United States District Court, S.D. New York
May 12, 2004.
CLAUDE WOLFF, Plaintiff, -against- UBS PAINEWEBBER, INC., RANI MERKEL, MARC A. ROUSSO and LEON B. LIPKIN, Defendants
The opinion of the court was delivered by: WILLIAM PAULEY, District Judge
On March 31, 2004, this Court denied, inter alia, defendant Leon B.
Lipkin's motion to dismiss plaintiff's claim for aiding and abetting
fraud based on New York's statute of limitations for fraud claims. See
Order, dated Mar. 31, 2004 at 21 n.6. Specifically, this Court held that
there were insufficient facts to determine as a matter of law that
plaintiff was on inquiry notice of the alleged fraud more than two years
before he named Lipkin as a defendant in January 2002. See Order, at 21
n.6. Lipkin now moves for partial reconsideration as to that portion of
the March 31, 2004 Order denying his motion to dismiss based on the
statute of limitations. For the following reasons, Lipkin's motion for
reconsideration is denied. Rule 6.3 of the Local Rules of the Southern District of New York
provides in pertinent part: "There shall be served with the notice of
motion a memorandum setting forth concisely the matters or controlling
decisions which counsel believes the court has overlooked." Accordingly,
to be entitled to reconsideration, a movant must demonstrate that the
court overlooked controlling decisions or factual matters that were put
before it on the underlying motion, which, had they been considered
"might reasonably have altered the result reached by the court." Consol.
Gold Fields v. Anglo Am. Corp., 713 F. Supp. 1457, 1476 (S.D.N.Y. 1989).
The decision to grant or deny a motion for reconsideration is within the
sound discretion of the court." See Dietrich v. Bauer, 76 F. Supp.2d 312,
327 (S.D.N.Y. 1999); AT&T Corp. v. Microsoft Corp., No. 01 Civ. 4872
(WHP), 2004 WL 309150, at *1 (S.D.N.Y. Feb. 19, 2004).
Lipkin moves for partial reconsideration of the March 31 Order arguing
that there were sufficient facts to have put plaintiff on notice of the
alleged fraud more than two years before naming Lipkin as a defendant in
this action. Accordingly, this Court must consider whether it overlooked
relevant facts and controlling law in applying the statute of
limitations, N.Y.C.P.L.R. §§ 213(8), 203(g) (McKinney 2003), to
plaintiff's aiding and abetting fraud claim against Lipkin. Under New York
law, a cause of action for fraud must be commenced within six years of the fraud, or two years from the date when
the fraud could reasonably have been discovered, whichever is longer.
Moreau v. The Archdiocese of Mew York, 690 N.Y.S.2d 100, 101 (App. Div.2d
Dep't. 1999); Baratta v. ABF Real Estate Co., 627 N.Y.S.2d 52, 53 (App.
Div.2d Dep't, 1995).
In the March 31 Order, this Court determined that the underlying fraud
could be viewed "as having occurred sometime in 1996 when Jaques Dehan
recommended to [plaintiff's agent] Jaques Heyer that plaintiff hold his
Firenze shares despite their decline." Order, dated March 31, 2004 at
9.*fn1 Plaintiff's aiding and abetting fraud claim against Lipkin can
therefore be viewed as timely under the six-year discovery rule,
N.Y.C.P.L.R. § 213(8), since he was named as a defendant in January 2002
six years from the point when the fraud can be seen as having
occurred. See Sackman v. Ligget Group, Inc., 167 F.R.D. 6, 16-17
(E.D.N.Y. 1996) (applying N.Y.C.P.L.R. § 213(8) to the latest date when
alleged fraud could be viewed as having occurred).
Moreover, since there are issues of fact concerning when plaintiff
discovered, or should have discovered, the fraud, this Court cannot
conclude that plaintiff's claims against Lipkin are untimely under the
two-year discovery limitations period. This Court reiterates its conclusion in the March 31 Order that
the issue of when a plaintiff discovered or should have discovered an
alleged fraud is a mixed question of law and fact that should not be
decided summarily. See Order, at 21. n. 6; Moreau, 690 N.Y.S.2d at 100;
see also Nivram Corp. v. Harcourt Brace Jonanovich, 840 F. Supp. 243, 252
(S.D.N.Y. 1993) ("defendants bear a heavy burden in establishing that the
plaintiff was on inquiry notice as a matter of law").
Lipkin contends that plaintiff fails to plead that he undertook
investigative measures after learning he had been defrauded. Whether
plaintiff exercised reasonable diligence depends on when plaintiff knew or
should have known of the fraud. See Dodds v. Cigna Sees., Inc.,
12 F.3d 346, 350 (2d Cir. 1993). However, when plaintiff was on inquiry
notice of the alleged fraud and thus when his duty of investigation was
triggered cannot be determined at this juncture. The Complaint alleges
that Lipkin assisted Rousso and Dehan in preparing perjurious testimony
in August 1997. (Compl. ¶ 74.) There is no allegation that Lipkin
himself provided testimony. It is uncertain when this information came to
light and when plaintiff actually learned of it or should have learned of
it. Accordingly, there is insufficient evidence at this point to
determine when plaintiff was on inquiry notice. See Trepuk v. Frank,
405 N.Y.S.2d 452, 453 (N.Y. 1978) ("Where it does not conclusively appear that plaintiff had knowledge of facts from which the
fraud could reasonably be inferred, a complaint should not be dismissed
on motion and the question should be left to the trier of the facts.");
see also G-I Holdings, Inc. v. Baron & Bud, 238 F. Supp.2d 521, 541
(S.D.N.Y. 2002) ("A motion to dismiss on the basis of a plaintiff's
failure to engage in due diligence cannot be granted unless the
`undisputed facts' show a lack of reasonable diligence.").
Lipkin's argument that other alleged facts from earlier versions of the
Complaint should have alerted plaintiff to the fraud is misplaced. Those
earlier pleadings were extinguished by the Second Amended Consolidated
Complaint filed in May 2003. See, e.g., Samide v. Roman Catholic Diocese
of Brooklyn, 754 N.Y.S.2d 164, 168 (N.Y.Sup.Ct. 2003) ("When an amended
complaint has been served, it supercedes the original complaint and
becomes the only complaint in the case.") (internal citations omitted);
see also Gay v. Farella, 772 N.Y.S.2d 871, 871 (N.Y. App. Div.2d Dep't
2004) ("the original complaint was superceded by the amended complaint,
rendering the sufficiency of the allegations in the original complaint
Additionally, even if it could be inferred from earlier pleadings when
plaintiff learned of the fraud, he has alleged facts to support his claim
that he could not have discovered the fraud before January 2001; namely, that defendants took
steps to conceal the scheme. (See Second Amended Consolidated Complaint
("Compl.") ¶ 74.) Accordingly, the circumstances pleaded in the
Complaint raise issues of fact precluding Lipkin's motion to dismiss.
See Nelson v. Stahl, 173 F. Supp.2d 153, 166 (S.D.N.Y 2001) (rejecting
argument that plaintiff's claim was barred by statute of limitations
because plaintiff was on inquiry notice of the fraud since "the question
of whether plaintiffs should have discovered fraud earlier than they
did, and thus whether the action is timely, is a question for the trier
For the foregoing reasons, defendant Leon B. Lipkin's motion for
partial reconsideration of this Court's March 31, 2004 Order is denied.