Wultz et al v. Bank of China Limited
Filing
246
OPINION & ORDER: #103114 For the reasons set forth herein, BOC's request to amend its Answer to assert the limitations defense to plaintiffs' claim is granted, as is BOC's request simultaneously to dismiss the claim as time-barred. SO ORDERED. (Signed by Judge Shira A. Scheindlin on 4/15/2013) (ja) Modified on 4/18/2013 (jab).
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
------------------------------------------------------- )(
SHERYL WULTZ, individually, as personal
representative of the Estate of Daniel Wultz,
and as the natural guardian of plaintiff
Abraham Leonard Wultz; YEKUTIEL
WULTZ, individually, as personal
representative of the Estate of Daniel Wultz,
and as the natural guardian of plaintiff
Abraham Leonard Wultz; AMANDA
WULTZ; and ABRAHAM LEONARD
WULTZ, minor, by his next friends and
guardians Sheryl Wultz and Yekutiel Wultz,
OPINION & ORDER
11 Civ. 1266 (SAS)
Plaintiffs,
- againstBANK OF CHINA LIMITED,
Defendant.
-------------------------------------------------------- )(
SHIRA A. SCHEINDLIN, U.S.D.J.:
I.
INTRODUCTION
This suit arises out of a terrorist attack in Tel Aviv, Israel on April 17,
2006. The attack injured Yekutiel Wultz and led to Daniel Wultz's death on May
14,2006. Four members of the Wultz family brought suit against Bank of China
("BOC") on August 28, 2008, more than two years later, alleging acts of
1
international terrorism and aiding and abetting international terrorism under the
Antiterrorism Act,1 as well as non-federal claims that were originally pled under
Israeli law, but later converted to claims under Chinese law.2 The general facts and
procedural history of the case were laid out in previous opinions, and familiarity
with them is assumed.3
In an Opinion on November 5, 2012, I dismissed all of plaintiffs’ nonfederal claims except one, which was originally pled as a “vicarious liability”
claim.4 In response to a request from plaintiffs, I also granted the parties an
opportunity to brief BOC’s newly asserted argument that plaintiffs’ “vicarious
liability” claim was time-barred under New York’s “borrowing statute.”5 That
briefing is the subject of this Opinion.
For the reasons stated below, plaintiffs’ remaining non-federal claim
1
See 18 U.S.C. § 2333.
2
See Wultz v. Bank of China Ltd., No. 11 Civ. 1266, 2012 WL
5431013, at *1–2 (S.D.N.Y. Nov. 5, 2012) (describing procedural history of
plaintiffs’ non-federal claims).
3
See, e.g., Wultz v. Bank of China Ltd., — F. Supp. 2d —, No. 11 Civ.
1266, 2012 WL 5378961, at *1 & n.3 (S.D.N.Y. Oct. 29, 2012) (collecting earlier
opinions). See also Wultz v. Islamic Republic of Iran, 864 F. Supp. 2d 24 (D.D.C.
2012) (granting default judgment with respect to defendants Islamic Republic of
Iran, Syrian Arab Republic, and other Iranian and Syrian defendants).
4
See Wultz, 2012 WL 5431013, at *4–6.
5
See id. at *6.
2
is time-barred under New York’s “borrowing statute.” BOC’s request to amend its
Answer to assert the limitations defense to plaintiffs’ remaining non-federal claim
is granted, as is BOC’s request simultaneously to dismiss the claim.
II.
DISCUSSION
“‘When diversity of citizenship is the basis of jurisdiction, a federal
court must look to the statute of limitations of the state in which it sits.’”6 “New
York courts generally apply New York’s statute of limitations even when the
injury giving rise to the action occurred outside New York. This general rule,
however, is subject to a traditional statutory exception, New York’s ‘borrowing’
statute.”7
Under New York’s borrowing statute,8 “when a nonresident plaintiff
6
Soward v. Deutsche Bank AG, 814 F. Supp. 2d 272, 277–78 (S.D.N.Y.
