Xerox State & Local Solutions, Inc. v. Xchanging Solutions (USA), Inc.
216 F. Supp. 3d 355
S.D.N.Y.2016Background
- Xerox purchased Xchanging’s rights under a Tennessee contract (the VIP project) via a 2007 Asset Purchase Agreement (APA) and an April 25, 2007 amendment; the APA is governed by New York law.
- The APA included Disclosure Schedules and a Closing Month Financial Baseline containing representations and warranties about project status, schedule, and costs; a Bring Down Certificate of April 25, 2007 certified those representations as "true and correct."
- The APA contained a clause that representations and warranties survive closing and are actionable until 30 days after the applicable statute of limitations; indemnification in the APA was the exclusive remedy for breaches.
- Xerox alleges the representations were inaccurate, the VIP project remained incomplete, and Xerox suffered nearly $100M in expenditures; Xerox filed suit for contractual indemnification on May 22, 2013.
- Defendants moved for summary judgment arguing the claim is time-barred under New York law (because the 30‑day extension is invalid under N.Y. Gen. Oblig. Law § 17‑103) and, alternatively, barred under Texas borrowing statute/limitations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of parties’ 30‑day post‑statute extension under N.Y. Gen. Oblig. Law § 17‑103 | Extension is enforceable and postpones accrual so May 2013 filing is timely | Extension was made at inception of liability (Jan/Apr 2007) and thus invalid under § 17‑103(1)/(3) | Court: extension invalid because it was made when cause accrued; § 17‑103 requires extension made after accrual; claim time‑barred |
| Accrual date for breach of representations and warranties | Some breaches accrued later (e.g., final pricing Oct 2007); indemnification claim accrues when loss is realized | Representations of present fact breach at execution (Jan/Apr 2007); accrual occurs when representation made | Court: breaches of present representations accrued on execution dates (Jan 22 and Apr 25, 2007); six‑year limitations expired Jan/Apr 2013 |
| Whether indemnification accrual is delayed until payment to a third party or final pricing | Indemnification claim accrues when parties finally fixed price (Oct 2007) or when loss is established | Indemnity for contract breaches that are not third‑party liabilities accrues at contractual breach (i.e., when representations were made) | Court: indemnification here is essentially contract damages (not third‑party liability); accrual at time of representations; no later accrual |
| Equitable estoppel/preclusion of statute‑of‑limitations defense | Xchanging’s conduct and prior motions misled Xerox and justify estoppel from asserting limitations | No affirmative concealment or post‑accrual misconduct; defendants pleaded limitations; no factual basis for estoppel | Court: equitable estoppel not established; defendant may assert statute of limitations; defense not waived |
Key Cases Cited
- Kassner & Co. v. City of New York, 46 N.Y.2d 544 (N.Y. 1979) (an agreement to extend a limitations period is unenforceable if made at or before the time liability arises)
- Hahn Auto. Warehouse, Inc. v. American Zurich Ins. Co., 18 N.Y.3d 765 (N.Y. 2012) (contract claims accrue at breach date; discovery rule generally not applied to straightforward contract claims)
- Deutsche Bank Nat’l Trust Co. v. Quicken Loans Inc., 810 F.3d 861 (2d Cir. 2015) (a representation of present fact is breached, if at all, when made)
- Germantown Cent. Sch. Dist. v. Clark, Millis & Gilson, AIA, 294 A.D.2d 93 (App. Div. 2002) (recasting time‑barred tort/contract claims as indemnity does not avoid the statute of limitations where no third‑party liability was paid)
- Raquet v. Braun, 90 N.Y.2d 177 (N.Y. 1997) (indemnity principle: indemnification claim arises when indemnitee actually pays a loss imposed by a third party)
- Kulzer v. Pittsburgh‑Corning Corp., 942 F.2d 122 (2d Cir. 1991) (the statute of limitations is an affirmative defense adequately raised by a bare assertion in a responsive pleading)