CPLR 205(a): how far will it take us?

New York litigators are familiar with CPLR 205(a), which says that, under certain conditions, you can refile a lawsuit within 6 months after the case was dismissed.  The statute contains some clear language about when you can keep filing the same case. This issue has never arisen until now. This case is dismissed.

The case is Ray v. Ray, issued on December 27. The dispute involves a hedge fund and a divorce. The timeline here is crucial. The first lawsuit was filed in 2010 and 2014, both of which alleged the defendant had fraudulently conveyed money to avoid certain obligations. Those cases were dismissed by State Supreme Court, and the Appellate Division affirmed. In 2018, a third fraudulent convenience lawsuit was filed, this time in federal court, alleging the same facts as the prior cases. The trial court said the case was timely even though the events took place more than six years earlier, because Section 205 allowed plaintiff to file a new case in six months after the Appellate Division had ruled on the last case. The 2018 case was dismissed for failure to state a claim, however. Plaintiff then sued his ex-wife again in 2020 in state court, but the case was removed to federal court. This was also a fraudulent conveyance suit. This case got dismissed on statute of limitations grounds, over plaintiff's objection that Section 205 gave him another six months to file after the 2018 case was dismissed. The issue is whether the 2020 case can proceed under Section 205.

How far will Section 205 allow a plaintiff like this to continue invoking the six month statute of limitations triggered by the last case dismissal? As the Court of Appeals framed the issue at the start of the opinion, "Does section 205(a) . . . 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)?" 

Situations like this may seem uncommon, but all litigators are worried about losing a case on statutes of limitations grounds, so this ruling may be cited in the future more often than you think. While new issues involving the CPLR may be sent to the New York State Court of Appeals to issue a definitive ruling to guide the Second Circuit, which usually does not want to resolve matters of first impression under state law, the Second Circuit decides this issue in the first instance, determining that the plain language of Section 205 answers the questions definitively. 

The Second Circuit finds that "by its own terms, section 205(a) can only be applied "provided that the new action would have been timely commenced at the time of commence of the prior action." This means that the 2020 action is the "new action" under the statute. The "prior action" was the 2018 case. For that angle, the 2020 action would not have been timely commenced when the 2018 case was commenced. Had the 2020 case been commenced in 2018, that would have been nearly nine years since the alleged fraudulent transfers. That would be untimely.