The opinion of the court was delivered by: CANNELLA
CANNELLA, Senior District Judge
Defendants' motion for summary judgment is granted. Fed. R. Civ. P. 56(b).
On August 20, 1970, defendants transferred to plaintiff all outstanding shares of their wholly-owned corporation, Concourse Provision Company ["Concourse Provision"], in return for plaintiff's limited shares. Thereafter, Concourse Provision became a division of plaintiff.
Following the Agreement and Plan of Acquisition ["August 1970 Agreement"] between the parties, defendants made a series of representations concerning the accuracy of certain financial statements.
Specifically, defendants represented that Concourse Provision had "good and marketable title to all its property and assets shown on Exhibit 7 [accompanying financial statements]."
Although the financial statements do not list individual properties, there are general entries for "machinery, equipment and office furniture."
Plaintiff asserts that machinery and equipment at three plants in the Bronx are included on the balance sheets of the August 1970 Agreement and are covered under defendants' marketable title representations.
Upon execution of the August 1970 Agreement, plaintiff assumed the obligations of a 1969 lease ["1969 Lease"] entered into between Concourse Provision and Concourse Management Corporation ["Concourse Management"].
Concourse Management had title to the Bronx plants and leased the property to Concourse Division for a term of eleven years commencing January 1, 1970.
In 1954, Concourse Management had previously leased Bronx property to Concourse Provision.
The 1969 Lease recites that all machinery and equipment, physically affixed to the premises, is the property of Concourse Management as lessor and not Concourse Provision as lessee.
On February 24, 1978, plaintiff's attorney wrote to one of the defendants concerning a problem with the 1969 Lease.
On November 6, 1978, plaintiff's attorney sent one of the defendants' copies of the 1969 Lease, acknowledging that plaintiff assumed the lease.
After termination of the lease in December 1980, plaintiff vacated the premises and removed machinery and equipment. On February 9, 1981, Concourse Management advised plaintiff that it had breached the 1969 Lease by "holding over" beyond the term of the lease and by removing certain machinery and equipment attached to the premises which belonged to Concourse Management as fixtures.
In March 1981, Concourse Management commenced suit against plaintiff in New York Supreme Court for damages resulting from the removal of machinery and equipment from the Bronx plants.
In the answer, plaintiff admits that it acquired Concourse Provision on August 20, 1970 and assumed all its rights and obligations, including those set forth in the 1969 Lease.
Plaintiff filed the instant action on November 23, 1983, alleging securities fraud, breach of contract and common law fraud arising from the August 1970 Agreement. Plaintiff alleges that each defendant made material misrepresentations, that Concourse Provision had good and marketable title to certain machinery and equipment affixed to the Bronx plants and suffered $10,131.15 in actual damages.
Defendants assert that the action is barred by statutes of limitations.
When a federally created right of action has no accompanying statute of limitations, the state law of limitations applies. Ernst & Ernst v. Hochfelder, 425 U.S. 185, 210, 47 L. Ed. 2d 668, 96 S. Ct. 1375 n.29 (1976); Klein v. Bower, 421 F.2d 338, 343 (2d Cir. 1970). Plaintiff's claim of federal securities law fraud rests on section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 for which there are no limitation periods. In actions alleging violations of these provisions, the Second Circuit has consistently applied the New York common law fraud statute of limitations. See Stull v. Bayard, 561 F.2d 429, 431 (2d Cir. 1977), cert. denied, 434 U.S. 1035, 54 L. Ed. 2d 783, 98 S. Ct. 769 (1978); Klein v. Shields & Co., 470 F.2d 1344, 1346 (2d Cir. 1972); Hoff Research & Development Laboratories, Inc. v. Philippine National Bank, 426 F.2d 1023, 1026 (2d Cir. 1970). Under New York law, claims of fraud must be brought within two years from the time plaintiff discovered or could have discovered the fraud with the exercise of reasonable diligence, or within six years of the fraud itself -- whichever is later.
N.Y. Civ. Prac. Law §§ 203(f), 213(8) (McKinney Supp. 1984); see IIT v. Cornfeld, 619 F.2d 909, 928-929 (2d Cir. 1980); Rice v. Baron, 456 F. Supp. 1361, 1367 (S.D.N.Y. 1978); Smith v. Sarkisian, 63 A.D.2d 780, 782, 404 N.Y.S.2d 911, 912 (3d Dep't 1978), aff'd, 47 N.Y.2d 878, 392 N.E.2d 1257, 419 N.Y.S.2d 74 (1979).
It is clear that any fraudulent acts of misrepresentation occurred not later than August 20, 1970. This action was not filed until November 23, 1983, more than six years later. Plaintiff, by its own admission, discovered the alleged fraud no later than February 9, 1981, the date defendants advised plaintiff that it had breached the 1969 Lease. Plaintiff also could have discovered the alleged fraud with reasonable diligence as early as 1970 when it assumed responsibility and possession of the 1969 Lease. In either event, the action was commenced more than two years after plaintiff's "discovery" of the fraud. Thus, plaintiff has failed to bring its fraud claims within the requisite ...