New York Law Review

Tag: statute of limitations

  • Village of Lindenhurst v. J.D. Posillico, Inc., 21 N.Y.3d 1024 (2013): Statute of Limitations for Defective Construction Claims by Third-Party Beneficiaries

    Village of Lindenhurst v. J.D. Posillico, Inc., 21 N.Y.3d 1024 (2013)

    A cause of action for defective construction, even when brought as a claim of continuing public nuisance by a third-party beneficiary to the construction contract, accrues upon completion of the construction work for statute of limitations purposes.

    Summary

    Ten related actions were brought by municipalities against contractors alleging faulty workmanship in sewer construction performed decades earlier, causing damage to roadways. The municipalities claimed the faulty work constituted a continuing public nuisance. The New York Court of Appeals affirmed the dismissal of the actions as time-barred, holding that the claims, even if characterized as continuing public nuisance, arose from defective construction and accrued upon completion of the work. The court applied the rule from *City School Dist. of City of Newburgh v Stubbins & Assoc.*, extending it to third-party beneficiaries who are not strangers to the contract, and also rejected the argument that the ongoing damage constituted a continuing tort.

    Facts

    In the 1970s and 1980s, Nassau and Suffolk Counties contracted with various construction companies (the defendants) to build a sewer system. The contracts included “protection clauses” requiring the contractors to restore roadways to their “usual condition” post-construction, as per County Law § 263. After the sewer construction was finished, the areas surrounding the sewer lines settled, leading to damage to adjacent roadways, sidewalks, and curbs within the plaintiff municipalities.

    Procedural History

    In July 2009, ten municipalities filed separate actions against the contractors, alleging a continuing public nuisance due to faulty workmanship. The Supreme Court dismissed each complaint, and the Appellate Division affirmed, holding the actions were time-barred under the six-year statute of limitations for breach of contract (as the claims were viewed as third-party beneficiary claims). The Court of Appeals granted leave to appeal and affirmed the Appellate Division’s decisions.

    Issue(s)

    1. Whether a claim by a third-party beneficiary against a contractor for faulty workmanship in construction accrues, for statute of limitations purposes, upon completion of the construction, even when framed as a continuing public nuisance?

    2. Whether the continued presence of roadway defects resulting from the contractor’s alleged negligence constitutes a continuing tort that gives rise to successive causes of action?

    Holding

    1. Yes, because the essence of the claim arises out of defective construction, and under City School Dist. of City of Newburgh v Stubbins & Assoc.*, such claims accrue upon completion of performance, regardless of how the claim is characterized.

    2. No, because the tortious conduct consisted of discrete acts (negligent excavation and backfilling) that ceased upon completion of the sewer construction, and there was no unlawful encroachment or continuous interference with property easements.

    Court’s Reasoning

    The Court of Appeals relied on the precedent set in *City School Dist. of City of Newburgh v Stubbins & Assoc.*, 85 N.Y.2d 535 (1995), which established that in cases against contractors, the statute of limitations begins to run upon completion of the contractual work. The court stated, “In cases against architects or contractors, the accrual date for Statute of Limitations purposes is completion of performance.” The court reasoned that the municipalities’ claims, though framed as continuing public nuisances, were fundamentally based on the contractors’ alleged breach of duty under the construction contracts’ protection clauses. The court emphasized the language in the complaints where the municipalities specifically alleged that the defendants “committed faulty workmanship under said contracts.” The Court extended the *Newburgh* rule to third-party beneficiaries, noting that the counties contracted with the defendants to install the sewer system for the benefit of the municipalities.

    The Court rejected the municipalities’ attempts to distinguish *Newburgh*, stating that the rule is not limited to owners of real property and that the counties’ intention to retain ownership of the sewer lines did not diminish the municipalities’ status as intended beneficiaries. The Court also dismissed the argument that the municipalities’ lack of involvement in the construction process was a distinguishing factor, noting that they at least consented to the project and allowed the contractors to work on their property. The court determined there was not such a “lack of privity” that plaintiffs’ claims should “not fall under the general rule of accrual” articulated in *Newburgh*.

    The Court also addressed the municipalities’ argument that the continuing presence of roadway defects constituted a continuing public nuisance, giving rise to successive causes of action. The Court disagreed, stating that the contractors’ tortious conduct consisted of discrete acts of negligence that ceased upon completion of the sewer construction. “Although plaintiffs allege that the injuries to their property are ongoing, defendants’ tortious conduct consisted of discrete acts (i.e., negligent excavation and backfilling) that ceased upon completion of the sewer construction over 20 years ago.” The court distinguished this situation from cases involving an unlawful encroachment or continuous interference with property easements. Because the municipalities commenced the actions more than three years after the contractors completed the construction work, these claims were also time-barred.

