Ceglia v. Zuckerberg et al

Filing 609

DECLARATION signed by Paul Argentieri re 607 Order on Motion for Extension of Time to File Response/Reply, 320 MOTION for Judgment on the Pleadings filed by Paul D. Ceglia filed by Paul D. Ceglia. (Attachments: # 1 Exhibit, # 2 Certificate of Service)(Argentieri, Paul)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
PAUL D. CEGLIA,

Civil Action No. : 1:10-cv-00569-RJA

Plaintiff,
v.
MARK ELLIOT ZUCKERBERG, Individually, and
FACEBOOK, INC.

DECLARATION
OF PAUL ARGENTIERI IN
RESPONSE TO DEFENDANTS’
MOTION TO DISMISS FOR
STATUTE OF LIMITATIONS
VIOLATION, ETC.

Defendants.
DECLARANT, submits this declaration and hereby declares under penalty of
perjury and pursuant to 28 U.S.C. 1746 and under the laws of the United States
that the following is true and correct:
1.

I make this declaration upon personal knowledge.

2.

Defendants have made several claims within their now summary judgment
motion regarding statute of limitations and laches.  Each will be addressed in
turn below.

STATUTE OF LIMITATIONS ARGUMENT
3.

Defendants’ motion, Doc. No. 321, argues their clients breached the FB
agreement with Plaintiff in April 2004.  Doc. No. 321 at 9.  As the court noted
in its October 17, 2012 Decision and Order however, “[t]he doctrine of judicial
estoppel prevents a party from asserting a factual position in one legal
proceeding that is contrary to a position that is successfully advanced in

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another proceeding.”   Rodal v. Anesthesia Group of Onondaga, P.C., 369 F.
3d113, 118 (2d Cir. 2004) (citing Mitchell v. Washingtonville Central School
District, 190F.3d1, 6 (2d Cir. 1999)).”   Doc. No. 572 at 9.   Defendants are
collaterally estopped from arguing that breach date as a result of contradictory
claims made by Defendants in a prior lawsuit, Facebook,Inc.v. Saverin, No.
105CV039867, filed in California Superior Court, Clara County (“Saverin
Case”).” See Exhibit A, Third Amended Complaint in Saverin Case.
4.

Defendants alleged in the Saverin Case that, “On April 13, 2004, Saverin
formed the LLC, which was organized as a limited liability company under
Florida law.    Zuckerberg, Moskovitz and Saverin are each listed as members
and managers of the LLC in the Articles of Organization.  At no time were the
intellectual property rights in the business ever assigned to the LLC. At no
time did those rights ever belong to the LLC.”  Doc. No. 401 at 6.

5.

The Court has effectively ruled on this issue in the May 30, 2012 Decision and
order as it clearly restates in its October 17, 2012 Decision and Order, “In
denying Defendants’ Clarification Motion, the court found that ‘Defendants, by
claiming as plaintiffs in the Saverin case, that no intellectual property rights
were transferred into the LLC formed by Saverin on April 13,2004 under
Florida law, moots the issue in the instant case and, as Defendants admit,[ ] no
further discovery on this issue is required.’”  Doc. No. 572 at 5.

6.

Following the court’s decision to prohibit Defendants from arguing the April
2004 breach date, they failed to approach the court alleging any other breach
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date.   Therefore, defendants’ motion to dismiss for statute of limitations
violation is without a specified alleged breach date.  In addition to their motion
being converted by the court to a motion for summary judgment, it is now
claiming a breach of the statute of limitations without alleging a breach date. 
As it is, Defendants’ motion must fail because it claims a violation of the
applicable statute of limitations while omitting their claimed breach date, an
omission whose consequences for the logic of Defendants’ argument are fatal. 
Even if this court were to entertain their motion, the only possible breach date
alleged by either party is the July 2004 breach date alleged in the complaint. 
It is without doubt that a breach by Defendants of the FB agreement in July
2004 is within the applicable statute of limitations for a complaint filed in
June 2010. N.Y. C.P.L.R. § 213(2).
LACHES DEFENSE
7.

Defendants’ arguments that the action should be dismissed because of laches
even though the action was commenced within the statute of limitations period
deserve little consideration.   Courts of the Western District have held that
reliance on the defense of laches is only available in the absence of an
applicable statute of limitations.   “There is no fixed statute of limitations for
admiralty suits for damages arising out of the unseaworthiness of a vessel. The
courts, in the absence of such a statute, apply the doctrine of laches in
determining whether or not such an action is barred”   Ferner v. Bethlehem
Steel Corp, 179 F. Supp. 518, 519 (W.D.N.Y. 1960).  Emphasis added.
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8.

