Abbott Labs. v. Feinberg

477 F.Supp.3d 57

ABBOTT LABORATORIES, Plaintiff,

v.Nancy FEINBERG et al., Defendants.

18 Civ. 8468 (LGS)

19 Civ. 600 (LGS)

United States District Court, S.D. New York.

Signed August 4, 2020

Giovanna Maria Marchese, Paul Cossu, Pro Hac Vice, William Laurence Charron, Pryor Cashman LLP, John Robert Cahill, Pro Hac Vice, Cahill Partners LLP, New York, NY, James L. Komie, Michael Daehyun Lee, Howard and Howard Attorneys PLLC, Chicago, IL, for Plaintiff.

David Matthew Rownd, Patrick Morales-Doyle, Thompson Coburn LLP, Chicago, IL, Judd Benjamin Grossman, Pro Hac Vice, Grossman LLP, New York, NY, for Defendants.

OPINION AND ORDER

LORNA G. SCHOFIELD, District Judge:

Plaintiff Abbott Laboratories brings this replevin action against Defendants Nancy Feinberg, Hope Feinberg Schroy and David Feinberg, as co-executors for the estate of Carol J. Feinberg, to recover an oil painting (the "Painting") that was allegedly stolen from Plaintiff years ago. Before the Court is Defendants’ choice-of-law motion (the "Motion"), which contends that the Illinois statute of limitations should govern Plaintiff's replevin claim. For the following reasons, the Motion is denied.

I. BACKGROUND

The following facts are drawn from the parties’ submissions on the Motion and the Complaint. See Amberger v. Legacy Capital Corp. , No. 17 Civ. 532, 2017 WL 4863093, at *8 (S.D.N.Y. Oct. 16, 2017).

Plaintiff is a corporation organized under Illinois law, with its headquarters in Abbott Park, Illinois. In 1960, Plaintiff purchased the Painting from a New York City art dealer, to include in its corporate art collection. In early 2016, Plaintiff retained the services of an expert art appraiser to assess and update the valuation of the works in its collection for insurance purposes. In March 2016, the appraiser issued a report concluding, for the first time, that Plaintiff was in possession of a deliberate forgery of the Painting (the "Copy").

Upon learning this information, Plaintiff immediately contacted law enforcement, and the Painting was eventually discovered, in 2018, in Carol Feinberg's apartment in Manhattan. Plaintiff asked Ms. Feinberg to return the Painting, and she refused. According to Defendants, Ms. Feinberg, a longtime domiciliary of Manhattan, purchased the Painting in good faith from a Manhattan art gallery in 1993, which had acquired the Painting from Eric Kaufman, a New York art collector. Mr. Kaufman testified that R. Bruce Duncan sold the Painting to a New York company formed by Mr. Kaufman in 1987. Plaintiff suspects that Mr. Duncan stole the Painting in 1987, when it was offsite for cleaning.

Plaintiff attempted to engage in settlement negotiations with Ms. Feinberg, who invited Plaintiff's representatives to meet with her son, Defendant David Feinberg, now a co-executor of her estate. Before any meeting could occur, on August 31, 2018, Ms. Feinberg filed a declaratory judgment action in the Northern District of Illinois (the "Illinois Action"), seeking a declaration, among other things, that she is the rightful owner of the Painting, and that Plaintiff does not have good title to the Painting and is barred from asserting so by the statute of limitations.

On September 17, 2018, Plaintiff filed the current action, asserting a replevin claim and seeking a declaratory judgment that Plaintiff (not Ms. Feinberg) is the rightful owner of the Painting with a right to immediate possession, and concurrently filed a motion to dismiss the Illinois Action or, alternatively, transfer the case to the Southern District of New York. On December 27, 2018, the Illinois court granted Plaintiff's motion to transfer pursuant to 28 U.S.C. § 1404(a). On February 28, 2019, this Court granted the parties’ joint letter motion to consolidate the cases.

II. DISCUSSION

Defendants primarily argue that the Illinois statute of limitations should apply to the replevin claim because, when an action sits in diversity and is transferred from one federal district to another, the choice-of-law rules of the transferor court should apply. Therefore, according to Defendants, the Illinois statute of limitations forecloses Plaintiff's replevin claim. For the following reasons, the Motion is denied because, based on New York's significant interest in resolving this dispute, New York's statute of limitations applies, and the replevin claim is therefore timely.

As a general rule, a federal court sitting in diversity or with pendent jurisdiction over state law claims applies the choice-of-law rules of the state in which it sits. Klaxon Co. v. Stentor Elec. Mfg. Co. , 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941) ; accord Loreley Fin. (Jersey) No. 3 Ltd. v. Wells Fargo Sec., LLC , 797 F.3d 160, 169 (2d Cir. 2015). However, where a case is transferred from one district to another under 28 U.S.C. § 1404(a), the transferee court must adopt the law, including the choice-of-law principles, of the transferor court. Van Dusen v. Barrack , 376 U.S. 612, 639, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964) ("[W]here the defendants seek transfer, the transferee district court must be obligated to apply the state law that would have been applied if there had been no change of venue."); accord Gerena v. Korb , 617 F.3d 197, 204 (2d Cir. 2010). The law of the transferor state applies so long as the transferor state could properly have exercised jurisdiction over the action.¹ Gerena , 617 F.3d at 204.

