Opinion
22233
June 26, 2002.
Sessler Sessler LLP, New York City (Jennifer R. Sessler of counsel), for defendant.
Kucker Bruh, New York City (Melissa T. Modarressi of counsel), for plaintiff.
OPINION OF THE COURT
This action seeks to recover $18,919.77 that plaintiff paid a former tenant of premises plaintiff purchased from defendant October 6, 1987. Defendant moves to dismiss plaintiff's claims for fraud and unjust enrichment as barred by the applicable statutes of limitations. CPLR § 3211(a)(5).
I. BACKGROUND
On October 6, 1987, plaintiff and her partners purchased a multiple dwelling at 32 East 38th Street, New York County, from defendant. At the time of the purchase, plaintiff was unaware that a tenant had filed a rent overcharge complaint against the owner. On January 18, 1995, the New York State Division of Housing and Community Renewal (DHCR) issued an order finding the tenant had been overcharged for September 1, 1982, through January 31, 1986, and holding plaintiff, as the current owner, liable for the overcharge. 9 N.Y.C.R.R. § 2526.1(f)(2). See Gaines v. New York State Div. of Hous. Community Renewal, 90 N.Y.2d 545, 549 (1997); Heights Assocs. v. Bautista, 178 Misc.2d 669, 672 (App. Term 2d Dep't 1998). Plaintiff unsuccessfully challenged the determination through administrative and judicial proceedings culminating in a final determination against the owner April 27, 2000. Plaintiff paid the tenant the overcharge plus interest and now seeks to recover from defendant as the prior owner who was responsible for and originally collected the overcharge.
II. FRAUD AND MISREPRESENTATION
Plaintiff's first cause of action, for fraud and misrepresentation, alleges that at the time of the sale, defendant failed to disclose to plaintiff both the pending rent overcharge complaint and the underlying illusory tenancy agreement that had exacted the rent overcharges. See, e.g., Badem Bldgs. v. Abrams, 70 N.Y.2d 45, 52-53 (1987); Bruenn v. Cole, 165 A.D.2d 443, 447-48 (1st Dep't 1991); Conti v. Citrin, 132 Misc.2d 834, 836-37 (Sup.Ct. N.Y. Co. 1985), aff'd, 121 A.D.2d 852 (1st Dep't 1986). The statutory period for commencing an action for fraud is six years from the wrongful act or two years from when the fraud was discovered or should have been discovered with reasonable diligence. CPLR §§ 203(g), 213(8); D'Amico v. First Union Natl. Bank, 285 A.D.2d 166, 170 (1st Dep't 2001). Defendant collected the rent overcharges only through January 1986 and entered the illusory tenancy agreement before then, all well more than six years before she commenced this action in 2002. Plaintiff learned of the alleged fraud through the DHCR order of January 18, 1995, that found a rent overcharge and an illusory tenancy, well more than two years before commencing this action. Therefore the court dismisses her claim for fraud and misrepresentation as time barred. CPLR §§ 203(g), 213(8), 3211(a)(5).
III. UNJUST ENRICHMENT
Plaintiff's second cause of action seeks damages for unjust enrichment. The applicable statute of limitations for this claim is six years. CPLR § 213(1); Chanler v. Roberts, 275 A.D.2d 625 (1st Dep't 2000); Congregation Yetev Lev D'Satmar v. 26 Adar N.B. Corp., 192 A.D.2d 501, 503 (2d Dep't 1993). A claim for unjust enrichment accrues upon commission of the wrongful act creating a duty of restitution. Id. at 502-503.
Plaintiff maintains that the statute of limitations did not begin to run until DHCR issued its final determination April 27, 2000. She claims defendant's wrongful act was failing to refund the overcharge when DHCR's final determination ordered him to do so. She presents no evidence, however, that DHCR ordered defendant, rather than plaintiff, to refund the overcharge.
In any event, it was not the failure to make the refund, but the wrongful acts of entering the illusory tenancy agreement to exact the rent overcharges and collecting the overcharges that unjustly enriched defendant, created a duty to refund the excess rent collected, and triggered the statute of limitations. Id.; Golden Pacific Bancorp v. F.D.I.C., 273 F.3d 509, 520 (2d Cir. 2001). Since defendant committed these acts more than six years before the commencement of this action, the court dismisses plaintiff's claim for unjust enrichment as time barred. CPLR §§ 213(1), 3211(a)(5).
Although plaintiff's unjust enrichment claim is barred, she may be able to recover against defendant on a claim for indemnification, as the six-year statute of limitations for this claim does not commence until costs are incurred. McDermott v. City of New York, 50 N.Y.2d 211, 217-18 (1980); Equitable Life Assur. Socy. of U.S. v. Werner, 286 A.D.2d 632 (1st Dep't 2001); Patel v. Exxon Corp. 284 A.D.2d 1007, 1008 (4th Dep't 2001). The "classic situation" creating a claim for indemnification is where a party, without fault on her own part, is held liable to a third party under law despite another's fault. City of New York v. Lead Indus. Assn., 222 A.D.2d 119, 125 (1st Dep't 1996). The wrongdoer's independent duty to prevent that vicarious liability to the injured party forms the predicate for an indemnity action. Rosado v. Proctor Schwartz, 66 N.Y.2d 21, 24 (1985); McDermott v. City of New York, 50 N.Y.2d at 217, 218 n. 4; City of New York v. Lead Indus. Assn., 222 A.D.2d at 124-25. The indemnitee need not establish that the indemnitor has ever owed her any duty apart from the duty to indemnify. McDermott v. City of New York, 50 N.Y.2d at 219 n. 5; City of New York v. Lead Indus. Assn., 222 A.D.2d at 125-26. Because a claim for indemnification is a separate cause of action, independent of the underlying wrong, the claim does not accrue until the party seeking indemnification pays for the injury. McDermott v. City of New York, 50 N.Y.2d at 218-19; Equitable Life Assur. Socy. of U.S. v. Werner, 286 A.D.2d 632; City of New York v. Lead Indus. Assn., 222 A.D.2d at 124, 126-27. Thus if plaintiff has such a claim against defendant based on her payment of the overcharge, the claim is not yet barred by the statute of limitations.
For the reasons explained above, however, the court grants defendant's motion and dismisses plaintiff's current claims for fraud and unjust enrichment.