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Under New York law - just like any jurisdiction - there is a finite period of time within which you can sue. In legalese, this is called a"Statute of Limitations."
However, that time period will differ, depending on the nature of your claim.
For example, while you may have 3 years from the date of an accident to bring a negligence claim, you will, generally speaking, have 6 years to bring a breach of contract lawsuit.
While most - if not nearly all - causes of action or claims have explicit statutes of limitation (i.e., time within which the claim must be brought), there is an important exception to this rule: breach of fiduciary duty claims. In these cases, the statute of limitations will depend entirely on the nature of the relief that the plaintiff is seeking.
How New York's Courts Calculate the Statute of Limitations in a Breach of Fiduciary Duty Case
In a 2009 opinion, New York State's highest court clarified the standard for determining how long you have to bring a breach of fiduciary duty claim - at least somewhat - stating as follows:
"New York law does not provide a single statute of limitations for breach of fiduciary duty claims. Rather, the choice of the applicable limitations period depends on the substantive remedy that the plaintiff seeks. Where the remedy sought is purely monetary in nature, courts construe the suit as alleging "injury to property" within the meaning of CPLR 214 (4), which has a three-year limitations period. Where, however, the relief sought is equitable in nature, the six-year limitations period of CPLR 213 (1) applies. Moreover, where an allegation of fraud is essential to a breach of fiduciary duty claim, courts have applied a six-year statute of limitations under CPLR 213 (8)." IDT Corp. v. Morgan Stanley Dean Witter & Co., 12 NY3d 132, 139 (2009).
What Happens if the Plaintiff is Seeking Both Money Damages As Well As Equitable Relief
Fortunately, this issue was front and center in the IDT v. Morgan Stanley case, and the Court of Appeals also provided some guidance on this issue, stating:
"Here, IDT primarily seeks damages—in the amount of "hundreds of millions of dollars"—and the equitable relief it seeks, including the disgorgement of profits, is incidental to that relief. This is not an action in which it can reasonably be asserted that "the relief demanded in the complaint . . . is equitable in nature and that a legal remedy would not be adequate" (Loengard, 70 NY2d at 267). Thus, looking to the{**12 NY3d at 140} reality, rather than the form, of this action (see Matter of Paver & Wildfoerster [Catholic High School Assn.], 38 NY2d 669, 674 [1976]), we conclude that IDT seeks a monetary remedy."
In other words, the courts are supposed to determine the appropriate statute of limitations by cutting through to the heart of the plaintiff's claims, and deciding what is the primary nature of the plaintiff's complaint - whose time limit will govern the breach of fiduciary duty claim - and what is truly secondary.
The Takeaway
As a practical matter, this means that if the primary reason you are suing for breach of a fiduciary duty is to recover money damages, then your claim must be brought within 3 years from the breach; on the other hand, if your claim is primarily seeking equitable relief, such as an injunction, an accounting or the return of confidential company property, then the 6 year statute of limitations will likely apply.
