the burden of proof should suffer the consequences of not apprising the Court, but only one judge of this Court has directly addressed the burden-bearing question in this context. That was Judge Lasker, in Grosser v. Commodity Exchange, supra. He concluded that the burden was on the party seeking to apply New York's limitations statute: "As we see it, the burden of proving lack of amenability to suit or lack of personal jurisdiction rests on plaintiff, who seeks to benefit from what she contends is New York's longer limitations period by invoking a judicially crafted exception to the applicability of the borrowing statute." 639 F. Supp. at 1303. Judge Lasker consequently ruled in favor of the defendants, who had moved to dismiss on statute of limitations grounds.
Judge Lasker's conclusion is supported by two Second Circuit cases addressing the borrowing statute, Arneil v. Ramsey, 550 F.2d 774, 781 (2d Cir. 1977), and Katz v. Goodyear Tire and Rubber Co., 737 F.2d 238, 243 (2d Cir. 1984). In Arneil, the Court borrowed Washington's statute of limitations. Upholding the district court's dismissal of plaintiff's claims, the Court stated that "plaintiffs here have demonstrated no reason why these defendants could not have been sued in Washington other than that Washington's statute of limitations had already run." 550 F.2d at 780. The opinion says nothing about whether defendants--the New York Stock Exchange, a New York brokerage house, two former officers of the brokerage house and a former chairman of the board--had offered evidence on their amenability to suit in Washington. The implicit holding is that plaintiffs bore the burden.
The Second Circuit also considered the borrowing statute in Katz. There the question was who should bear the burden of showing a change in domicile. The district court had granted defendant Goodyear's motion for summary judgment because "plaintiff failed to convince us of his claim of [New York] domiciliary intent]," 737 F.2d at 242, and applied Virginia's two-year statute of limitations instead of New York's three-year period. Before addressing the particular facts of the dispute, the court of appeals discussed who generally bears the burden in borrowing statute cases:
Where the statute of limitations is an affirmative defense, the party asserting the defense must prove the elements of that defense. See Romano v. Romano, 19 N.Y.2d 444, 447, 280 N.Y.S.2d 570, 573, 227 N.E.2d 389 (1967); Brush v. Olivo, 81 A.D.2d 852, 853, 438 N.Y.S.2d 857, 859 (1981). With respect to the borrowing statute, however, New York law appears to place "the burden of proving residency . . . upon the party seeking to take advantage of the New York statute." Public Administrator v. Curtiss-Wright Corp., 224 F. Supp. 236, 240 (S.D.N.Y. 1963); Bache Halsey Stuart Inc. v. Namm, 446 F. Supp. 692, 694 (S.D.N.Y. 1978); see Oglesby v. Cranwell, 250 A.D. 720, 293 N.Y.S. 67, 68 (1937) (per curiam) ("to make section 13 [section 202's predecessor], Civil Practice Act, applicable, it will be necessary for plaintiff to show that he was a resident of this state at the time" the claim accrued); Whiting v. Miller, 188 A.D. 825, 829, 176 N.Y.S. 639, 641 (1919) (burden on plaintiffs to prove they were residents at the time the claim accrued if they "wished to bring themselves within the exception contained in . . . section 390-a," a predecessor of section 202).
Katz, 737 F.2d at 243.
Despite this observation, the Court proceeded to place the burden on the defendant. It reasoned that in the domicile context, the burden of proving a change in domicile rests with the party asserting the change. Since there was a dispute of fact as to whether defendant had met this burden, the Court reversed the district court's granting of summary judgment.
While Katz's initial discussion of the law may support Judge Lasker's holding in Grosser, as does Arneil's implicit holding, there is authority suggesting a contrary result. Judge McLaughlin alluded to this in the Commentary to the borrowing statute, which I reproduce here at length:
Under conflict of law principles, a New York court normally applies its own statute of limitations. CPLR 202, the borrowing statute, is an exception. It has been held, therefore, that when a party seeks to wrap himself in the protection of a foreign statute of limitations, that party, whether he is plaintiff or defendant, bears the burden of proving that he is entitled to the benefit of the foreign statute of limitations. This means that he has to prove that the plaintiff is a non-resident, that the cause of action accrued outside New York, and that the foreign period of limitations has expired. Katz v. Goodyear Tire & Rubber Co., C.A.N.Y. 1984, 737 F.2d 238.
These rules are well illustrated in Childs v. Brandon, 1983, 60 N.Y.2d 927, 471 N.Y.S.2d 40, 459 N.E.2d 149. Plaintiff was a domiciliary of Alabama. He sued several New York residents on a cause of action that accrued in Alabama. The New York defendants moved to dismiss the action as barred under the Alabama statute. Because the defendants were invoking the foreign statute of limitations, the burden fell to them to demonstrate that it had expired. Alabama, however, like New York, created a toll of the statute of limitations for defendants who were absent from Alabama during the period when an action could have been commenced against them. Accordingly, part of the defendants' burden included proving that they were in Alabama with sufficient regularity that service of process could have been made upon them.
Proof of these various elements almost invariably involves questions of fact. As both the Childs and Katz case, supra, indicate, summary judgment is rarely the correct vehicle by which to resolve these questions.
Commentary to N.Y.C.P.L.R. § 202 at 110-11 (McKinney 1990).
In the case at bar, MasterCard International has shown that plaintiff is not a resident of New York, that the cause of action accrued outside of New York, and that the foreign period of limitations has expired. It has not shown that the foreign court has jurisdiction over it. Although the Commentary suggests that this burden may be the defendant's, it does not explicitly assign this particular burden.
