Ames Ray v. Christina Ray

United States Court of Appeals for the Second Circuit
On appeal from The United States District Court for the Southern District of New York

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Description:

New York, New York - Divorce lawyers represented both Plaintiff-Appellant and Defendant-Appellee with a Civil Practice Law and Rules ("CPLR”) claim.

In 1993, following their divorce, Plaintiff Ames Ray ("Ames”)

invested $500,000 in the hedge fund business of Defendant Christina

Ray ("Christina”). They entered into a contract under which Christina

agreed to indemnify up to $350,000 in Ames's trading losses.

Substantially all of Ames's $500,000 was lost, and Christina agreed to

repay him under their contract, but did not do so. Ames sued Christina

for breach of contract (the "1998 Action”). That litigation is ongoing.

Meanwhile, in April 2008, Christina mortgaged her co-op

apartment for $500,000 and began transferring the proceeds to the

John Doe Guarnerius Entities, various hedge funds. In two different

state court lawsuits for fraudulent conveyance, filed in December

2010 (the "2010 Action”) and April 2014 (the "2014 Action”), Ames

alleged that Christina mortgaged her apartment and transferred the

proceeds in order to render herself insolvent and thereby avoid

paying any debts that might arise from the 1998 Action. Both the 2010

and 2014 actions were dismissed by the New York State Supreme

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Court, and those dismissals were both affirmed by the Appellate

Division, First Department.1

In August 2018, Ames filed a third fraudulent conveyance

lawsuit against Christina (the "2018 Federal Action”), this one in the

District Court for the Southern District of New York (George B.

Daniels, Judge). This lawsuit alleged substantially the same theory as

did the two prior state actions. Christina moved to dismiss the claims

as time-barred based on a six-year statute of limitations,2 since her

allegedly fraudulent transfers occurred between 2008 and 2009, more

than six years prior to the filing of the 2018 Federal Action. Ames

defended his claim as timely under New York's "Saving Statute,”

CPLR section 205(a).

Section 205(a) states:

If an action is timely commenced and is terminated in any other

manner than by a voluntary discontinuance, a failure to obtain

personal jurisdiction over the defendant, a dismissal of the

complaint for neglect to prosecute the action, or a final judgment

upon the merits, the plaintiff . . . may commence a new action

upon the same transaction or occurrence or series of transactions

or occurrences within six months after the termination provided

1 See Ray v. Ray, 970 N.Y.S.2d 9 (1st Dep't 2013), and Ray v. Ray, 68 N.Y.S.3d

724 (1st Dep't 2018).

2 See N.Y. C.P.L.R. § 213(1).

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that the new action would have been timely commenced at the

time of commencement of the prior action . . . .3

It was (and is) undisputed by the parties that the 2014 Action

was timely. The 2018 Federal Action would have been untimely,

except that it was brought within six months of the First Department's

February 2018 affirmance of the dismissal of the 2014 Action, thus

bringing it under CPLR section 205(a). Judge Daniels therefore found

the 2018 Federal Action timely,4 but he granted Christina's motion to

dismiss for failure to state a claim on other grounds.5 We affirmed that

dismissal in January 2020.6

In July 2020, Ames again sued Christina in New York State

Supreme Court in the action that gives rise to this appeal (the "2020

Action”). Ames alleged fraudulent conveyance under the New York

Debtor & Creditor Law ("DCL”) section 273, complaining,

substantially as before, that Christina had mortgaged her apartment

and transferred the proceeds in order avoid paying any debts that

might arise from the 1998 Action. Christina removed the case to federal

court based on diversity jurisdiction and moved to dismiss the

complaint under Federal Rule of Civil Procedure 12(b)(6), urging, inter

alia, that the complaint was time-barred based on the six-year statute

3 N.Y. C.P.L.R. § 205(a).

4 See Ray v. Ray, No. 18-CV-7035, 2019 WL 1649981, at *3–4 (S.D.N.Y. Mar.

28, 2019).

5 Id. at *5–11.

6 See Ray v. Ray, 799 F. App'x 29 (2d Cir. 2020) (summary order).

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of limitations. Ames again defended his claim as timely based on

section 205(a). Judge Engelmayer found that the complaint was timebarred and granted Christina's motion to dismiss. Ames now appeals.

II. DISCUSSION

"We review de novo a district court's grant of a motion to

dismiss, including its legal interpretation and application of a statute

of limitations . . . .”7 "When sitting in diversity jurisdiction and

determining New York state law claims, we must apply the law of

New York . . . .”8

We affirmed the dismissal of the 2018 Federal Action in a

summary order dated January 23, 2020.9 Ames filed his initial

complaint in the 2020 Action on July 8, 2020. Ames argues that because

the 2020 Action was filed within six months of our dismissal of the

2018 Federal Action (which was, itself, timely based on section 205(a),

having been filed within six months of the affirmance of the dismissal

of the 2014 Action), the 2020 Action is timely.