2011) (quoting Cuccolo v. Lipsky, Goodkin & Co., 826 F. Supp. 763, 766
(S.D.N.Y. 1993)). BOC does not contest that this Court “exercises diversity and
supplemental jurisdiction over plaintiffs’ nonfederal claims.” 8/20/12
Memorandum of Bank of China Limited in Support of Motion for Partial Judgment
on the Pleadings Dismissing Plaintiffs’ Non-Federal Claims at 8.
7
Stuart v. American Cyanamid Co., 158 F.3d 622, 627 (2d Cir. 1998)
(citations omitted).
8
See N.Y. C.P.L.R. § 202 (“An action based upon a cause of action
accruing without the state cannot be commenced after the expiration of the time
limited by the laws of either the state or the place without the state where the cause
of action accrued, except that where the cause of action accrued in favor of a
resident of the state the time limited by the laws of the state shall apply.”).
3
sues upon a cause of action that arose outside of New York, the court must apply
the shorter limitations period, including all relevant tolling provisions, of either:
(1) New York; or (2) the state where the cause of action accrued.”9 “For the
purposes of the borrowing statute, a cause of action accrues where the injury is
sustained rather than where the defendant committed the wrongful acts.”10 “Hence,
an action by a nonresident on a foreign cause of action is untimely if it is barred
under the law of either New York or the state where the injury occurred.”11
The burden of proving that a particular statute of limitation has
expired falls on the defendant. However, the plaintiff bears the
burden of proving that a particular statute of limitation has been
tolled. Finally, when another state’s statute of limitations is
considered pursuant to N.Y. C.P.L.R. 202, the party seeking to
benefit therefrom bears the burden of proof.12
Plaintiffs assume that their remaining non-federal claim accrued in
China.13 Because plaintiffs’ injury was sustained in Israel, however, BOC is
correct that plaintiffs’ cause of action accrued in Israel for the purposes of the
9
Stuart, 158 F.3d at 627 (citing N.Y. C.P.L.R. § 202).
10
Gordon & Co. v. Ross, 63 F. Supp. 2d 405, 408 (S.D.N.Y. 1999)
(citations omitted).
11
Stuart, 158 F.3d at 627.
12
Cuccolo, 826 F. Supp. at 767 n.2 (citations omitted).
13
See 2/21/13 Plaintiffs’ Supplemental Memorandum of Law
Addressing the New York Borrowing Statute (“Pl. Mem.”) at 6.
4
borrowing statute.14 The parties agree that Israel has a seven-year statute of
limitations for tort claims.15 Thus, as BOC states, “[a]ll conceivably relevant New
York limitations periods are shorter than Israel’s generally-applicable seven-year
limitations period.”16 The viability of plaintiffs’ remaining non-federal claim
depends on whether the claim is time-barred under the applicable New York
limitations period.
“In determining which limitations period is applicable to a given
claim, [New York courts] . . . look to the substance of the allegations rather than to
the characterization of those allegations by the parties.”17 “Plaintiffs may not plead
untimely intentional tort claims as negligence claims to avoid the one year statute
of limitations applicable to intentional torts.”18 Where the substance of a non-New
York claim does not clearly correspond to the substance of any claim under New
14
See 3/14/13 Bank of China Limited’s Opposition to Plaintiffs’
Supplemental Memorandum of Law Addressing the New York Borrowing Statute
(“BOC Opp.”) at 3–4.
15
See id. at 4 n.4 (citing Prescription Law, 5718-1958, 12 LSI 129, Art.
5(1) (1957–1958) (Isr.)); 3/22/13 Plaintiffs’ Reply Memorandum of Law
Addressing the New York Borrowing Statute (“Pl. Reply”) at 2 n.1.
16
BOC Opp. at 4.
17
Tong v. Target, Inc., 922 N.Y.S.2d 458, 459 (2d Dep’t 2011) (citing
Western Elec. Co. v. Brenner, 392 N.Y.S.2d 409 (1977)).
18
Sawyer v. Wight, 196 F. Supp. 2d 220, 228 (E.D.N.Y. 2002) (citing
Wrase v. Bosco, 706 N.Y.S.2d 434, 435 (2d Dep’t 2000)).
