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posted 9 years ago
Resolving “an open question of New York civil procedure,”
the New York Court of Appeals recently held that when claims are re-filed
pursuant to New York’s “savings” statute, CPLR § 205(a), New York’s
“borrowing” statute, CPLR § 202, cannot operate to time-bar the new case
if the original case was timely filed before the “borrowed” statute of
limitations had run. Norex Petroleum Ltd. v. Blavatnik,
2014 NY Slip Op. 04802, 2014 WL 2883898 (N.Y. June 26, 2014).
New York’s “savings” statute, CPLR § 205(a), allows a
plaintiff to refile claims within six months after the termination of a
timely filed prior action if for reasons other than the merits or a
plaintiff’s unwillingness to prosecute the claims in a diligent
manner.
New York’s “borrowing” statute, CPLR § 202, requires
application of the statute of limitations of the jurisdiction where the
claim arose, if shorter than New York’s, to measure the lawsuit’s
timeliness when a cause of action accrues outside of New York and the
plaintiff is a nonresident.
In February 2002, Norex Petroleum, a company in Alberta,
Canada, filed a RICO action in the Southern District of New York against
Tyumen Oil Company in Russia, Ukrainian-American businessman Leonard
Blavatnik, Russian businessman Viktor Vekselberg, and entities owned by
Blavatnik and Vekselberg. Norex alleged that the defendants
illegally wrested away Norex’s majority interest in a Russian oil company
with significant proven reserves, depriving Norex of hundreds of millions
of dollars in profits and dividends.
Defendants filed motions to dismiss on several grounds,
which the parties litigated for almost ten years. The Second Circuit
eventually ruled that dismissal was warranted under Federal Rule
12(b)(6). Within two months, in March 2011, Norex filed a New York
state action against the defendants, asserting claims for, among others,
tortious interference, conversion, and unjust enrichment. Defendants moved
to dismiss under CPLR § 202.
As Norex’s state law claims accrued in Alberta, that
jurisdiction’s shorter time period controlled. Because Norex’s state
law action was untimely under Alberta law’s two-year statute of
limitations, and Alberta did not have a savings statute, the motion court
dismissed the complaint as time-barred. The Appellate Division
unanimously affirmed.
The Court of Appeals reversed. It explained that the
purpose of New York’s savings statute is to “implement[] the vitally
important policy preference for the determination of actions on the
merits.” Norex, 2014 WL 2883898 (quoting Goldstein v.
New York State Urban Dev. Corp., 13 N.Y.3d 511, 521 (N.Y.
2009)). The court also explained that the purpose of New York’s
borrowing statute is to prevent a nonresident plaintiff from forum
shopping by suing in New York courts to take advantage of a longer statute
of limitations.
Thus, “once [Norex] timely commenced its federal court
action in New York, the borrowing statute’s purpose to prevent forum
shopping was fulfilled, and CPLR 202 had no more role to play.
Because Norex’s ‘prior’ federal court action was timely under the
borrowing statute, the ‘new’ action that it brought pursuant to the
savings statute ‘would have been timely commenced at the time of the
commencement of the prior action’ (CPLR 205 [a]). Stated another
way, it is irrelevant that Alberta law does not have a savings statute
similar to CPLR 205 (a) because at the point in time when Norex filed its
‘new’ action in Supreme Court, the borrowing statute’s requirements had
already been met.” Norex, 2014 WL 2883898.
The case now goes back to the motion court to decide among
other things whether the federal court’s rule 12(b)(6) dismissal of
Norex’s initial complaint was or was not on the merits.
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