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LOENGARD v. SANTA FE INDUS.

October 6, 1983

RICHARD O. LOENGARD, JR., et al, Plaintiffs, against SANTA FE INDUSTRIES, INC., et al., Defendants.


The opinion of the court was delivered by: DUFFY

MEMORANDUM & ORDER

KEVIN THOMAS DUFFY, D.J.:

 Defendants, Santa Fe Industries, Inc. ("Santa Fe"), Santa Fe Natural Resources, Inc. ("Resources"), and Kirby Forest Industries, Inc. ("Kirby"), move for summary judgment on the ground that the claims asserted by the plaintiffs, who will be collectively referred to as the Loengard plaintiffs, are barred by the applicable statute of limitations.For the reasons that follow, the defendants' motion for summary judgment is denied in part, and granted in part.

 The action instituted by the Loengard plaintiffs arose out of a "cash-out-merger" between Kirby and Forest Industries, Inc. ("Forest"), a wholly-owned subsidiary of Resources which had been formed for the purpose of the merger. This merger has prompted a plethora of litigation in both federal and state courts.See Green v. Santa Fe Industries, Inc., 430 U.S. 462, 51 L. Ed. 2d 480, 97 S. Ct. 1292 (1977); Bell v. Kirby Lumber Corp., 413 A.2d 137 (Del. 1980). I will assume familiarity with all past opinions issued in the instant case and in the related case of Green v. Santa Fe Industries, Inc., and will only set forth the facts relevant to this motion.

 I.

 FACTS

 On July 31, 1974, a "short-form" merger between Kirby and Forest was effected pursuant to section 253 of the Delaware Corporation Law.An information statement was thereafter sent to the minority shareholders of Kirby advising them of their rights. A class action complaint arising out of this merger was filed in Green v. Santa Fe Industries, Inc., 74 Civ. 3915, on September 10, 1974 in this court. The defendants do not dispute that the Loengard plaintiffs would have been included in this class had the action been allowed to continue as a class suit.

 After numerous extensions, the plaintiffs in Green moved for class certification on February 13, 1979. This motion was denied on June 7, 1979. Green v. Santa Fe Industries, 82 F.R.D. 688, 690 (S.D.N.Y. 1979). A second motion for class certification was made by the Green plaintiffs on July 7, 1980. This motion was denied on November 7, 1980. Green v. Santa Fe Industries, 88 F.R.D. 575 (S.D.N.Y. 1980).

 On January 26, 1982, the Loengard plaintiffs filed a motion to intervene in the Green action. This motion was denied as untimely on March 22, 1979 and this ruling was affirmed by the Second Circuit on October 29, 1982. The present Loengard complaint was filed on November 30, 1982. The defendants have moved for summary judgment arguing that the applicable statute of limitations has expired on the two claims asserted by the plaintiffs; the first claim arises under the Martin Act. The plaintiffs oppose this motion and argue that the statutes of limitations were suspended from the commencement of the federal action on September 10, 1974 until the denial of the first motion for class certification on June 7, 1979.The plaintiffs contend that with this tolling, only approximately three and one-half years has expired and that both causes of action are governed by a six year statute of limitations. The defendants challenge the plaintiffs' tolling calculations and use of the six-year statutes of limitations. *fn1"

 II.

 DISCUSSION

 Applicable Statute of Limitations

 A. Martin Act Claims.

 The first cause of action asserted by the plaintiffs is under sections 339-a and 352-c of New York's General Business Law (McKinney Supp. 1981-1982), commonly known as the Martin Act. Because the Martin Act provides no statute of limitations period, the New York Civil Practice Law and Rules (CPLR) governs. There are three CPLR sections that may apply to the plaintiff's Martin Act claim. Section 214(2) provides for a three year period for actions "to recover upon a liability, penalty or forfeiture created ir imposed by statute." N.Y. Civ. Prac. Law § 214(2) (McKinney 1972). Section 213(8), read together with section 203(f), provides that actions based on fraud must be commenced within six years of the alleged fraudulent conduct or within two years after actual or imputed discovery of the facts underlying ...


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