Opinion ID: 398657
Heading Depth: 2
Heading Rank: 1

Heading: Existing Case Law

Text: 1 Following the analysis of existing federal and New York case law, Judge Mishler defined the issue as how to determine where a cause of action accrues for purposes of applying the borrowing statute. The problem, under this view, is whether to apply the traditional conflicts rule that a cause of action in tort accrues at the place of injury or the modern conflicts approach adopted by the New York Court of Appeals in Babcock v. Jackson, 12 N.Y.2d 473, 240 N.Y.S.2d 743, 191 N.E.2d 279 (1963). The Babcock approach focuses on which jurisdiction had the most significant interest in, or contact with, the subject matter of the litigation. Id. 2 Judge Mishler was confronted with a split of federal and state authority on this issue. The federal courts have specifically framed the issue as requiring a choice between these two tests. See Arneil v. Ramsey, 550 F.2d 774 (2d Cir. 1977); Gluck v. Amicor, Inc., 487 F.Supp. 608 (S.D.N.Y.1980); Haberman v. Tobin, 466 F.Supp. 447 (S.D.N.Y.1979); Posner v. Merrill Lynch, Pierce, Fenner & Smith, 469 F.Supp. 972 (S.D.N.Y.1979); State Teachers Retirement Board v. Fluor Corp., 84 F.R.D. 38 (S.D.N.Y.1979); Bache Halsey Stuart, Inc. v. Namm, 446 F.Supp. 692 (S.D.N.Y.1978); Natural Resources Corp. v. Royal Resources Corp., 427 F.Supp. 880 (S.D.N.Y.1977). One group of cases follows Arneil v. Ramsey, 550 F.2d 774 (2d Cir. 1977), and Sack v. Low, 478 F.2d 360 (2d Cir. 1973), which are read as establishing the rule that the place of injury determines where a cause of action accrues. E. g., Bache Halsey Stuart, Inc. v. Namm, 446 F.Supp. at 696. Another set of federal cases holds that the grouping of contacts approach controls the question. Haberman v. Tobin, 466 F.Supp. 447 (dictum); State Teachers Retirement Board v. Fluor Corp., 84 F.R.D. 38 (dictum); Natural Resources Corp. v. Royal Resources Corp., 427 F.Supp. 880. 3 The New York cases, however, have not squarely addressed the problem of whether a place of injury or a grouping of contacts approach should be applied to determine where a cause of action accrues for purposes of the borrowing statute. The question has arisen in a context where the New York courts were primarily concerned with the separate issue of whether, for purposes of the borrowing statute, a breach of warranty claim should be considered to accrue separately from a strict liability claim concerning the same events. E. g., Martin v. Julius Dierck Equipment Co., 384 N.Y.S.2d at 481-82 (2d Dept. 1976). The First Department of the Appellate Division of the New York Supreme Court affirmed a lower court holding that a warranty cause of action accrued in New York, the state where the product was manufactured, while reversing on a related negligence cause of action, holding that it accrued in the state where the injury occurred. Myers v. Dunlop Tire & Rubber Corp., 40 A.D.2d 599, 335 N.Y.S.2d 961, 962 (1st Dept. 1972) (as described in Martin v. Julius Dierck Equipment Co., 384 N.Y.S.2d at 481-82). The Second Department declined to follow Myers, holding that a warranty claim should be considered, for purposes of the borrowing statute, to be equivalent to the strict liability claim and to accrue at the same time and place. Martin v. Julius Dierck Equipment Co., 384 N.Y.S.2d at 482. The Second Department then applied a grouping of contacts approach to determine where the action accrued: 4 (A) court should first ascertain the underlying nature of plaintiff's action and then decide which area or locality has the primary interest in the matters in dispute. To put it succinctly, the test requires us to determine what the essence of the action is and which jurisdiction has the most significant contacts with the issues before the court (cf. Babcock v. Jackson, 12 N.Y.2d 473, 240 N.Y.S.2d 743, 191 N.E.2d 279; Auten v. Auten, 308 N.Y. 155, 124 N.E.2d 99). 5 Martin v. Julius Dierck Equipment Co., 384 N.Y.S.2d at 482. 6 The New York Court of Appeals affirmed the Second Department's decision in Martin but addressed only the question of whether the warranty action should be considered to accrue separately from the strict liability and negligence causes of action. Martin v. Julius Dierck Equipment Co., 403 N.Y.S.2d at 188, 374 N.E.2d 97. The Court of Appeals did not discuss the Appellate Division's second holding that the grouping of contacts test determined where the action accrued. 4 None of these New York cases analyze in any depth the question of whether place of injury or a grouping of contacts should determine where a cause of action accrues for purposes of applying the borrowing statute. The Myers court simply assumed that the place of injury governed, Myers, 335 N.Y.S.2d at 962, and the Appellate Division's opinion in Martin only stated its conclusion that a grouping of contacts approach was appropriate without explaining its rationale. Martin, 384 N.Y.S.2d at 482. 7 The district court below concluded that since the New York intermediate courts were divided on the question and the New York Court of Appeals had avoided ruling on it when directly presented with an opportunity, it was most appropriate for a federal court applying New York law in its diversity jurisdiction to take a conservative position and apply the traditional place of injury test. Judge Mishler relied upon this court's decision in Arneil v. Ramsey, 550 F.2d 774 (2d Cir. 1977), stressing that its rationale was based upon the underlying policy of the borrowing statute to protect New York resident-defendants from suits in New York that would be barred by shorter statutes of limitations in other states where non-resident-plaintiffs could have brought suit. Id. at 779-80 (quoting Sack v. Low, 478 F.2d at 367). 8