909 F. Supp. 2d 149
E.D.N.Y2012Background
- Lia, Mobile Management, LLC, and N.R. Automotive, Inc. filed a NY Nassau Supreme Court complaint in 2011 seeking specific performance, ownership, constructive trust, accounting, and damages.
- Saporito removed the action to federal court under diversity jurisdiction; Armstead joined the motions to dismiss.
- Lia alleged a 2003 Agreement forming an open point for a Hamilton Honda dealership and an arrangement where Lia funded the venture while defendants held ownership interests.
- Lia contends the 2003 and 2006 agreements required formal amendments and disclosures, with Lia claiming a 75% interest and control; Saporito allegedly signed the 2006 document but failed to amend operating agreements.
- Hamilton Honda opened May 19, 2009, with Lia alleging he was frozen out and that defendants misappropriated funds and impeded his distributions and control.
- Defendants moved to dismiss under Rule 12(b)(6) (and 12(b)(1) for Armstead) and the court granted some dismissals and denied others, ultimately severing Willis Honda and granting partial dismissal based on judicial estoppel.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Statute of limitations governing the claims | Lia claims timely under New York limitations rules | Defendants argue time bars apply and some claims are time-barred | Some claims untimely barred; others timely and proceed |
| Specific performance timeliness | Breach ongoing as to 2003/2006 agreements | Breach occurred when documents not executed; not ongoing | First cause not time-barred; not all breaches timely but some survived |
| Breach of contract on the note (eighth cause of action) | Note breach arises from 2002 demand note | Note claim accrues at execution; six-year limit | Eighth claim dismissed as time-barred |
| Declaratory judgment claim timeliness | Remedies sought are declaratory on underlying contract breaches | Lack of timely relief under declaratory standards | Second claim not time-barred; timely under six-year contract claim basis |
| Breach of fiduciary duty claims | Monetary relief; fiduciary duties violated | Different accruals; some claims time-barred | Third and fourth claims: third partially survives; but portions time-barred; other fiduciary claims dismissed as time-barred or lacking fiduciary relationship |
Key Cases Cited
- Guilbert v. Gardner, 480 F.3d 140 (2d Cir. 2007) (six-year contract statute of limitations guidance)
- Hahn Automotive Warehouse, Inc. v. American Zurich Ins. Co., 18 N.Y.3d 765 (N.Y. 2012) (statute accrues upon breach; reasonable time for performance matters)
- IDT Corp. v. Morgan Stanley Dean Witter & Co., 12 N.Y.3d 132 (N.Y. 2009) (three-year limitations for monetary fiduciary claims; six-year for equitable)