16‐1467 Chassman v. Shipley
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
1 2 At a stated term of the United States Court of Appeals for the Second 3 Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley 4 Square, in the City of New York, on the 21st day of June, two thousand seventeen. 5 6 PRESENT: JOSÉ A. CABRANES, 7 RICHARD C. WESLEY, 8 Circuit Judges 9 WILLIAM K. SESSIONS III, 10 District Judge.* 11 ______________________ 12 13 MARGIE CHASSMAN, 14 15 Plaintiff‐Appellant, 16 17 ‐v.‐ 16‐1467‐cv 18 19 ROBERT SHIPLEY, 20 21 Defendant‐Appellee. 22 ______________________
Judge William K. Sessions III, of the United States District Court for the District of *
Vermont, sitting by designation.
1 1 2 FOR APPELLANT: STANLEY K. SHAPIRO, New York, NY. 3 4 FOR APPELLEE: MARC A. SILVERMAN (Michael David Hynes, on the 5 brief), DLA Piper LLP, New York, NY. 6 7 Appeal from the United States District Court for the Southern District of 8 New York (Crotty, J.). 9 10 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
11 ADJUDGED AND DECREED that the judgment of said District Court be and it
12 hereby is AFFIRMED.
13 Plaintiff‐Appellant Margie Chassman appeals the April 12, 2016 opinion
14 and order and April 13, 2016 judgment of the District Court (Crotty, J.) dismissing
15 Chassman’s complaint as barred by the one‐year statute of limitations set forth in
16 New York Civil Practice Laws & Rules (“N.Y. C.P.L.R.”) 215(6). We assume the
17 parties’ familiarity with the underlying facts and the procedural history, which we
18 reference only as necessary to explain our conclusions.
19 In exchange for a loan of $600,000 Margie Chassman executed a promissory
20 note (the “Note”)1 for an equal amount to her lender, Robert Shipley. The Note
21 required that Chassman use the borrowed money to buy 6,000 preferred shares (the
22 “Preferred Shares”) in a publicly traded company then known as MedaSorb
1 The parties agree that the Note is governed by New York law.
2 1 Technologies Corp. (“MedaSorb”). In addition to a ten percent per annum interest
2 rate, the parties agreed that, as an inducement to Shipley to make the loan,
3 Chassman would assign Shipley warrants to purchase shares in MedaSorb at a
4 fixed price per share. The Note had a maturity date of November 21, 2008, at which
5 time Chassman was required to either repay the principal plus interest due or to
6 deliver to Shipley the Preferred Shares plus a cash payment for interest. Nowhere
7 in the Note did the parties express that, if Chassman chose the latter, the value of
8 the Preferred Shares in excess of the outstanding principal would constitute
9 interest.
10 When it came time to pay, Chassman delivered the Preferred Shares in
11 November 2008. Despite delivery of the shares, Chassman contends she retained
12 ownership of the stock, collecting dividends thereon until October 2009. Chassman
13 contends that when Shipley finally took ownership in October 2009 the Preferred
14 Shares were worth more than $2 million.
15 In 2015, Chassman sued Shipley for breach of contract, alleging that she was
16 entitled to any overcharged interest that exceeded New York’s usury rate of
17 twenty‐five percent. She claimed that Shipley was required, pursuant to Paragraph
18 12 of the Note (the “Usury Provision”), to refund the value of the warrants and the
3 1 Preferred Shares that exceeded the usury limit set by New York, after crediting
2 their value for payment of principal. In other words, she claimed that, to the extent
3 the value of the securities she used to pay for her loan exceeded the amount of
4 outstanding principal plus the 25% usury rate, she was entitled to that excess
5 amount.
6 Shipley moved for summary judgment. He argued that Chassman’s claim
7 was barred by either the one‐year statute of limitations applicable to claims of
8 overcharged interest, N.Y. C.P.L.R. 215(6), or the six‐year statute of limitations for
9 breach‐of‐contract claims, N.Y. C.P.L.R. 213(2). Even if timely, Shipley argued, the
10 claim was meritless.
11 In a brief opinion that relied almost entirely on Siradas v. Chase Lincoln First
12 Bank, N.A., No. 98‐cv‐4028 (RCC), 1999 WL 787658 (S.D.N.Y. Sept. 30, 1999), the
13 District Court held that N.Y. C.P.L.R. 215(6) “applies for any claim alleging an
14 overcharge of interest, regardless of whether the claim is contractual or statutory.”
