CPLR 202 shows no intent to equate ‘resident’ with ‘domiciliary.’ The purpose of CPLR 202, which is to prevent forum shopping by non-residents, is better served by focusing on whether a plaintiff has a substantial connection to New York. If ‘resident’ were interpreted as ‘domiciliary,’ an individual with significant contacts in New York might unfairly be treated the same as someone with no New York connections. The court found Antone’s action time-barred because he was not a New York resident at the time of the accident, and the Pennsylvania statute of limitations was two years, which had already expired. The court rejected Antone’s arguments that GM should be equitably estopped from asserting the statute of limitations or that he should be allowed to amend his complaint to add a cause of action for fraudulent concealment, finding no evidence to support these claims. As the court stated, “the determination of whether a plaintiff is a New York resident, for purposes of CPLR 202, turns on whether he has a significant connection with some locality in the State as the result of living there for some length of time during the course of a year”.

  • United States Fidelity & Guaranty Co. v. E.W. Smith Co., 46 N.Y.2d 569 (1979): Tolling Statute of Limitations for Subrogees

    46 N.Y.2d 569 (1979)

    A subrogee inherits the residency status of the subrogor for the purpose of applying New York’s borrowing statute (CPLR 202) regarding the Statute of Limitations.

    Summary

    United States Fidelity & Guaranty Co. (Fidelity), as subrogee of a New York partnership, brought a conversion action against E.W. Smith Co., a Pennsylvania corporation. The case concerned whether the action was barred by the Statute of Limitations. The court held that because Fidelity stood in the shoes of its subrogor (the New York partnership), the New York statute of limitations applied, and the action was timely filed. The court also clarified the application of CPLR 202 regarding causes of action accruing outside of New York, emphasizing that the residency of the original claimant (the subrogor) is determinative. The court rejected the argument that CPLR 205(a) shortened the Statute of Limitations.

    Facts

    W.E. Hutton and Company, a New York brokerage firm, had stock certificates stolen from its New York office in October 1968.
    E.W. Smith Company, a Pennsylvania corporation, allegedly obtained these certificates and sold them through Philadelphia brokerage houses on behalf of a customer.
    United States Fidelity and Guaranty Company (Fidelity), Hutton’s insurer, paid Hutton for the loss and became subrogated to Hutton’s rights.
    Smith registered to do business in New York in November 1974.

    Procedural History

    In 1970, Fidelity initially sued Smith in New York, alleging conversion, but the case was dismissed for lack of personal jurisdiction, and the dismissal was affirmed.
    In 1977, Fidelity filed a second suit against Smith, alleging the same conversion claim, arguing that Smith’s registration to do business in New York conferred jurisdiction.
    Special Term dismissed the complaint based on the Statute of Limitations.
    The Appellate Division affirmed the dismissal. The New York Court of Appeals granted leave to appeal.

    Issue(s)

    1. Whether the Statute of Limitations was tolled under CPLR 207 until Smith came into New York by registering to do business.
    2. Whether CPLR 202 requires applying Pennsylvania’s shorter Statute of Limitations because the cause of action accrued outside New York and Fidelity is a foreign corporation.
    3. Whether CPLR 205(a) bars the action because it was not commenced within six months after the termination of Fidelity’s prior action.

    Holding

    1. Yes, because CPLR 207 applies, tolling the Statute of Limitations until Smith entered the state.
    2. No, because Fidelity, as subrogee, stands in the shoes of Hutton, a New York resident, and therefore the New York Statute of Limitations applies.
    3. No, because CPLR 205(a) is a grace period provision and does not shorten an otherwise validly tolled Statute of Limitations period.

    Court’s Reasoning

    The court found that CPLR 207 applied, which states, “If, when a cause of action accrues against a person, he is without the state, the time within which the action must be commenced shall be computed from the time he comes into or returns to the state.”
    The court held that Fidelity, as the subrogee of Hutton, was entitled to the same rights and remedies as Hutton, including the benefit of New York’s Statute of Limitations. “It is the very essence of subrogation that a subrogee stands in the shoes of the subrogor and is entitled to all of the latter’s rights, benefits and remedies”.
    The court referenced CPLR 202, noting that the critical factor is the residency of the person in whose favor the cause of action accrued. The court stated, “CPLR 202 provides for the application of the shorter of the two limitations periods in question ‘except * * * where the cause of action accrued in favor of a resident of the state’ (emphasis added), in which case the New York period is applicable.”
    The court rejected the argument that CPLR 205(a) barred the action, stating, “Where, as here, the statutory time limit has not expired, due to a toll or otherwise, this section cannot be applied in such a way as to shorten the period otherwise available to the plaintiff”. CPLR 205(a) is meant to extend, not shorten, a Statute of Limitations.
    There were no dissenting or concurring opinions.