The opinion of the court was delivered by: THEODORE KATZ, Magistrate Judge
On June 30, 2004, by leave of the Court, Defendant Mary Merritt
amended her Answers in these consolidated declaratory judgment
and interpleader actions, to assert counter- and cross-claims
against Spanierman Gallery, for a declaratory judgment that she
possesses superior title to Arthur Wesley Dow's painting, the
"Grand Canyon" ("the painting"), and, in turn, for an order
requiring the return of the painting.*fn1 Plaintiff
Spanierman Gallery ("Plaintiff" or "Spanierman") has moved for summary
judgment on these claims, pursuant to Fed.R.Civ.P. 56, on the
grounds that: (1) Merritt's claims are barred by the statute of
limitations; and (2) Merritt released all claims against third
parties, including Spanierman Gallery, relating to the painting,
in a "Settlement Agreement" between Merritt and Timothy Fagan,
executed on September 14, 1999.
The parties have consented to trial before this Court pursuant
to 28 U.S.C. § 636(c). For the following reasons, Plaintiff's
motion for summary judgment is denied.
The Court recites only those facts relevant to the instant
motion,*fn2 and, unless otherwise noted, the following facts
are undisputed. On February 16, 1998, Merritt invited a local art
and antiques dealer, Timothy Fagan, to her home to assist her in
preparing to move into a smaller residence. Merritt's niece,
Katra Showah, was also present. At the end of that visit, Fagan
left Merritt's home with, among other items, the painting. At the
center of this dispute is whether Merritt sold the painting to
Fagan, as Spanierman Gallery contends, or whether Merritt, as she
contends, merely permitted Fagan to take the painting for the
limited purpose of having it appraised.
Approximately three months later, in May 1998, Fagan sold the
painting to Spanierman Gallery through Craftsman Auctions, in
Pittsfield, Massachusetts, for $150,000. Merritt claims to have
been unaware of this sale until September 1999. (Affidavit of
Mary Merritt, dated Sept. 6, 2000 ("Merritt Aff."), ¶ 11,
attached as Ex. A to Affirmation of Elisabeth Seieroe Maurer,
Esq., dated July 20, 2004 ("Maurer Affirm.").) Merritt further
claims that Fagan failed to respond to her inquiries about the
painting between February 1998 and September 1999, and that she
therefore sought the assistance of an attorney, John Bonee III,
Esq. (See id. ¶¶ 12-13.)
On September 14, 1999, Merritt, Showah, and her attorney,
Bonee, met with Fagan and his counsel regarding the painting, at
which time attorney Bonee handwrote, and Merritt and Fagan both
signed, a "Settlement Agreement" ("the Agreement"), under which
Fagan promised to, among other things (1) pay Merritt a total of
$40,000 over time; (2) provide certain information to Merritt
concerning the painting's sale, such as the auction catalogue;
and (3) to assist in verifying information about the sale,
including the sale price and buyer. In return, Merritt was to release any
claims against Fagan, and not to pursue claims against any third
party. There are factual disputes with regard to Fagan's
compliance with the Agreement's terms, including whether Merritt
prevented Fagan's compliance. At the meeting, and subsequent
thereto. Fagan provided Merritt with some information regarding
the sale of the painting, but he did not make any payments under
Merritt commenced an action against Fagan in November 1999, in
Connecticut state court, alleging, inter alia, conversion. In
January 2000, Merritt retained her current counsel, Elisabeth
Seieroe Maurer, Esq., to represent her in the Connecticut action.
Upon her retention, Maurer contacted the FBI to report Merritt's
loss of the painting. The FBI conducted an investigation, and
seized the painting in January 2000. Ultimately, the United
States Attorney's Office commenced the instant interpleader
action, naming Spanierman and Merritt as Defendants.
On August 2, 2000, Spanierman Gallery commenced the instant
declaratory judgment action, claiming that it is the painting's
rightful titleholder. Shortly thereafter, Merritt moved to
dismiss the action, asserting, inter alia, that her claims
against Fagan in the Connecticut court action would be
dispositive of Spanierman's claims to the painting's title. Fagan
had defaulted in the liability phase of the Connecticut action,
and in May 2002, the Connecticut Superior Court for the Judicial
District of Danbury entered judgment in Merritt's favor on her conversion and related
claims. See Merritt v. Fagan, No. CV990337866S, 2002 WL
1331839 (Conn. Super. Ct. May 17, 2002) (unpublished opinion). In
an Opinion and Order dated February 6, 2003, the Court (Swain,
J.) denied Merritt's motion to dismiss, and held that the
Connecticut action had no preclusive effect in this action. See
Spanierman Gallery, 2003 WL 289704, at **3-5.
