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contractlawsuitplaintiffdefendantdamagesstatutemotioncorporationstatute of limitationsmotion to dismiss
contractplaintiffdefendantstatutemotionwillcorporationstatute of limitationsmotion to dismiss

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Rusch Factors, Inc. v. Levin, 284 F.Supp. 85

Facts

In late 1963 and early 1964, a Rhode Island corporation sought financing from the plaintiff, a New York commercial banking corporation. The plaintiff requested certified financial statements to assess the corporation's financial stability, which were prepared by the defendant accountant. These statements falsely represented the corporation as solvent, leading the plaintiff to loan over $337,000. After the corporation went into receivership, the plaintiff was unable to recover the full amount loaned, prompting the lawsuit against the accountant for damages due to reliance on the misleading financial statements.

The facts are as follows. In late 1963 and early 1964 a Rhode Island corporation sought financing from the plaintiff… The plaintiff relied upon the statements and loaned the corporation a sum in excess of $337,000.00.

Issue

The main legal issues were whether the action was barred by the statute of limitations for personal injuries and whether the absence of privity of contract between the accountant and the plaintiff constituted a complete defense.

The defendant has moved to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), on two grounds: (1) that the Rhode Island statute of limitations for personal injuries or injuries by spoken word… bars the plaintiff's action; or (2) that the absence of privity of contract between the defendant accountant and the plaintiff reliant party is a complete defense.

Rule

The court applied Rhode Island's statutes of limitations, determining that the action for pecuniary loss due to reliance on fraudulent or negligent misrepresentation does not fall under the personal injury statute but rather under the general six-year statute of limitations for all injuries not otherwise specified.

The applicable statute is Title 9, Chapter 1, Section 13 of Rhode Island General Laws, 1956 Title 9, Chapter 1, Section 13 of Rhode Island General Laws, 1956, as amended, 1965, the general six-year statute of limitations.

Analysis

The court analyzed the nature of the plaintiff's claims, concluding that the reliance on the accountant's written financial statements constituted a pecuniary loss rather than a personal injury. The court distinguished this case from actions involving spoken words or personal injuries, affirming that the applicable statute of limitations was the six-year general statute. Additionally, the court found that privity of contract was not necessary for a fraud claim, as the accountant could be liable to those he should have reasonably foreseen would rely on his misrepresentations.

The proper inquiry… is only whether the plaintiff has been injured in his person, Title 9, Chapter 1, Section 14, or in some other unspecified manner, Title 9, Chapter 1, Section 13.

Conclusion

The court denied the defendant's motion to dismiss, allowing the case to proceed based on the determination that the complaint stated a valid cause of action and was not barred by the statute of limitations.

The defendant's motion to dismiss with respect to the statute of limitations is denied.

Who won?

The plaintiff, a New York commercial banking corporation, prevailed in the motion to dismiss, as the court found that the complaint was valid and not subject to dismissal under the statute of limitations.

The plaintiff will prepare a proper order in accordance with this decision.

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