Commercial Division Blog
Partial Payment After Statute of Limitations Expires May Toll or Restart It
On May 10, 2016, Justice Scheinkman of the Westchester County Commercial Division issued a decision in Calltrol Corp. v. Dialconnection, LLC, 2016 NY Slip Op. 50765(U), holding that partial payment after the statute of limitations expires can serve to toll or restart the limitations period, explaining:
The premise of Defendant's motion is that the very allegations of the Complaint show that the action is untimely in that the action was not brought within four years of May 2, 2010, as required by UCC § 2-725(1). However, even if it may be said that Defendant has shown prima facie that the action is untimely, Plaintiff has raised questions of fact as to whether the statute of limitations has been tolled.
The Court notes that Friedman avers in his affidavit, as does the Complaint, that Defendant made payments to Defendant after May 3, 2010, with the payments totaling $42,794.41. Partial payment of a debt before or after the statute of limitations has expired may toll the statute or start it running a new, provided that the payment was of a portion of an admitted debt under circumstances amounting to a clear demonstrated intention to pay the balance. The statute will be tolled if the creditor demonstrates that it was payment of a portion of an admitted debt, made and accepted as such, accompanied by circumstances amounting to an absolute and unqualified acknowledgment by the debtor of more being due, from which a promise may be inferred to pay the remainder.
. . .
As to a written acknowledgment, pursuant to General Obligations Law § 17—101, the statute of limitations will be tolled by a signed written acknowledgment of an existing debt which contains nothing inconsistent with an intention on the part of the debtor to pay it. The critical question is whether the acknowledgment imports an intention to pay (Knoll v Datek Securities Corp., 2 AD3d 594 [2d Dept 2003]; see Jeffrey L. Rosenberg & Assoc., LLC v Lajaunie, 54 AD3d 813 [2d Dept 2008]).
In this case, Defendant acknowledged in writing in the May 2010 Contract that it currently was indebted to Plaintiff in the amount of $419,000, and referred to this amount as the "Balance Due". Furthermore, the written acknowledgment also referred to the accompanying spreadsheet (the "breakdown of the Balance Due"), which in turn showed that there was a larger sub total of claims by Plaintiff ($558,616.50) and that the sum of $419,000 constituted the "Balance Due This Statement" after deduction of $139,616.50 for a negotiated discount. Thus, the writing reflects an admission of a debt to Plaintiff and certainly does not contain anything inconsistent with an intention to pay the debt.
(Internal quotations and citations omitted).