15 Chassman v. Shipley, No. 15‐cv‐5228 (PAC), 2016 WL 1451585, at *3 (S.D.N.Y. April
16 12, 2016). The District Court dismissed Chassman’s claim as barred by the one‐year
17 limitation period and did not address the parties’ dispute as to the proper accrual
18 date or the merits of Chassman’s claim. See id. at *2‐*3.
4 1 We review all issues here de novo. See Miller v. Wolpoff & Abramson, L.L.P.,
2 321 F.3d 292, 300 (2d Cir. 2003) (reviewing order granting summary judgment de
3 novo); Golden Pacific Bancorp v. F.D.I.C., 273 F.3d 509, 515 (2d Cir. 2001) (applying de
4 novo review to statute‐of‐limitations ruling). We may affirm on any basis apparent
5 in the record. Thyroff v. Nationwide Nut. Ins. Co., 460 F.3d 400, 405 (2d Cir. 2006).
6 While we have substantial doubts (set forth in the margin2) as to whether the
7 District Court’s conclusion that the one year statute of limitations applies here, we
8 need not decide this appeal on that conclusion as Chassman’s claim is meritless.
2 Siradas misreads two New York cases— Englishtown Sportswear v. Marine Midland Bank., 467 N.Y.S.2d 693 (2d Dep’t 1983), and Rubin v. County National Bank & Trust Co. of Gloversville, 520 N.Y.S.2d 640 (3d Dep’t 1987)—and finds conflict between them where none exists. See Siradas, 1999 WL 787658, at *6. Indeed, the two cases nicely complement each other: N.Y. C.P.L.R. 215(6), at minimum, applies to statutory usury actions, as suggested in Englishtown, 467 N.Y.S.2d at 694, and, at most, to any statutory overcharge claims, as held in Rubin, 520 N.Y.S.2d at 640. The Siradas court read Rubin to extend N.Y. C.P.L.R. 215(6) to all overcharge actions, including those grounded in breach of contract. It did nothing of the sort. Rubin said only that N.Y. C.P.L.R. 215(6) applies to statutory overcharge actions, whether based on usury or some other provision of New York law that deals with overcharges. See Rubin, 520 N.Y.S.2d at 640. As the factual allegations of Chassman’s complaint and her brief reveal, this is a quintessential breach‐of‐contract case to which the six‐year statute of limitations applies. Chassman’s claim is that Shipley was “contractually obligated” under the Usury Provision to “immediately refund excess collateral and value of the Preferred Shares, but failed to do so.” J.A. 14.
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16‐1467 Chassman v. Shipley
UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
1 2 At a stated term of the United States Court of Appeals for the Second 3 Circuit, held at the Thurgood Marshall United States Courthouse, 40 Foley 4 Square, in the City of New York, on the 21st day of June, two thousand seventeen. 5 6 PRESENT: JOSÉ A. CABRANES, 7 RICHARD C. WESLEY, 8 Circuit Judges 9 WILLIAM K. SESSIONS III, 10 District Judge.* 11 ______________________ 12 13 MARGIE CHASSMAN, 14 15 Plaintiff‐Appellant, 16 17 ‐v.‐ 16‐1467‐cv 18 19 ROBERT SHIPLEY, 20 21 Defendant‐Appellee. 22 ______________________
Judge William K. Sessions III, of the United States District Court for the District of *
Vermont, sitting by designation.
1 1 2 FOR APPELLANT: STANLEY K. SHAPIRO, New York, NY. 3 4 FOR APPELLEE: MARC A. SILVERMAN (Michael David Hynes, on the 5 brief), DLA Piper LLP, New York, NY. 6 7 Appeal from the United States District Court for the Southern District of 8 New York (Crotty, J.). 9 10 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED,
11 ADJUDGED AND DECREED that the judgment of said District Court be and it
12 hereby is AFFIRMED.
13 Plaintiff‐Appellant Margie Chassman appeals the April 12, 2016 opinion
14 and order and April 13, 2016 judgment of the District Court (Crotty, J.) dismissing
15 Chassman’s complaint as barred by the one‐year statute of limitations set forth in
16 New York Civil Practice Laws & Rules (“N.Y. C.P.L.R.”) 215(6). We assume the
17 parties’ familiarity with the underlying facts and the procedural history, which we
18 reference only as necessary to explain our conclusions.
