Claims of fraud raise many issues and permutations relating to the statute of limitations—the time by which a claim can be brought. These rules require careful analysis, as they are often confused or misapplied by counsel. For example, while many assume that any type of fraud has a special extended period by which to bring suit, that is not really true. Only a claim of actual fraud as opposed to constructive fraud or negligent misrepresentation triggers the extended two-year period to bring suit from the date the actual fraud was discovered or with reasonable diligence could have been discovered. See, e.g., my post Different Statutes of Limitations for Actual and Constructive Fraud.
Another area that is often misunderstood is the circumstances under which the so-called discovery period begins to run. That is, when is a party claiming fraud deemed to have become aware of the alleged fraud or should have discovered the fraud with the exercise of reasonable diligence? Simply having knowledge about the underlying fraudulent conduct does not necessarily constitute the “inquiry notice” that triggers start of the discovery period. As I have explained, to start the two-year period, courts require that the circumstances underlying the fraud suggested to the plaintiff the “probability” not merely the “possibility” of having been defrauded. See my post Second Circuit Addresses Statute of Limitations Issues Including the Standard on Duty of Inquiry.
And yet another source of continuing misunderstanding is the “continuing wrong” doctrine. Based upon arguments repeatedly rejected by the courts, it appears counsel often try to argue that the statute of limitations is extended merely because the damages alleged are continuing. As a new decision of the Appellate Division, Second Department, shows, it is not the continuing damage that extends the limitations period but continuing wrongful acts that form the basis of the claim.
The Second Department in York v York, 2025 NY Slip Op 01129 (2d Dep’t Decided Feb. 26, 2025) flatly rejected the continuing wrong argument made by the appellant.
But first, some background on the continuing wrong doctrine would be instructive. …
Continuing Wrong Doctrine
The continuing wrong doctrine has been applied to a whole range of causes of action, in tort and contract, among others. The essence of the doctrine is that if an actionable wrong occurs, and keeps occurring, the period by which to bring a lawsuit to seek remedies for the wrongs is extended while the continuing wrongful acts occur. But if there is only one wrongful act, even if it continues to cause damage in the future, the limitations period does not get extended from the date of the damage.
The New York Court of Appeals explained it well in Capruso v Village of Kings Point, 23 NY3d 631 (2014) in connection with the torts of nuisance, trespass and the public trust doctrine:
We have applied the continuing wrong doctrine
“in certain cases such as nuisance or continuing trespass where the harm sustained by the complaining party is not exclusively traced to the day when the original objectionable act was committed. The rule is based on the principle that continuous injuries create separate causes of action barred only by the running of the statute of limitations against each successive trespass. The repeated offenses are treated as separate rights of action and the limitations period begins to run as to each upon its commission” (Covington v Walker, 3 NY3d 287, 292 [2004], cert denied 545 US 1131 [2005] [citations omitted]).
The doctrine applies here to ongoing use of parkland alleged to violate the public trust doctrine.
The harm sustained by the public when structures having “no connection with park purposes . . . encroach upon [parkland] without legislative authority plainly conferred” (Williams, 229 NY at 253) cannot be traced exclusively to the day when the illegal encroachment began. “In New York, we have consistently characterized an unlawful encroachment as a continuous trespass giving rise to successive causes of action” (509 Sixth Ave. Corp. v New York City Tr. Auth., 15 NY2d 48, 52 [1964]). Even though here, because the Village owns the parkland, the encroachment is not trespass, it clearly bears the hallmark of{**23 NY3d at 640} continuity common to the trespass cases: defendants are, continuously, in violation of the public trust doctrine and able to abate that wrong. Just as the failure of a landlord to repair a building’s common elements, in violation of bylaws, “constituted a continuing wrong that is not referable exclusively to the day the original wrong was committed” (Kaymakcian v Board of Mgrs. of Charles House Condominium, 49 AD3d 407, 407 [1st Dept 2008] [internal quotation marks omitted]) and “[t]he alleged violation of defendants’ contractual obligations to comply with the law and refrain from interfering with the rights of other lessees amounts to a continuous or recurring wrong” (1050 Tenants Corp. v Lapidus, 289 AD2d 145, 146 [1st Dept 2001]), so does a municipality’s ongoing failure to [*5]comply with the law and seek legislative authorization for nonpark use of parkland. The harm does not consist of the lingering effects of a single, discrete incursion, but rather is a continuous series of wrongs. In short, the claim here is “predicated on continuing unlawful acts and not on the continuing effects of earlier unlawful conduct” (Shelton v Elite Model Mgt., Inc., 11 Misc 3d 345, 361 [Sup Ct, NY County 2005] [internal quotation marks omitted], quoting Selkirk v State of New York, 249 AD2d 818, 819 [3d Dept 1998]).[FN3]
The First Department in Henry v Bank of Am.,147 AD3d 599 (1st Dep’t 2017) explained it well in connection with torts and breach of contract claims as follows:
The continuous wrong doctrine is an exception to the general rule that the statute of limitations “ ’runs from the time of the breach though no damage occurs until later’ ” (Ely-Cruikshank Co. v Bank of Montreal, 81 NY2d 399, 402 [1993]). The doctrine “is usually employed where there is a series of continuing wrongs and serves to toll the running of a period of limitations to the date of the commission of the last wrongful act” (Selkirk v State of New York, 249 AD2d 818, 819 [3d Dept 1998]). Where applicable, the doctrine will save all claims for recovery of damages but only to the extent of wrongs committed within the applicable statute of limitations (see Jensen v General Elec. Co., 82 NY2d 77, 83-85, 88 [1993]; Sutton Investing Corp. v City of Syracuse, 48 AD3d 1141, 1143 [4th Dept 2008], lv dismissed 10 NY3d 858 [2008]).
