Summary
noting that in an RPAPL Article 15 action to compel the determination of a claim to real property, a court may determine the ownership interests in the property or reform a deed)
Summary of this case from Gass v. Mamedova-BrazOpinion
Civil Action No. CV-03-1721 (DGT) (CLP)
March 30, 2004
MEMORANDUM AND ORDER
Plaintiff TEG N.Y. LLC ("TEG") brings this action for a determination of the ownership rights in four lots of real property in Staten Island against three named defendants: Ardenwood Estates, Inc. ("Ardenwood"), Hanna Bokser, and Fima Bokser. Hanna and Fima Bokser were the two sole shareholders of Ardenwood. TEG seeks to secure title in the property via equitable relief. Alternatively, if the defendants are found to be the rightful owners of any of the lots, TEG seeks monetary relief, arguing that the defendants have been unjustly enriched.
This action involves a dispute over the ownership of four vacant lots of real property ("Lot A"; "Lot B"; "Lot C"; "Lot D"). The "entire" property, that is, the four lots taken together with two vacant parcels ("Parcels I and II"), was allegedly transferred from Ardenwood to Montgomery Ward, Inc. ("MW") in 1993, who then transferred the property to TEG in 2003. TEG claims that an examination of the legal description and survey of the land, attached as Exhibits to a 1992 Stipulation of Agreement, reveal the defendants' intent to convey the entire property to MW. On the contrary, defendants claim that they clearly intended to convey solely Parcels I and II, as described by the 1993 Deed.
For the following reasons, defendants' motion to dismiss should be granted in part and denied in part.
Background
The following facts are drawn from the Complaint and, for purposes of this opinion, are presumed to be true. On or about May 11, 1992, MW and defendant Ardenwood entered into a Stipulation of Settlement (the "Stipulation") in the case of Ardenwood Estates, Inc. v. Montgomery Ward, Inc., et al. (N.Y.Sup.Ct. Richmond Cty. 1992), an action arising out of the presence of potential environmental contaminants on the property. Compl. ¶ 12. As part of the Stipulation, Ardenwood transferred title to certain real property, which is at the core of this dispute. Compl. Exhibit 3.
TEG alleges that Ardenwood agreed to convey the entire property to MW. Id. ¶ 2. The relevant portion of the Stipulation provides that:
Within sixty (60) days from the date hereof, a closing to transfer title of the premises as set forth in Exhibit A annexed hereto, ("PREMISES"), from ARDENWOOD to MONTGOMERY WARD, shall take place. . . . The sale includes of all [sic] ARDENWOOD'S ownership and rights, if any, in any land lying in the bed of any street or highway, opened or proposed, in front of or adjoining the PREMISES to the center line thereof. It also includes any right of ARDENWOOD to any unpaid award by reason of any taking by condemnation and/or for any damage to the PREMISES by reason of change of grade of any street or highway. ARDENWOOD will deliver at no additional cost to MONTGOMERY WARD, at closing, or thereafter, on demand, any documents which MONTGOMERY WARD may require to collect the award and damages.Compl. Exhibit 3 ¶ 1. Exhibit A to the Stipulation contains two metes and bounds legal descriptions and one survey. Compl. ¶ 14. The two legal descriptions describe Parcels I and II and Lot C. Id. The survey depicts Parcels I and II, and Lots A, B, and D. Id. Therefore, taken as a whole, TEG claims that Exhibit A to the Stipulation describes the entire property and evidences the defendants' intent to convey the entire property: Parcels I and II, and Lots A, B, C, and D. Id. ¶¶ 14, 15. In further support of this conclusion, TEG claims that during negotiations between MW and Ardenwood, they always discussed the inclusion of the entire property in their agreement. Id. ¶ 15.
On or about November 19, 1993, Ardenwood transferred the deed to MW. Id. ¶ 16. However, the deed did not conform to Exhibit A of the Stipulation. The legal description only described Parcels I and II. Id. ¶¶ 2, 16. The deed did not mention Lots A, B, C, or D. Id. ¶¶ 2, 16.
