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Laches Defense Fails to Convince Court to Enter Judgment for the Defendant

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  • Posted on: Jan 16 2019

Laches is an equitable bar to a claim that is based on a lengthy failure to assert one’s rights that prejudices an adverse party. The doctrine is “designed to promote justice by preventing surprises through the revival of claims that have been allowed to slumber until evidence has been lost, memories have faded, and witnesses have disappeared.” Order of R.R. Tels. v. Ry Express Agency, Inc., 321 U.S. 342, 348-49 (1944). As explained in Law.Com’s online dictionary, the doctrine “is often raised in the list of ‘affirmative defenses’ in answers filed by defendants, but is seldom applied by the courts” (here). InStancioff v. Danielson, 2018 N.Y. Slip Op. 33412(U) (Sup. Ct. N.Y. Cnty. Dec. 31, 2018) (here), the court addressed a laches defense on a motion for summary judgment, finding issues of fact with regard to the elements of the defense.

Laches Under New York Law

As noted, laches is an equitable defense that may be “asserted where neglect in promptly asserting a claim for relief results in prejudice to a defendant.…” Slip op. at *11 (citing Moreschi v. DiPasquale, 58 A.D.3d 545, 545 (1st Dept. 2009)). To invoke the doctrine, “a party must show: (1) conduct by an offending party giving rise to the situation complained of, (2) delay by the complainant in asserting his or her claim for relief despite the opportunity to do so, (3) lack of knowledge or notice on the part of the offending party that the complainant would assert his or her claim for relief, and (4) injury or prejudice to the offending party in the event that relief is accorded the complainant.” Cohen v. Krantz, 227 A.D.2d 581, 582 (2d Dept. 1996). All four elements are necessary to invoke the doctrine. Id.; Dwyer v. Mazzola, 171 A.D.2d 726, 727 (2d Dept. 1991) (citation omitted). When that occurs, the doctrine “will operate as a bar to the relief sought.” Stancioff, Slip Op. at *11.

Delay

“In order for laches to apply, there must be an unreasonable and inexcusable delay.” Waldman v. 853 St. Nicholas Realty Corp., 64 A.D.3d 585, 588 (2d Dept. 2009). There is, however, no defined length of delay that will trigger the defense. Capital Crossing Bank v. Aurora Hospitality, LLC, 45 A.D.3d 1266, 1268 (4th Dept. 2007) (“Essentially, the defense of laches consists of an unreasonable delay by the plaintiff to the prejudice of the defendant. But mere delay, however long, absent the necessary elements to create an equitable estoppel, does not preclude the granting of equitable relief.”) (citation omitted). Thus, “[m]ere inaction or delay in bringing a proceeding, without a showing of prejudice, [will] not constitute laches.” (Haberman v. Haberman, 216 A.D.2d 525, 527 (2d Dept. 1995).

Prejudice

To show prejudice, the defendant must demonstrate “an injury, change of position, or other disadvantage resulting from [the] delay.” Haberman, 216 A.D.2d at 527 (citations omitted).

Knowledge

While delay and prejudice are important elements of the doctrine, a plaintiff who has no knowledge of the facts giving rise to the cause of action cannot be charged with laches. Stancioff, Slip op. at *12 (quoting Platt v. Platt, 13 Sickels 646, 646 (1874) (“‘[l]aches cannot … exist where a party is ignorant of his rights, or where though apprehensive of them, there is such an obscurity in the transaction that he must, with painstaking, gather the facts or the evidence of them upon which the successful prosecution of the action must depend.’”). However, where a plaintiff knows or has reason to know about his/her claim, he/she must act diligently to protect his/her rights. Hayward v. Eliot National Bank, 96 U.S. 611, 618 (1877) (“when a party with full knowledge of the facts, acquiesces in a transaction and sleeps upon his rights, equity will not aid him”); seealsoBank of Am., N.A. v. 414 Midland Ave. Assocs., LLC, 78 A.D.3d 746, 750 (2d Dept. 2010).

Issues of Fact

Whether the laches defense should be applied is an issue typically reserved for the trier of fact. Solomon R. Guggenheim Found. v. Lubell, 77 N.Y.2d 311, 311 (1991); Tri-Star Pictures, Inc. v. Leisure Time Prods., B.V., 17 F.3d 38, 44 (2d Cir. 1994) (noting that “[t]he equitable nature of laches necessarily requires that the resolution be based on the circumstances peculiar to each case. The inquiry is a factual one.”); United States v. Portrait of Wally, A Painting By Egon Schiele, No. 99 Civ. 9940 (MBM), 2002 WL 553532, at *22 (S.D.N.Y. April 12, 2002) (laches requires a “fact intensive inquiry into the conduct and background of both parties in order to determine the relative equities” which is “often not amenable to resolution on a motion for summary judgment”).