  • Local 456, Int’l Bhd. of Teamsters, AFL-CIO v. City of Buffalo Fiscal Stability Auth., 19 N.Y.3d 957 (2012): Statute of Limitations for Challenging Administrative Actions

    Local 456, Int’l Bhd. of Teamsters, AFL-CIO v. City of Buffalo Fiscal Stability Auth., 19 N.Y.3d 957 (2012)

    When a declaratory judgment action challenges an administrative action for which a specific, shorter limitations period exists (e.g., Article 78), that shorter period applies instead of the general six-year statute of limitations.

    Summary

    This case concerns the statute of limitations applicable to a declaratory judgment action challenging the Buffalo Fiscal Stability Authority’s (BFSA) wage freeze. Seasonal employees of the City of Buffalo’s Public Works Department sued the BFSA, arguing the wage freeze violated the city’s Living Wage Ordinance. The BFSA argued the suit was time-barred because it was essentially an Article 78 proceeding subject to a four-month statute of limitations. The Court of Appeals agreed with the BFSA, holding that because the action challenged a specific administrative decision (the wage freeze’s application to the plaintiffs), the shorter statute of limitations applied, barring the suit. The Court emphasized that the substance of the claim dictates the applicable limitations period.

    Facts

    In 2004, the BFSA adopted Resolution No. 04-35, imposing a wage freeze on City of Buffalo employees to address a fiscal crisis. Plaintiffs, at-will seasonal employees, alleged the City failed to pay them scheduled wage increases under Buffalo’s Living Wage Ordinance due to the wage freeze. Plaintiffs filed suit in January 2008, seeking injunctive relief and retroactive pay, claiming the BFSA lacked authority to freeze their wages.

    Procedural History

    Plaintiffs initially sued the City and Mayor. After the wage freeze was raised as a defense, plaintiffs amended their complaint to include the BFSA. Supreme Court rejected the BFSA’s statute of limitations defense and issued a declaration in favor of the plaintiffs. The Appellate Division affirmed. The Court of Appeals granted leave to appeal.

    Issue(s)

    Whether the plaintiffs’ declaratory judgment action against the BFSA, challenging the application of a wage freeze to them, is governed by the four-month statute of limitations applicable to Article 78 proceedings, or the general six-year statute of limitations for declaratory judgment actions.

    Holding

    No, because the gravamen of the claim is a challenge to a specific administrative determination (the application of the wage freeze to the plaintiffs). Therefore, the four-month statute of limitations for Article 78 proceedings applies, rendering the action untimely.

    Court’s Reasoning

    The Court relied on Solnick v. Whalen, which established that the statute of limitations in a declaratory judgment action is determined by the gravamen of the claim. If the action could have been brought as an alternative proceeding with a specific limitations period (like Article 78), that period governs. Here, the plaintiffs challenged the BFSA’s specific decision to suspend their wage increases, characterizing it as an administrative action subject to Article 78. The Court reasoned that the plaintiffs were not challenging the wage freeze in general, but its specific application to them. Even if the BFSA arguably lacked the authority to freeze the plaintiffs’ wages, the action was still time-barred because it was filed more than four months after the BFSA’s resolution. The Court emphasized that it must “examine the substance of [the] action to identify the relationship out of which the claim arises and the relief [is] sought” (quoting Solnick v. Whalen). This case underscores the importance of promptly challenging administrative actions to avoid statute of limitations issues. The dissent’s argument that the BFSA lacked authority to freeze wages was deemed irrelevant to the statute of limitations analysis; the key was that the BFSA *did* freeze the wages, triggering the need for a timely challenge.

  • Matter of N.J.R. Assoc. v. Tausend, 19 N.Y.3d 503 (2012): Determining Forum for Statute of Limitations Challenge in Arbitration

    Matter of N.J.R. Assoc. v. Tausend, 19 N.Y.3d 503 (2012)

    When a party initiates and participates in arbitration, they cannot later seek a court order to block counterclaims from being arbitrated by raising a statute of limitations defense; the timeliness challenge must be decided by the arbitrator.

    Summary

    This case addresses whether a court or an arbitrator should resolve a statute of limitations challenge to counterclaims in an arbitration proceeding. Ronald Tausend formed a partnership (NJR) with his children, Nicole and Jeffrey, to purchase properties from a trust. Years later, a dispute arose, and after Nicole initiated legal action, NJR demanded arbitration. Nicole asserted counterclaims, and NJR then sought to stay arbitration of those counterclaims based on the statute of limitations. The Court of Appeals held that, because NJR initiated and participated in the arbitration, the timeliness issue must be decided by the arbitrator.

