The opinion of the court was delivered by: Cedarbaum, District Judge.
Gordon & Co. ("Gordon") sues Arthur H. Ross, the former Chief
Executive Officer of Hanover Square Securities Group, Inc.
("Hanover Square"), for allegedly fraudulent representations that
led Gordon to make two loans to Hanover Square.
Gordon's amended complaint was dismissed by then Magistrate
Judge Gershon, based on a grant of partial summary judgment and a
verdict following a bench trial. The Second Circuit vacated the
judgment and remanded the case, holding that the magistrate judge
did not follow established principles of New York law with
respect to fraud and misapplied the test of reliance. Ross now
moves to amend his answer to assert a statute of limitations
defense based on New York's borrowing statute and, on that
ground, seeks summary judgment dismissing the amended complaint.
The following facts are undisputed except where otherwise
Gordon, a broker-dealer, is a Massachusetts limited
partnership, whose sole office is in Newton, Massachusetts. (Def.
& Pl. 56.1 Stmt. ¶ 1). All of Gordon's partners are residents of
Massachusetts. (Id. ¶ 2).
Ross was the CEO of Hanover Square, a New York broker-dealer,
at all times relevant to this suit. Id. ¶ 4). He was a New York
resident at all relevant times. (Id. ¶ 5).
Gordon maintained a margin account with Hanover Square. (Id.
¶ 6). On October 17, 1983, Gordon alleges that the New York Stock
Exchange informed Hanover Square's principals that their
brokerage business would be closed on Friday, October 21, unless
they raised substantial capital, stopped hypothecating fully-paid
securities, and corrected shoddy bookkeeping practices. On
October 21, 1983, Gordon's CEO, Michael B. Salke, heard a rumor
that Hanover Square was having financial problems and allegedly
requested that Hanover Square transfer to Gordon the full
available cash balance in its margin account. He was told that
Hanover Square could not comply with this request. (Salke Aff. ¶
Salke traveled to New York to meet with Hanover Square
representatives over the weekend of October 22-23, 1983. (Salke
Aff. ¶ 4). Gordon agreed to advance $1,950,000 to Hanover Square
by increasing the debit balance (the amount Gordon owed to
Hanover Square) in its margin account by that amount. (Def. & Pl.
56.1 Stmt. ¶ 8).
Although Hanover Square did open for business on October 24, it
did not deliver any of Gordon's securities until October 26 and
did not complete deliveries until November 7, when Gordon
(through Bear Stearns) advanced additional money to two banks
holding the remainder of Gordon's securities hypothecated by
Hanover Square. (Pl. & Def. 56.1 Stmt. ¶ 10).
Gordon knew that Ross's representations were false no later
than November 7, 1983. (Id. ¶ 11).
Gordon commenced this action in New York State Supreme Court on
approximately August 31, 1987, and the action was subsequently