Opinion
01 Civ. 4039 (WHP)
May 12, 2004
Arthur Russell, Esq., New York, NY, for Plaintiff
Andrew W. Sideman, Esq. and Marlen Kruzhkov, Esq., Butler, Fitzgerald Potter, New York, NY, for Defendant UBS Financial Services, Inc.
James J. McEnroe, Esq., Law Offices of James J. McEnroe, Esq., New York, NY, for Defendant Marc A. Rousso
Chaim Book, Esq., Moskowitz Book, New York, NY, for Defendant Rani Merkel
Steven M. Kaplan, Esq. and Tab K. Rosenfeld, Esq., Rosenfeld Kaplan, LLP, New York, NY, for Defendant Leon B. Lipkin
ORDER
On March 31, 2004, this Court denied, inter alia, defendant Leon B. Lipkin's motion to dismiss plaintiff's claim for aiding and abetting fraud based on New York's statute of limitations for fraud claims. See Order, dated Mar. 31, 2004 at 21 n. 6. Specifically, this Court held that there were insufficient facts to determine as a matter of law that plaintiff was on inquiry notice of the alleged fraud more than two years before he named Lipkin as a defendant in January 2002. See Order, at 21 n. 6. Lipkin now moves for partial reconsideration as to that portion of the March 31, 2004 Order denying his motion to dismiss based on the statute of limitations. For the following reasons, Lipkin's motion for reconsideration is denied.
Rule 6.3 of the Local Rules of the Southern District of New York provides in pertinent part: "There shall be served with the notice of motion a memorandum setting forth concisely the matters or controlling decisions which counsel believes the court has overlooked." Accordingly, to be entitled to reconsideration, a movant must demonstrate that the court overlooked controlling decisions or factual matters that were put before it on the underlying motion, which, had they been considered "might reasonably have altered the result reached by the court." Consol. Gold Fields v. Anglo Am. Corp., 713 F. Supp. 1457, 1476 (S.D.N.Y. 1989). The decision to grant or deny a motion for reconsideration is within the sound discretion of the court." See Dietrich v. Bauer, 76 F. Supp.2d 312, 327 (S.D.N.Y. 1999); ATT Corp. v. Microsoft Corp., No. 01 Civ. 4872 (WHP), 2004 WL 309150, at *1 (S.D.N.Y. Feb. 19, 2004).
Lipkin moves for partial reconsideration of the March 31 Order arguing that there were sufficient facts to have put plaintiff on notice of the alleged fraud more than two years before naming Lipkin as a defendant in this action. Accordingly, this Court must consider whether it overlooked relevant facts and controlling law in applying the statute of limitations, N.Y.C.P.L.R. §§ 213(8), 203(g) (McKinney 2003), to plaintiff's aiding and abetting fraud claim against Lipkin. Under New York law, a cause of action for fraud must be commenced within six years of the fraud, or two years from the date when the fraud could reasonably have been discovered, whichever is longer.Moreau v. The Archdiocese of Mew York, 690 N.Y.S.2d 100, 101 (App.Div.2d Dep't. 1999); Baratta v. ABF Real Estate Co., 627 N.Y.S.2d 52, 53 (App. Div.2d Dep't, 1995).
In the March 31 Order, this Court determined that the underlying fraud could be viewed "as having occurred sometime in 1996 when Jaques Dehan recommended to [plaintiff's agent] Jaques Heyer that plaintiff hold his Firenze shares despite their decline." Order, dated March 31, 2004 at 9. Plaintiff's aiding and abetting fraud claim against Lipkin can therefore be viewed as timely under the six-year discovery rule, N.Y.C.P.L.R. § 213(8), since he was named as a defendant in January 2002 — six years from the point when the fraud can be seen as having occurred. See Sackman v. Ligget Group, Inc., 167 F.R.D. 6, 16-17 (E.D.N.Y. 1996) (applying N.Y.C.P.L.R. § 213(8) to the latest date when alleged fraud could be viewed as having occurred).