19 In exchange for a loan of $600,000 Margie Chassman executed a promissory
20 note (the “Note”)1 for an equal amount to her lender, Robert Shipley. The Note
21 required that Chassman use the borrowed money to buy 6,000 preferred shares (the
22 “Preferred Shares”) in a publicly traded company then known as MedaSorb
1 The parties agree that the Note is governed by New York law.
2 1 Technologies Corp. (“MedaSorb”). In addition to a ten percent per annum interest
2 rate, the parties agreed that, as an inducement to Shipley to make the loan,
3 Chassman would assign Shipley warrants to purchase shares in MedaSorb at a
4 fixed price per share. The Note had a maturity date of November 21, 2008, at which
5 time Chassman was required to either repay the principal plus interest due or to
6 deliver to Shipley the Preferred Shares plus a cash payment for interest. Nowhere
7 in the Note did the parties express that, if Chassman chose the latter, the value of
8 the Preferred Shares in excess of the outstanding principal would constitute
9 interest.
10 When it came time to pay, Chassman delivered the Preferred Shares in
11 November 2008. Despite delivery of the shares, Chassman contends she retained
12 ownership of the stock, collecting dividends thereon until October 2009. Chassman
13 contends that when Shipley finally took ownership in October 2009 the Preferred
14 Shares were worth more than $2 million.
15 In 2015, Chassman sued Shipley for breach of contract, alleging that she was
16 entitled to any overcharged interest that exceeded New York’s usury rate of
17 twenty‐five percent. She claimed that Shipley was required, pursuant to Paragraph
18 12 of the Note (the “Usury Provision”), to refund the value of the warrants and the
3 1 Preferred Shares that exceeded the usury limit set by New York, after crediting
2 their value for payment of principal. In other words, she claimed that, to the extent
3 the value of the securities she used to pay for her loan exceeded the amount of
4 outstanding principal plus the 25% usury rate, she was entitled to that excess
5 amount.
6 Shipley moved for summary judgment. He argued that Chassman’s claim
7 was barred by either the one‐year statute of limitations applicable to claims of
8 overcharged interest, N.Y. C.P.L.R. 215(6), or the six‐year statute of limitations for
9 breach‐of‐contract claims, N.Y. C.P.L.R. 213(2). Even if timely, Shipley argued, the
10 claim was meritless.
11 In a brief opinion that relied almost entirely on Siradas v. Chase Lincoln First
12 Bank, N.A., No. 98‐cv‐4028 (RCC), 1999 WL 787658 (S.D.N.Y. Sept. 30, 1999), the
13 District Court held that N.Y. C.P.L.R. 215(6) “applies for any claim alleging an
14 overcharge of interest, regardless of whether the claim is contractual or statutory.”
15 Chassman v. Shipley, No. 15‐cv‐5228 (PAC), 2016 WL 1451585, at *3 (S.D.N.Y. April
16 12, 2016). The District Court dismissed Chassman’s claim as barred by the one‐year
17 limitation period and did not address the parties’ dispute as to the proper accrual
18 date or the merits of Chassman’s claim. See id. at *2‐*3.
4 1 We review all issues here de novo. See Miller v. Wolpoff & Abramson, L.L.P.,
2 321 F.3d 292, 300 (2d Cir. 2003) (reviewing order granting summary judgment de
3 novo); Golden Pacific Bancorp v. F.D.I.C., 273 F.3d 509, 515 (2d Cir. 2001) (applying de
4 novo review to statute‐of‐limitations ruling). We may affirm on any basis apparent
5 in the record. Thyroff v. Nationwide Nut. Ins. Co., 460 F.3d 400, 405 (2d Cir. 2006).
6 While we have substantial doubts (set forth in the margin2) as to whether the
7 District Court’s conclusion that the one year statute of limitations applies here, we
8 need not decide this appeal on that conclusion as Chassman’s claim is meritless.
