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United States of America > New York > Litigation Dispute resolution > Advisory > Article > Better a Saver Than a Borrower Be

Article: Better a Saver Than a Borrower Be

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.

Article by Charles E. "Trip" Dorkey III and John W. Lomas, Jr.

Last Update: 2015-Mar-01 Charles E. “Trip” Dorkey III - Dentons
The contents of this page do not constitute legal advice or create an attorney- client relationship with the contributor. Do not apply anything you read here without contacting a professional.
Author: Charles E. “Trip” Dorkey III
Law Firm: Dentons
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