5
York law, “the Court must apply the statute of limitations that applies to the ‘most
. . . analogous’ cause of action.” 19
Plaintiffs argue that their remaining non-federal claim is more closely
analogous to a negligence claim than an intentional tort, while BOC argues that
plaintiffs’ claim is most analogous to an aiding-and-abetting claim where the
primary violation was an intentional tort.20 BOC is correct. Under New York law,
19
Seghers v. Morgan Stanley DW, Inc., No. 06 Civ. 4639, 2007 WL
1404434, at *7 n.10 (S.D.N.Y. May 10, 2007) (quoting Stern v. BSL Dev. Corp.,
557 N.Y.S.2d 89, 89 (1st Dep’t 1990), and citing Brewer for Value-Added
Commc’ns, Inc. Litig. Trust v. New York, 672 N.Y.S.2d 650 (Ct. Cl. 1998) (finding
an unnamed tort similar to a conversion claim, and applying the conversion statute
of limitations)). Accord Solnick v. Whalen, 49 N.Y.2d 224, 229 (1980) (noting that
lack of a specifically prescribed statute of limitations for an action does not mean
that “the six-year catch-all limitation of CPLR 213 (subd. 1) therefore
automatically or necessarily governs,” and concluding that if the substance of a
claim shows that the claim was “open to resolution through a form of proceeding
for which a specific limitation period is statutorily provided, then that period”
applies); Scholes v. American Kennel Club, Inc., No. 98 Civ. 6538, 1999 WL
799532, at *5 (S.D.N.Y. Oct. 7, 1999) (“Because New York does not recognize the
tort of outrage, to ascertain the appropriate New York statue of limitations for such
a claim, the Court is required to identify the New York cause of action that it most
closely resembles.”).
20
See Pl. Mem. at 7–8, 10–15; BOC Opp. at 7–17. Plaintiffs also argue
that “federal courts apply New York’s residual three-year limitations period
governing personal injury when no state law analogue to the asserted claim exists.”
Pl. Mem. at 8 (formatting altered). Plaintiffs cite cases in which the U.S. Supreme
Court and the Southern District of New York were confronted with federal
statutory causes of action for which Congress failed to provide a specific statute of
limitations. See Pl. Mem. at 8–10 (citing Owens v. Okure, 488 U.S. 235 (1989)
(determining limitations period for § 1983 claims); McKenna v. Senior Life Mgmt.,
Inc., 429 F. Supp. 2d 695 (S.D.N.Y. 2006) (determining limitations period for
6
[a] plaintiff seeking to establish a cause of action for aiding and
abetting . . . must show: “(1) the existence of a . . . violation by the
primary (as opposed to the aiding and abetting) party; (2)
‘knowledge’ of this violation on the part of the aider and abettor;
and (3) ‘substantial assistance’ by the aider and abettor in the
achievement of the primary violation.”21
These elements capture the substance of plaintiffs’ remaining non-federal claim.
The claim states that “BOC provided PIJ with banking services which enabled,
facilitated, supported and assisted PIJ to carry out the Terrorist Bombing.”22 The
claim also incorporates by reference plaintiffs’ allegations that BOC “had actual
knowledge” that its customer was transferring funds to the PIJ “for the purpose of
federal qui tam action)). In order to fill the gap left by Congress in a uniform way,
the Supreme Court held that “where state law provides multiple statutes of
limitations for personal injury actions, courts considering § 1983 claims should
borrow the general or residual statute for personal injury actions.” Owens, 488
U.S. at 249–50. Owens and McKenna are easily distinguished from the current
case, and do not stand for the general principle that federal courts apply New
York’s residual three-year limitations period governing personal injury when no
clear state law analogue to the asserted claim exists. In Owens and McKenna, the
governing law failed to specify a limitations period. As a result, the courts had
little choice but to supply a period by looking, in part, to policy considerations. In
the current case, by contrast, the limitations period is explicitly supplied by New
York’s borrowing statute. Plaintiffs provide no applicable authority for concluding
that this Court is at liberty to disregard New York’s statute based on policy
considerations. See Pl. Mem. at 15–17.
