Global Financial Corp. v. Triarc Corp.
93 N.Y.2d 525, 715 N.E.2d 482, 693 N.Y.S.2d 479 (1999)
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Rule of Law:
For the purposes of New York's borrowing statute (CPLR 202), a nonresident's cause of action for a purely economic injury, such as breach of contract, accrues where the plaintiff resides and sustains the economic impact of the loss.
Facts:
- Global Financial Corp. and Triarc Corp., both Delaware corporations, entered into a contract dated February 1, 1988, for Global Financial to provide consulting services.
- Global Financial had its principal place of business in either Pennsylvania or Florida, not New York.
- Most of the contract-related events, including negotiation, performance, and breach, occurred in New York.
- Between February 1988 and August 1989, Global Financial performed services, including finding an investment company to purchase Triarc's shares.
- On November 6, 1989, Global Financial demanded payment of over nine million dollars for its services.
- The following week, Triarc refused to make the payment.
Procedural Posture:
- On November 9, 1995, Global Financial Corp. (plaintiff) filed an action against Triarc Corp. (defendant) in the U.S. District Court for the Southern District of New York.
- On April 10, 1996, the federal court dismissed the complaint for lack of subject matter jurisdiction.
- Three months later, Global Financial filed a substantially similar suit in the Supreme Court, New York County, a state trial court.
- Triarc moved to dismiss the action as time-barred under CPLR 202, arguing that the shorter statutes of limitations of plaintiff's home state (Delaware, Pennsylvania, or Florida) should apply.
- The Supreme Court granted Triarc's motion to dismiss, holding that the cause of action accrued where the plaintiff suffered the injury, i.e., its place of residence.
- The Appellate Division, an intermediate appellate court, unanimously affirmed the trial court's dismissal.
- The New York Court of Appeals, the state's highest court, granted Global Financial leave to appeal.
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Issue:
For purposes of New York's borrowing statute (CPLR 202), does a nonresident plaintiff's cause of action for breach of contract accrue where the contract was negotiated, performed, and breached, or where the plaintiff resides and sustains the resulting economic injury?
Opinions:
Majority - Chief Judge Kaye
No, for purposes of New York's borrowing statute, a nonresident plaintiff's cause of action for breach of contract accrues where the plaintiff resides and sustains the economic injury, not where the contract was negotiated, performed, and breached. The court reasoned that CPLR 202's term 'accrued' refers to the time and place where the plaintiff first had the right to bring the cause of action. This interpretation is consistent with the court's prior holdings in tort cases, where the cause of action accrues at the place of the injury. The court explicitly rejected applying the 'center of gravity' or 'grouping of contacts' analysis used in substantive choice-of-law questions, noting that the borrowing statute predates those common law doctrines and serves a different purpose. For a purely economic injury, the place of injury is where the plaintiff resides and sustains the economic impact of the loss. This bright-line rule promotes clarity and certainty, which is the goal of CPLR 202, by avoiding a complex, case-by-case analysis of contractual contacts.
Analysis:
This decision solidifies the 'place of injury' rule for determining the accrual of economic injury claims under New York's borrowing statute, CPLR 202. It establishes a clear precedent that for nonresidents, contract claims accrue in their home state where the financial loss is felt, irrespective of where the underlying transaction occurred. This creates a sharp distinction between the procedural analysis for the Statute of Limitations and the substantive 'center of gravity' analysis for choice-of-law in contract disputes. The ruling provides certainty for litigants but means that cases with substantial connections to New York may be dismissed as untimely based on the shorter statutes of limitations of other states.