Nonetheless, for the nine years following the transfer of the deed, MW acted as though it owned the entire property. Id. ¶¶ 3, 18, 29. MW built fences around the entire property, repaired and maintained these fences, maintained the property, exercised sole dominion and control over the property until it was sold to TEG, and paid all real estate taxes. Id. ¶¶ 3, 18. Additionally, under an Order on Consent with the State of New York for environmental remediation, MW was identified as the sole property owner of the entire property. Id. ¶ 18. Furthermore, during this time, TEG alleges that all of the defendants proceeded as though the entire property was conveyed to MW. Id. ¶ 19. Defendants never challenged Ward's dominion and control over the property, never objected to the erection or maintenance of fences, took no part in any environmental remediation, never paid real estate taxes or any expenses associated with the property, and finally, never accessed, possessed, maintained, used or developed the property after the deed was transferred to MW. Id. ¶¶ 3, 19, 29.
On September 24, 1997, Ardenwood was voluntarily dissolved by its two shareholders, Hanna and Fima Bokser. Id. ¶¶ 3, 20. Upon dissolution, Ardenwood's assets, if any, were distributed to these shareholders. Id. ¶ 20. At this time, Ardenwood never attempted to convey, transfer, distribute, or sell any portion of the property to its shareholders. Id. ¶¶ 3, 20.
In 2002, TEG agreed to purchase the entire property from MW. Id. ¶¶ 4, 21. However, at or prior to closing, TEG and MW discovered the omission of Lots A, B, C, and D from the deed. Id. ¶¶ 4, 21. TEG claims that this exclusion must have been the result of either: (1) mutual mistake, or (2) fraud on behalf of the defendants and unilateral mistake on the behalf of MW. Id. ¶¶ 2, 17. Therefore, because of this omission, in August 2002, TEG contacted Hanna and Fima Bokser and requested a revised deed, correcting the omission of Lots A, B, C, and D from the legal descriptions attached to the 1993 Deed. Id. ¶¶ 5, 25. TEG claims that defendants agreed to reform the deed in exchange for a fair and reasonable sum to cover the expenses associated with addressing the issue. Id. ¶¶ 5, 26. Accordingly, when defendants' attorney told TEG that the defendants were in the office reforming the contract, TEG deposited $25,000 in Chicago Title and Trust in New York. Id. ¶ 26. However, shortly thereafter, defendants reneged their agreement and claimed that they were the rightful owners of a fee simple interest in Lots A, B, C, and D. Id. ¶¶ 5, 26, 31.
In January 2003, MW transferred Parcels I and II to TEG by warranty deed, since both parcels were contained in the 1993 deed and not in dispute, and transferred Lots A, B, C, and D by quitclaim deed. Id. ¶¶ 4, 22. Further, MW assigned TEG all of its rights relevant to Ardenwood and the property, including but not limited to Ward's rights under the 1992 Stipulation. Id. At this time, TEG entered into an Order on Consent with the State of New York, to take over the environmental remediation for the entire property. Id. ¶ 23. This Order did not contemplate any role for the defendants. Id. ¶ 23. TEG has since commenced the environmental remediation in accordance with the Order on Consent. Id. ¶ 24.
Discussion
A complaint may not be dismissed under Fed.R.Civ.P. 12(b)(6) unless "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief."
Conley v. Gibson, 355 U.S. 41, 45-46 (1957). A court considering a 12(b)(6) motion must accept the plaintiff's allegations as true and view them in the light most favorable to the plaintiff. Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). Courts may not consider matters outside the pleadings but may consider documents attached to the pleadings, documents referenced in the pleadings, or documents that are integral to the pleadings. Chambers v. Time Warner, Inc., 282 F.3d 147, 152-53 (2d Cir. 2002).
In a diversity case filed in New York, a district court must apply New York's choice of law rules and statutes of limitations. Stuart v. American Cynamid Co., 158 F.3d 622, 626 (2d Cir. 1998). Since the case is wholly concerned with title to real property in New York State, the application of New York law regarding the state statute of limitations is proper. See, e.g., El Cid Ltd. v. N.J. Zinc Co., 575 F. Supp. 1513, 1515 (S.D.N.Y. 1983), aff'd, 770 F.2d 157 (2d Cir. 1985), cert. denied, 474 U.S. 1021 (1985); Robins Island Preservation Fund v. Southold Development Corp., 755 F. Supp. 1185, 1191 (E.D.N.Y. 1991). To determine which statute of limitations period to apply in New York, courts look at the essence of the stated claim and not the label by which a plaintiff chooses to plead the claim. Dolmetta v. Uintah Nat'l Corp., 712 F.2d 15, 19 (2d Cir. 1983). In other words, the choice of applicable statute of limitations is related to the substantive form of the remedy rather than to the general theory of liability. Loengard v. Santa Fe Industries, Inc., 70 N.Y.2d 262, 266, 514 N.E.2d 113, 115, 519 N.Y.S.2d 801, 803 (1987). Therefore, since TEG seeks various forms of relief for its five causes of action, each limitations period will be determined independently to ascertain whether or not the claim is time barred.
