Court Applies Continuing Wrong Doctrine to Find Breach of Contract Claims Timely

On July 1, 2020, Justice Cohen of the New York County Commercial Division issued a decision in Tsui v. Chou, 2020 NY Slip Op. 32158(U), applying the continuing wrong doctrine to find breach of contract claims timely, explaining:

As a threshold matter, Defendants argue that Plaintiffs' breach of contract claims are untimely. The applicable statute of limitations for a breach of contract claim is six years. Defendants contend that Plaintiffs' breach of contract claims accrued when Katherine and Robert first failed to offer unsold Units for sale and amend the Plan, on December 16, 1987. Therefore, Defendants argue, the statute of limitations expired in 1993.

The Court disagrees. In contract actions, the continuing wrong doctrine is applied to extend the statute of limitations when a contract imposes a continuing duty on the breaching party. The continuing wrong doctrine may only be predicated on continuing unlawful acts and not on the continuing effects of unlawful conduct. The distinction is between a single wrong that has continuing effects and a series of independent, distinct wrongs. Katherine and Robert have, each year, refused to offer up the unsold Units for sale and/or subsequently amend the Plan to represent their Unit ownership. Thus, Plaintiffs have presented sufficient evidence to demonstrate a series of independent, distinct wrongs committed by Katherine and Robert. Plaintiffs' breach of contract claims are not barred by the statute of limitations.

(Internal 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.