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Current Developments in the Commercial Divisions of the
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Posted: May 9, 2017

Fiduciary Tolling Applied to Claim Seeking Both Legal and Equitable Relief

On April 20, 2017, Justice Scarpulla of the New York County Commercial Division issued a decision in Lemle v. Lemle, 2017 NY Slip Op. 30811(U), applying fiduciary tolling to a claim seeking both legal and equitable relief, explaining:

In some actions, as plaintiff argues, the statute of limitation is tolled until the relationship terminates or the fiduciary openly repudiates his or her obligations. Here defendants have not demonstrated that the fiduciary relationship has been terminated or openly repudiated. It is possible that plaintiff may have a cause of action for breach of fiduciary duty, seeking an accounting or other equitable relief, arising from events that occurred before April 18, 2001. Defendants do not address, much less rebut, plaintiffs argument that some of those events may support a cause of action for breach of fiduciary duty and that such claims are tolled until the fiduciary relationship is terminated, which has not happened yet.

Arguably, the open repudiation doctrine toll does not apply to claims for money damages as specifically sought in plaintiffs fifth cause of action for breach of fiduciary duty. However, courts apply this limitation when a plaintiffs claims are solely at law, unlike here, where plaintiff alleges breach of fiduciary duty and seeks a mix of both damages and an accounting.

Although a number of the claims, including the fifth cause of action for breach of the fiduciary duty, do seek monetary damages, those remedies are ancillary to the primary relief sought, which is equitable, i.e., an accounting. Because plaintiff primarily seeks an accounting, and pursues damages as an incident to the outcome of that claim, I apply the open repudiation doctrine to plaintiffs breach of fiduciary duty claim.

(Internal quotations and citations omitted).

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