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Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: March 29, 2018

Statute of Limitations Does Not Apply to Claim Based on Allegedly Forged Deed

On March 13, 2018, Justice Knipel of the Kings County Commercial Division issued a decision in Stewart v. VSR Stewart Mgt., LLC, 2018 NY Slip Op. 30433(U), denying a motion to dismiss on statute of limitations ground, holding that the statute of limitations was not a defense to a claim based on a forged deed, explaining:

Relying on Faison v Lewis, Shirlea claims that the deed at issue was void ab initio, even though the conveyance of the underlying property occurred more than ten years ago, and that the defendant’s statute-of-limitation defense does not apply. At issue in Faison was the ownership of a house that formerly was jointly owned by the plaintiffs father and aunt. The aunt conveyed her half-interest in the house to her daughter, the defendant in Faison. The daughter then allegedly recorded a corrected deed conveying the plaintiffs father’s half-interest to herself as well. Eight years later, the daughter obtained a loan from Bank of America secured by a mortgage on the house. Thereafter, the plaintiff was appointed the executor of her father’s estate and commenced an action for a declaration that the corrected deed recorded by the aunt’s daughter was void as a forgery. The IAS court granted the motion to dismiss the complaint in its entirety as time-barred.

The Second Department modified the order as to some defendants, but held that plaintiff’s claim as against the aunt’s daughter and Bank of America was still subject to a six-year statute of limitations applicable to fraud claims under CPLR 213(8). The Court of Appeals reversed, holding that because the complaint alleged a forged deed, the aunt’s daughter and Bank of America could not rely on the statute of limitation as a defense. The Court of Appeals explained:

Defendant Bank of America contends that plaintiffs claim is time-barred because forgery is a category of fraud, and, like any other claim based on fraud, an action challenging a forged deed is subject to the limitations period of CPLR 213(8). That conclusion cannot be squared with general principles of real property law. Nor is it supported by compelling policy reasons. On the contrary, our long-standing commitment to the protection of ownership interests and the integrity of our real property system favors the continued treatment of challenges to forged deeds as distinct from other claims, and exempt from a statute of limitations defense.

Here, Shirlea’s allegations fall within the scope of activities condemned by the Court of Appeals in Faison, precluding the defendant from invoking any statute of limitations defense.

(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 a claim is barred by the statute of limitations.

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