Commercial Division Blog

Posted: July 13, 2016 / Categories Commercial, Statute of Limitations/Laches

Plaintiffs Not Entitled to Equitable Tolling Despite Auction House's Refusal to Discuss Dispute

On July 7, 2016, the First Department issued a decision in Kainer v. Christie's Inc., 2016 NY Slip Op. 05454, refusing to grant equitable tolling.

In Kainer, the plaintiffs brought a General Business Law § 349 action against an auction house in connection with the sale of a drawing that, according to plaintiffs, had been seized from their family by the Nazis. The defendants moved to dismiss arguing, among other things, that the claims were time-barred. The trial court granted the motion, which the First Department affirmed, explaining:

Generally, a cause of action accrues, thereby triggering the statute of limitations, when all of the factual circumstances necessary to establish a right of action have occurred, so that the plaintiff would be entitled to relief. New York courts have applied CPLR 214(2)'s three-year period of limitations for statutory causes of action to General Business Law § 349 claims. The statute runs from the time when the plaintiff was injured. A defendant is estopped from raising a statute of limitations defense to a cause of action under General Business Law § 349, where the plaintiff has alleged both the tort that was the basis of the action and later acts of deception that prevented the plaintiff from bringing a timely lawsuit. The later fraudulent misrepresentation must be for the purpose of concealing the former tort. It is fundamental to the application of equitable estoppel for plaintiffs to establish that subsequent and specific actions by defendant somehow kept them from timely bringing a suit.

Christie's asserts that the alleged injury occurred at the time of the sale in November 2009, more than five years before the filing of the instant action. Plaintiffs argue that their General Business Law § 349 claim is not barred by the statute of limitations, because they could not have claimed injury as heirs until they obtained the French "acte de notoriété" on May 25, 2012. However, plaintiffs have not established that they needed to obtain the "acte de notoriété" in order to assert the General Business Law § 349 claim. Indeed, nothing prevented plaintiffs from filing their General Business Law § 349 action in New York when they learned of their status as heirs, sometime in 2011 or 2012.

Plaintiffs argue that Christie's should be estopped from raising a statute of limitations argument. Plaintiffs allege that they notified Christie's about their ownership claim sometime in 2012, but, despite their request, Christie's refused to release, and deliberately concealed, any information relating to the sale and the salesroom notice. However, plaintiffs have failed to allege that this prevented them from filing their consumer protection claim in New York in a timely way. Accordingly, the action was properly dismissed based on the statute of limitations.

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