A. Determination Of Adverse Claims Under New York State Real Property actions and Proceedings Law Is Not Time Barred.
TEG's first cause of action seeks equitable relief under Article 15 of the New York State Real Property Actions and Proceedings Law ("RPAPL"). TEG seeks to compel determination of TEG's and defendants' adverse claims to Lots A, B, C, and D. Compl. ¶ 28. Under RPAPL § 1501(1), "Where a person claims an estate or interest in real property . . . such person . . . may maintain an action against any other person . . . to compel the determination of any claim adverse to that of the plaintiff which the defendant makes, or which it appears from the public records, or from the allegations of the complaint, the defendant might make. . . . As a threshold matter, TEG has asserted an interest in the property which enables them to bring suit under § 1501. TEG obtained an interest in the property when MW transferred a quitclaim deed to them for valuable consideration. Compl. ¶ 4, 22.
Defendants' contention that the quitclaim deed is not "an enforceable ownership interest in these Lots" and consequently that "TEG does not have the ability to seek an adjudication concerning the ownership of these Lots" misconstrues the purpose of Article 15.
By alleging that the 1993 deed to MW was intended to convey the entire property rather than solely Parcels I and II, TEG's complaint sufficiently sets forth a cause of action seeking a judgment determining ownership of the property. The statute of limitations governing such a cause of action is ten years. CPLR § 212(a); see e.g. Robins Island Preservation Fund, 755 F. Supp. at 1192; Downes v. Peluso, 115 A.D.2d 454, 495 N.Y.S.2d 691 (2d Dep't 1985). Therefore, TEG's claim under RPAPL Article 15 must be timely.
In both Robins Island and Downes, the plaintiffs were not in possession of the disputed property. TEG might have been able to bring an Article 15 action more than ten years after the execution of the 1993 deed. See Ford v. Clendenin, 215 N.Y. 10, 17, 109 N.E. 124 (1915) ("The owner of real property who is in possession thereof may wait until his possession is invaded or his title is attacked before taking steps to vindicate his right. A person claiming title to real property but not in possession thereof must act affirmatively and within the time provided by the statute. Possession is a continuing right as is the right to defend such possession.") However, since this suit was brought on April 9, 2003, and the 1993 deed was executed on November 19, 1993, it need not be determined when, exactly, the statute of limitations began to run on the Article 15 claim.
In an Article 15 action to compel the determination of a claim to real property,
[f]inal judgment . . . shall declare the validity of any claim to any estate or interest established by any party to the action. The judgment shall also declare that any party whose claim to an estate or interest in the property has been adjudged invalid . . . [shall] be forever barred from asserting such claim to an estate or interest the invalidity of which is established in the action, and [the court] may direct that any instrument purporting to create any such estate or interest be delivered up or cancelled of record or be reformed of record as the facts may require.
RPAPL § 1521(1). Therefore, as the statute provides, a deed can be reformed at the closing of the action, "as the facts may require." However, the remedy sought by TEG's first claim is a determination of ownership interests pursuant to Article 15, not simply reformation of the 1993 deed. The six year statute of limitations period that applies to claims for reformation of a contract based on mistake, see CPLR § 213(6), does not govern an Article 15 action. Accordingly, defendants' motion to dismiss is denied as to TEG's first claim.
B. Declaratory Judgment Action Is Not Time Barred.
The second remedy sought by TEG is a declaratory judgment that the defendants conveyed the entire property to MW. Compl. ¶ 36. Therefore, by successive interest, TEG claims that it now owns the entire property. Compl. ¶ 36. In order to determine whether there is a limitation prescribed by law for a particular declaratory judgment action, courts must look to the substance of the underlying claim and the nature of the relief sought to determine the applicable period of limitation. Solnick v. Whalen, 49 N.Y.2d 224, 229, 401 N.E.2d 190, 193, 425 N.Y.S.2d 68, 71 (1980). "When the rights of parties sought to be stabilized in a declaratory judgment action are, or have been, open to resolution through a particular procedural route for which a specific limitation period is statutorily provided, then that period generally governs the time for commencement of the declaratory judgment action." Vigilant Ins. Co. of America v. Hous. Auth. of City of El Paso, Tex., 87 N.Y.2d 36, 41, 660 N.E.2d 1121, 1123, 637 N.Y.S.2d 342, 344 (1995). If the period for invoking this other procedural vehicle has expired, the declaratory action is also barred. Solnick, 49 N.Y.2d at 230. However, if the alternative proceeding is not time barred, then a challenge of untimeliness addressed to the declaratory judgment action must also fail. Id. Since, the substance of TEG's declaratory judgment action is a declaration that it is the legal owner of the entire property, TEG's declaratory judgment action falls within the ten year statutory period provided by CPLR § 212(a), which governs proceedings under RPAPL § 1501(1). Therefore, TEG's second cause of action is not time barred. C. Specific Performance Action Is Time Barred.
