Ray v. Ray ( 2021 )

21-982-cv
Ray v. Ray
In the
United States Court of Appeals
for the Second Circuit
AUGUST TERM 2021
No. 21-982-cv
AMES RAY
Plaintiff-Appellant,
v.
CHRISTINA RAY,
Defendant-Appellee,
John Doe Guarnerius Entities #1-20,
Defendants. ∗
On Appeal from the United States District Court
for the Southern District of New York
ARGUED: DECEMBER 16, 2021
DECIDED: DECEMBER 27, 2021
∗
The Clerk of Court is directed to amend the caption as set forth above.
Before: CABRANES, PARKER, and LEE, Circuit Judges.
Plaintiff Ames Ray appeals from the March 25, 2021, order of the
United States District Court for the Southern District of New York
(Paul A. Engelmayer, Judge) granting Defendant Christina Ray’s
motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), on
the grounds that the complaint was time-barred. This appeal presents
the following question: Does Civil Practice Law and Rules (“CPLR”)
section 205(a), New York’s “Saving Statute,” permit a litigant to file an
otherwise untimely “new action” within six months of a prior action,
where that “prior action” was, itself, only made timely by a previous
application of section 205(a)? Finding that it does not, we AFFIRM the
order of the District Court.
RITA W. GORDON, New York, NY for
Plaintiff-Appellant.
MATTHEW A. BEYER, Lewis Brisbois Bisgaard
& Smith, LLP, New York, NY for
Defendant-Appellee.
2
PER CURIAM:
This appeal presents the following question: Does Civil Practice
Law and Rules (“CPLR”) section 205(a), New York’s “Saving Statute,”
permit a litigant to file an otherwise untimely “new action” within six
months of a “prior action,” where that prior action was, itself, only
made timely by a previous application of section 205(a)? Finding that
it does not, we AFFIRM the order of the District Court (Paul A.
Engelmayer, Judge).
I. BACKGROUND
In 1993, following their divorce, Plaintiff Ames Ray (“Ames”)
invested $500,000 in the hedge fund business of Defendant Christina
Ray (“Christina”). They entered into a contract under which Christina
agreed to indemnify up to $350,000 in Ames’s trading losses.
Substantially all of Ames’s $500,000 was lost, and Christina agreed to
repay him under their contract, but did not do so. Ames sued Christina
for breach of contract (the “1998 Action”). That litigation is ongoing.
Meanwhile, in April 2008, Christina mortgaged her co-op
apartment for $500,000 and began transferring the proceeds to the
John Doe Guarnerius Entities, various hedge funds. In two different
state court lawsuits for fraudulent conveyance, filed in December
2010 (the “2010 Action”) and April 2014 (the “2014 Action”), Ames
alleged that Christina mortgaged her apartment and transferred the
proceeds in order to render herself insolvent and thereby avoid
paying any debts that might arise from the 1998 Action. Both the 2010
and 2014 actions were dismissed by the New York State Supreme
3
Court, and those dismissals were both affirmed by the Appellate
Division, First Department. 1
In August 2018, Ames filed a third fraudulent conveyance
lawsuit against Christina (the “2018 Federal Action”), this one in the
District Court for the Southern District of New York (George B.
Daniels, Judge). This lawsuit alleged substantially the same theory as
did the two prior state actions. Christina moved to dismiss the claims
as time-barred based on a six-year statute of limitations, 2 since her
allegedly fraudulent transfers occurred between 2008 and 2009, more
than six years prior to the filing of the 2018 Federal Action. Ames
defended his claim as timely under New York’s “Saving Statute,”
CPLR section 205(a).
Section 205(a) states:
If an action is timely commenced and is terminated in any other
manner than by a voluntary discontinuance, a failure to obtain
personal jurisdiction over the defendant, a dismissal of the
complaint for neglect to prosecute the action, or a final judgment
upon the merits, the plaintiff . . . may commence a new action
upon the same transaction or occurrence or series of transactions
or occurrences within six months after the termination provided
1 See Ray v. Ray, 970 N.Y.S.2d 9 (1st Dep’t 2013), and Ray v. Ray, 68 N.Y.S.3d
724 (1st Dep’t 2018).
