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Thomas F. Kane, Sr v. the Manufacturers Life Insurance Company

December 31, 2010


The opinion of the court was delivered by: Katharine S. Hayden, U.S.D.J.



Defendant, The Manufacturers Life Insurance Company, (―Manulife‖ or ―defendant‖) moves to dismiss Counts III through VIII (―New Claims‖) and the Ninth Affirmative Defense (―New Defense‖) raised in plaintiff Thomas F. Kane's (―Kane‖ or ―plaintiff‖) amended pleadings. [D.E. 69.] For the reasons set forth herein, the Court grants Manulife's motion to dismiss.


This case relates to a pair of agreements executed by Kane and Manulife in 1995. Kane is a businessman who in the 1980s and 1990s borrowed money from his son's business. (Am. Compl. ¶¶ 3, 9--12.) The business assigned its right to the debt to Manulife. (Id. ¶ 13.) In three promissory notes (―Notes‖) and a related pledge agreement (―Adare Pledge Agreement‖) entered into in 1995, Kane amended the notes that had been assigned to Manulife and provided security for those obligations to Manulife. (Id. ¶¶ 7--12; 19--20.) At the same time, the parties entered into a separate pledge agreement (―Beaudry Building Agreement‖), in which Kane pledged his interest in an entity that owned a building in California (―Beaudry Building‖) to Manulife as additional collateral for debt incurred under the Notes and Adare Pledge Agreement. (Id. at ¶¶ 37--38.)

In 2006, Manulife sued Kane and other parties in the Chancery Court of Delaware, seeking to collect the debt and enforce rights under the Notes and Adare Pledge Agreement. (Id. at ¶ 27.) The action was dismissed without prejudice for lack of personal jurisdiction over Kane in June 2008. (Id. at ¶ 28.) Shortly thereafter, Kane initiated the present action,*fn1 seeking a declaratory judgment releasing him from the debt and obligations under the Notes and Adare Pledge Agreement. Manulife counterclaimed for the same relief it had sought in the Delaware action. [D.E. 3.] After initially responding to Manulife's counterclaims in October 2008, Kane filed an amended complaint on November 24, 2009. [D.E. 30.] The amended complaint for the first time raised the New Claims, which relate to Manulife's 2001 sale of the Beaudry Building and application of the proceeds to pay down the outstanding debt. (Am. Compl. ¶¶ 39-40.) The New Claims allege that Manulife acted negligently and breached various duties in connection with the sale. (Id. at ¶¶ 39-52, 61-82.) Manulife then filed an amended answer and counterclaims [D.E. 31], and on Dec. 14, 2009, Kane filed an amended answer to Manulife's counterclaims [D.E. 39.], pleading also for the first time the New Defense, an affirmative defense for recoupment of the damages allegedly suffered by Kane as a result of the breaches associated with the sale of the Beaudry Building. (Pl.'s Am. Answer ¶¶ 68-69.)

In response to Kane's amended pleadings, Manulife filed the present motion to dismiss the New Claims and Defense. [D.E. 69.] Manulife argues that the New Claims and New Defense are time barred by the relevant statutes of limitations. (See Moving Br.) Kane disagrees, contending that the New Claims and Defense are saved by two applicable savings statutes and that factual disputes make a motion to dismiss inappropriate at this time. (Opp'n Br. at 12--25.)


A.Motion to Dismiss Standard

When deciding a motion to dismiss, a court must accept as true all of the factual allegations in the complaint and all reasonable inferences that can be made therefrom. Phillips v. County of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008).However, ―a court need not credit a complaint's ‗bald assertions' or ‗legal conclusions.'‖ Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997).

When a party seeks dismissal on the basis of an expired statute of limitations, courts hesitate to grant such motions due to the inherently factual elements of a statute of limitations inquiry, such as the date of relevant transactions, the date of accrual and the fact that ―[n]ormally, parties will not learn that a limitations period has expired until discovery.‖ Saylor v. Ridge, 989 F. Supp. 680, 684 (E.D. Pa. 1998). ―When the applicability of the statute of limitations is in dispute, there are usually factual questions as to when a plaintiff discovered or should have discovered the elements of its cause of action, and thus defendants bear a heavy burden in seeking to establish as a matter of law that the challenged claims are barred.‖ S. Cross Overseas Agencies v. Wah Kwong Shipping Group, 181 F.3d 410, 425 (3d Cir. 1999) (quoting Van Buskirk v. Carey Canadian Mines, Ltd., 760 F.2d 481, 498 (3d Cir. 1985)). However, as with other allegations of outstanding factual disputes, dismissal is appropriate where ―it is clear from the face of the pleadings that a statute of limitations has expired . . . .‖ Saylor v. Ridge, 989 F. Supp. at 684; see also Robinson v. Johnson, 313 F.3d 128, 135 (3d Cir. 2002) (reiterating the ―Third Circuit Rule‖ that allows defenses of expired statutes of limitations in Fed. R. Civ. P. 12(b)(6) motions).

B. Choice of Law

Plaintiff and Defendant consent-and the Court agrees-that New York law applies to the relevant agreements and underlying relationship between the parties, based on contractual provisions in the Notes, Adare Pledge Agreement and Beaudry Building Agreement. (Pl.'s Choice of Law Br.; Def.'s Choice of Law Br.); see Notes ¶ 11, attached as Exs. 2--4 to Def.'s Answer; Adare Pledge Agreement ¶ 15, attached as Ex. 1 to Def.'s Answer.)*fn2

―In evaluating whether a contractual choice-of-law clause is enforceable, federal courts sitting in diversity apply the choice-of-law rules of the forum state.‖ Homa v. Amer. Express Co., 558 F.3d 225, 227 (3d Cir. 2009). New Jersey courts will ordinarily uphold a party's contractual choice of law provided that it does not violate New Jersey's public policy. Homa v. Amer. Express Co., supra, 558 F.3d at 227. This analysis applies to statutes of limitation. See Heavner v. Uniroyal, Inc., 63 N.J. 130, 140 (1973). While New Jersey does not have a savings statute comparable to N.Y. C.P.L.R. 205, the provisions of this statute cannot be said to violate a fundamental state policy. Nor can N.Y. C.P.L.R. 203(d), which codifies the doctrine of equitable recoupment, be said to violate state policy, as ...

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