2 Siradas misreads two New York cases— Englishtown Sportswear v. Marine Midland Bank., 467 N.Y.S.2d 693 (2d Dep’t 1983), and Rubin v. County National Bank & Trust Co. of Gloversville, 520 N.Y.S.2d 640 (3d Dep’t 1987)—and finds conflict between them where none exists. See Siradas, 1999 WL 787658, at *6. Indeed, the two cases nicely complement each other: N.Y. C.P.L.R. 215(6), at minimum, applies to statutory usury actions, as suggested in Englishtown, 467 N.Y.S.2d at 694, and, at most, to any statutory overcharge claims, as held in Rubin, 520 N.Y.S.2d at 640. The Siradas court read Rubin to extend N.Y. C.P.L.R. 215(6) to all overcharge actions, including those grounded in breach of contract. It did nothing of the sort. Rubin said only that N.Y. C.P.L.R. 215(6) applies to statutory overcharge actions, whether based on usury or some other provision of New York law that deals with overcharges. See Rubin, 520 N.Y.S.2d at 640. As the factual allegations of Chassman’s complaint and her brief reveal, this is a quintessential breach‐of‐contract case to which the six‐year statute of limitations applies. Chassman’s claim is that Shipley was “contractually obligated” under the Usury Provision to “immediately refund excess collateral and value of the Preferred Shares, but failed to do so.” J.A. 14. That failure allegedly constituted a breach, and Chassman’s requested relief is payment of the overcharged interest. Shipley (and Siradas) would have us ignore the contractual nature of the claim because the contract references New York’s usury law. However, the fact that a claim sounding in contract, or some other theory of relief, references New York’s usury law to make out an element of the claim does not trigger the usury statute of limitations. See McNellis v. Raymond, 420 F.2d 51, 55 (2d Cir. 1970). What
5 1 “The meaning of contract provisions is a question of law over which we
2 exercise de novo review.” Photopaint Tech., LLC v. Smartlens Corp., 335 F.3d 152, 160
3 (2d Cir. 2003). Judgment as a matter of law is appropriate under New York law “if
4 the contract language is unambiguous.” Id. That parties to litigation urge different
5 interpretations of unambiguous contractual language does not render that language
6 ambiguous. See id. (citation omitted).
7 There is ultimately nothing to Chassman’s claim of overpayment of interest,
8 because she did not in fact pay any interest to Shipley. Chassman asserts that she
9 made two interest payments. First, she claims the warrants she transferred to
10 Shipley when the contract was executed constituted an interest payment on the
11 loan. Second, she claims that to the extent the value of the convertible preferred
12 shares she transferred to Shipley as an alternative principal payment exceeded 10%
13 per annum on $600,000, the excess value was also an interest payment.
14 The relevant contract language here unambiguously contradicts Chassman’s
15 position. Paragraph 4 of the contract provides:
matters is that the parties contracted—albeit by reference to usury law—that any overcharge of interest above the amount set by law be refunded after crediting principal. Chassman’s claim as alleged is for breach of that contractual language. N.Y. C.P.L.R. 215(6) does not somehow render her claim something it is not.
6 1 It is agreed that Chassman may repay the principal of this Note, in 2 whole but not in part, by delivering to the Holder, at any time on or 3 before the Maturity Date, the Preferred Shares, together with a cash 4 payment equal to the interest accrued hereunder through the date of such 5 delivery at the [10% per annum] interest rate set for in Section 1 hereof. 6 As an inducement to the Holder to advance the funds represented by this 7 Note, Chassman hereby grants the Holder an option . . . to purchase 8 from Chassman up to 3.98 million shares of the common . . . of 9 MedaSorb [also known as the warrants at issue in this case]. 10 11 J.A. 20 (emphasis added).
12 This language removes any possibility that the assignment of the Warrants
13 constituted a payment of interest. The contract makes clear that Chassman
14 transferred the warrants as “an inducement” to convince Shipley to loan Chassman
15 $600,000. There is no support in the above language for the notion that the
16 warrants were, as Chassman urges, a deposit on the yet unaccrued interest on the
17 loan.
18 Moreover, Chassman’s assertion that the increased market value of the
19 convertible Preferred Shares constituted an interest payment makes no sense in
20 context. The contract provides that Chassman could elect to deliver the preferred
21 shares to Shipley to “repay the principal” of the loan instead of paying back the
22 $600,000 principal in cash. J.A. 20. The contract specifically requires, however, that
23 if Chassman chooses this alternative principal payment, she must make an
7 1 additional “cash payment equal to the interest accrued . . . through the date of such
2 delivery” at the regular, 10% per annum interest rate. Id. There is no hint
3 anywhere in the contract that to the extent the value of the preferred shares
4 exceeded $600,000, that value would constitute payment of interest—in fact, the
5 contract specifically contemplates that any interest must be paid in cash.
6 In sum, Chassman’s claim is belied by the unambiguous terms of the
7 contract. Thus, even assuming her claim is timely, summary judgment was proper.
8 We have also considered the remainder of Chassman’s arguments and find
9 them to be without merit. Accordingly, the judgment of the District Court is
10 AFFIRMED.
11 12 FOR THE COURT: 13 Catherine O’Hagan Wolfe, Clerk