Title: Portfolio Recovery Associates, LLC v. Jared King

State: new-york

Issuer: New York Appellate Court

Document:

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This opinion is uncorrected and subject to revision before
publication in the New York Reports.
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No. 46  
Portfolio Recovery Associates, 
LLC,
            Respondent,
        v.
Jared King,
            Appellant.
Jared King, appellant pro se.
Robert A. Spolzino, for respondent.
CAMBA Legal Services, Inc. et al.; Association of the
Bar of the City of New York et al.; Michael J. Hutter; AARP et
al., amici curiae.
PIGOTT, J.:
In April 1989, defendant Jared King, then a resident of
Connecticut, opened a credit card account with Greenwood Trust
Company, a Delaware corporation with a principal place of
business in Greenwood, Delaware.  The agreement contained a
standard choice of law clause stating that it would be governed
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by the laws of Delaware.  Greenwood subsequently changed its name
to Discover Bank. 
It is undisputed that, on January 27, 1999, King sent a
letter to Discover cancelling his credit card, which he had cut
in half and enclosed with the letter.  King demanded that
Discover advise him on how to proceed in paying the card's
outstanding balance, but concededly made no payment on the
account after December 1998.  In August 2000, Discover
transferred to plaintiff Portfolio Recovery Associates, LLC, "all
right, title and interest in and to" King's outstanding account.  
On April 1, 2005, nearly five years after the
assignment and more than six years after the account was
canceled, Portfolio commenced this action against King, now a
resident of New York, asserting causes of action for breach of
contract and account stated.  King asserts in his answer, among
other things, that upon application of CPLR 202--this State's
"borrowing statute"--Portfolio's claims are time-barred. 
Specifically, King claims that Delaware's three-year statute of
limitations for breach of a credit contract (see 10 Del.C. §
8106) applies and, alternatively, Portfolio's claims are untimely
under this State's six-year breach of contract limitations period
(see CPLR 213[2]). 
Portfolio obtained summary judgment on its complaint.
Supreme Court directed that judgment be entered in Portfolio's
favor and the Appellate Division affirmed (55 AD3d 1074).  We now
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reverse.  
The Appellate Division properly concluded that the
Delaware choice of law clause did not require the application of
the Delaware three-year statute of limitations to bar Portfolio's
claims.  Choice of law provisions typically apply to only
substantive issues (see Tanges v Heidelberg N. Am., 93 NY2d 48,
53 [1999]), and statutes of limitations are considered
"procedural" because they are deemed "'as pertaining to the
remedy rather than the right'" (id. at 54-55 quoting Martin v
Dierck Equip. Co., 43 NY2d 583, 588 [1978]).  There being no
express intention in the agreement that Delaware's statute of
limitations was to apply to this dispute, the choice of law
provision cannot be read to encompass that limitations period. 
We conclude, however, that the Appellate Division should have
applied CPLR 202 to Portfolio's claims to determine whether they
were timely brought (see e.g. Global Fin. Corp. v Triarc Corp.,
93 NY2d 525, 528 [1999] ["there is a significant difference
between a choice-of-law question, which is a matter of common
law, and (a) Statute of Limitations issue, which is governed by
the particular terms of the CPLR"]).  
CPLR 202 provides, in relevant part, that "[a]n 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."  Therefore, "[w]hen a nonresident sues on a
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cause of action accruing outside New York, CPLR 202 requires the
cause of action to be timely under the limitation periods of both
New York and the jurisdiction where the cause of action accrued"
(Triarc, 93 NY2d at 528).  If the claimed injury is an economic
one, the cause of action typically accrues "where the plaintiff
resides and sustains the economic impact of the loss" (id. at
529).  
Portfolio, as the assignee of Discover, is not entitled
to stand in a better position than that of its assignor.  We must
therefore first ascertain where the cause of action accrued in
favor of Discover.  Here, it is evident that the contract causes
of action accrued in Delaware, the place where Discover sustained
the economic injury in 1999 when King allegedly breached the
contract.  Discover is incorporated in Delaware and is not a New
York resident.  Therefore, the borrowing statute applies and the
Delaware three-year statute of limitations governs.  
That does not end the inquiry, however, because in
determining whether Portfolio's action would be barred in
Delaware, this Court must "borrow" Delaware's tolling statute to
determine whether under Delaware law Portfolio would have had the
benefit of additional time to bring the action (see GML, Inc. v
Cinque & Cinque, P.C., 9 NY3d 949, 951 [2007]).  Delaware's
tolling statute--Delaware Code § 8117--provides that:
"If at the time when a cause of action
accrues against any person, such person is
out of the State, the action may be
commenced, within the time limited therefor
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in this chapter, after such person comes into
the State in such manner that by reasonable
diligence, such person may be served with
process.  If, after a cause of action shall
have accrued against any person, such person
departs from and resides or remains out of
the State, the time of such person's absence
until such person shall have returned into
the State in the manner provided in this
section, shall not be taken as any part of
the time limited for the commencement of the
action."  
Section 8117 was meant to apply only in a circumstance
where the defendant had a prior connection to Delaware, meaning
that the tolling provision envisioned that there would be some
point where the defendant would return to the state or where the
plaintiff could effect service on the defendant to obtain
jurisdiction (see Williams v Congregation Yetev Lev, 2004 WL
2924490 *7 [SDNY 2004]).  Indeed, Delaware's highest court has
held that the literal application of its tolling provision "would
result in the abolition of the defense of statutes of limitation
in actions involving non-residents" (Hurwich v Adams, 155 A2d
591, 593-594 [Del. 1959]). 
There is no indication that King ever resided in
Delaware, nor is there any indication from the case law that
Delaware intended for its tolling provision to apply to a
nonresident like King.  Therefore, we conclude that Delaware's
tolling provision does not extend the three-year statute of
limitations.  Moreover, contrary to Portfolio's contention, it is
of no moment that Portfolio was unable to obtain personal
jurisdiction over King in Delaware; this Court has held that it
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is not inconsistent to apply CPLR 202 in such a situation (see
Insurance Co. of N. Am. v ABB Power Generation, 91 NY2d 180, 187-
188 [1997]).  
Applying Delaware's three-year statute of limitation,
the instant action should have been commenced not later than
2002.  Because the contract claims were not brought until 2005,
they are time-barred in Delaware, where the causes of action
accrued, and therefore they are likewise time-barred in New York
upon application of the borrowing statute.  This holding is
consistent with one of the key policies underlying CPLR 202,
namely, to prevent forum shopping by nonresidents attempting to
take advantage of a more favorable statute of limitations in this
State (see Antone v General Motors Corp., 64 NY2d 20, 27-28
[1984]).  
As a final matter, we note that only Portfolio sought
summary judgment below.  Absent a cross motion for summary
judgment by King, we are not empowered to now grant that relief
(see Stern v Bluestone, 12 NY3d 873, 876 [2009]; Falk v
Chittenden, 11 NY3d 73, 78-79 [2008]; Merritt Hill Vineyards v
Windy Hgts. Vineyard, 61 NY2d 106, 110-111 [1984]).
Accordingly, the order of the Appellate Division should
be reversed, with costs, and Portfolio's motion for summary
judgment should be denied.
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*   *   *   *   *   *   *   *   *   *   *   *   *   *   *   *   *
Order reversed, with costs, and plaintiff's motion for summary
judgment denied.  Opinion by Judge Pigott.  Chief Judge Lippman
and Judges Ciparick, Graffeo, Read, Smith and Jones concur.
Decided April 29, 2010