Commercial Division Blog

Posted: January 27, 2015 / Categories Commercial, Contracts, Statute of Limitations/Laches

Debt Not Acknowledged in Writing Does Not Revive Statute of Limitations

On January 21, 2015, the Second Department issued a decision in Mosab Construction Corp. v. Prospect Park Yeshiva, Inc., 2015 NY Slip Op. 00505, holding that the defendants had not acknowledged the debt in a writing, restarting the statute of limitations period.

In Mosab Construction Corp, the trial court granted the defendants' motion to dismiss the breach of contract claim against them as time-barred. The Second Department affirmed, explaining:

[T]he plaintiff argued that the defendants had acknowledged the debt in a writing, and so had restarted the statute of limitations period. General Obligations Law § 17-101 effectively revives a time-barred claim when the debtor has signed a writing which validly acknowledges the debt. To constitute an acknowledgment of a debt, a writing must recognize an existing debt and contain nothing inconsistent with an intention on the part of the debtor to pay it.

Here, the plaintiff's opposition papers did not include any writing that purported to be a written acknowledgment of the debt by the defendants. Moreover, while the Supreme Court allowed the plaintiff to submit, at the oral argument on the motion, a writing purporting to be such an acknowledgment, the writing submitted by the plaintiff neither acknowledged a debt owed to the plaintiff, nor indicated that the defendants intended to pay the plaintiff. Rather, it set forth various claims asserted by the defendants against the plaintiff. Thus, as the Supreme Court properly determined, the writing did not constitute an acknowledgment under General Obligations Law § 17-101 so as to restart the statute of limitations period.

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