    Facts

    Ronald Tausend, along with his children Nicole and Jeffrey, were beneficiaries of a trust. The trust owned two New York City buildings. In 1985, Ronald formed NJR Associates, a partnership, with Nicole and Jeffrey to acquire these properties. The partnership agreement contained an arbitration clause and a New York choice of law provision. NJR purchased the properties from the trust for $1.9 million and shortly after sold the air rights for one of the buildings for $1.75 million. Later, the remaining interest in that property was sold for $10.25 million. In 2005, Ronald surrendered his interest in the trust, and the remaining principal was distributed to Nicole and Jeffrey. In 2008, Nicole’s request for information about the property sale was rejected, leading her to commence a legal proceeding.

    Procedural History

    Nicole initiated a CPLR article 78 proceeding to access partnership documents. NJR responded by demanding arbitration, prompting Nicole to petition for a stay of arbitration. Supreme Court denied the stay, ordering arbitration, which was affirmed by the Appellate Division. Nicole asserted counterclaims in the arbitration, leading NJR to seek a court stay of arbitration regarding the counterclaims based on the statute of limitations. Supreme Court granted NJR’s petition. The Appellate Division modified, dismissing NJR’s petition, stating CPLR 7503(b) barred the partnership from obtaining a stay because it initiated and participated in arbitration. The Court of Appeals granted leave to appeal.

    Issue(s)

    Whether a party who initiates and participates in arbitration can later seek a court order to stay arbitration of counterclaims based on the statute of limitations, or whether the timeliness challenge must be decided by the arbitrator.

    Holding

    No, because NJR initiated and participated in the arbitration, the timeliness challenge to Nicole’s counterclaims must be decided by the arbitrator.

    Court’s Reasoning

    The Court considered both the Federal Arbitration Act (FAA) and New York law. Under the FAA, statute of limitations defenses are presumptively reserved to the arbitrator. While New York law allows a threshold issue of timeliness to be asserted in court, a contract can adopt the New York rule if it specifies that New York law governs both the agreement and its enforcement. The partnership agreement here lacked the critical “enforcement” language to invoke the New York rule. Therefore, under the FAA, the timeliness question must be resolved by the arbitrator.

    Under New York law (CPLR 7503[b]), a statute of limitations defense can be raised in state court by a party who has not participated in the arbitration. The Court found that NJR’s actions constituted participation because NJR initiated arbitration, successfully defended against Nicole’s petition to stay arbitration, received an application to compel arbitration regarding the counterclaims, and sought a court order to prevent the counterclaims from being considered. The court stated, “It is also inconsistent for NJR to assert that Nicole’s counterclaims are not arbitrable—a party cannot compel arbitration of its own causes of action, prevent its adversary from obtaining judicial relief and then ask a court to block the adversary’s counterclaims from being arbitrated by raising a statute of limitations defense”. The court determined that arbitration should proceed if there is at least one arbitrable issue. Because NJR initiated and participated in arbitration, the timeliness challenge to the counterclaims must be decided by an arbitrator.

  • Hahn Automotive Warehouse, Inc. v. American Zurich Ins. Co., 21 N.Y.3d 765 (2013): Statute of Limitations on Contract Claims Accrues When Right to Demand Payment Arises

    Hahn Automotive Warehouse, Inc. v. American Zurich Ins. Co., 21 N.Y.3d 765 (2013)

    In a breach of contract claim for payment of money owed, the statute of limitations begins to run when the party has the legal right to demand payment, not necessarily when the demand is actually made.

    Summary

    Hahn Automotive sued American Zurich Insurance, seeking a declaration that Zurich’s claims for unpaid insurance premiums were time-barred by the statute of limitations. Zurich counterclaimed for breach of contract, arguing the statute of limitations began when it invoiced Hahn for the unpaid amounts. The New York Court of Appeals held that the statute of limitations began to run when Zurich had the contractual right to demand payment, regardless of when it actually sent the invoices. This prevents a party from indefinitely extending the statute of limitations by delaying billing. The court affirmed the lower court’s ruling, finding some of Zurich’s claims were indeed time-barred.

    Facts

    Hahn Automotive obtained various insurance policies from Zurich between 1992 and 2003, including general liability, automotive liability, and workers’ compensation. These policies fell into four categories: retrospective premium agreements, adjustable deductible policies, deductible policies, and claim services contracts. Under the retrospective premium and adjustable deductible policies, Zurich was required to recalculate premiums based on actual claims experience. For deductible policies, Zurich would pay claims and then seek reimbursement from Hahn. Zurich performed an internal audit in 2005 and discovered it had not billed Hahn for certain deductibles and adjustments. Zurich issued invoices to Hahn in April 2005, March 2006, and March 2006, which Hahn did not pay.

