Counterclaims Entitled to Benefit of Relation-Back Doctrine

On February 23, 2018, Justice Scarpulla of the New York County issued a decision in Sharbat v. AGS Capital Group, LLC, 2018 NY Slip Op. 30333(U), holding that counterclaims related back to the date of the initial complaint for statute of limitations purposes, explaining:

Plaintiffs argue that the breach of contract counterclaim is timed-barred by the six year statutes of limitations. AGS Capital argues that the breach of contract counterclaim is not time-barred, as it is protected by the relation-back doctrine set forth in CPLR 203(d). According to AGS Capital, the claims asserted in the complaint were interposed on July 6, 2015, less than six years after the parties entered into the first of the three related contracts, and less than six years after the alleged breach. It argues that the breach of contract counterclaim relates back to plaintiffs' filing of the complaint, and is, therefore, within the applicable six-year statute of limitations.

CPLR 203(d) provides that:

Defense or counterclaim. A defense or counterclaim is interposed when a pleading containing it is served. A defense or counterclaim is not barred if it was not barred at the time the claims asserted in the complaint were interposed, except that if the defense or counterclaim arose from the transactions, occurrences, or series of transactions or occurrences, upon which a claim asserted in the complaint depends, it is not barred to the extent of the demand in the complaint notwithstanding that it was barred at the time the claims asserted in the complaint were interposed.

The breach of contract counterclaim, which has a six-year statute of limitations and was based upon the July 2009 agreements, was timely when the complaint was filed in this action on July 6, 2015. Thus, pursuant to the relation back doctrine set forth in CPLR 203(d), AGS Capital's counterclaim for breach of those same agreements is also timely. For this reason, I deny plaintiffs' motion to dismiss the breach of counterclaim as untimely under the Statute of Limitations.

It is not unusual for the statute of limitations to be an issue in complex commercial litigation. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have questions regarding whether a claim is barred by the statute of limitations.