CPLR 203(d) is an ill-understood, mysterious saving statute that allows untimely counter-claims to be brought under certain circumstances. It can be a saving statute for wildly out of statute counterclaims and acts as an offset to a claim. The requirements are set forth in a recent opinion by Judge Schecter in Supreme Court, New York County. Capone v LDH Mgt. Holdings LLC 2020 NY Slip Op 30013(U) January 2, 2020 Supreme Court, New York County Docket Number: 651794/2015.
“Defendants’ contentions that their counterclaims are grounded in fraud or that plaintiffs deceptively caused them to wait until after 2014 to assert such claims ate baseless. To be sure, the limitations period for fiduciary duty claims involving fraud is six years plus two years from when a reasonable person knew or should have known about the fraud (Kaufman v Cohen, 307 AD2d 113, 119 [1st Dept 2003], see Aozora Bank, Ltd. v Credit Suisse Group, 144 AD3d 437, 438 [1st Dept 2016]). The fraud, however, must not be incidental to the breach of fiduciary duty (see Romanoff v Romanoff, 148 AD3d 614, 616 [1st Dept 2017]; Access Point Med., LLC v Mandell, 106 AD3d 40, 44 [1st Dept 2013] [“failure to disclose a conflict of interest does not transform a breach of fiduciary duty into a fraud”]). Additionally, a failure to disclose one’s own alleged wrongdoing does not toll the statute of limitations (Ross v Louise Wise Servs., Inc., 8 NY3d 478, 491  [“a plaintiff may not rely on the same act that forms the basis for the claim” to obtain a toll and there must be “some conduct on the part of the defendant after the initial wrongdoing; mere silence or failure to disclose the wrongdoing is insufficient”] [emphasis added]). Here, the alleged fraud is Scheinman’s “concealment of his disloyal dealings” (Dkt. 135 at 13; Dkt. 141 at 20). It is incidental to the alleged breach of fiduciary duty and there is no basis for any toll.
Nor can the counterclaims based on Scheinman’s alleged misconduct be used to set off defendants’ liability on his breach of contract claims. CPLR 203( d) provides that a counterclaim that “arose from the transactions, occurrences, or series of transactions or occurrences, upon which a claim asserted in the complaint depends (is) not barred to the extent of the demand in the complaint notwithstanding that it was barred at the time the claims asserted in the complaint were interposed.” The statute’s “arose from” language is interpreted strictly to exclude claims that merely “relate to” but do not actually “arise out of the same transactions or occurrences” (SCM Corp. v Fisher Park Lane Co., 40 NY2d 788, 792 ; see Levy v Kendricks, 170 AD2d 387, 388 [1st Dept 1991]). Here, Scheinman’s conduct concerns the advice he allegedly improperly gave to Capone about the merits of the claims that Capone asserts in this action. While Scheinman’s alleged malfeasance relates to Capone’s claims, it does not anse out of the transactions or occurrences giving rise to Capone’s claims – namely, the valuation used to compute his buy-out. The propriety of the advice does not turn on the validity of the valuation; it was advice, give after the fact, about how to challenge the valuation. Ergo, the advice merely
relates to the valuation. A set-off under CPLR 203( d), therefore, is impermissible (see Distribuidora De Discos Karen C. Por A. v Universal Music Group, Inc., 201 7 WL 1019697, at *6 [SDNY Mar. 15, 2017] [“While both claims implicate the 2006 Release Agreement, they will involve development of different facts and relate to different time periods and different actions by the parties. This is not a sufficient nexus to justify
application of section 203( d)”]). “