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.