“This Court has no quarrel with the view that laches might preclude
enforcement of a claim before the expiration of a Statute of Limitations if it is
not clear that a statutory limitations period applies to the action or if the
limitations period is being applied to an equitable or legal remedy only by way
of analogy.  This Court has great difficulty, however, accepting the proposition
that “‘Laches and the Statute of Limitations are mutually exclusive, even when
the statute has been made specifically applicable to the claim and the claim
was brought within the statutory period.’”  In re Cardon Realty Corp., 172 B.R.
182, 188-89 (Bankr. W.D.N.Y. 1994).

9.

“Laches within the term of the statute of limitations is no defense at law.” 
Merck & Co., Inc. v. Reynolds, 130 S. Ct. 1784 - Supreme Court 2010  “Laches
cannot be a defense to a legal action for damages if the action was commenced
within the statute of limitations period.”  Maxim Group LLC v. Life Partners
Holdings, Inc., 690 F. Supp. 2d 293, 310 (S.D.N.Y. 2010).

LACHES CANNOT BE RESOLVED ON THE PLEADINGS
10. Defendants acknowledge that the Court can only grant judgment on the
pleadings, “where it is clear on the face of the Complaint that the plaintiff can
prove no set of facts to avoid the insuperable bar.”  (“Although in some cases
laches cannot be resolved on the pleadings where the reasonableness and
prejudicial effect of a plaintiff’s delay depend on facts outside the pleadings,
courts do grant judgment on the pleadings “where it is clear on the face of the
Complaint that the plaintiff can prove no set of facts to avoid the insuperable
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bar.” LinkCo, 615 F. Supp. 2d at 142 (internal quotation marks omitted,
emphasis added). That is, if the complaint itself (or facts subject to judicial
notice) forecloses any plausible explanation for the delay, and if the complaint
and public records show that the delay will prejudice the defendant, courts
have held that the plaintiff’s claims are barred.”  Doc. No. 321 at 26.
11. “When a suit is brought within the time fixed by the analogous statute, the
burden is on the defendant to show ... circumstances exist which require the
application of the doctrine of laches.”  Leonick v. Jones & Laughlin Steel Corp.,
258 F.2d 48, 50 (2d Cir.1958) (quoting Reconstruction Fin. Corp. v. Harrisons
& Crosfield, Ltd., 204 F.2d 366, 370 (2d Cir.) cert. denied, 346 U.S. 854, 74
S.Ct. 69, 98 L.Ed. 368 (1953)); see University of Pittsburgh v. Champion Prods.
Inc., 686 F.2d 1040, 1045 (3d Cir.), cert. denied, 459 U.S. 1087, 103 S.Ct. 571,
74 L.Ed.2d 933 (1982).  Conopco, Inc. v. Campbell Soup Co., 95 F.3d 187, 191
(2d Cir. 1996).
12. Moreover, laches is “is an equitable defense that bars a[n]...equitable claim.” 
Ikelionwu v. United States, 150 F.3d 233, 237 (2d Cir. 1998).  Emphasis added. 
Plaintiff’s claim are claims at law, a contract breach governed by a specific
statute of limitations.
RELATION BACK ARGUMENT
13. Defendants argue that the amended complaint and its claims do not
sufficiently relate back to those in the original complaint.