2 See N.Y. C.P.L.R. § 213(1).
4
that the new action would have been timely commenced at the
time of commencement of the prior action . . . . 3
It was (and is) undisputed by the parties that the 2014 Action
was timely. The 2018 Federal Action would have been untimely,
except that it was brought within six months of the First Department’s
February 2018 affirmance of the dismissal of the 2014 Action, thus
bringing it under CPLR section 205(a). Judge Daniels therefore found
the 2018 Federal Action timely, 4 but he granted Christina’s motion to
dismiss for failure to state a claim on other grounds. 5 We affirmed that
dismissal in January 2020. 6
In July 2020, Ames again sued Christina in New York State
Supreme Court in the action that gives rise to this appeal (the “2020
Action”). Ames alleged fraudulent conveyance under the New York
Debtor & Creditor Law (“DCL”) section 273, complaining,
substantially as before, that Christina had mortgaged her apartment
and transferred the proceeds in order avoid paying any debts that
might arise from the 1998 Action. Christina removed the case to federal
court based on diversity jurisdiction and moved to dismiss the
complaint under Federal Rule of Civil Procedure 12(b)(6), urging, inter
alia, that the complaint was time-barred based on the six-year statute
3 N.Y. C.P.L.R. § 205(a).
4 See Ray v. Ray, No. 18-CV-7035, 2019 WL 1649981, at *3–4 (S.D.N.Y. Mar.
28, 2019).
5 Id. at *5–11.
6 See Ray v. Ray, 799 F. App’x 29 (2d Cir. 2020) (summary order).
5
of limitations. Ames again defended his claim as timely based on
section 205(a). Judge Engelmayer found that the complaint was time-
barred and granted Christina’s motion to dismiss. Ames now appeals.
II. DISCUSSION
“We review de novo a district court’s grant of a motion to
dismiss, including its legal interpretation and application of a statute
of limitations . . . .” 7 “When sitting in diversity jurisdiction and
determining New York state law claims, we must apply the law of
New York . . . .” 8
We affirmed the dismissal of the 2018 Federal Action in a
summary order dated January 23, 2020. 9 Ames filed his initial
complaint in the 2020 Action on July 8, 2020. Ames argues that because
the 2020 Action was filed within six months of our dismissal of the
2018 Federal Action (which was, itself, timely based on section 205(a),
having been filed within six months of the affirmance of the dismissal
of the 2014 Action), the 2020 Action is timely.
7 Deutsche Bank Nat’l Tr. Co. v. Quicken Loans Inc., 810 F.3d 861, 865 (2d Cir.
2015).
8 Id. (citation and internal quotation marks omitted); see also Stuart v. Am.
Cyanamid Co., 158 F.3d 622, 626 (2d Cir. 1998) (“Where jurisdiction rests upon
diversity of citizenship, a federal court sitting in New York must apply the New
York . . . statutes of limitations.”).
9 See Ray, 799 F. App’x 29.
6
As Judge Engelmayer explained, Ames “argues that [section]
205(a) effectively operates as a chain, making each successive lawsuit
timely[,] provided that it was filed within six months of the
termination of its predecessor (and that the initial action in the chain
was timely).” 10
The primary issue in this appeal, then, is whether section 205(a)
permits successive re-filings in this manner. We agree with the District
Court that this construction of section 205(a) is wrong. 11
We address section 205(a) under well-established principles of
statutory interpretation:
When answering questions of statutory interpretation, we begin
with the language of the statute. If the statutory language is
unambiguous, we construe the statute according to the plain
meaning of its words. We discern plain meaning by looking to
the statutory scheme as a whole and placing the particular
provision within the context of that statute. Only when the
terms are ambiguous or unclear do we consider legislative
history and other tools of statutory interpretation. 12
The interpretation of section 205(a) in this case is straightforward. By
its own terms, section 205(a) can only be applied “provided that the
10 Spec. App’x 11.
11 Id.
12 United States ex rel. Wood v. Allergan, Inc., 899 F.3d 163, 171 (2d Cir. 2018)
(citations and internal quotation marks omitted).
7
new action would have been timely commenced at the time of
commencement of the prior action” (emphases added). For the
purposes of evaluating whether it saves Ames’s 2020 Action, the 2020
Action is clearly the “new action” under the statute. The “prior action”
is the 2018 Action—i.e., the one Ames argues was terminated “within
[a] six-month period” before the filing of the new action, thereby
saving the 2020 Action. The statute therefore requires us to ask
whether the 2020 Action “would have been timely commenced at the
time of commencement of” the 2018 Action. The 2018 Action was
commenced on August 6, 2018. If the 2020 Action had been
commenced at that time, almost nine years after Christina’s allegedly
fraudulent transfers, it would have been untimely. 13 Therefore, section
205(a) does not apply to the 2020 Action.
This reading of section 205(a) makes sense, and it accords with
the basic purpose of the statute. 14
By contrast, Ames’s reading does not make sense. It would
render meaningless the statute’s requirement that “the new action
would have been timely commenced at the time of commencement of
13 See Jaliman v. D.H. Blair & Co., 964 N.Y.S.2d 112, 114 (1st Dep’t 2013) (“New
York law provides that a claim for constructive fraud is governed by the six-year
limitation set out in CPLR 213(1), and that such a claim arises at the time the fraud
or conveyance occurs.” (citation omitted)).
