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Current Developments in the Commercial Divisions of the
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Posted: October 17, 2014

Claim by Nonresident Dismissed Based on Statute of Limitations of State Where Claim Accrued

On October 9, 2014, Justice Friedman of the New York County Commercial Division issued a decision in Cambridge Capital Real Estate Investments, LLC v. Archstone Enterprises LP, 2014 NY Slip Op. 32625(U), dismissing an action based on the statute of limitations of the state where the action accrued.

In Cambridge Capital, the plaintiff, a “minority limited partner of a fund, which invested in a real estate investment trust,” sued “the general partner of the fund and other entities, based on the general partner’s alleged conflict in the sale of the fund’s assets.” Among the issues the court addressed in deciding the defendants’ motion to dismiss was whether the plaintiff’s breach of contract claim, which accrued in Colorado, was barred by the statute of limitations. The court ruled that it was, explaining:

It is well settled that when a nonresident sues on a cause of action accruing outside New York, CPLR 202 requires the cause of action to be timely under the limitation periods of both New York and the jurisdiction where the cause of action accrued. The purpose of the statute is to prevent nonresidents from shopping in New York for a favorable Statute of Limitations. Furthermore, when an alleged injury is purely economic, the place of injury usually is where the plaintiff resides and sustains the economic impact of the loss.

While plaintiffs contract claim based on the amendments to the LPA is timely under New York’s six year statute of limitations, Colorado’s limitation period for such a claim is three years. Under Colorado law, a breach of contract claim accrues on the date the breach is discovered or should have been discovered by the exercise of reasonable diligence.

Contrary to plaintiffs contention, the determination as to when a claim accrues may be made at the pleading stage where, as here, it is clear from the undisputed facts when the breach was or should have been discovered. The Amended LPA, dated March 31, 2009, contains the amendments that plaintiff challenges. Plaintiff admits that it received the Amended LPA on August 12, 2009. As a sophisticated business entity, plaintiff could have discovered the relevant amendments by reading the document to determine the changes it made and its effect on plaintiffs interests. When it received the Amended LPA, it was aware or should have been aware that the amendments had been made without its consent.

(Internal quotations and citations omitted) (emphasis added).

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