A trial in this action is scheduled to commence on August 10,
2004. In the course of preparing for the trial. Spanierman made
known its position that Merritt has never asserted an actual
claim to the painting in either of these actions. The Court
granted Merritt leave to amend her Answers to assert such claims.
Plaintiff's summary judgment motion followed. The motion seeks to
preclude Merritt from asserting her replevin claims on the
grounds that they are barred by the statute of limitations and/or
the general release provision contained in the Settlement
Agreement between Fagan and Merritt.
I. The Summary Judgment Standard
Summary judgment is appropriate only when the submissions of
the parties, taken together, "show that there is no genuine issue
as to any material fact and that the moving party is entitled to
a judgment as a matter of law." Fed.R.Civ.P. 56(c). In
deciding a motion for summary judgment, the Court "must view the
evidence in the light most favorable to the non-moving party and draw all
reasonable inferences in its favor." Am. Cas. Co. of Reading,
Pa. v. Nordic Leasing, Inc., 42 F.3d 725, 728 (2d Cir. 1994)
(quoting Consarc Corp. v. Marine Midland Bank, N.A.,
996 F.2d 568, 572 (2d Cir. 1993)); see also Reeves v. Sanderson
Plumbing Prods., Inc., 530 U.S. 133, 150, 120 S.Ct. 2097, 2110
(2000) ("Credibility determinations, the weighing of the
evidence, and the drawing of legitimate inferences from the facts
are jury functions, not those of a judge.") (quoting Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 2513
(1986)); Hayut v. State Univ. of New York, 352 F.3d 733, 743
(2d Cir. 2003). The moving party must "inform the district
court of the basis for its motion" and identify the matter that
"it believes demonstrate[s] the absence of a genuine issue of
material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323,
106 S.Ct. 2548, 2553 (1986). If the moving party meets this
burden, the burden shifts to the nonmoving party to come forward
with "specific facts showing that there is a genuine issue for
trial." Fed.R.Civ.P. 56(e).
A party opposing a motion for summary judgment "may not rest on
the pleadings but must further set forth specific facts in the
affidavits, depositions, answers to interrogatories, or
admissions showing a genuine issue exists for trial." Cifarelli
v. Village of Babylon, 93 F.3d 47, 51 (2d Cir. 1996); see also
Fed.R.Civ.P. 56(c), (e); Celotex, 477 U.S. at 324, 106 So.
Ct. at 2553. "[T]here is no issue for trial unless there is sufficient evidence
favoring the nonmoving party for a jury to return a verdict for
that party." Anderson, 477 U.S. at 249, 106 S.Ct. at 2511; see
also Hayut, 352 F.3d at 743. The nonmoving party may not rely
on conclusory allegations or speculation to create disputed
factual issues. See D'Amico v. City of New York,
132 F.3d 145, 149 (2d Cir.), cert. denied, 524 U.S. 911, 118 S.Ct. 2075
(1998); Lipton v. Nature Co., 71 F.3d 464, 469 (2d Cir. 1995).
"If the evidence is merely colorable, or is not significantly
probative, summary judgment may be granted." Anderson, 477 U.S.
at 249-50, 106 S.Ct. at 2511 (citations omitted).
II. The Timeliness of Merritt's Claims
Spanierman Gallery argues that the counter- and cross-claims
asserted by Merritt in her June 30, 2004 Amended Answers are
untimely. Plaintiff contends that, under New York choice of law
rules, the Massachusetts statute of limitations governs Merritt's
replevin claims, and, under Massachusetts law, the claims are
barred by the governing statute of limitations. Alternatively,
Plaintiff argues that the claims are untimely under the
limitations periods of Connecticut and New York, as
well.*fn3 (See Pl.'s Mem. of Law in Support of Pl.'s Mot.
for Summ. J. on Def.'s Counterclaims and Crossclaims ("Pl.'s
Mem.") at 6-14; Pl.'s Statement of Material Facts ¶ 4.) Merritt rejoins that New York law governs her
replevin claims, because she first demanded that Spanierman
return the painting in New York (i.e., by way of asserting her
counter- and cross-claims in this action on June 30, 2004), and
that her claims are timely under New York's statute of
limitations. (See Def.'s Mem. in Opp'n to Pl.'s Mot. for Summ.
J. ("Def.'s Mem.") at 3-4.)
A federal court sitting in diversity applies the choice of law
rules of the forum state in which it sits, and thus, the Court
applies New York's choice of law rules. See Klaxon Co. v.
Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021
(1941); Hoelzer v. City of Stamford, 933 F.2d 1131, 1135-36 (2d
Spanierman correctly argues that, under New York's choice of
law rules, "questions relating to the validity of a transfer of
personal property are governed by the law of the state where the
property is located at the time of the transfer." Wertheimer v.