7 Deutsche Bank Nat'l Tr. Co. v. Quicken Loans Inc., 810 F.3d 861, 865 (2d Cir.

2015).

8 Id. (citation and internal quotation marks omitted); see also Stuart v. Am.

Cyanamid Co., 158 F.3d 622, 626 (2d Cir. 1998) ("Where jurisdiction rests upon

diversity of citizenship, a federal court sitting in New York must apply the New

York . . . statutes of limitations.”).

9 See Ray, 799 F. App'x 29.

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As Judge Engelmayer explained, Ames "argues that [section]

205(a) effectively operates as a chain, making each successive lawsuit

timely[,] provided that it was filed within six months of the

termination of its predecessor (and that the initial action in the chain

was timely).”10

The primary issue in this appeal, then, is whether section 205(a)

permits successive re-filings in this manner. We agree with the District

Court that this construction of section 205(a) is wrong.11

We address section 205(a) under well-established principles of

statutory interpretation:

When answering questions of statutory interpretation, we begin

with the language of the statute. If the statutory language is

unambiguous, we construe the statute according to the plain

meaning of its words. We discern plain meaning by looking to

the statutory scheme as a whole and placing the particular

provision within the context of that statute. Only when the

terms are ambiguous or unclear do we consider legislative

history and other tools of statutory interpretation.12

The interpretation of section 205(a) in this case is straightforward. By

its own terms, section 205(a) can only be applied "provided that the

10 Spec. App'x 11.

11 Id.

12 United States ex rel. Wood v. Allergan, Inc., 899 F.3d 163, 171 (2d Cir. 2018)

(citations and internal quotation marks omitted).

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new action would have been timely commenced at the time of

commencement of the prior action” (emphases added). For the

purposes of evaluating whether it saves Ames's 2020 Action, the 2020

Action is clearly the "new action” under the statute. The "prior action”

is the 2018 Action—i.e., the one Ames argues was terminated "within

[a] six-month period” before the filing of the new action, thereby

saving the 2020 Action. The statute therefore requires us to ask

whether the 2020 Action "would have been timely commenced at the

time of commencement of” the 2018 Action. The 2018 Action was

commenced on August 6, 2018. If the 2020 Action had been

commenced at that time, almost nine years after Christina's allegedly

fraudulent transfers, it would have been untimely.13 Therefore, section

205(a) does not apply to the 2020 Action.

This reading of section 205(a) makes sense, and it accords with

the basic purpose of the statute.14

By contrast, Ames's reading does not make sense. It would

render meaningless the statute's requirement that "the new action

would have been timely commenced at the time of commencement of

13 See Jaliman v. D.H. Blair & Co., 964 N.Y.S.2d 112, 114 (1st Dep't 2013) ("New

York law provides that a claim for constructive fraud is governed by the six-year

limitation set out in CPLR 213(1), and that such a claim arises at the time the fraud

or conveyance occurs.” (citation omitted)).

14 Hakala v. Deutsche Bank AG, 343 F.3d 111, 115 (2d Cir. 2003) ("The purpose

of [section] 205(a) is to avert unintended and capricious unfairness by providing

that if the first complaint was timely but was dismissed for . . . curable reasons, the

suit may be reinstituted within six months of the dismissal.”).

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the prior action” and it would—as the facts of this case demonstrate—

permit a litigant to frustrate the statute of limitations entirely by filing

new actions within six months of dismissals, in perpetuity.15

It is unsurprising, then, that both federal and New York courts

have consistently described section 205(a) as authorizing a "second”

opportunity to file a claim after a "first” or "initial” claim is dismissed

on a non-merits final judgment.16

Finally, Ames invites us to certify the question of the proper

interpretation of section 205(a) to the New York Court of Appeals. This

we decline to do.

15 See Spec. App'x 13 ("Otherwise, were Ames to bring yet another such

action . . . within six months of the affirmance of this Court's dismissal, it, too,

would elude the statute of limitations.”).

