Court Excuses Defendants' Failure to Raise Statute of Limitations Defense in Initial Motion to Dismiss

On April 17, 2020, Justice Borrok of the New York County Commercial Division issued a decision in HH Trinity Apex Invs. LLC v. Hendrickson Props. LLC, 2020 NY Slip Op. 30947(U), excusing the defendants' failure to raise a statute of limitations defense in their initial motion to dismiss, explaining:

The Defendants argue that the first through fifth and the seventh causes of action should all be dismissed as untimely. The Plaintiffs maintain that any arguments based on the statute of limitations were waived when the Defendants failed to preserve such objections before making their prior motion to dismiss based on forum non conveniens and/or for a stay and did not move at that time to dismiss based on the statute of limitations. The Defendants counter that even if this were true, the Preliminary Conference Order (the PC Order) dated September 4, 2019, entered into by the parties after oral argument on the first motion to dismiss, provided for defendants to move to dismiss and/or answer w/in 30 days, and therefore any failure to reserve their rights with respect to the statute of limitation is a nullity.

CPLR 3211(e) provides that an objection or defense based on the statute of limitations is waived unless raised in a responsive pleading or in a pre-answer motion to dismiss. However, such waiver may be said to be retracted under certain circumstances. The threshold inquiry is one of prejudice. A party suffers prejudice where it has been hindered in the preparation of its case or otherwise prevented from taking some measure in support of its position. In Scholastic, the First Department held that the motion court properly considered defendant's statute of limitations defense proffered for the first time in opposition to plaintiffs motion for summary judgment because the defendants vigorously asserted such a defense in his post-answer submissions". Under those circumstances, the Court found there was no prejudice to the plaintiff despite the fact that the affirmative defense was not timely asserted. Here, inasmuch as the Defendants timely filed the instant motion to dismiss and gave notice of their intention to file a second motion to dismiss at the PC conference, the Plaintiffs have suffered no prejudice. This is particularly so as discovery has just commenced in this action. Accordingly, it cannot be said that the Defendants' statute of limitations arguments were waived.

(Internal quotations and citations omitted).

It is not unusual for the statute of limitations to be an issue in complex commercial litigation. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have questions regarding whether claims are barred by the statute of limitations.