One New York case does, however. In Rescildo by Rescildo v. R.H. Macy's, 155 A.D.2d 379, 548 N.Y.S.2d 164, 165 (App.Div. 1989), the court reversed the lower court's granting of summary judgment in favor of defendants who had relied on Connecticut's statute of limitations:
The IAS Court erred in ruling, as a matter of law, that the defendants were amenable to suit in Connecticut during the statute of limitations period. The record reveals that the defendants' evidence in this regard was woefully inadequate. . . . Thus, the issue of the amenability of these defendants to suit pursuant to Connecticut's long-arm statute, Conn.Gen.Stat.Anno. § 33-411, and attendant due process concerns was not conclusively established. Also critical in this case, and to be determined in accordance with the jurisdictional matter, is the related issue of whether Connecticut's toll for absence from the state, Conn.Gen.Stat.Anno. § 52-590, applies to the defendants.
These are threshold matters that must be resolved before defendants may invoke the Connecticut time bar pursuant to New York's Borrowing Statute, CPLR § 202. See Childs v. Brandon, 60 N.Y.2d 927, 929, 471 N.Y.S.2d 40, 459 N.E.2d 149; Katz v. Goodyear Tire and Rubber Company, 737 F.2d 238, 243.
548 N.Y.S.2d at 165 (emphasis added).
The question, then, is whether the case at bar is governed by the two federal cases--Grosser and Arneil--or the two state cases--Childs and Rescildo.8 It is true that this is a motion for summary judgment, and all doubts should be resolved in favor of the non-moving party. But this is a question of law; I cannot and will not resolve the tension on procedural grounds.
I am persuaded that New York law places the burden on the defendant. While reconciling these cases seems futile, I am mindful that a federal court sitting in diversity must apply the law of the forum state. The most recent court to speak on the matter was the New York court in Childs, and that court assigned the burden to the defendant. It would be error for me to do otherwise.
Accordingly, since defendant has failed to make a prima facie showing that MasterCard International could be sued in Massachusetts, I apply New York's six-year statute of limitations. Under New York law, a cause of action in negligence accrues "when [the] acts or omissions constituting negligence produce injury." E.g., Triangle Underwriters Inc. v. Honeywell, Inc., 604 F.2d 737, 744 (2d Cir. 1979). The alleged injury in this case accrued on January 29, 1988, the date of the breach of contract. Six years from that date is January 29, 1994, so plaintiff's second cause of action is not time-barred.
B. The Third Cause of Action
Plaintiff's time had expired on the fraudulent inducement claim under New York law. Hence, I do not borrow Massachusetts law. Under N.Y.C.P.L.R. § 213(8) (McKinney 1990), the period of limitations for fraud is six years from the cause of action or, under N.Y.C.P.L.R. § 203(f) (McKinney 1990), two years from the discovery of the fraud.
The date of the fraud appears in plaintiff's complaint: "on or about May 21, 1985, the defendants fraudulently induced plaintiff to enter into a contract to purchase . . . Airline Tickets." Complaint, P 17. See also Ply* Gem of Laurel, Inc. v. Lee, 91 A.D.2d 513, 456 N.Y.S.2d 382, 383 (App.Div. 1982) ("A cause of action for fraud in the inducement of a contract accrues at the time of the execution of the contract. . . ."). The date of discovery was January 29, 1988, the date of the breach. The limitations period either expired on May 21, 1991 or January 29, 1990. Since plaintiff did not file his complaint until November 6, 1991, his time expired under either scenario.
3. Failure to State a Claim
MasterCard International next argues that the second and third causes of action should be dismissed for failure to state a claim upon which relief can be granted. Rule 12(b)(6), Fed. R. Civ. P. (applying Rule 56 analysis as in Rule 12(c) motion practice). Since I have already held that the third claim is time-barred, I need not consider this argument as to the fraudulent concealment action.
As to the negligence claim, defendant claims that "it is well-settled in New York that a breach of contract does not give rise to an action in negligence 'unless the promisor undertakes to perform the duty assumed in the contract.'" (citing Rozner v. Resolute Paper Products Corp. 37 A.D.2d 396, 326 N.Y.S.2d 44, 46 (App.Div. 1971), aff'd, 31 N.Y.2d 934, 340 N.Y.S.2d 927, 293 N.E.2d 94 (1972)). The plaintiff acknowledges that the defendant did not perform under the contract. Complaint, P 11. Therefore, defendant asserts, the negligence claim must be dismissed. See World Trade Knitting v. Lido Knitting, 154 A.D.2d 99, 551 N.Y.S.2d 930, 934-35 (App.Div. 1990); F. W. Woolworth Co. v. Southbridge Towers, 101 A.D.2d 434, 476 N.Y.S.2d 299, 302 (App.Div. 1984)
Plaintiff's only response to this argument is that he needs more discovery. But his request is conclusory; he offers no reason why discovery will enable him to plead a legitimate negligence claim. Indeed, given the gravamen of his complaint, no such reason appears to exist. Defendant's motion to dismiss the negligence cause of action is therefore granted.
For the reasons stated above, the motion to dismiss is granted as to defendants Maryland Bank and MNC. As to defendant MasterCard International, the motion is denied as to count one and granted as to counts two and three.
The Clerk of the Court is directed to dismiss the complaint with prejudice against Maryland Bank and MNC. The other parties are directed to attend a status conference on December 4, 1992 at 2:30 p.m. in Room 307 of the United States Courthouse.
It is SO ORDERED.
Dated: New York, New York
November 10, 1992
CHARLES S. HAIGHT, JR.