Legal Memorandum: Statute of Limitations for Fraud

Issue: Under New York law, how does fraud extend or toll the statute of limitations, and what do New York cases say about the burden of proof in such a situation (i.e., who has the burden of proof as to discovery of the fraud, and how is the burden of proof articulated)

Area of Law: Corporate & Securities, Litigation & Procedure
Keywords: Statutory limitations period; Tolling of time; Discovery of the fraud
Jurisdiction: New York 
Cited Cases: 211 A.D.2d 541; 159 A.D.2d 550; 214 A.D.2d 456; 187 A.D.2d 253; 116 A.D.2d 875; 216 N.Y. 205; 265 A.D.2d 657; 18 N.Y.2d 125; 63 A.D.2d 780; 213 A.D.2d 167
Cited Statutes: N.Y. C.P.L.R. § 213(8); N.Y. C.P.L.R. § 213(1); N.Y. C.P.L.R. § 203(g); N.Y. C.P.L.R. § 213; N.Y. C.P.L.R. § 213(8)
Date: 09/01/2010

“Fraudulent representations may play a dual role.  They may be the basis for an independent action for fraud.  They may also, in equity, be a basis for an equitable estoppel barring the defendants from invoking the statute of limitations as against a cause of action for breach of fiduciary relations.”  Simcuski v. Saeli, 44 N.Y.2d 442, 448 (1978). 

Thus, an act of fraud*FN1 can serve to toll a statutory limitations period until the plaintiff discovered, or reasonably should have discovered, the fraud.  As with actions for which no limitation period is specifically prescribed, N.Y. C.P.L.R. § 213(1), the limitations period for a fraud action is generally six years, N.Y. C.P.L.R. § 213(8), although a discovery exception is written into the statute:

[T]he time within which [a fraud] action must be commenced shall be the greater of six years from the date the cause of action accrued or two years from the time the plaintiff or the person under whom the plaintiff claims discovered the fraud, or could with reasonable diligence have discovered it.

Id., § 213(8).  See Fread v. Grabowski, 159 A.D.2d 550 (2d Dep’t 1990) (holding that the plaintiff’s fraud complaint was not time-barred because he alleged that the defendants intentionally deceived him and that he was unaware of facts that would reasonably have put him on notice of the fraudulent nature of the conveyance; he instituted his action within two years of discovering the fraud).  See also Grasso […]

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