Even if the "essence" of TEG's second cause of action was an action to reform the 1993 deed, as defendants claim, (Def. Mem. of Law in Further Support at 5), it would still not be time barred, as the reformation action is not itself time barred, see discussion infra.
TEG's third cause of action alleges that in 1993 MW was ready, willing, and able to perform, and did perform, all conditions precedent and all obligations required under the Stipulation, whereas defendants did not. Compl. ¶¶ 41, 42. TEG alleges that defendants breached their obligations under the Stipulation by providing MW with an erroneous deed that did not include the legal descriptions for the entire property. Compl. ¶ 42. Therefore, demand has been made upon the defendants to perform under the terms of the Stipulation. Compl. ¶ 43.
This cause of action is essentially one for specific performance of a contract: the Stipulation. New York law provides that "[t]he following actions must be commenced within six years . . . (2) [A]n action upon a contractual obligation or liability, express or implied. . . ." CPLR § 213(2). Accordingly, this cause of action is governed by the six-year statute of limitations. See, e.g., Feldman v. Teitelbaum, 160 A.D.2d 832, 833, 554 N.Y.S.2d 265, 266 (2d Dep't 1990). A review of the Stipulation's terms indicates that it was to be performed by the defendant "[w]ithin sixty (60) days from the date hereof." Compl. Exhibit 3 § 1. Therefore, any breach of the Stipulation by the defendant occurred in 1992.
TEG contends that "[a]n action for specific performance premised on a seller's failure to deliver title is never time barred . . . because the contractual obligation of the seller to deliver legal title is continuing." (P. Mem. of Law in Opp. at 9). For this proposition, TEG relies on Lippe v. Genlyte Group Inc., 98 Civ. 86672, 2002 WL 531010 (S.D.N.Y. April 8, 2002). TEG accurately characterizes Lippe. (P. Mem. of Law in Opp. at 9 ("The court observed that the agreement at issue included a clause obligating the seller to deliver sufficient documents to vest and protect the purchaser's 'right, title and interest in, and enjoyment of,' the real estate. Noting that the contract did not include a termination date for that duty, the court concluded that the contractual obligation was continuing . . .") (quoting Lippe at *4)). However, the contract at issue in Lippe provided that all documents needed to protect the purchaser's title to the property be delivered by the seller "[a]fter the Closing." Lippe at *4. The Stipulation at issue here requires the deed be delivered at the closing and that the closing occur within sixty days of the Stipulation, and therefore the obligation cannot be considered ongoing. Accordingly, TEG's cause of action for specific performance is time barred, as it falls outside of the six-year limitations period.
D. Actions to Reform the Deed Based On Mistake Or Fraud Are Not Time Barred.
TEG's fourth cause of action seeks reformation of the 1993 deed. Compl. ¶ 51. TEG claims that the omission of Lots A, B, C, and D were the result of either: (1) mutual mistake or (2) fraud on behalf of the defendants and unilateral mistake on behalf of MW. Compl. ¶¶ 49, 50. Established New York contract law permits the reformation of the express terms of a contract when the agreement between the parties is not accurately reflected in the language of the contract, either through mutual mistake of the parties or fraud by one and mistake by the other. Brubrad Co. v. U.S. Postal Serv., 404 F. Supp. 691, 693 (E.D.N.Y. 1975) (Judd, J.).
Although the Complaint also seeks reformation of the Stipulation to include Lots A, B, and D in the legal metes and bounds descriptions, TEG's counsel at oral argument acknowledged that reformation of the Stipulation was unnecessary. The survey including Lots A, B, and D was attached to the Stipulation as part of "Exhibit A" which defined the "PREMISES." Furthermore, since the specific performance claim is time barred, reformation of the Stipulation would not help TEG gain legal title to those lots.