21
Design Strategy, Inc. v. Davis, 469 F.3d 284, 303 (2d Cir. 2006)
(quoting Samuel M. Feinberg Testamentary Trust v. Carter, 652 F. Supp. 1066,
1082 (S.D.N.Y. 1987)).
22
First Amended Complaint ¶ 154.
7
carrying out terrorist attacks,” and that those transfers “enhanced the PIJ’s ability
to plan, prepare for and carry out such attacks.”23 Moreover, plaintiffs themselves
previously argued, and this Court agreed, that plaintiffs’ “vicarious liability” claim
“is most akin to one for aiding and abetting,” at least in the context of Israeli law.24
Similarly, in the Opinion dismissing all but one of plaintiffs’ non-federal claims
under Chinese law, I relied on BOC’s expert’s argument that plaintiffs’ “vicarious
liability” claim could be categorized under a form of Chinese joint tort liability
“‘for one who aids or abets another in the commission of a tort.’”25
“The statute of limitations for each aiding and abetting claim is
23
Id. ¶ 77.
24
Wultz v. Bank of China Ltd., 811 F. Supp. 2d 841, 850 & n.66
(S.D.N.Y. 2011), withdrawn on other grounds on reconsideration, 865 F. Supp. 2d
425 (S.D.N.Y. 2012). Accord Wultz v. Bank of China Ltd., 860 F. Supp. 2d 225,
236 (S.D.N.Y. 2012) (“Plaintiffs’ Sixth Count, which they label ‘Vicarious
Liability,’ alleges that the Bank is liable for aiding and abetting al-Shurafa under
§ 12 of the Civil Wrongs Ordinance.”); 5/19/11 Plaintiffs’ Memorandum in
Opposition to Bank of China’s Motion Concerning the Choice of Law Governing
Plaintiffs’ Non-Federal Claims at 5–7 (“[N]otwithstanding how plaintiffs have
captioned it, their [‘vicarious liability’] claim is in substance an ‘aiding and
abetting’ claim.”).
25
Wultz, 2012 WL 5431013, at *6 (quoting Expert Report of Jacques
deLisle, Ex. 1 to 8/20/12 Declaration of Mitchell R. Berger, counsel for BOC,
¶ 60).
8
determined by the underlying tort.”26 BOC argues that “the underlying torts of the
primary tortfeasors — the PIJ — either are intentional torts (assault, battery, and
intentional infliction of emotional distress) or would give rise to a ‘civil action for
wrongful death,’”27 and thus would be governed by the one-year limitations period
for the former or the two-year period for the latter.28
Plaintiffs do not squarely address BOC’s argument that plaintiffs’
“vicarious liability” claim, based on the substance of plaintiffs’ allegations, is best
understood for limitations purposes under New York law as a claim of aiding and
abetting intentional torts (or acts giving rise to a wrongful death claim).29 Instead,
plaintiffs argue against BOC’s alternate argument that plaintiffs’ “vicarious
liability” claim is “in substance an intentional tort” claim.30
26
Marketxt Holdings Corp. v. Engel & Reiman, P.C., 693 F. Supp. 2d
387, 393 (S.D.N.Y. 2010). Accord Geren v. Quantum Chem. Corp., 832 F. Supp.
728, 737–38 (S.D.N.Y. 1993) (“Where the primary violation is barred by the
applicable statute of limitations, a claim for aiding and abetting this primary
violation fails to state a claim.” (citing Wood v. Wood, 312 F. Supp. 762, 763
(S.D.N.Y. 1970))).
27
BOC Opp. at 12–13.
28
See id. (citing N.Y. C.P.L.R. § 215(3); N.Y. E.P.T.L. § 5-4.1).
29
Indeed, plaintiffs’ opening brief appears to accept BOC’s position that
the underlying causes of action resulting from the PIJ’s acts were wrongful death,
battery, and intentional infliction of emotional distress. See Pl. Mem. at 7–8.