Lipkin does not move for reconsideration of that determination.
Moreover, since there are issues of fact concerning when plaintiff discovered, or should have discovered, the fraud, this Court cannot conclude that plaintiff's claims against Lipkin are untimely under the two-year discovery limitations period. This Court reiterates its conclusion in the March 31 Order that the issue of when a plaintiff discovered or should have discovered an alleged fraud is a mixed question of law and fact that should not be decided summarily. See Order, at 21. n. 6; Moreau, 690 N.Y.S.2d at 100;see also Nivram Corp. v. Harcourt Brace Jonanovich, 840 F. Supp. 243, 252 (S.D.N.Y. 1993) ("defendants bear a heavy burden in establishing that the plaintiff was on inquiry notice as a matter of law").
Lipkin contends that plaintiff fails to plead that he undertook investigative measures after learning he had been defrauded. Whether plaintiff exercised reasonable diligence depends on when plaintiff knew or should have known of the fraud. See Dodds v. Cigna Sees., Inc., 12 F.3d 346, 350 (2d Cir. 1993). However, when plaintiff was on inquiry notice of the alleged fraud — and thus when his duty of investigation was triggered — cannot be determined at this juncture. The Complaint alleges that Lipkin assisted Rousso and Dehan in preparing perjurious testimony in August 1997. (Compl. ¶ 74.) There is no allegation that Lipkin himself provided testimony. It is uncertain when this information came to light and when plaintiff actually learned of it or should have learned of it. Accordingly, there is insufficient evidence at this point to determine when plaintiff was on inquiry notice. See Trepuk v. Frank, 405 N.Y.S.2d 452, 453 (N.Y. 1978) ("Where it does not conclusively appear that plaintiff had knowledge of facts from which the fraud could reasonably be inferred, a complaint should not be dismissed on motion and the question should be left to the trier of the facts.");see also G-I Holdings, Inc. v. Baron Bud, 238 F. Supp.2d 521, 541 (S.D.N.Y. 2002) ("A motion to dismiss on the basis of a plaintiff's failure to engage in due diligence cannot be granted unless the `undisputed facts' show a lack of reasonable diligence.").
Lipkin's argument that other alleged facts from earlier versions of the Complaint should have alerted plaintiff to the fraud is misplaced. Those earlier pleadings were extinguished by the Second Amended Consolidated Complaint filed in May 2003. See, e.g., Samide v. Roman Catholic Diocese of Brooklyn, 754 N.Y.S.2d 164, 168 (N.Y.Sup.Ct. 2003) ("When an amended complaint has been served, it supercedes the original complaint and becomes the only complaint in the case.") (internal citations omitted);see also Gay v. Farella, 772 N.Y.S.2d 871, 871 (N.Y.App.Div.2d Dep't 2004) ("the original complaint was superceded by the amended complaint, rendering the sufficiency of the allegations in the original complaint academic").
Additionally, even if it could be inferred from earlier pleadings when plaintiff learned of the fraud, he has alleged facts to support his claim that he could not have discovered the fraud before January 2001; namely, that defendants took steps to conceal the scheme. (See Second Amended Consolidated Complaint ("Compl.") ¶ 74.) Accordingly, the circumstances pleaded in the Complaint raise issues of fact precluding Lipkin's motion to dismiss.See Nelson v. Stahl, 173 F. Supp.2d 153, 166 (S.D.N.Y 2001) (rejecting argument that plaintiff's claim was barred by statute of limitations because plaintiff was on inquiry notice of the fraud since "the question of whether plaintiffs should have discovered fraud earlier than they did, and thus whether the action is timely, is a question for the trier of fact.").
CONCLUSION
For the foregoing reasons, defendant Leon B. Lipkin's motion for partial reconsideration of this Court's March 31, 2004 Order is denied.
SO ORDERED.