    Procedural History

    Hahn sued Zurich, seeking a declaration that claims for debts arising more than six years before the suit were time-barred. Zurich counterclaimed for breach of contract. The Supreme Court granted partial summary judgment to Hahn, finding that the statute of limitations ran from when Zurich had the right to demand payment. The Appellate Division modified, dismissing some of Hahn’s claims but agreeing that Zurich’s counterclaims for debts arising more than six years prior were time-barred. Zurich appealed to the New York Court of Appeals.

    Issue(s)

    Whether the six-year statute of limitations for Zurich’s breach of contract counterclaims began to run when Zurich possessed the legal right to demand payment from Hahn, or when Zurich actually issued invoices to Hahn?

    Holding

    Yes, the statute of limitations on Zurich’s counterclaims began to run when Zurich had the contractual right to demand payment from Hahn because in contract actions, a claim generally accrues at the time of the breach, which in this case is when Zurich had the right to demand payment.

    Court’s Reasoning

    The Court of Appeals applied CPLR 213(2), which governs the six-year statute of limitations for breach of contract claims. The court stated, “[A] claim generally accrues at the time of the breach.” The court reasoned that a cause of action accrues “when all of the facts necessary to the cause of action have occurred so that the party would be entitled to obtain relief in court.” The court also relied on Appellate Division precedent, which held that “where the claim is for payment of a sum of money allegedly owed pursuant to a contract, the cause of action accrues when the [party making the claim] possesses a legal right to demand payment.” To hold otherwise would allow Zurich to extend the statute of limitations indefinitely by simply failing to make a demand. The Court distinguished this case from cases where the right to payment is expressly conditioned on a specific event, noting that Zurich could not point to any contract language unambiguously conditioning its right to payment on its own demand. The court stated, “[T]he contracts contain specific references to the applicable time periods when Zurich was entitled to calculate adjustments and bill Hahn for the amounts owed. Such provisions contradict the open-ended arrangement now proposed by Zurich.”

  • Corsello v. Verizon New York, Inc., 18 N.Y.3d 777 (2012): Inverse Condemnation and Statute of Limitations

    Corsello v. Verizon New York, Inc., 18 N.Y.3d 777 (2012)

    A property owner can bring an inverse condemnation claim against an entity with eminent domain power for a permanent physical occupation of their property, and a statute barring claims related to attachments of wires or cables to a building precludes a statute of limitations defense.

    Summary

    The Corsellos sued Verizon for attaching a terminal box to their apartment building without compensation, enabling Verizon to provide phone service to other buildings. The Corsellos claimed inverse condemnation, unjust enrichment, trespass, and deceptive trade practices. The New York Court of Appeals held that the Corsellos stated a valid inverse condemnation claim, which was not time-barred due to Real Property Law § 261. However, the Court found the General Business Law § 349 claim time-barred and the unjust enrichment claim legally insufficient. The Court also upheld the denial of class certification, finding that individual issues predominated.

    Facts

    The Corsellos owned an apartment building in Brooklyn. Verizon’s predecessor attached a terminal box to the building, which connected Verizon’s “Block Cable” to “Station Connection wires,” providing telephone service to multiple buildings, not just the Corsellos’. The Corsellos alleged that Verizon never disclosed their right to compensation and falsely implied it had a right to attach the box. A Verizon representative allegedly told William Corsello in 1986 that Verizon “had a right” to put the box on the wall.

    Procedural History

    The Corsellos sued Verizon, seeking damages and injunctive relief on behalf of themselves and similarly situated building owners. The Supreme Court dismissed the unjust enrichment claim but upheld the other claims. It later denied class certification. The Appellate Division modified the Supreme Court’s order, dismissing the inverse condemnation claim as time-barred, reinstating the unjust enrichment claim, and affirming the General Business Law claim. It also affirmed the denial of class certification. The Court of Appeals modified the Appellate Division’s order, reinstating the inverse condemnation claim but dismissing the other two claims. It affirmed the denial of class certification.

    Issue(s)

    1. Whether the attachment of a telecommunications box to a building constitutes a taking for which an inverse condemnation claim may be brought.

    2. Whether Real Property Law § 261 saves the inverse condemnation claim from being time-barred.

    3. Whether the claim under General Business Law § 349 is barred by the statute of limitations.

    4. Whether the plaintiffs stated a valid claim for unjust enrichment.

    5. Whether the lower courts abused their discretion in denying class certification.

    Holding

    1. Yes, because the complaint alleges facts from which a continuous and permanent occupation of the plaintiff’s property—a de facto taking—could be found.