14 Hakala v. Deutsche Bank AG, 343 F.3d 111, 115 (2d Cir. 2003) (“The purpose
of [section] 205(a) is to avert unintended and capricious unfairness by providing
that if the first complaint was timely but was dismissed for . . . curable reasons, the
suit may be reinstituted within six months of the dismissal.”).
8
the prior action” and it would—as the facts of this case demonstrate—
permit a litigant to frustrate the statute of limitations entirely by filing
new actions within six months of dismissals, in perpetuity. 15
It is unsurprising, then, that both federal and New York courts
have consistently described section 205(a) as authorizing a “second”
opportunity to file a claim after a “first” or “initial” claim is dismissed
on a non-merits final judgment. 16
Finally, Ames invites us to certify the question of the proper
interpretation of section 205(a) to the New York Court of Appeals. This
we decline to do.
15 See Spec. App’x 13 (“Otherwise, were Ames to bring yet another such
action . . . within six months of the affirmance of this Court’s dismissal, it, too,
would elude the statute of limitations.”).
16 See, e.g., Diffley v. Allied-Signal, Inc., 921 F.2d 421, 423 (2d Cir. 1990)
(“Section 205(a) . . . merely allows the plaintiffs an additional six months in which
to bring another action based on the same occurrences, after their timely initial
complaint was dismissed for procedural defects.” (emphasis added)); U.S. Bank
Nat’l Ass’n v. DLJ Mortg. Cap., Inc., 122 N.E.3d 40, 42 (N.Y. 2019) (“As a general rule,
under CPLR 205(a) a subsequent action may be filed within six months of a non-
merits dismissal of the initial timely-filed matter.” (emphasis added)); George v. Mt.
Sinai Hosp., 390 N.E.2d 1156, 1161 (N.Y. 1979) (“The very function of [section 205(a)]
is to provide a second opportunity to the claimant who has failed the first time
around because of some error pertaining neither to the claimant’s willingness to
prosecute in a timely fashion nor to the merits of the underlying claim.” (emphases
added)); Moran v. County of Suffolk, 138 N.Y.S.3d 92, 96 (2d Dep’t 2020) (“CLPR
205(a) . . . saves only those claims that were timely interposed in the first action.”
(emphasis added) (citation and internal quotation marks omitted)).
9
Our certification of a question of law to the New York Court of
Appeals is discretionary. 17 Certification “must not be a device for
shifting the burdens of this Court to those whose burdens are at least
as great.” 18 “In the past, we have certified questions to the New York
Court of Appeals . . . where the statute’s plain language does not
indicate the answer . . . .” 19 But here, as discussed, the statute’s plain
text does indicate the answer. 20
We have noted that “there are drawbacks to certification,” as the
specific situation of this litigation demonstrates. 21 First, ”while
certification can serve federalism objectives, significant federalism
interests can also cut against certification,” particularly in diversity
jurisdiction cases where “certification . . . substantially undermines the
diverse litigant’s entitlement to the federal forum.” 22 Christina
specifically chose to remove Ames’s 2020 Action from state to federal
court, and we see no reason to needlessly upset her right to removal
here.
17 Penguin Grp. (USA) Inc. v. Am. Buddha, 609 F.3d 30, 41 (2d Cir. 2010).
18Alphonse Hotel Corp. v. Tran, 828 F.3d 146, 156 (2d Cir. 2016) (quoting
Kidney by Kidney v. Kolmar Labs., Inc., 808 F.2d 955, 957 (2d Cir. 1987)).
19 Riordan v. Nationwide Mut. Fire Ins. Co., 977 F.2d 47, 51 (2d Cir. 1992).
20Cf. id. at 52 (“The statute is clear, and none of [the Appellant’s] arguments
raises a serious question about the correct interpretation of the language.”).
21 53rd St., LLC v. U.S. Bank Nat'l Ass'n, 8 F.4th 74, 81 (2d Cir. 2021) (Leval,
J.).
22 Id. (citation and internal quotation marks omitted).
10
Additionally, as Judge Leval recently reminded us,
“certification almost invariably results in substantial increase to the
expenses the parties incur and inevitably delays the resolution of the
case, sometimes for well more than a year.” 23 Confronted with a series
of litigations that has lasted more than two decades, 24 we are hardly
inclined to require that the parties appear before more tribunals than
are necessary to resolve their claims.
III. CONCLUSION
To summarize, we hold that CPLR section 205(a), New York’s
“Saving Statute,” does not permit a litigant to file an otherwise
untimely “new action” within six months of a “prior action,” where
that prior action was, itself, only made timely by a previous
application of section 205(a).
We have reviewed all of the arguments raised by Ames on
appeal and find them to be without merit. For the foregoing reasons,
we AFFIRM the March 25, 2021, order of the District Court.
23 Id. (citation and internal quotation marks omitted).
24 Spec. App’x 18 (“Enough is enough.”).
11