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Statute of Limitations and Breach of Contract

Statute of Limitations and Breach of Contract

The Appellate Division of the Supreme Court of New York, Second Department recently heard the case of DeLuca v. Pecoraro. This case involved a somewhat unusual set of circumstances not typically encountered in the breach of contract context – yet it was a great illustration of the interconnectedness of various areas of the law and also served as yet another in our long list of cautionary tales about contractual disputes.

Background of the Case

The case involved a dispute about who owned an item of real estate. The plaintiff and defendant each put forth their own theories regarding the item – a building located on Grand Street, Brooklyn, New York. The exact nature and details of the dispute were not entirely clear from the Appellate Division’s opinion – what was clear was that the plaintiff was able to produce a key piece of evidence: a deed of conveyance, signed by the defendant’s now deceased wife (Giovanna Pecoraro) conveying the property to the plaintiffs (DeLuca and Cello) as tenants in common.

Defendant brought up a contractual agreement between Giovanna and Cello, signed in 1982, that he felt entitled him to an interest in, or share of, the property. The defendant also alleged that the deed transfer was the product of some form of undue or improper influence (a theory frequently encountered in the context of cases involving the Will of a decedent) – however he did not allege this as a defense in his answer to the plaintiffs’ complaint.

The procedural context of the lawsuit was that the plaintiffs filed for a declaratory judgment against the defendants regarding the building in question. A declaratory judgment is a type of action or lawsuit intended to settle a matter that may otherwise be in dispute. It is somewhat different, procedurally, from other types of suits in that the plaintiff is not asking for damages, per se, but instead a declaration or pronouncement from the court that they (plaintiff) are in the right regarding a certain matter, and often the remedy given is a form of equitable relief – such as a court order. In this case, plaintiff wanted defendant to get off the property and stop collecting rent from tenants, because plaintiffs felt that the defendant did not have a valid ownership interest. Declaratory relief is often seen in the real estate context to settle or quiet title – to resolve who actually owns property and to destroy any other claims to it. This is often a necessary action before real estate may be sold, as buyers typically do not want to deal with the headaches of uncertain title.

Analysis

The court ruled in favor of the plaintiffs. They said that the contract, to which the defendant was not a party, would not entitle him to any ownership interest. The court ruled that a pleading deficiency precluded the claim of undue influence. And, most interestingly for our purposes, the court ruled that the breach of contract claim was time-barred by the six year statute of limitations.

A statute of limitations is the idea that certain lawsuits MUST be brought before a court within a certain amount of time from when the critical events happened or the case is dismissed (even if otherwise meritorious). This is a public policy law, present in all fifty states, that reasons that an injured party has an obligation to act with a certain degree of expediency to bring forth a case – in this case six years for breach of contract. Undue delay tends to cause many problems: witnesses forget or pass away, employees retire or move out of the country, records become lost or destroyed, etc. Statutes of limitations occur in most areas of the law, but are rarely encountered in breach of contract cases, since injured parties typically want to recover their money or goods. However they do exist, and they do operate in quite a draconian manner.

If you have any questions about statutes of limitations please don’t hesitate to contact our office for a consultation.

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