that is the state in which all the partners of Gordon reside.
Ross states that he did not assert this defense initially
because, for purposes of the New York borrowing statute, the
Second Circuit had ruled that a cause of action could not accrue
in a state that could not exercise jurisdiction over the
defendant. Stafford v. International Harvester Co.,
668 F.2d 142 (2d Cir. 1981). This holding was consistent with the supposed
purpose of the borrowing statute: to prevent forum-shopping by a
plaintiff who may be barred by the limitations period of one
forum but not another. Id. at 152; see also Arneil v. Ramsey,
550 F.2d 774, 779-80 (2d Cir. 1977); Antone v. General Motors
Corp., 64 N.Y.2d 20, 27-28, 484 N.Y.S.2d 514, 473 N.E.2d 742
(1984). "Since Ross is and was a New York resident, and did not
appear to have sufficient contacts with . . . Massachusetts to
subject him to jurisdiction in that state, he did not plead the
statute of limitations as a defense because to do so would have
been futile" under Stafford. (Zelermyer (Def.) Aff. ¶ 19).
In Insurance Co. of North America v. ABB Power Generation,
Inc., 91 N.Y.2d 180, 668 N.Y.S.2d 143, 690 N.E.2d 1249 (1997),
the New York Court of Appeals held that Stafford misconstrued
the borrowing statute and that an available out-of-state forum is
not necessary. With this ruling, the borrowing statute acquired
greater reach, and Ross asserted the limitations defense.
For purposes of the New York borrowing statute, a cause of
action accrues where the injury is sustained rather than where
the defendant committed the wrongful acts. Global Financial
Corp. v. Triarc Corp., 93 N.Y.2d 525, 693 N.Y.S.2d 479,
715 N.E.2d 482 (1999) (to be published at 93 N.Y.2d 525, 693 N.Y.S.2d 479,
715 N.E.2d 482); Sack v. Low, 478 F.2d 360, 365-67 (2d
When an injury is purely economic, the place of injury for
purposes of the borrowing statute is where the economic impact of
defendant's conduct is felt, which is usually the plaintiff's
place of residence. Global, 93 N.Y.2d 525, 693 N.Y.S.2d 479,
715 N.E.2d 482; Gorlin v. Bond Richman & Co., 706 F. Supp. 236,
240 (S.D.N.Y. 1989); Appel v. Kidder, Peabody & Co.,
628 F. Supp. 153, 156 (S.D.N.Y. 1986). In this case, all of Gordon's
partners are Massachusetts residents.
Nevertheless, Gordon contends that the place of injury is New
York. In Sack, Judge Friendly stated that if an out-of-state
plaintiff maintained an open account at a New York brokerage
firm, and a loss was reflected in this account, it "might make
some difference" in determining the place of injury and hence
accrual. 478 F.2d at 367-68. Gordon might argue that because the
loans were made to Hanover Square by increasing its debit
accounts in New York, the loss was suffered in New York.
This argument, however, is not persuasive. In securities fraud
cases in which the plaintiff investor ordinarily has maintained
an account at defendant brokerage and the loss is reflected in
that account, courts have regularly held that the place of
accrual for borrowing statute purposes is where the plaintiff
resides. See, e.g., Gorlin, supra; Appel, supra; Klock v. Lehman
Bros., Kuhn Loeb Inc., 584 F. Supp. 210 (S.D.N.Y. 1984).
Moreover, the New York Court of Appeals recently reiterated the
general applicability of the residence standard and also stated
that that standard is consistent with the purpose of the
borrowing statute. In explaining why the state with the greatest
contacts is not the place of accrual for purposes of the
borrowing statute, the court stated: "[A]s we underscored in ABB
Power, `CPLR 202 is designed to add clarity to the law and to
provide the certainty of uniform application to litigants.' This
goal is better served by a rule requiring the single
determination of a plaintiff's residence than by a rule dependent
on a litany of events relevant to the `center of gravity' of a
contract dispute." Global, 93 N.Y.2d 525, 693 N.Y.S.2d 479,
715 N.E.2d 482. Finally, even if it can be said that the cause of
action accrued in both New York and Massachusetts, the borrowing
statute still applies, and the Massachusetts statute would bar
the action. Sack, 478 F.2d at 368.
Gordon's contention that Ross relies predominantly upon
inapplicable securities fraud cases is without merit. Gordon does
not show that securities fraud cases are governed by different
rules from other fraud cases and does not articulate any reason
for such purported difference in this context.
In borrowing a foreign statute of limitations, New York courts
must apply all extensions and tolls applicable in the foreign
state. Childs v. Brandon, 60 N.Y.2d 927, 471 N.Y.S.2d 40,
459 N.E.2d 149 (1983); Smith Barney, Harris Upham & Co. v. Luckie,
85 N.Y.2d 193, 207, 623 N.Y.S.2d 800, 647 N.E.2d 1308 (1995).
Under the borrowing statute, "`the entire foreign statute of
limitations applies, and not merely its period.'" Smith Barney,
85 N.Y.2d at 207, 623 N.Y.S.2d 800, 647 N.E.2d 1308 (quoting
McLaughlin, Practice Commentaries, McKinney's Cons. Laws of N.Y.,
Book 7B, CPLR C202:3, at 109).
The Massachusetts tolling provision, Mass. Gen. Laws Ann. ch.
260, § 9 (West 1998) ("Nonresident defendant; suspension of
"If, when a cause of action hereinbefore mentioned
accrues against a person, he resides outside of the
commonwealth, the action may be commenced within the
time herein limited after he comes into the
commonwealth; and if, after a cause of action has
accrued, the person against whom it has accrued
resides out of the commonwealth, the time of such
residence shall be excluded in determining the time
limited for the commencement of the action; but no
action shall be brought by any person upon a cause of
action which was barred by the laws of any state or
country while he resided therein."
The purpose of the tolling provision is to prevent a potential
defendant from insulating himself from liability by placing
himself beyond the reach of service until the statute of
limitations has expired. Walsh v. Ogorzalek, 372 Mass. 271,
274, 361 N.E.2d 1247, 1250 (1977).