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Federal Court Permits New York's Longer Statute Of Limitations Applying Delaware's Borrowing Statute And Case Law

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B. Lewis Productions, Inc. v. Bean, No. 02-93-KAJ, 2005 WL 273298 (D.Del. Jan. 28, 2005). The central dispute in this Memorandum Order that dealt with a motion in limine was which statute of limitations applied: Delaware's three year statute or New York's six year statute. Plaintiff brought a breach of contract and fraud action under the diversity jurisdiction of the Court. Plaintiff, counterclaim defendant and third-party defendant Butch Lewis ("Lewis"), a Delaware citizen, filed a motion in limine to prevent Vaughn Bean ("Bean"), a defendant and a citizen of Illinois, from introducing evidence of damages at trial predating February 4, 1999, under statute of limitation grounds. The Court denied the motion. Plaintiff and counterclaim defendant, B. Lewis Productions, Inc. ("BLP"), is a New York corporation with its principal place of business in that state. BLP and Bean entered into a contract with BLP acting as Bean's boxing promoter. The Court observed that this motion was really a motion for partial summary judgment and should have been raised within the deadline set for dispositive motions in the Court's scheduling order. The Court declined to accommodate the defendant's argument that there was a waiver of the limitations defense asserted by the plaintiff because it noted that a dispositive legal issue existed and both parties were not deprived of "the opportunity to take discovery or to present argument." The parties agreed that if Delaware's three year statute of limitations did apply, it would extinguish Bean's counterclaim or third-party claim for damages originating from events pre-dating February 4, 1999. The parties also agreed that if New York law applied to the substantive issues in the dispute its six year statute of limitations would cause the above claims to reach back to February 1996. Accordingly, the present Memorandum Order's core centered on which statute of limitation applied: Delaware's or New York's. The Court agreed with Bean that the Delaware Supreme Court's interpretation of borrowing statutes resulted in New York's statute applying to the matter. Bean argued that it would be unfair to permit the shorter Delaware statute to apply because he could have brought his action in New York. The Supreme Court had held in Saudi Basic Industries Corp. v. Mobil Yanbu Petrochemical Co., Inc., 2005 WL 120789 (Del. Jan. 14, 2005), cert. denied, 126 S.Ct. 422 (2005), that a literal reading of Delaware's borrowing statute would subvert the purpose of the statute, namely, discourage forum shopping. Importantly, Saudi Basic, the Court noted that a literal reading and application of Delaware's borrowing statute would permit a plaintiff "to prevail on a limitations defense that would never have been available to it had the [defendants'] ... claims been brought in the jurisdiction where the cause of action arose." The Court also noted that Delaware's connection to the matter was less significant than that of New York's, a fact that the plaintiff had conceded. The only connection the matter had to Delaware was the execution of the contract between the parties in Delaware. That apart, the claims and the contractual performance were unrelated to Delaware. Thus, the Court held that the longer statute of limitations would apply because it would not "effectively encourage the forum shopping denounced by the Delaware Supreme Court, and it would [not] unfairly deprive Bean of rights to which he may otherwise be entitled." Authored by: Raj Srivatsan 302.888.6831 rsrivatsan@morrisjames.com Share

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