  Therefore,

Defendants argue, the amended complaint being filed in April 2011 is outside
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the six year statute of limitations which began to run, as alleged in the
amended complaint in July 2004.
DEFENDANTS’ ARGUMENTS
14. Defendants main argument is that the original complaint only had contract
claims.   Therefore, all the non-contract claims in the amended complaint do
not relate back.
15. They argue that relation back means, “asserts a claim that arose out of the
conduct, transaction, or occurrence set out or attempted to be set out in the
original pleading.”  Doc. No. 321 at 22. “the basic claim must have arisen out of
the conduct set forth in the original pleading.”   Id.   “whether the original
complaint gave the defendant fair notice of the newly alleged claims.”
16. Defendants’ cite to Tho Dinh Tran v. Alphones Hotel Corp, 281 F.3d 23 and
note that it was “overruled on other grounds.”  The overruling court held the
following:
17. “In our view, the relation back issue is more analogous to a dismissal on the
pleadings than a balancing of factors involving the conduct of a lawsuit. If facts
provable under the amended complaint arose out of the conduct alleged in
the original complaint, relation back is mandatory. The proper standard
of review of Rule 15(c)(2) decisions is therefore de novo and we so hold.” 
Slayton v. Am. Exp. Co., 460 F.3d 215, 227-28 (2d Cir. 2006).  Emphasis added.
18. The emphasized quote from that case is the operative legal standard.   The
facts provable under Plaintiff’s original complaint are a breach of contract. 
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There are no different facts underlying the claims in the amended complaint. 
It is obvious that an offshoot of the claims in the original complaint would be
email and other communications confirming the parties’ contract as alleged in
the original complaint.  The amended complaint, at its core, is still arguing a
contract breach between the parties.
19. There is only one event at issue in this case, the alleged breach of the parties’
contract.  There may be varieties of entities and interests established by that
contract, a business partnership, a joint ownership, etc.   But, the key claim
from the original complaint is not restated or reformed in the amended
complaint.   The parties had a contract and it was breached by Defendants. 
That is the key claim and has been so since the filing of the original complaint
up until today.
20. “In our view, the relation back issue is more analogous to a dismissal on the
pleadings than a balancing of factors involving the conduct of a lawsuit. If facts
provable under the amended complaint arose out of the conduct alleged in the
original complaint, relation back is mandatory. The proper standard of review
of Rule 15(c)(2) decisions is therefore de novo and we so hold. Rule 15(c)(2)
provides that “[a]n amendment of a pleading relates back to the date of the
original pleading when ... the claim or defense asserted in the amended
pleading arose out of the conduct, transaction, or occurrence set forth or
attempted to be set forth in the original pleading.” The purpose of “Rule 15 ‘is
to provide maximum opportunity for each claim to be decided on its merits
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rather than on procedural technicalities.’ ” Siegel, 714 F.2d at 216 (quoting 6 C.
Wright & A. Miller, Federal Practice and Procedure, § 1471, at 359 (1971)).
“For a newly added action to relate back, ‘the basic claim must have arisen out
of the conduct set forth in the original pleading....’ ” Tho Dinh Tran, 281 F.3d
at 36 (quoting Schiavone v. Fortune, 477 U.S. 21, 29, 106 S.Ct. 2379, 91 L.Ed.
2d 18 (1986)). Under Rule 15, the “central inquiry is whether adequate notice
of the matters raised in the amended pleading has been given to the opposing
party within the statute of limitations by the general fact situation alleged in
the original pleading.” Stevelman, 174 F.3d at 86 (internal quotations and
citation omitted). Where the amended complaint does not allege a new claim
but renders prior allegations more definite and precise, relation back occurs.
Id. at 87.  Slayton at 227-28.
21. The original complaint contains allegations representing a “general fact
situation” that clearly provides “adequate notice of the matters raised in the
amended pleading.”  Id.  The amended complaint also serves to further define
and make more precise the claims in the original complaint.   In the end, the
liberal pleading standard applied to notice pleadings in the federal courts
favors relation back in circumstances such as these.
DEFENDANTS ARE ENGAGED IN A CONTINUING BREACH
22. A continuing breach restarts the applicable statute of limitations upon the
occurrence of every new breach.  In New York, the Statute of Limitations on a
claim for breach of contract is six years. N.Y. C.P.L.R. § 213(2). In general, the
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limitations period begins to run when the cause of action accrues. N.Y.
C.P.L.R. § 203(a). A cause of action for breach of contract ordinarily accrues
and the limitations period begins to run upon breach. See Ely-Cruikshank Co.
v. Bank of Montreal, 81 N.Y.2d 399, 599 N.Y.S.2d 501, 615 N.E.2d 985, 986
(1993). The plaintiff need not be aware of the breach or wrong to start the
period running. See id. 599 N.Y.S.2d 501, 615 N.E.2d at 987. Where a contract
does not specify a date or time for performance, New York law implies a
reasonable time period. See Schmidt v. McKay, 555 F.2d 30, 35 (2d Cir.1977);
Lituchy v. Guinan Lithographic Co., 60 A.D.2d 622, 400 N.Y.S.2d 158, 159
(App.Div.1977).
23. If, however, a contract requires continuing performance over a period of time,
each successive breach may begin the statute of limitations running anew. See
Bulova Watch Co. v. Celotex Corp., 46 N.Y.2d 606, 415 N.Y.S.2d 817, 389 N.E.
2d 130, 132 (1979); Stalis v. Sugar Creek Stores, Inc., 295 A.D.2d 939, 744
N.Y.S.2d 586, 587-88 (App.Div.2002); Orville v. Newski, Inc., 155 A.D.2d 799,
547 N.Y.S.2d 913, 914 (App.Div.1989); Airco Alloys Div. v. Niagara Mohawk
Power Corp., 76 A.D.2d 68, 430 N.Y.S.2d 179, 186 (App.Div.1980).
DEVELOPMENT OF CONTINUING BREACH ARGUMENT
24. The court has repeatedly reminded counsel that we are in limited expedited
discovery as to two issues:

the authenticity of the FB Contract and/or the

emails. Plus, because general discovery has been stayed, any factual argument
about continuing breach can only be developed after Defendants’ motions to
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dismiss are denied and general discovery begins.
I hereby declare under penalty of perjury and pursuant to 28 U.S.C. 1746 and
under the laws of the United States that the following is true and correct:
DATED: November 25, 2012.

/s/ Paul Argentieri
Paul Argentieri

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