New York City Debt Collection Defense Attorney

Capital One case dismissed under shorter Virginia statute of limitations

We see again a battle over New York's borrowing statute as it relates Capital One's allegations of a breached credit card agreement that contains a choice of law provision that holds Virginia as the governing jurisdiction.

Defendant adeptly cross-moved for summary judgment under CPLR §§ 3212 and 202 arguing and pointing to Virginia's shorter five-year statute of limitations for written contracts, and its three-year statute of limitations for implied agreements (i.e. account statements). Under New York (six-year statute of limitations), the action would have been timely; Under VA law, it would not have been.

Citibank expectedly argued that New York State law holds that because a statute of limitations defense is procedure -- not substantive -- in nature, New York would apply its own six-year limitation. The plaintiff relied on Portfolio Recovery Assoc., LLC v. King, 55 A.D.3d 1074 [3d Dep't 2008], where the Appellate Division, Third Department held that New York's six-year Statute of Limitations and not Delaware's three-year Statute of Limitations governed the dispute.

Portfolio Recovery was reversed while the motion and cross-motion in the instant matter were sub judice (14 N.Y.3d 410 [2010]). In that case, the defendant, a resident of Connecticut, obtained a credit card from Greenwood Trust Company, a Delaware corporation, with a principal place of business in Delaware. The agreement contained a Delaware choice-of-law provision. Greenwood Trust subsequently changed its name to Discover Bank. Defendant cancelled the credit card on January 27, 1999. In 2000, Discover assigned its rights to Portfolio. Five years after the account was cancelled, Portfolio brought the action against defendant, who was now a New York resident.

The Court of Appeals held that New York's borrowing statute, CPLR 202, should have been applied. This statute provides that where a nonresident sues on a cause of action that accrued outside New York, the claim must be timely both in New York and the state where the cause of action accrued. There, the Court wrote:

Applying Delaware's thee-year statute of limitation, the instant Capital One action should have been commenced not later than 2002. Because the contract claims were not brought until 2005, they are time-barred in Delaware, where the causes of action accrued, and therefore they are likewise time-barred in New York upon application of the borrowing statute. This holding is consistent with one of the key policies underlying CPLR 202, namely, to prevent forum shopping by nonresidents attempting to take advantage of a more favorable statute of limitations in this State.

Capital One Bank v. McGurk, 77036 CVN 2006