FRICKE v. BEAUCHAMP GARDENS OWNERS CORP (2023)

DECISION & ORDER

In an action, inter alia, to recover damages for breach of contract, the plaintiffs appeal from an order of the Supreme Court, Westchester County (James W. Hubert, J.), dated January 11, 2022.  The order, insofar as appealed from, granted those branches of the defendant's motion which were pursuant to CPLR 3211(a) to dismiss the causes of action alleging breach of contract and violation of Business Corporation Law § 720.

ORDERED that the order is affirmed insofar as appealed from, with costs.

The plaintiffs are shareholders in the defendant cooperative corporation and the owners of separate apartments in the cooperative complex.  On February 17, 2020, the plaintiffs commenced this action, alleging that the defendant breached its contract with the plaintiffs and violated Business Corporation Law § 720 by enacting certain sublet policies which limited the number of years shareholders could sublet their apartments and imposed an annual sublet fee.  The challenged policies became effective on January 1, 2013, and January 1, 2017.

The defendant subsequently moved, inter alia, pursuant to CPLR 3211(a)(5) to dismiss the causes of action alleging breach of contract and violation of Business Corporation Law § 720 as time-barred.  The Supreme Court granted those branches of the defendant's motion.  The plaintiffs appeal.

“A defendant who seeks dismissal of a complaint on the ground that it is barred by the statute of limitations bears the initial burden of proving, prima facie, that the time in which to commence an action has expired” (Rojas v. Tandon, 208 A.D.3d 702, 702–703, 173 N.Y.S.3d 625 [internal quotation marks omitted];  see Bayview Loan Servicing, LLC v. Paniagua, 207 A.D.3d 691, 691–692, 172 N.Y.S.3d 451).  “If the defendant satisfies this burden, the burden shifts to the plaintiff to raise a question of fact as to whether the statute of limitations was tolled or otherwise inapplicable, or whether the plaintiff actually commenced the action within the applicable limitations period” (Bayview Loan Servicing, LLC v. Paniagua, 207 A.D.3d at 692, 172 N.Y.S.3d 451 [internal quotation marks omitted]).

Where a cooperative shareholder seeks to challenge the actions of the board in promulgating a new rule or amendment, “such challenge is to be made in the form of a[ ] [CPLR] article 78 proceeding” (Musey v. 425 E. 86 Apts. Corp., 154 A.D.3d 401, 403, 62 N.Y.S.3d 93;  see Ciccone v. One W. 64th St., Inc., 171 A.D.3d 481, 98 N.Y.S.3d 21;  Katz v. Third Colony Corp., 101 A.D.3d 652, 653, 957 N.Y.S.2d 330).  Challenges to the promulgation of new rules are in the nature of CPLR article 78 proceedings even where the complaint characterizes the cause of action as one sounding in breach of contract (see Dau v. 16 Sutton Place Apt. Corp., 205 A.D.3d 533, 534–535, 169 N.Y.S.3d 268;  Musey v. 425 E. 86 Apts. Corp., 154 A.D.3d at 404, 62 N.Y.S.3d 93).  A CPLR “article 78 proceeding must be commenced within four months after the determination to be reviewed becomes ‘final and binding upon the petitioner’ ” (Musey v. 425 E. 86 Apts. Corp., 154 A.D.3d at 404, 62 N.Y.S.3d 93, quoting CPLR 217[1];  see Matter of SR PPW, LLC v. City of New York, 216 A.D.3d 969, 970, 189 N.Y.S.3d 640).

Here, the defendant demonstrated that the plaintiffs’ cause of action alleging breach of contract was actually a challenge to the actions of the board in enacting the sublet policies, and was therefore in the nature of a CPLR article 78 proceeding (see Dau v. 16 Sutton Place Apt. Corp., 205 A.D.3d at 534–535, 169 N.Y.S.3d 268;  Ciccone v. One W. 64th St., Inc., 171 A.D.3d at 481, 98 N.Y.S.3d 21;  Musey v. 425 E. 86 Apts. Corp., 154 A.D.3d at 403, 62 N.Y.S.3d 93;  Katz v. Third Colony Corp., 101 A.D.3d at 653, 957 N.Y.S.2d 330).  The defendant also established that the most recently enacted sublet policy was enacted more than four months prior to the commencement of this action, and thus, the defendant met its initial burden of establishing, prima facie, that the time in which to interpose the cause of action alleging breach of contract, which was actually in the nature of a CPLR article 78 proceeding, expired prior to the commencement of this action (see Matter of SR PPW, LLC v. City of New York, 216 A.D.3d at 970, 189 N.Y.S.3d 640;  Musey v. 425 E. 86 Apts. Corp., 154 A.D.3d at 404, 62 N.Y.S.3d 93).

Contrary to the plaintiffs’ contention, the continuing wrong doctrine is inapplicable here to toll the statute of limitations.  That doctrine “may only be predicated on continuing unlawful acts and not on the continuing effects of earlier unlawful conduct.  The distinction is between a single wrong that has continuing effects and a series of independent, distinct wrongs” (Blaize v. New York City Dept. of Educ., 205 A.D.3d 871, 874–875, 168 N.Y.S.3d 512 [citations and internal quotation marks omitted];  see Matter of Salomon v. Town of Wallkill, 174 A.D.3d 720, 721, 107 N.Y.S.3d 420).  Here, the enforcement of the sublet policies is predicated entirely on the alleged wrong of the defendant's enactment of the policies, and thus, the continuing wrong doctrine does not apply (see Blaize v. New York City Dept. of Educ., 205 A.D.3d at 874–875, 168 N.Y.S.3d 512;  Matter of Salomon v. Town of Wallkill, 174 A.D.3d at 721, 107 N.Y.S.3d 420).  Accordingly, the Supreme Court properly granted that branch of the defendant's motion which was pursuant to CPLR 3211(a)(5) to dismiss the cause of action alleging breach of contract as time-barred (see Rojas v. Tandon, 208 A.D.3d at 702–703, 173 N.Y.S.3d 625;  Bayview Loan Servicing, LLC v. Paniagua, 207 A.D.3d at 691–692, 172 N.Y.S.3d 451).

Similarly, contrary to the plaintiffs’ contention in opposition to the defendant's prima facie showing that the Business Corporation Law § 720 cause of action was time-barred, the continuing wrong doctrine did not serve to toll the statute of limitations with respect to that cause of action (see Blaize v. New York City Dept. of Educ., 205 A.D.3d at 874–875, 168 N.Y.S.3d 512;  Matter of Salomon v. Town of Wallkill, 174 A.D.3d at 721, 107 N.Y.S.3d 420).  Accordingly, the Supreme Court also properly granted that branch of the defendant's motion which was pursuant to CPLR 3211(a)(5) to dismiss the cause of action alleging violation of Business Corporation Law § 720 as time-barred.

In light of our determination, we need not reach the parties’ remaining contentions.

IANNACCI, J.P., GENOVESI, VOUTSINAS and TAYLOR, JJ., concur.