Expiration of Statute of Limitations Supports Grant of Motion to Extend Time to Serve

On February 26, 2020, the Second Department issued a decision in BAC Home Loans Servicing, L.P. v. Herbst, 2020 NY Slip Op. 01316, holding that the expiration of the statute of limitations supported granting additional time to serve, explaining:

As relevant here, CPLR 306-b provides that service of the summons and complaint shall be made within one hundred twenty days after the commencement of the action. That section further provides that, if service is not made upon a defendant within the time provided in this section, the court, upon motion, shall dismiss the action without prejudice as to that defendant, or upon good cause shown or in the interest of justice, extend the time for service. An extension of time for service is a matter within the court's discretion. Good cause and interest of justice are two separate and independent statutory standards. To establish good cause, a plaintiff must demonstrate reasonable diligence in attempting service. If good cause for an extension is not established, courts must consider the interest of justice standard of CPLR 306-b, which requires a careful judicial analysis of the factual setting of the case and a balancing of the competing interests presented by the parties. Unlike an extension request premised on good cause, a plaintiff seeking an extension in the interest of justice need not establish reasonably diligent efforts at service as a threshold matter. However, the court may consider diligence, or lack thereof, along with any other relevant factor in making its determination, including expiration of the Statute of Limitations, the potentially meritorious nature of the cause of action, the length of delay in service, the promptness of a plaintiff's request for the extension of time, and prejudice to defendant. No one factor is determinative—the calculus of the court's decision is dependent on the competing interests of the litigants and a clearly expressed desire by the Legislature that the interests of justice be served.

While the plaintiff did not establish good cause, an extension of time was warranted in the interest of justice. The plaintiff demonstrated that a potentially meritorious cause of action existed, that it promptly moved for an extension of time to serve the summons and complaint after the defendants challenged service on the ground that it was defective, that the statute of limitations had expired at the time the defendants and the plaintiff made their respective cross motions, and that there was no demonstrable prejudice to the defendants as a consequence of the delay in service.

(Internal quotations and citations omitted).

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.