Were Breach of Contract & BCL Claims Barred by Statute of Limitations?
Alison Fricke and others were shareholders in Beauchamp Gardens Owners Corp., a cooperative corporation, and the owners of separate apartments in the cooperative complex. On February 17, 2020, they commenced an action alleging that BGOC breached its contract with them and violated Business Corporation Law § 720 by enacting certain sublet policies which limited the number of years shareholders could sublet their apartments and imposed an annual sublet fee. The challenged policies became effective on January 1, 2013, and January 1, 2017.
BGOC subsequently moved to dismiss the causes of action alleging breach of contract and violation of Business Corporation Law § 720 as time-barred. Supreme Court granted those branches of the motion. Fricke and the others appealed
A defendant who seeks dismissal of a complaint on the ground that it is barred by the statute of limitations bears the initial burden of proving, prima facie, that the time in which to commence an action has expired. If the defendant satisfies that burden, the burden shifts to the plaintiff to raise a question of fact as to whether the statute of limitations was tolled or otherwise inapplicable, or whether the plaintiff actually commenced the action within the applicable limitations period..
Where a cooperative shareholder seeks to challenge the actions of the board in promulgating a new rule or amendment, such challenge is to be made in the form of a CPLR article 78 proceeding- even where the complaint characterizes the cause of action as one sounding in breach of contract. And a CPLR article 78 proceeding must be commenced within four months after the determination to be reviewed becomes final and binding upon the petitioner,
Here, BGOC demonstrated that the cause of action alleging breach of contract was actually a challenge to the actions of the board in enacting the sublet policies, and was therefore in the nature of a CPLR article 78 proceeding. BGOC also established that the most recently enacted sublet policy was enacted more than four months prior to the commencement of thee action. Thus, BGOC met its initial burden of establishing, prima facie, that the time in which to interpose the cause of action alleging breach of contract, which was actually in the nature of a CPLR article 78 proceeding, expired prior to the commencement of the action.
Contrary to the unit owners’ contention, the continuing wrong doctrine was inapplicable to toll the statute of limitations. That doctrine may only be predicated on continuing unlawful acts and not on the continuing effects of earlier unlawful conduct. The distinction is between a single wrong that has continuing effects and a series of independent, distinct wrongs.
Here, the enforcement of the sublet policies was predicated entirely on the alleged wrong of BGOC’s enactment of the policies, and thus, the continuing wrong doctrine did not apply. Accordingly, Supreme Court properly granted that branch of BGOC’s motion to dismiss the cause of action alleging breach of contract as time-barred.
Similarly, contrary to the contention in opposition to BGOC’s prima facie showing that the Business Corporation Law § 720 cause of action was time-barred, the continuing wrong doctrine did not serve to toll the statute of limitations with respect to that cause of action. Accordingly, Supreme Court also properly granted that branch of BOGC’s motion to dismiss the cause of action alleging violation of Business Corporation Law § 720 as time-barred.