    2. Yes, because Real Property Law § 261 precludes a statute of limitations defense based on the attachment of wires or cables to a building.

    3. Yes, because the alleged deception occurred more than three years before the suit was brought, and no subsequent deceptive act was alleged to justify equitable estoppel.

    4. No, because an unjust enrichment claim is not available where it duplicates or replaces a conventional tort claim.

    5. No, because the courts were justified in finding that common questions of law or fact did not predominate and that the claims of the representative parties were not typical of the class.

    Court’s Reasoning

    The Court reasoned that inverse condemnation is a means for a landowner to recover just compensation when their property has been taken without formal condemnation proceedings. The Court rejected Verizon’s argument that inverse condemnation is only available when an entity chooses to exercise its eminent domain power. The Court clarified that a continuous, permanent trespass could constitute a de facto taking. Regarding the statute of limitations, the Court held that Real Property Law § 261 prevents a lapse-of-time defense. It emphasized that the statute aims to protect property owners from losing remedies due to the passage of time when a company unlawfully attaches wires or cables to their property. The Court determined that the General Business Law claim was time-barred because the injury occurred when the plaintiffs refrained from demanding payment or removal of the box, which was more than three years before the suit. The Court stated that the unjust enrichment claim was duplicative of the trespass and taking claims. Lastly, the Court found no abuse of discretion in denying class certification. Evidence submitted by Verizon cast doubt on the existence of a uniform policy of attaching apparatus to buildings furtively and without consent. Verizon presented evidence specific to the plaintiffs’ building, suggesting that individual issues predominated over common ones. The Court quoted United States v. Clarke, 445 U.S. 253, 257 (1980) in defining inverse condemnation as “the manner in which a landowner recovers just compensation for a taking of his property when condemnation proceedings have not been instituted.”

  • Kahn v. New York City Department of Education, 20 N.Y.3d 461 (2013): Statute of Limitations for Challenging Probationary Teacher Termination

    Kahn v. New York City Department of Education, 20 N.Y.3d 461 (2013)

    A decision by the New York City Department of Education (DOE) to terminate a probationary teacher is considered a final and binding determination on the date the probationary service ends, triggering the four-month statute of limitations for challenging the termination, regardless of any pending internal review procedures.

    Summary

    This case addresses whether probationary teachers, Kahn and Nash, were required to exhaust an internal appeal process before challenging their termination from the NYC Department of Education. The Court of Appeals held that the DOE’s termination decisions were final when their probationary service ended. The internal review process, stemming from a collective bargaining agreement, is an optional procedure and does not extend the statute of limitations for filing a lawsuit. Consequently, the teachers’ lawsuits, filed more than four months after their termination dates, were deemed time-barred.

    Facts

    Leslie Kahn, a probationary social worker, received an unsatisfactory performance review and was informed on December 21, 2007, that her probationary service would end on January 25, 2008. Doreen Nash, a probationary secretary, received an unsatisfactory performance review in May 2005, and was notified on June 15, 2005, that her services would be discontinued on July 15, 2005. Both Kahn and Nash initiated internal review procedures under the DOE’s bylaws and the collective bargaining agreement (CBA). Kahn’s probationary service ended January 25, 2008 and she commenced an Article 78 proceeding September 9, 2008. Nash’s probationary service ended July 15, 2005, and she commenced an Article 78 proceeding September 10, 2008.

    Procedural History

    Kahn: Supreme Court initially denied DOE’s motion to dismiss, but the Appellate Division reversed, granting the motion. The Court of Appeals granted leave to appeal. Nash: Supreme Court dismissed Nash’s petition as time-barred, and the Appellate Division affirmed. The Court of Appeals granted leave to appeal.

    Issue(s)

    Whether the internal review process provided by the DOE and the CBA must be exhausted before a probationary employee can bring a CPLR Article 78 proceeding to challenge their termination, thereby tolling the statute of limitations.

    Holding

    No, because the DOE’s decision to terminate a probationary employee is final and binding on the date the probationary service ends, and the internal review procedure is an optional process that does not affect the finality of the termination decision.