Stancioff v. Danielson

Background

Plaintiffs, the living heirs and descendants of Dimitri Stancioff (“Stancioff”), a Bulgarian minister, brought suit to recover a bejeweled, nineteenth-century Russian imperial snuffbox purportedly given to Stancioff by Emperor Nicholas II at the Conference of Peace held in St. Petersburg, Russia (the “Snuffbox”). Plaintiffs claimed that the snuffbox was “stolen or otherwise misappropriated” from their family sometime during World War II or its aftermath.

According to the Court, “[e]veryone with any first hand knowledge of the[] events [surrounding the snuffbox] is now deceased.” Slip op. at *2.  “Indeed, not much was known about the whereabouts of the snuffbox until 2014,” when defendant, the Estate of Barbara Danielson (the “Estate”), consigned the box to defendant Christie’s, Inc. (“Christie’s”) for sale at auction. Id.

[Ed. Note: The Court dismissed Christie’s from the action because it was not a necessary party to the action.]

Barbara Danielson inherited the snuffbox from her mother, Rosemary Danielson, who died sometime in 1981. Barbara Danielson died in 2013. According to the Court, “[i]t is not known how Rosemary came to possess the snuffbox except that, when Christie’s received the item for auction, a document was apparently contained inside bearing the letterhead of Waldo Frank Perez de Leon, describing, in great detail, a ‘[r]rectangular gold presentation snuffbox’ and listing the price of $8,000.” Id. The document contained no other information, such as the buyer, the seller or the date of sale. According to Christie’s research into the matter, Perez de Leon was the proprietor of an interior design shop in Miami, Florida, active at least during the mid-to-late 1960s. Perez de Leon died in 1982.

Christie’s initially appraised the snuffbox at $120,000-$180,000. However, at a May 2015 auction, the snuffbox sold for $680,000.

Plaintiffs initially took no issue with the sale and provided Christie’s with photographs of Stancioff to use in its catalogue and promotional materials, allegedly believing that the item was being auctioned at the behest of a Stancioff family member. However, by email dated June 3, 2015, plaintiffs Nadejda and Alex Stancioff contacted Christie’s, asserting that the snuffbox had been stolen from their family and warning Christie’s not to disburse the proceeds of the sale. Christie’s agreed to hold back the sale until it could investigate the claim. Although Christie’s was dismissed from the action, the snuffbox remains in Christie’s possession pending the resolution of the action.

Plaintiffs filed suit, asserting two causes of action against the Estate: replevin and conversion (the first and second cause of action).

The Estate moved for summary judgment to dismiss the claims against it. Among the defenses asserted was laches.

The Court’s Decision

The Court denied the Estate’s motion.

The Court held that the Estate failed to establish any prejudice resulting from the Plaintiffs’ failure to promptly assert their claims:

Here, to the extent that plaintiffs may have neglected to promptly assert their claim, the Estate has not established how this resulted in prejudice to it since anyone with first hand knowledge of the underlying facts has been deceased for far longer than the Estate has been in possession of the snuff box.

Slip op. at *11.

In addition, the Court held that the Estate failed to establish that the Plaintiffs did not exercise reasonable diligence to locate the snuffbox, or that the Plaintiffs’ alleged inaction had prejudiced the Estate. Slip op. at *12 (citing Matter of Flamenbaum, 22 N.Y.3d 962, 965 (2013)). The Court noted that “[w]hile the snuffbox came into Rosemary Danielson’s possession, it was never advertised for sale and appears to have been displayed only in Danielson’s home.” Id. at *13. Thus, there was an issue of fact as to whether Plaintiffs exercised reasonable diligence in locating the snuff box. As the Court observed, it was unclear “how far back such action [i.e., reasonable diligence to locate the snuffbox] would have needed to be taken to enable the Estate to escape the prejudice resulting from the delay.” Id. at *12.

Takeaway

Determining whether to apply the laches defense requires a “fact intensive inquiry into the conduct and background of both parties in order to determine the relative equities.” Portrait of Wally, 2002 WL 553532, at *22. For this reason, resolution of the defense is “often not amenable to resolution on a motion for summary judgment.” Id. Stancioffhighlights the difficulties that a defendant must overcome to demonstrate that the application of the defense is appropriate.

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