16 See, e.g., Diffley v. Allied-Signal, Inc., 921 F.2d 421, 423 (2d Cir. 1990)

("Section 205(a) . . . merely allows the plaintiffs an additional six months in which

to bring another action based on the same occurrences, after their timely initial

complaint was dismissed for procedural defects.” (emphasis added)); U.S. Bank

Nat'l Ass'n v. DLJ Mortg. Cap., Inc., 122 N.E.3d 40, 42 (N.Y. 2019) ("As a general rule,

under CPLR 205(a) a subsequent action may be filed within six months of a nonmerits dismissal of the initial timely-filed matter.” (emphasis added)); George v. Mt.

Sinai Hosp., 390 N.E.2d 1156, 1161 (N.Y. 1979) ("The very function of [section 205(a)]

is to provide a second opportunity to the claimant who has failed the first time

around because of some error pertaining neither to the claimant's willingness to

prosecute in a timely fashion nor to the merits of the underlying claim.” (emphases

added)); Moran v. County of Suffolk, 138 N.Y.S.3d 92, 96 (2d Dep't 2020) ("CLPR

205(a) . . . saves only those claims that were timely interposed in the first action.”

(emphasis added) (citation and internal quotation marks omitted)).

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Our certification of a question of law to the New York Court of

Appeals is discretionary.17 Certification "must not be a device for

shifting the burdens of this Court to those whose burdens are at least

as great.”18 "In the past, we have certified questions to the New York

Court of Appeals . . . where the statute's plain language does not

indicate the answer . . . .”19 But here, as discussed, the statute's plain

text does indicate the answer.20

We have noted that "there are drawbacks to certification,” as the

specific situation of this litigation demonstrates.21 First, ”while

certification can serve federalism objectives, significant federalism

interests can also cut against certification,” particularly in diversity

jurisdiction cases where "certification . . . substantially undermines the

diverse litigant's entitlement to the federal forum.”22 Christina

specifically chose to remove Ames's 2020 Action from state to federal

court, and we see no reason to needlessly upset her right to removal

here.

17 Penguin Grp. (USA) Inc. v. Am. Buddha, 609 F.3d 30, 41 (2d Cir. 2010).

18 Alphonse Hotel Corp. v. Tran, 828 F.3d 146, 156 (2d Cir. 2016) (quoting

Kidney by Kidney v. Kolmar Labs., Inc., 808 F.2d 955, 957 (2d Cir. 1987)).

19 Riordan v. Nationwide Mut. Fire Ins. Co., 977 F.2d 47, 51 (2d Cir. 1992).

20 Cf. id. at 52 ("The statute is clear, and none of [the Appellant's] arguments

raises a serious question about the correct interpretation of the language.”).

21 53rd St., LLC v. U.S. Bank Nat'l Ass'n, 8 F.4th 74, 81 (2d Cir. 2021) (Leval,

J.).

22 Id. (citation and internal quotation marks omitted).

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Additionally, as Judge Leval recently reminded us,

"certification almost invariably results in substantial increase to the

expenses the parties incur and inevitably delays the resolution of the

case, sometimes for well more than a year.”23 Confronted with a series

of litigations that has lasted more than two decades,24 we are hardly

inclined to require that the parties appear before more tribunals than

are necessary to resolve their claims.

Outcome:

To summarize, we hold that CPLR section 205(a), New York’s

“Saving Statute,” does not 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).



We have reviewed all of the arguments raised by Ames on

appeal and find them to be without merit. For the foregoing reasons,

we AFFIRM the March 25, 2021, order of the District Court.

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About This Case

What was the outcome of Ames Ray v. Christina Ray?

The outcome was: To summarize, we hold that CPLR section 205(a), New York’s “Saving Statute,” does not 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). We have reviewed all of the arguments raised by Ames on appeal and find them to be without merit. For the foregoing reasons, we AFFIRM the March 25, 2021, order of the District Court.

Which court heard Ames Ray v. Christina Ray?

This case was heard in <center><h4><b> United States Court of Appeals for the Second Circuit </b> <br> <font color="green"><i>On appeal from The United States District Court for the Southern District of New York </i></font></center></h4>, NY. The presiding judge was Before: CABRANES, PARKER, and LEE, Circuit Judges PER CURIAM.

Who were the attorneys in Ames Ray v. Christina Ray?

Plaintiff's attorney: See Below. Defendant's attorney: New York, New York - Best Divorce Lawyer Directory Tell MoreLaw About Your Litigation Successes and MoreLaw Will Tell the World. Re: MoreLaw National Jury Verdict and Settlement Counselor: MoreLaw collects and publishes civil and criminal litigation information from the state and federal courts nationwide. Publication is free and access to the information is free to the public. MoreLaw will publish litigation reports submitted by you free of charge Info@MoreLaw.com - 855-853-4800.

When was Ames Ray v. Christina Ray decided?

This case was decided on December 31, 2021.