    Court’s Reasoning

    The Court relied on its prior decision in Matter of Frasier v Board of Educ. of City School Dist. of City of N.Y., 71 NY2d 763 (1988), which held that a probationary teacher’s termination is final when made, fully terminating employment under Education Law § 2573 (1) (a). The court emphasized that probationary teachers have no constitutional or statutory right to a review of the Chancellor’s decisions to discontinue their services. The right to a review stems solely from the CBA. The internal review procedure, established in the bylaws, is “an optional procedure under which a teacher may ask the Chancellor to reconsider and reverse his initial decision, a decision which is final and which, when made, in all respects terminates the employment of a probationer” (id. at 767). Therefore, the four-month statute of limitations under CPLR 217(1) begins to run from the date the probationary service ends. The Court rejected the argument that requiring immediate legal action would harm probationary teachers, stating that potentially meritorious claims would be delayed while awaiting the internal review’s outcome without pay or a right to back pay if reinstated. The Court noted that overturning a DOE decision to terminate a probationary employee during the probationary period is rare.

  • Roslyn Union Free School District v. Margaritis, 18 N.Y.3d 650 (2012): Statute of Limitations for School District Claims Against Board Members

    Roslyn Union Free School District v. Margaritis, 18 N.Y.3d 650 (2012)

    A school district is considered a corporation under New York law, and therefore a six-year statute of limitations applies to actions brought by a school district against a former board member for breach of fiduciary duty or negligence related to financial mismanagement.

    Summary

    The Roslyn Union Free School District sued a former board member, Carol Margaritis, alleging breach of fiduciary duty and negligence related to a massive theft of district funds. Margaritis argued the claims were time-barred by a three-year statute of limitations. The New York Court of Appeals held that a school district is a corporation under CPLR 213(7), thus a six-year statute of limitations applied, making the action timely. The Court reasoned that the General Construction Law defines a corporation to include a municipal corporation, which includes a school district.

    Facts

    The Roslyn Union Free School District suffered significant financial losses due to embezzlement by its employees, including the assistant superintendent and superintendent. The school district discovered initial irregularities in 2002. A later audit uncovered approximately $11 million in misappropriated funds between 1998 and 2004. Carol Margaritis was a member of the Board for approximately one year, beginning in 2000, before the criminal activities came to light. There were no allegations that Margaritis directly participated in the theft or benefitted from it, but she was on the board during the period when funds were being stolen.

    Procedural History

    The school district commenced an action in April 2005 against former and current board members, including Margaritis. Margaritis moved to dismiss, claiming the three-year statute of limitations in CPLR 214(4) barred the claims. Supreme Court agreed and dismissed the claims. The Appellate Division affirmed. The New York Court of Appeals granted leave to appeal.

    Issue(s)

    Whether a school district is a “corporation” within the meaning of CPLR 213(7), which would provide a six-year statute of limitations for actions against former officers or directors for waste or injury to property.

    Holding

    Yes, because a school district falls within the definition of “corporation” as defined by the General Construction Law and other provisions of state law, the six-year statute of limitations in CPLR 213(7) applies to actions brought by the school district against a former board member for breach of fiduciary duty and negligence.

    Court’s Reasoning

    The Court reasoned that the General Construction Law defines “corporation” to include a “public corporation,” which in turn includes a “municipal corporation.” The term “municipal corporation” expressly includes a “school district.” Therefore, a school district is a corporation under CPLR 213(7). The Court stated, “Because a school district is both a municipal corporation and a public corporation, it falls within the ambit of the term “corporation” in CPLR 213 (7).” The Court also noted that other state laws and the State Constitution recognize school districts as corporations. The legislative history of CPLR 213(7) supports the conclusion that it applies to both equitable and non-equitable causes of action. The Court rejected the argument that the Legislature’s use of the specific term “school district” in other statutes, such as Education Law § 3813, meant that the general term “corporation” in CPLR 213(7) should not apply to school districts, holding that the legislature would have been redundant to specifically include the term “school districts” in the statute, since they are already included under the definition of “corporation.” The Court did, however, dismiss the claim for an accounting, stating that it was unnecessary given the extensive forensic audit already conducted.

  • People v. Evans, 16 N.Y.3d 571 (2011): Ineffective Assistance and Statute of Limitations Defense

    16 N.Y.3d 571 (2011)

    A defense attorney’s failure to raise a statute of limitations defense does not automatically constitute ineffective assistance of counsel if a legitimate trial strategy, viewed objectively, could justify the decision.

    Summary

    Shareef Evans was convicted of manslaughter for a 1993 killing, years after the statute of limitations had expired. His attorney didn’t raise this defense. Evans argued ineffective assistance of counsel. The New York Court of Appeals affirmed the conviction, holding that even though the statute of limitations defense was valid, the attorney might have had a legitimate trial strategy: allowing the court to consider manslaughter as a lesser charge than murder. This strategy aimed to give the court an alternative basis for finding the defendant criminally responsible, increasing the chance of avoiding a murder conviction.