A cause of action for reformation due to mistake must be brought within six years. CPLR § 213(6). However, there is a "well recognized exception" to the rule that the running of the statute does not depend on discovery of the mistake. Hart v. Blabey, 287 N.Y. 257, 262, 39 N.E.2d 230 (1942). "[A]s to one who is in possession of real property under an instrument of title, the statute never begins to run against his right to reform that instrument until he has notice of a claim adverse to his under the instrument, or until his possession is otherwise disturbed." Id. at 262-63; see also Wilshire Credit Corp. v. Ghostlaw, 300 A.D.2d 971, 973, 753 N.Y.S.2d 537, 539 (3d Dep't 2002).
The relevant facts of Hart v. Blabey are essentially the same as those alleged by TEG in this action. In 1912, plaintiff Hart conveyed a deed to defendant Blabey that contained an erroneous description of the southern boundary of the property Blabey was purchasing, with the result that the deed conveyed more land than had been agreed upon. 287 N.Y. at 260. However, Blabey only took possession of the property that had been agreed upon. Id. at 261. In 1925, Hart conveyed the remainder of the property to plaintiffs Meineker in a deed containing the same faulty description of the northern boundary with Blabey's property. Id. In 1937, Blabey, for the first time, began asserting her ownership of the property south of the originally agreed upon boundary, based on the description in the 1912 deed. Id. In 1939, the Meinekers conveyed their property to plaintiff Weaver by a deed that "gave warranties as to the undisputed part only and quitclaimed as to the part over which a dispute had arisen." Id. at 263. The court found that the statute of limitations for reformation did not run from the delivery of the deed in 1912, since
[a]ll the plaintiffs here are entitled to the benefit of that more lenient rule as to the running of the statute of limitations. Under the facts as found at Trial Term and by which we are bound, plaintiffs Hart and Meineker were in exclusive possession of the now disputed gore or triangle of land until 1937. Only then did the running of the statute begin. Plaintiff Weaver, who took title later, in 1939, did not go into possession of the disputed piece because defendant Blabey had meanwhile enclosed and occupied it, but plaintiff Weaver, by his deed, took all the rights of the other plaintiffs, even though it was a quitclaim deed only as to the land involved here.Id. at 263-264.
Like plaintiff Weaver in Hart, TEG received a quitclaim deed to property which had been in the exclusive possession of its predecessor in interest. Therefore, the "more lenient rule" stated in Hart is applicable here, and the statute of limitations only began to run once MW or TEG had notice of a claim adverse to their claims. This notice occurred when MW and TEG reviewed the deed prior to the transfer of the deed in 2002. Compl. ¶ 4, 21. The deed itself can not be deemed to constitute adequate notice under Hart, as that case found a 1939 action to reform a 1912 deed was not time barred. Accordingly, the six-year statute of limitations period began to run in 2002 and thus does not bar TEG's claim for reformation due to mistake.
Next, although the limitations period for reformation of a deed due to fraud is six years, CPLR § 213(8) in conjunction with § 203(g) provide that fraud claims must be commenced within either six years of the commission of the fraud or two years from the time that the party discovered or should have discovered the fraud with reasonable diligence, whichever is longer. The due diligence test "turns upon whether a person of ordinary intelligence possessed knowledge of facts from which the fraud could be reasonably inferred." Ghandour v. Shearson Lehman Bros., Inc., 213 A.D.2d 304, 305-306, 624 N.Y.S.2d 390, 392 (1st Dep't 1995). Here, neither TEG nor MW had knowledge of facts from which fraud could be reasonably inferred until 2002, the year the deed was reviewed and subsequently conveyed from MW to TEG. Compl. ¶ 4, 21. MW had no reason to examine the deed prior to this time because it "exercised sole dominion and control" over the entire property since the transfer of the deed in 1993. Compl. ¶ 3, 18. Furthermore, this control does not seem to have been challenged by any adverse party. Therefore, TEG had two years from the date of discovery in 2002 to file suit. Although the complaint did not specify the exact date that this error was discovered, the complaint was filed on April 9, 2003, no more than 17 months after the earliest possible date of discovery and clearly within the two-year limitations period.