Cirker's Hayes Storage Warehouse, Inc., 2001 WL 1657237, 2001
N.Y. Slip. Op. 40445(U) (N.Y.Sup.Ct. Sept. 28, 2001) (replevin
action) (citing Kunstsammlungen Zu Weimar v. Elicofon,
536 F. Supp. 829, 845-46 (E.D.N.Y. 1981) and The Greek Orthodox
Patriarchate of Jerusalem v. Christie's, Inc., No. 98 Civ. 7664
(KMW), 1999 WL 673347, at *4 (S.D.N.Y. Aug. 30, 1999)); see
also Wyatt v. Fulrath, 16 N.Y.2d 169, 264 N.Y.S.2d 233 (1965).
Spanierman contends that the relevant transfer of title occurred
in Massachusetts, where it purchased the painting, in May 1998, from Craftsman Auction, and
thus, the Massachusetts statute of limitations governs Merritt's
The question of which substantive law governs the replevin
claims, however, differs from the question of which statute of
limitations applies. In New York, "[s]tatutes of limitations are
usually characterized as procedural, not substantive," and New
York courts apply local procedural rules, even when applying the
substantive law of another state. Wertheimer, 2001 WL 1657237
(replevin claim governed by Arizona substantive law and New York
statute of limitations). "New York courts generally apply New
York's statutes of limitations, even when the injury giving rise
to the action occurred outside New York . . . subject to a
traditional statutory exception, New York's `borrowing' statute,
C.P.L.R. § 202." Stuart v. American Cyanamid Co., 158 F.3d 622,
627 (2d Cir. 1998). Under New York's "borrowing" statute, if a
cause of action accrues outside of New York in favor of a
non-resident, courts must apply the shorter limitations period of
either the state where the cause of action accrued or New York.*fn5 See N.Y.C.P.L.R.
§ 202; Dugan v. Schering Corp., 86 N.Y.2d 857, 859,
635 N.Y.S.2d 164, 165 (1995); Stuart, 158 F.3d at 627; Hoelzer,
933 F.2d at 1136.
Spanierman does not address which statute of limitations
applies under New York's borrowing statute. Rather, Spanierman
appears to argue that because the relevant transaction took place
in Massachusetts, Merritt's replevin cause of action accrued
there, and thus the Massachusetts limitations period applies.
(See Pl.'s Mem. at 7.) Merritt rejoins that her cause of action
accrued in New York, because she "made a demand to Spanierman
Gallery in New York, for return of the painting, which demand
was refused by Spanierman Gallery in New York. Thus, New York law
governs the time that Defendant Mary Merritt has to assert her
counterclaims." (Def.'s Mem. at 3-4.)
For the reasons that follow, regardless of whether the
Massachusetts or New York limitations period applies, the Court
concludes that Merritt's replevin claims are timely. B. Merritt's Replevin Claims are Timely
Massachusetts and New York both have three year limitation
periods for replevin claims, see, e.g., Mass. Gen. Laws ch.
260, § 2a; N.Y.C.P.L.R. § 214(3), but the accrual point for
replevin claims differs between the states. In Massachusetts,
replevin "claims are subject to the so-called `discovery rule,'
under which a cause of action which `is based on an inherently
unknowable wrong' only accrues `when the injured person knows, or
in the exercise of reasonable diligence should know of the facts
giving rise to the cause of action." The Republic of Turkey v.
OKS Partners, 797 F. Supp. 64, 69 (D. Mass. 1992) (quoting
Dinsky v. Town of Framingham, 386 Mass. 801, 803 (1982)); see
also MacCleave v. Merchant, No. 010859, 2002 WL 31480307, at
*2 (Mass. Super. Oct. 1, 2002) (citing Hendrickson v. Sears,
365 Mass. 83, 89-90 (1974)) ("A cause of action accrues on the
happening of the event likely to put the plaintiff on notice.").
Whereas, under New York law, "a cause of action for replevin
against the good-faith purchaser of a stolen chattel accrues when
the true owner makes demand for return of the chattel and the
person in possession of the chattel refuses to return it."
Solomon R. Guggenheim Foundation v. Lubell, 77 N.Y.2d 311,
317-18, 567 N.Y.S.2d 623, 626 (1991); see also Hoelzer, 933
F.2d at 1136.
Spanierman argues that Merritt knew, or reasonably should have
known, "by the end of 1999," that it had purchased the painting, because her niece, Katra Showah, saw the painting featured in a
Spanierman Gallery advertisement, and within a few months of
mid-September 1999, had told Merritt and Merritt's former
attorney, "I know who bought the painting." (Pl.'s Mem. at 6;
Deposition of Katra Showah, dated July 9, 2003 ("Showah Depo."),
at 86-87, attached as Ex. H to Affidavit of Andrew B. Bittens,
Esq., dated July 12, 2004 ("Bittens Aff.").) Merritt claims that
she did not learn of the ...