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Kevin Schlosser Writes, "Fraud Breathes New Life Into Otherwise Time-Barred Causes of Action"

Mar 16, 2022Litigation & Dispute Resolution

As this Blog has detailed, the tort known as fraud is a robust legal flavor enhancer that produces all kinds of powerful legal remedies and benefits. For example, fraudulent conduct can give rise to rather remarkable remedies, like completely undoing a legal transaction—i.e., “rescission” for fraudulent inducement. Establishing the tort of fraud can warrant the award of punitive damages, where the fraudulent conduct is egregious enough. Attempts to discharge debts in bankruptcy can be thwarted by intentional fraudulent misconduct. Another huge benefit of alleging fraud is the legal life-extending or resuscitating of causes of action that would otherwise be time-barred under applicable statute of limitations.

Fraud’s Special Statute of Limitations

For the cause of action for “actual fraud” itself, New York gives an extended period of time to assert the claim: CPLR 213(8) provides that for “an action based upon fraud;  the time within which the action must be commenced shall be the greater of six years from the date the cause of action accrued or two years from the time the plaintiff or the person under whom the plaintiff claims discovered the fraud, or could with reasonable diligence have discovered it.”

I have written about some of the more dicey issues concerning the statute of limitations for fraud, such as the courts’ confusion over the limitations period for asserting actual fraud and constructive fraud or negligent misrepresentation – which have different periods. I have also commented upon when the fraud claim actually “accrues” or is deemed to have started to run – when the clock starts clicking to bring the claim. I have also addressed another issue that is not always treated clearly or consistently by the courts—whether a claim for fraud accrues simply when the alleged fraud is “committed” or when an injury that the fraud has caused occurs (if that could arguably have happened some time after the fraudulent misrepresentation was conveyed).

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