The opinion of the court was delivered by: SOTOMAYOR
Defendants Joshua Leibowitz, Adi Leibowitz, Eyal Leibowitz and Oded Leibowitz move for summary judgment, pursuant to Fed. R. Civ. P. 56, on the ground that the plaintiff's claims are barred by the statute of limitations. For the following reasons, the Court grants the defendants' motion.
This action arises from plaintiff's investment of $ 100,000 into Levtech Medical Technologies Limited ("Levtech"), a company allegedly controlled by defendants. Plaintiff is a citizen of New York. Defendants are citizens of Israel. Defendants Adi Leibowitz and Eyal Leibowitz are Joshua Leibowitz's sons, and defendant Oded Leibowitz is his nephew.
The dates relevant to this motion are as follows: On October 12, 1989, plaintiff invested $ 100,000 into Levtech, in exchange for 100,000 shares in the company at a dollar a share. Plaintiff alleges that he made the investment based upon defendants' representations that Levtech was about to acquire two Italian companies and that, after Levtech went public, the value of plaintiff's shares would rise from $ 1 per share to a projected $ 13 per share. On April 1, 1990, when the price of Levtech shares had risen to $ 3.50 per share, plaintiff claims that he demanded the issuance of his stock certificates, so he could sell his 100,000 shares, but that defendants refused to comply. Defendants finally issued plaintiffs' shares on September 15, 1991, at which time plaintiff alleges he discovered that the stock was worthless and that defendants' representations to him about the company were false. Approximately a year and a half later, on April 30, 1993, defendant Joshua Leibowitz issued plaintiff a promissory note in which he promised to repay plaintiff the sum of $ 100,000. Defendants have not repaid plaintiff to date.
Based upon these allegations, plaintiff initially filed a complaint against defendants in State Supreme Court, on September 3, 1993. However, none of the defendants were served in that action. Plaintiff claims he was unable to serve defendant Joshua Leibowitz because he "effectively evaded service and moved to Israel," and that service as to the other three defendants was unsuccessful because they "were either in Italy or Israel, and did not return to the United States thereafter." (See plaintiff's July 21, 1997 letter to the Court, Exh. C to Aronstam Aff.) Plaintiff filed the complaint in this action (the "Complaint") on November 25, 1996, after locating a correct address for Joshua Leibowitz in Israel.
The Complaint alleges three causes of action against defendants: Counts I and III seek the recovery of $ 350,000 for fraud in the inducement and unjust enrichment. Count II seeks the recovery of $ 100,000 based on the promissory note. The Court has already ordered a default judgment on Count II of the Complaint against Joshua Leibowitz. Defendants now seek dismissal of the two remaining counts as barred by the applicable six-year statute of limitations under New York State law. Plaintiff disputes that his claims are time-barred, contending that the statute of limitations was statutorily tolled during defendants' continued absence from New York State during the relevant period.
This Court has diversity jurisdiction over plaintiff's claims pursuant to 28 U.S.C. § 1332.
New York law governs this Court's analysis of whether plaintiff's claims are time-barred. See Bank of New York v. Amoco Co., 35 F.3d 643, 650 (2d Cir. 1994) (a federal court sitting in diversity jurisdiction applies the law of the forum state to determine the issues). Under CPLR § 213(8), a fraudulent inducement claim must be brought within six years of "when the party alleging fraud is given consideration and thus suffered damage," Dynamics Corp. of America v. International Harvester Co., 429 F. Supp. 341, 355 (S.D.N.Y. 1977), or within two years of the discovery of the fraud, CPLR § 203(g), whichever is longer. Here, plaintiff's fraudulent inducement claim was filed outside of both limitations periods. The claim accrued on October 12, 1989, when plaintiff was induced to invest $ 100,000 into Levtech, and plaintiff concedes in the Complaint that he discovered the fraud in 1991. Thus, the deadline for bringing action on the claim was in October 1995. (The six year limitations period is the longer of the two in this case because, under § 203(g), plaintiff would have had to bring his claim by September 1993). However, plaintiff filed the Complaint in November 1996.
Plaintiff's claim for unjust enrichment is also subject to a six-year limitations period, pursuant to CPLR § 213(2). Under New York law, an unjust enrichment claim accrues upon occurrence of the wrongful act giving rise to the duty of restitution. See Rosner v. Codata Corp., 917 F. Supp. 1009, 1021 (S.D.N.Y. 1996). In this case, the six-year statute of limitations arguably began either on October 12, 1989, when plaintiff made the investment, or on April 1, 1990, when defendants allegedly refused to issue plaintiff's stock certificates so he could sell his stock. Under either scenario, however, more than six years passed from the date of accrual before the filing of the Complaint.
If, when a cause of action accrues against a person, he is without the state, the time within which the action must be commenced shall be computed from the time he comes into or returns to the state. If, after a cause of action has accrued against a person, he departs from the state and remains continuously absent therefrom for four months or more, . . . the time of his absence . . . ...