    Facts

    In 1993, 15-year-old Shareef Evans shot and killed a cab driver.

    In 2001, Evans was indicted on murder and manslaughter charges.

    The manslaughter charge had a five-year statute of limitations.

    At trial, Evans admitted to firing the shot but claimed it was to stop a robbery.

    Evans was acquitted of murder but convicted of manslaughter.

    Procedural History

    Evans appealed his conviction and filed a motion to vacate it, arguing ineffective assistance for failing to raise the statute of limitations defense.

    The Supreme Court denied the motion, stating the issue could be reviewed on direct appeal.

    The Appellate Division affirmed the conviction, finding the failure to raise the defense was a legitimate trial strategy.

    The Court of Appeals granted leave to appeal.

    Issue(s)

    Whether trial counsel’s failure to raise the statute of limitations defense for the manslaughter charge constituted ineffective assistance of counsel.

    Holding

    No, because a reasonably competent attorney could have viewed the failure to raise the statute of limitations as a legitimate trial strategy.

    Court’s Reasoning

    The Court of Appeals acknowledged that failing to raise a statute of limitations defense could be ineffective assistance. However, the court applied an objective standard from People v. Satterfield, asking whether the transcript revealed a trial strategy a reasonably competent attorney might have pursued.

    The court reasoned that Evans, facing murder charges and admitting to firing the shot, might have benefitted from the court considering manslaughter as a lesser charge. As the court explained, the defense counsel specifically asked the court to consider the manslaughter charge on the theory that Evans took out the weapon to stop a robbery. This presented the court with an alternative verdict.

    The court distinguished People v. Turner, where appellate counsel was deemed ineffective for failing to raise the statute of limitations because the trial counsel had objected to the manslaughter charge, making the failure to raise the statute of limitations inexplicable.

    Judge Jones dissented, arguing that the record didn’t show a deliberate choice by defense counsel to waive the statute of limitations defense and that the failure to raise it was prejudicial.

  • Goldenberg v. Westchester County Health Care Corp., 16 N.Y.3d 326 (2011): Consequences of Failing to File a Summons and Complaint

    Goldenberg v. Westchester County Health Care Corp., 16 N.Y.3d 326 (2011)

    CPLR 2001, as amended in 2007, does not allow a trial court to disregard a complete failure to file a summons and complaint within the statute of limitations; it is meant to address mistakes in the method of filing, not mistakes in what is filed.

    Summary

    Arthur Goldenberg commenced a medical malpractice action against Westchester County Health Care Corporation (WCHCC) by serving a summons and complaint without first purchasing an index number and filing the papers. After the statute of limitations expired, WCHCC moved to dismiss based on this error. Goldenberg cross-moved to file the summons and complaint nunc pro tunc. The Court of Appeals held that Goldenberg’s failure to file a summons and complaint was not a mere filing defect curable under CPLR 2001, but a fundamental failure to commence the action properly, and thus the action was time-barred. The 2007 amendment to CPLR 2001 was intended to address procedural filing errors, not the complete omission of required filings.

    Facts

    Goldenberg sought permission to file a late notice of claim for medical malpractice against WCHCC, attaching a proposed complaint to his petition. He then served WCHCC with a notice of claim, a summons, and a complaint (without an index number). The served complaint added a cause of action for lack of informed consent and alleged continuous treatment for a longer period than the proposed complaint. Goldenberg never purchased an index number or filed the summons and complaint with the County Clerk before service.

    Procedural History

    Supreme Court granted Goldenberg’s petition to file a late notice of claim. After Goldenberg commenced the action improperly, WCHCC raised statute of limitations and lack of personal jurisdiction defenses in its answer. Supreme Court granted WCHCC’s motion to dismiss and denied Goldenberg’s cross-motion to file nunc pro tunc. The Appellate Division affirmed. The Court of Appeals affirmed, finding no basis to excuse the failure to properly commence the action.

    Issue(s)

    Whether CPLR 2001, as amended in 2007, permits a court to excuse the complete failure to file a summons and complaint before the statute of limitations expires, when the plaintiff only served the papers and attached a proposed complaint to a petition seeking leave to file a late notice of claim.

    Holding

    No, because CPLR 2001 addresses mistakes in the method of filing, not the failure to actually file the required documents to commence an action.