Alternatively, even if it can be argued that MW and TEG failed the "due diligence" test, TEG's cause of action still will not be dismissed for untimeliness. Since reformation due to fraud is also a claim in equity, the same reasoning provided by Hart v. Blabey applies to this fraud claim. Accordingly, since TEG was in possession of the real property under an instrument of title, the statute did not begin to run against its right to reform the 1993 deed until its possession was disturbed or it was given notice of a claim adverse to its claim. As stated above, MW's possession was never disturbed and MW and TEG were first given notice of the adverse claim while reviewing the 1993 deed in 2002. Compl. ¶ 4, 21. Therefore, since TEG had six years to file suit from the time it was given notice of the adverse claim, it has clearly met the limitations period.
E. TEG Has Stated a Claim For Unjust Enrichment.
TEG's final cause of action alleges that in the event defendants are found to be the owners of some or all of the lots, they have been unjustly enriched at the expense of MW and TEG. Compl. ¶ 55. TEG argues that ever since the execution of the 1993 deed, MW and TEG, by successive interest, have assumed all legal responsibility for the entire property, including all costs and expenses associated with the property. Compl. ¶¶ 56, 57.
Furthermore, during this time defendant failed to assert any ownership rights or take any action, for that matter, in relation to the property. Compl. ¶ 58.
To recover on a theory of unjust enrichment, plaintiff must prove that: (1) the defendant was enriched; (2) the enrichment was at plaintiff's expense; and (3) the circumstances were such that in equity and good conscience the defendant should return the money or property to the plaintiff. See e.g., Clark v. Daby, 300 A.D.2d 732, 751 N.Y.S.2d 622, 623 (3d Dep't 2002), Dolmetta v. Uintah Nat'l Corp., 712 F.2d 15, 20 (2d Cir. 1983). "Generally, courts will look to see if a benefit has been conferred on the defendant under mistake of fact or law, if the benefit still remains with the defendant, if there has been otherwise a change of position by the defendant, and whether the defendant's conduct was tortious or fraudulent." Paramount Film Distrib. Corp. v. State of New York, 30 N.Y.2d 415, 421, 285 N.E.2d 695, 698, 334 N.Y.S.2d 388, 393 (1972).
First, if defendants are found to have been the owners of any of the lots for the past ten years, it follows that they should have incurred all of the expenses MW, and subsequently TEG, assumed for those lots from the time of transfer of the 1993 deed. If defendants did not have to pay any of these costs associated with their property since the execution of the 1993 deed, they have been enriched at TEG's expense. For over nine years following the execution of the 1993 deed, MW and then TEG maintained the property, paid all real estate taxes on the entire property, entered into Orders on Consent with the State of New York to provide environmental investigation and remediation of the property, undertook the cost and expense of compliance with these Orders, and assumed all other costs and expenses associated with the property. Compl. ¶ 56. Furthermore, TEG purchased from MW all of its rights relevant to Ardenwood and the property, and thus is entitled, as successor in interest, to any unjust enrichment of defendants that occurred at MW's expense. If defendants have avoided the costs of ownership of lots they are deemed to have owned all along, they should in equity and good conscience be required to return the money to TEG. In particular, the environmental investigation and remediation of the now disputed lots, although undertaken in compliance with orders on consent with the state, only benefits the rightful owner of the lots. Therefore, TEG has stated a claim upon which relief may be granted, and the motion to dismiss the unjust enrichment claim is denied.
F. Paragraphs 25 and 26 of the Complaint Should Not Be Stricken at this Time.
Defendants argue that paragraphs 25 and 26 of the Complaint should be stricken from the record pursuant to Fed R. Civ. P. 12(f), as they refer to an attempted settlement of the matter and are thus inadmissible as evidence under Fed.R.Evid. 408. (D. Mem. of Law at 18 n. 3). However, these paragraphs will not be stricken from the Complaint at this time, as it is unclear from the face of the Complaint whether the discussions occurred before any dispute between TEG and the defendants had yet arisen or whether the paragraphs might be admissible on other grounds. See Eskofot A/S v. E.I. Du Pont De Nemours Co., 872 F. Supp. 81, 94 (S.D.N.Y. 1995); Lipsky v. Commonwealth United Corp., 551 F.2d 887, 893 (2d Cir. 1976).
("[O]rdinarily neither a district court nor an appellate court should decide to strike a portion of the complaint on the grounds that the material could not possibly be relevant on the sterile field of the pleadings alone.")
Conclusion
TEG's claims for specific performance of the Stipulation and for reformation of the Stipulation are time barred, and are hereby dismissed. Defendants' motion to dismiss is denied as to the rest of TEG's claims.SO ORDERED.