30
Pl. Reply at 6. Accord id. at 8 (criticizing “the proposition that
Plaintiffs have essentially pled an intentional tort as negligence”).
9
In the absence of a persuasive counterargument, I agree with BOC
that the underlying torts of the PIJ were either intentional torts or acts giving rise to
a wrongful death action. Because plaintiffs’ “vicarious liability” claim is in
substance an aiding and abetting claim, and because the limitations period for an
aiding and abetting claim is determined by the underlying tort, plaintiffs’
“vicarious liability” claim is governed by, at most, the two-year statute of
limitations for wrongful death actions. As noted earlier, the terrorist attack that
killed Daniel Wultz and injured Yekutiel Wultz took place on April 17, 2006, and
Daniel Wultz died on May 14, 2006.31 Plaintiffs filed this action on August 28,
2008, more than two years later.32 Plaintiffs’ remaining non-federal claim is
therefore time-barred, unless the limitations period was tolled.
Plaintiffs’ final defense of their “vicarious liability” claim is to argue
that equitable tolling under New York law is a question of fact requiring fact
discovery.33 BOC notes, correctly, that “‘New York is not especially hospitable to
failures to sue within the periods prescribed by law.’”34 Equitable tolling is
31
See Pl. Mem. at 2.
32
See id.
33
See Pl. Reply at 9.
34
BOC Opp. at 21 (quoting Hakala v. JP Morgan Secs., Inc., 356 F.
Supp. 2d 355, 357 (S.D.N.Y. 2005)).
10
intended “‘to prevent misconduct on the part of a defendant that makes it unfair for
such defendant to hide behind the [limitations] defense and employ it as a weapon
to defeat a legitimate cause of action.’”35 Plaintiffs have alleged no facts upon
which to conclude that BOC “has actively concealed its involvement”36 with the
PIJ and Hamas, and therefore that plaintiffs are entitled to equitable tolling.
Plaintiffs’ argument that “BOC’s staunch resistance to fact discovery . . .
underscores the possibility it engaged in affirmative efforts to conceal its
involvement” is conceded to be speculative, and is an insufficient basis for
ordering fact discovery as to equitable tolling.37 Nothing done by BOC prevented
plaintiffs from filing suit in August 2008, and any discovery obstruction after that
point does not provide evidence of prior concealment.
III.
CONCLUSION
For the foregoing reasons, BOC’s request to amend its Answer to
assert the limitations defense to plaintiffs’ claim is granted, as is BOC’s request
35
Hakala, 356 F. Supp. 2d at 357 (quoting Peterson v. Long, 519
N.Y.S.2d 201, 203 (Sup. Ct. Cattaraugus Co. 1987)).
36
Pl. Reply at 9 (emphasis added).
37
Id. at 10 (emphasis added). Cf. Strauss v. Credit Lyonnais, S.A., No.
06 Civ. 0702, 2007 WL 2296832, at *6 (E.D.N.Y. Aug. 6, 2007) (rejecting, based
on facts generally similar to those of the present case, plaintiffs’ attempt to toll
limitations period, even under the broader federal standards for diligence-discovery
and equitable tolling).
11
simultaneously to dismiss the claim as time-barred. 38
SO ORDERED:
Dated:
38
April 15, 2013
New York, New York
See BOC Opp. at 25.
12
- Appearances For Plaintiffs:
For Defendant:
Lee S. Wolosky, Esq.
Steven I. Froot, Esq.
Marilyn C. Kunstler, Esq.
Jaime Sneider, Esq.
Boies, Schiller & Flexner LLP
575 Lexington Avenue
New York, NY 10022
(212) 446-2350
Mitchell R. Berger, Esq.
Patton Boggs LLP (DC)
2550 M Street, N.W.
Washington, D.C. 20037
(202) 457-5601
Zachary Carter, Esq.
Lanier Saperstein, Esq.
Neil McDonell, Esq.
Eric Epstein, Esq.
Daniel Goldberger, Esq.
Dorsey & Whitney LLP
51 West 52nd Street
New York, NY 10019
(212) 415-9309
13
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