The doctrine “may only be predicated on continuing unlawful acts and not on the continuing effects of earlier unlawful conduct. The distinction is between a single wrong that has continuing effects and a series of independent, distinct wrongs” (Doukas v Ballard, 39 Misc 3d 1227[A], 2013 NY Slip Op 50776[U], *6 [Sup Ct, Suffolk County 2013] [citation omitted]; see also Roslyn Sav. Bank v National Westminster Bank USA, 266 AD2d 272 [2d Dept 1999]). The doctrine is inapplicable where there is one tortious act complained of since the cause of action accrues in those cases at the time that the wrongful act first injured plaintiff and it does not change as a result of “ ’continuing consequential damages’ ” (Town of Oyster Bay v Lizza Indus., Inc., 22 NY3d 1024, 1032 [2013]; see also Quintana v Wiener, 717 F Supp 77, 80 [SD NY 1989]). In contract actions, the doctrine is applied to extend the statute of limitations when the contract imposes a continuing duty on the breaching party (see Bulova Watch Co. v Celotex Corp., 46 NY2d 606, 611 [1979]; Meadowbrook Farms Homeowners Assn., Inc. v JZG Resources, Inc., 105 AD3d 820, 822 [2d Dept 2013], lv dismissed 21 NY3d 1024 [2013]; King v 870 Riverside Dr. Hous. Dev. Fund Corp., 74 AD3d 494, 496 [1st Dept 2010]). Thus, where a plaintiff asserts a single breach—with damages increasing as the breach continued—the continuing wrong theory does not apply (see Kahn v Kohlberg, Kravis, Roberts & Co., 970 F2d 1030, 1041 [2d Cir 1992], cert denied 506 US 986 [1992]).
York Decision
In the recent Second Department decision in York, plaintiff wife was involved in a protracted divorce proceeding against her husband. In the action subject to the appeal, the wife was attempting to allege claims of fraud against her husband and others she alleged had aided him in that fraud. Allegedly to avoid money judgments that the wife had obtained against him for court-ordered support, the husband entered into a stock purchase agreement with two others under which the husband would continue to work for the company, get a reduced salary on the books, and the others then separately paid for his living expenses. It is unclear from the decision how that amounted to a cause of action for fraud (for example, what was misrepresented to the wife or concealed from her that induced her to act to her detriment?).
In any event, the Second Department observed that the applicable statute of limitations over the fraud claim had expired:
Here, the alleged fraud occurred in 2003, when Joseph’s salary was significantly reduced and his living expenses were paid by William and Betty. The six-year limitations period would begin to run at that time and would end in 2009. Moreover, the plaintiff would have been aware of the alleged fraud by 2016, when Joseph testified at a deposition that he only earned $26,000 per year and that William and Betty paid his living expenses. Since the plaintiff commenced this action in November 2019, more than six years after the alleged fraud occurred and more than two years after it could have been discovered with reasonable diligence, her fraud claims are time-barred under either limitations period.
The Second Department then rejected plaintiff’s attempt to find shelter under the continuing wrong doctrine, as follows:
Contrary to the plaintiff’s contention, the untimeliness of the fraud claims is not cured by tolling under the continuing wrong doctrine. The continuing wrong doctrine “is usually employed where there is a series of continuing wrongs and serves to toll the running of a period of limitations to the date of the commission of the last wrongful act” (Affordable Hous. Assoc., Inc. v Town of Brookhaven, 150 AD3d 800, 802 [internal quotation marks omitted]). The doctrine allows only tolling “predicated on continuing unlawful acts and not on the continuing effects of earlier unlawful conduct” (Matter of Salomon v Town of Wallkill, 174 AD3d 720, 721 [internal quotation marks omitted]). “The distinction is between a single wrong that has continuing effects and a series of independent, distinct wrongs” (Henry v Bank of Am., 147 AD3d 599, 601 [internal quotation marks omitted]). Here, the plaintiff’s allegations amount to a single wrong that has continuing effects (see Matter of Salomon v Town of Wallkill, 174 AD3d at 721-722; Henry v Bank of Am., 147 AD3d at 602).
The decision does not indicate how long the husband continued to get his living expenses separately paid under the reduced salary, but the real point was that the wife could not claim to have been defrauded after 2016 when she knew of the alleged scheme, so any continuing acts could not have amounted to a cause of action for fraud in any event.
Commentary
There are many issues involving the statute of limitations as it relates to claims of fraud. The issues are often misunderstood or ineffectively presented to the courts. As to the continuing wrong doctrine, courts require the actual fraud to continue, not simply any damage stemming from the fraud, in order to extend the limitations period based upon continuing wrongful conduct.