The narrow issue presented in the Motion is whether the New York or Illinois statute of limitations governs Plaintiff's replevin claim. Under both New York and Illinois law, statutes of limitations are considered procedural. Portfolio Recovery Assocs., LLC v. King , 14 N.Y.3d 410, 901 N.Y.S.2d 575, 927 N.E.2d 1059, 1061 (2010) ("[S]tatutes of limitations are considered procedural because they are deemed as pertaining to the remedy rather than the right." (internal quotation marks omitted)); Belleville Toyota, Inc. v. Toyota Motor Sales, U.S.A., Inc. , 199 Ill.2d 325, 264 Ill.Dec. 283, 770 N.E.2d 177, 194 (2002) ("Statutes of limitations are procedural, merely fixing the time in which the remedy for a wrong may be sought, and do not alter substantive rights."). Because "[u]nder the Erie doctrine, federal courts sitting in diversity apply state substantive law and federal procedural law," Gasperini v. Ctr. for Humanities, Inc. , 518 U.S. 415, 427, 116 S.Ct. 2211, 135 L.Ed.2d 659 (1996), normally New York's statute of limitations would control, as the law of the forum state. Stuart v. Am. Cyanamid Co. , 158 F.3d 622, 626-27 (2d Cir. 1998) ; accord Wei Su v. Sotheby's, Inc. , No. 17 Civ. 4577, 2019 WL 4917609, at *2 (S.D.N.Y. Oct. 4, 2019) ; see Erie R. Co. v. Tompkins , 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). Traditional choice-of-law analysis would not apply to determine the applicable statute of limitations because the issue is procedural.

However, where, as here, the diversity action begins as a first-filed case outside of the district, which is then transferred and consolidated with a second, mirror-image case, the issue is more complicated. See generally Van Dusen , 376 U.S. at 639, 84 S.Ct. 805 ; Dorf & Stanton Commc'ns, Inc. v. Molson Breweries , 56 F.3d 13, 15 (2d Cir. 1995) ("[C]onsolidation is a procedural device that does not change the rights of the parties in the separate suits." (internal quotation marks omitted)). The Second Circuit has not directly addressed this issue of whether to apply the statute of limitations of the state where the action was first filed, or the state where the federal court sitting in diversity is adjudicating the consolidated action.

The parties dispute whether the New York or Illinois statute of limitations applies to the replevin claim. Under New York law, the statute of limitations for replevin is three years when the claim involves a good-faith purchaser of a stolen chattel. Solomon R. Guggenheim Found. v. Lubell , 77 N.Y.2d 311, 317, 567 N.Y.S.2d 623, 569 N.E.2d 426 (1991) ; accord PaySys Int'l, Inc. v. Atos SE , No. 14 Civ. 10105, 2016 WL 10651919, at *6 (S.D.N.Y. July 14, 2016) (applying New York law). The claim begins to "accrue[ ] when the true owner makes demand for return of the chattel and the person in possession of the chattel refuses to return it." Lubell , 77 N.Y.2d at 317-18, 567 N.Y.S.2d 623, 569 N.E.2d 426 ; accord PaySys Int'l, Inc. , 2016 WL 10651919, at *6. Plaintiff's replevin claim is timely under New York's statute of limitations because Plaintiff's demand for the Painting and Ms. Feinberg's refusal both occurred in 2018. Both actions were commenced in 2018.

Under Illinois law, the statute of limitations for a replevin claim is five years. Hitt v. Stephens , 285 Ill.App.3d 713, 221 Ill.Dec. 368, 675 N.E.2d 275, 277 (1997) ; accord Sherry v. City of Chicago , No. 18 Civ. 5525, 2019 WL 2525887, at *4 (N.D. Ill. June 19, 2019) (applying Illinois law). Illinois law follows the general rule in tort actions that the statute of limitations begins to accrue when a plaintiff suffers injury. Hermitage Corp. v. Contractors Adjustment Co. , 166 Ill.2d 72, 209 Ill.Dec. 684, 651 N.E.2d 1132, 1135 (1995). For replevin claims, the majority of Illinois courts have interpreted the point of accrual as when "facts exist which authorize one party to maintain an action against another," such as when the claimant has the right to take possession of the property upon breach of an agreement. See , e.g., Meeker v. Summers , 70 Ill.App.3d 528, 26 Ill.Dec. 919, 388 N.E.2d 920, 921 (1979) ; Isham v. Cudlip , 33 Ill.App.2d 254, 179 N.E.2d 25, 33 (1962) ("The seller's right to demand a return of the property accrued when default was made in payment," i.e., "at th[e] time a clear and full common law remedy of replevin available to the seller."). However, some Illinois courts have concluded -- like those in New York -- that a replevin claim does not begin to accrue until a demand is made and refused because a defendant's possession of the property is not...