statutes of limitations bar all of the actions other than that for indemnification, and that I must dismiss the indemnification claim, because plaintiff fails to provide any evidence for its assertion that fraud and mistake impose an indemnification duty upon defendants.
In response to defendants' motion, plaintiff offers three arguments to support its action's timeliness. First, it recasts its claim as one for mutual mistake and asserts that I should apply the federal limitations period, which recognizes equitable tolling until discovery, and not the New York statute of limitations, CPLR § 213(6), which bars claims more than six years after the mistake occurred. This argument fails regardless of which rule I apply because plaintiff has failed to demonstrate that any mistake that caused its loss was mutual with defendants or that defendants fraudulently induced plaintiff's unilateral mistake. See Surlak v. Surlak, 95 A.D.2d 371, 466 N.Y.S.2d 461, 470 (App. Div. 1983) (mistake is available only when inaccuracy is due to mutual mistake or fraudulently induced unitlateral mistake). Defendants provided the court with evidence that DG Meyer sent a correct confirmation to plaintiff and to its clearing agent. It also provided evidence that even if its clearing agent provided plaintiff's clearing agent with incorrect information, industry practice precluded plaintiff's clearing agent from relying on that information, and instead required plaintiff's clearing agent to rely only on information provided by plaintiff. Furthermore, defendant demonstrated that it immediately discovered the overpayment, contacted plaintiff about it on more than one occasion, and maintained the money in a segregated account until its liquidation. Plaintiff has not provided the court with evidence to contradict any of these facts.
Consequently, any mistake that was made was made either by plaintiff or by its clearing agent, not by defendant. Plaintiff has no evidence by which to prove its mistake claim, and thus recasting its action as one for mutual mistake cannot save it from being time barred.
Plaintiff next argues that, even if New York law applies, CPLR § 206(a)(1) allows it to bring its claim. That provision provides that for actions where a demand is necessary to entitle a person to commence an action, "where a right grows out of the receipt or detention of money or property by a trustee, agent, attorney or other person acting in a fiduciary capacity," the limitations period does not commence until the claimant discovers the facts upon which the right depends. Plaintiff asserts that because its action is one for constructive trust, defendants stood in a fiduciary relationship to plaintiff, and consequently, that section 206(a)(1) applies. Plaintiff, however, has not provided the court with any case law supporting the view that a claimant may utilize this tolling provision against one who had no prior fiduciary relationship with the claimant and who has become a fiduciary only by way of the events giving rise to the cause of action. The plain language of the statute indicates that the person against whom the action lies must be a fiduciary prior to the events in question, who then receives or detains money. In this case, defendants were not trustees who detained money, but rather trading partners who allegedly became trustees because they received and detained money. Section 206(a)(1)'s plain language thus does not allow for its use in this action.
Further, an interpretation finding section 206(a)(1) inapplicable here comports with the general New York rule regarding the accrual of actions for constructive trusts: "an action to impress a constructive trust is governed by the six-year Statute of Limitations period provided under CPLR 213(1) that 'commences to run upon the occurrence of the wrongful act giving rise to a duty of restitution and not from the time the facts constituting the fraud are discovered.'" Mattera v. Mattera, 125 A.D.2d 555, 509 N.Y.S.2d 831, 833 (App. Div. 1986), quoting Boronow v. Boronow, 111 A.D.2d 735, 490 N.Y.S.2d 230, 232 (App. Div. 1985), aff'd 71 N.Y.2d 284, 525 N.Y.S.2d 179, 519 N.E.2d 1375 (1988) (emphasis added). Holding that the limitations period for actions against constructive trustees does not begin to commence until discovery of the facts on which the right depends would vitiate the above-stated rule, as it would mean that the limitations period would, in fact, commence to run from the time the facts constituting fraud are discovered. As such, I conclude that the action for constructive trust is time-barred.
Finally, plaintiff asserts that, regarding its claim for indemnification, the limitations period did not commence until the date it compensated UST for the overpayment, particularly because, it argues, fraud caused the loss. It is generally true that the limitations period for an indemnification claim does not commence until the party seeking indemnification has become liable for the amount for which it seeks to be indemnified. Summary judgment for defendant is nevertheless still warranted, because plaintiff has failed to demonstrate the existence of a material factual dispute as to whether plaintiff can support its claim for indemnification. Plaintiff bases that claim on the assertion that "plaintiff PWRES was liable to U.S. Trust in the amount of $ 1,058,465.48 solely by reason of the deceptive, misleading and inaccurate overcharge to U.S. Trust by and on behalf of D.G. MEYER & CO., INC., in the said amount, and by the active affirmative and intentional or wrongful malfeasance, non-feasance, fraud, deceit, mistake, wrongdoing, or misrepresentations of defendants without any act or omission or fault or culpable conduct on the part of PWRES contributing thereto." Complaint P 25. As discussed above, defendants' moving papers demonstrate that any mistake that caused plaintiff's loss was made by plaintiff or plaintiff's agent UST, not by defendants. Plaintiff has not produced any evidence to counter these facts. Regarding plaintiff's fraud claim, plaintiff has not submitted any evidence rebutting defendants' showing that DG Meyer acted honestly and forthrightly at all times. In their moving papers, defendants demonstrated that they never made any misstatement to plaintiff, and that industry practice did not allow UST to rely on the misstatement made by defendants' clearing agent, SecPac. In its opposition papers, plaintiff provided no evidence to contradict those assertions. In fact, plaintiff's counsel acknowledged that "the error that occurred here was not the fault of the two principals party hereto, PaineWebber Real Estate Securities and D.G. Meyer & Co., Inc.," and called defendants "innocent parties." Affidavit in Opposition at 6-7. It is only in plaintiff's complaint and in its memorandum in opposition that it makes speculative claims regarding allegedly fraudulent acts by plaintiff, claims for which it provides neither documentary nor affidavit support. As such, I see no basis on which to find any fraud or mistake-based duty to indemnify plaintiff for its loss. I therefore grant summary judgment to defendants on the indemnification claim.
For the reasons discussed above, summary judgment is hereby granted to defendants and the complaint is dismissed.
DATED: New York, New York
April 12, 1993
Kimba M. Wood
United States District Judge