A new decision of the New York Appellate Division, First Department, reminds us of the quirky rules that apply New York’s statute of limitations even when a contract provides for applying the substantive law of another state—Cincinnati Terrace Member LLC v Tartar Krinsky & Drogin LLC, 2026 NY Slip Op 02369 (1st Dep’t Decided Apr. 21, 2026)(Cincinnati Terrace).
Dicey Statute of Limitations Issues
Over the years on this blog, I have explored a number of what can fairly be described as the more dicey issues surrounding the statute of limitations for fraud claims—areas where the governing principles are settled in the abstract but anything but clear in application. As discussed in prior posts such as Circling the Muddy Waters of Fraud Statute of Limitations Accrual and Continuing Wrongs, courts continue to wrestle with when a fraud claim actually accrues—whether upon the making of the misrepresentation or upon the occurrence of a cognizable injury—and have not always applied a consistent rule. I have also addressed the persistent confusion over the distinction between actual fraud and fraud‑adjacent claims (such as constructive fraud or negligent misrepresentation), which carry materially different limitations periods. The contours of the two‑year discovery rule and when a plaintiff is deemed to be on inquiry notice have also presented intriguing issues, including the “probability” versus “possibility” standard discussed in Second Circuit Addresses Statute of Limitations Issues Including the Standard on Duty of Inquiry. In addition, posts like Demanding Standard to Extend Statute of Limitations Based Upon Equitable Estoppel and Continuing Wrong Doctrine Does Not Extend Statute of Limitations for a Single Fraudulent Act Even if Alleged Damages Continue highlight the difficulty litigants face in invoking tolling doctrines—particularly equitable estoppel and the continuing wrong doctrine—which courts apply narrowly and often reject where the alleged delay is not directly caused by actionable misconduct. These recurring themes underscore that statute of limitations issues in fraud cases remain fertile grounds for motion practice and dispute.
The new Cincinnati Terrace decision addresses a situation where a contractual choice of law provision mandating another state’s law to apply does not require the procedural law of that state to govern the causes of action asserted in the New York Supreme Court.
New York Statute Governs
In Cincinnati Terrace, plaintiffs alleged a fraudulent scheme in which individual defendants, acting through an LLC, contracted to sell a Property in Cincinnati, Ohio two times—first to a nonparty and then a day later to plaintiff. To induce plaintiff to pay $11 million to purchase the Property and mortgage a New York property to finance that purchase, defendants allegedly represented that no prior contract existed.
Among the grounds the defendants asserted was that the fraud claims were barred by the four-year statute of limitations. Defendants argued that under a choice of law analysis and the choice of law provision in the subject contract of sale, Ohio law applied to the statute of limitations issue.
The defendants were correct that the contract did provide for Ohio law to apply “without giving effect to any choice of law or conflict of law provision.” However, the First Department found it critical that the contract did not expressly mention applying Ohio’s statute of limitation, and that the above quoted language was mere “boilerplate.”
The First Department first explained the CPLR rules and interpreting case law requiring New York’s statute of limitations to apply there because the choice of law provision only required the substantive law of Ohio to apply, and its procedural rules (including the statute of limitations):
The remaining defendants’ analysis is flawed because under New York choice of law rules, matters of procedure are governed by the law of the forum (Eccles v Shamrock Capital Advisors, LLC, 42 NY3d 321, 335 [2024]). Thus, in an action pending in New York, the procedural law of New York applies, regardless of whatever substantive law governs the merits of the case. Because New York classifies the statute of limitations as procedural law — its operation affects only the remedy, not the rights at issue — the general rule is that New York’s statute of limitations law applies to actions brought in New York (see Tanges v Heidelberg N. Am., 93 NY2d 48, 54-55 [1999]; Martin v Dierck Equip. Co., 43 NY2d 583, 588 [1978]).
CPLR 202 modifies this general rule when the claim accrued outside New York and the plaintiff was a nonresident at the time it accrued. In this case, however, plaintiffs are Delaware LLCs with their principal places of business in New York, and the individual plaintiff … is a New York resident as well. Additionally, “in the case of an economic injury, ‘the place of injury usually is where the plaintiff resides and sustains the economic impact of the loss’” (Deutsche Bank National Trust Co. v Barclay’s Bank PLC, 34 NY3d 327, 331 [2019] quoting Global Fin. Corp., 93 NY2d 525, 529 [1999]).
The First Department then surveyed the decisions on contractual choice of law provisions, viewing them as requiring precise, express contractual language to incorporate procedural law as well if that is what the parties intended:
The remaining defendants’ reliance on the subject contract’s inclusion of a choice of law provision that called for application of Ohio law is misplaced. The Court of Appeals has held that, in the absence of an express intention in an agreement that a specific statute of limitations is to apply to a dispute, a choice of law provision cannot be read to encompass that limitations period (see e.g. Portfolio Recovery Assoc., LLC v King, 14 NY3d 410, 416 [2010] [“there is a significant difference between a choice-of-law question, which is a matter of common law, and (a) Statute of Limitations issue, which is governed by particular terms of the CPLR”]; Royal Park Investments SA/NV v Stanley, 165 AD3d 460, 461 [1st Dept 2018] [“when parties include a choice-of-law provision in a contract, they intend application of only that state’s substantive law.” In other words, “[c]hoice of law provisions typically apply to only substantive issues”] [citations and internal quotation marks omitted]; see also Deutsche Bank Natl. Trust Co., 156 AD3d at 402-403). The choice-of-law provision here does not specifically call for the application of the Ohio statute of limitations. The reference to “without giving effect to any choice of law or conflict of law provision” is boilerplate and thus insufficient to encompass that statute of limitations period (see Baker v Greentech Capital Advisors LLP, 206 AD3d 422, 423 [1st Dept 2022] [“[a]s the choice-of-law provision in the partnership agreement does not expressly mention the application of the Delaware statute of limitations, the law of the forum state (New York) governs the limitations period”]).
Thus, since it is undisputed that the fraud claims asserted against the remaining defendants were timely commenced within New York’s six-year statute of limitations, they were not subject to dismissal as time-barred.
Interestingly, the First Department then went on, nonetheless, to affirm dismissal of the claims, finding as a matter of New York substantive law (applying to defendants who were not contracting parties) that the complaint did not properly allege the various attempted fraud causes of action.
Commentary
The main take away from Cincinnati Terrace and the cases it cited is that contractual language must be precise, and relying on long-used “boilerplate” may be problematic if specific intended results are desired. If, for example, the contracting parties wish for a particular state’s procedural law to apply to any claims relating to the contract, that should be explicitly stated in the contract.