    Court’s Reasoning

    The Court of Appeals reasoned that the 2007 amendment to CPLR 2001, enacted in response to prior decisions, was intended to allow courts to correct defects in the filing process, such as failing to purchase an index number or filing the wrong version of a document. However, it was not intended to excuse a complete failure to file a summons and complaint within the statute of limitations. The Court emphasized that, “in order to properly commence an action, a plaintiff or petitioner would still have to actually file a summons and complaint or a petition. A bare summons, for example, would not constitute a filing.” The Court stated that the purpose of the amendment was to clarify that “a mistake in the method of filing, AS OPPOSED TO A MISTAKE IN WHAT IS FILED, is a mistake subject to correction in the court’s discretion.” Since Goldenberg never filed a summons and complaint, there was “a complete failure to file within the statute of limitations,” which CPLR 2001 does not allow a trial judge to disregard. Because the court found the initial failure to file dispositive, it did not reach the issue of whether the differences between the proposed complaint and the served complaint would independently preclude relief under CPLR 2001.

  • Grimm v. State of New York Division of Housing and Community Renewal, 15 N.Y.3d 358 (2010): Fraud Exception to Rent Overcharge Statute of Limitations

    Grimm v. State of New York Division of Housing and Community Renewal, 15 N.Y.3d 358 (2010)

    When a rent overcharge complaint alleges fraud, the Division of Housing and Community Renewal (DHCR) must investigate whether the base date rent is lawful, even if it requires examining rental history beyond the typical four-year statute of limitations.

    Summary

    Sylvie Grimm filed a rent overcharge complaint, alleging her landlord fraudulently inflated the rent. The DHCR denied her claim, relying on the rent four years prior to the complaint (the “base date”) without investigating potential fraud. The New York Court of Appeals held that DHCR acted arbitrarily by failing to investigate Grimm’s allegations of fraud, which included significant rent increases for prior tenants, failure to provide a rent-stabilized lease rider, and the landlord’s lapse in filing annual registration statements. The court affirmed that DHCR has a duty to ascertain the legality of the base date rent when fraud is alleged, potentially allowing examination of rental history beyond the typical four-year limit.

    Facts

    In 1999, the rent for the subject apartment was registered at $578.86. In 2000, the owner charged new tenants $1,450 (originally offered at $2,000 with a reduction if the tenants made repairs), failing to use the legal rent-setting formula. The new tenants signed a lease without a rent-stabilized rider. The owner did not provide a statement showing the apartment was registered with DHCR. In 2004, Grimm moved in, agreeing to $1,450/month, with no initial indication of rent stabilization in her lease. Grimm filed a rent overcharge complaint in July 2005. The landlord then sent revised leases stating the apartment was rent-stabilized and filed registration statements for 2001-2005, admitting it hadn’t registered the apartment since 1999.

    Procedural History

    The DHCR Rent Administrator denied Grimm’s overcharge complaint, focusing on the base date rent ($1,450) and subsequent lawful adjustments. DHCR denied Grimm’s request for administrative review and reconsideration. Grimm then filed a CPLR article 78 proceeding challenging DHCR’s determination. Supreme Court granted the petition, vacated DHCR’s determination, and remanded for reconsideration, finding DHCR failed to address the fraud allegations. The Appellate Division affirmed. DHCR and 151 Owners Corp. appealed by permission to the Court of Appeals.

    Issue(s)

    Whether DHCR must investigate allegations of fraud that could taint the base date rent when determining a rent overcharge claim, potentially allowing review of rental history beyond the four-year statute of limitations.

    Holding

    Yes, because when a tenant presents substantial indicia of fraud that could render the base date rent unlawful, DHCR has a duty to investigate the legality of that rent and cannot simply rely on the rent charged four years prior to the complaint.

    Court’s Reasoning

    The Court of Appeals relied on its prior decision in Thornton v. Baron, which established an exception to the four-year statute of limitations for rent overcharge claims when there is evidence of a fraudulent scheme to deregulate an apartment. The court clarified that while rent overcharge claims are generally subject to a four-year statute of limitations, this limitation does not prevent examination of rental history beyond the four-year period when a tenant alleges fraud. The Court emphasized that DHCR cannot “turn a blind eye to what could be fraud and an attempt by the landlord to circumvent the Rent Stabilization Law.” The Court found that Grimm presented sufficient indicia of fraud to warrant further investigation by DHCR, including a large, unexplained rent increase for the prior tenants, failure to provide a rent-stabilized lease rider to those tenants, the landlord’s failure to file timely annual registration statements, and the lack of a rent stabilization rider in Grimm’s initial lease. The court cautioned that a mere increase in rent is insufficient to establish fraud, but evidence of a “fraudulent deregulation scheme” warrants further inquiry. As the court stated, “[T]he rental history may be examined for the limited purpose of determining whether a fraudulent scheme to destabilize the apartment tainted the reliability of the rent on the base date.”