In Southgate Owners Corp. v. Esposito, 2025 N.Y. Slip Op. 32750(U) (Sup. Ct., N.Y. County July 24, 2025) (here), plaintiff sued defendant, a shareholder in its cooperative building, seeking a declaratory judgment that 80 additional shares had been properly allocated to her unit following a 1996 expansion of her unit into terrace space. Plaintiff claimed that defendant refused to accept the allocation and pay her pro rata share of expenses and sought a declaratory judgment to that effect. Defendant moved to dismiss the complaint as time-barred under CPLR 213, which imposes a six-year statute of limitations on declaratory judgment actions. The motion court found that the cause of action accrued no later than 2014, when defendant definitively refused the proposed allocation after repeated requests from plaintiff’s board. The motion court rejected plaintiff’s argument that the claim accrued only in 2024, especially since the official notice of allocation was sent after the complaint was filed. The motion court also noted that retroactive charges from 1996 were impermissible under the proprietary lease, which allowed charges from the date of issuance. Since defendant successfully defended the claim, the motion court awarded her attorneys’ fees under the proprietary lease and Real Property Law.
Background
Plaintiff owns the cooperative building located at 424 East 52nd Street. When the building became a co-op in 1987, each apartment was issued a number of shares relative to its size and location. In that regard, the corporation’s bylaws required the board of directors (the “Board”) to allocate shares to apartments based on a “reasonable relationship to the portion of the fair market value of equity.” Under the original offering plan, 460 shares were allocated to defendant’s unit.
In 1996, defendant made changes to the apartment, expanding the interior into the terrace space. No extra shares were allocated to defendant at that time. In 2011-2012, the corporation’s President asked defendant twice if she would voluntarily accept the allocation of additional shares. Defendant rejected the requests.
In 2014, plaintiff’s then-attorney considered bringing an action against defendant but did not do so, admitting that the statute of limitations had run on the Board’s ability to bring an action against defendant regarding an additional share allocation. Counsel hoped that defendant would be willing to meet with the Board on the matter. No meeting apparently happened.
In 2022, plaintiff’s then-attorney wrote a letter to defendant informing her that “shares are to be allocated to this additional space”, but no official allocation was made at that time.
On April 19, 2024, plaintiff initiated the action. According to the complaint, the Board had allocated extra shares to defendant “as of” 1996 at the completion of the expansion. Plaintiff also alleged “upon information and belief” that defendant refused to accept the allocation and pay her pro rata share of co-operative expenses. Three days after plaintiff filed the complaint, the Board sent a letter to defendant, stating that her account had been allocated extra shares and that her account was being charged for the extra shares retroactively to 1996. Plaintiff asserted a single cause of action, seeking a declaratory judgment that plaintiff had properly allocated 80 additional shares to defendant “as of January 1, 1996” and that defendant was liable for the full pro rata share of the additional expenses together with interest dating from 1996. Defendant timely answered the complaint and asserted two counterclaims, one for attorneys’ fees pursuant to the proprietary lease and one seeking to annul the decision that allocated 80 additional shares.
Defendant moved for summary judgment, seeking to dismiss the complaint as time-barred and to receive reimbursement of her attorneys’ fees. Plaintiff opposed, and cross-moved for summary judgment in its favor. The motion court granted defendant’s motion and denied plaintiff’s cross-motion.
The Court’s Decision
Declaratory judgments are governed by a six-year statute of limitations under CPLR 213. A claim for declaratory relief accrues “when there is a bona fide, justiciable controversy between the parties.”[1] Such a controversy occurs when “a plaintiff receives direct, definitive notice that the defendant is repudiating his or her rights.”[2] Plaintiff argued that its cause of action did not accrue until 2024. The motion court rejected the argument, holding that “the complaint was time-barred, for multiple reasons.”[3]
First, said the motion court, “according to Plaintiff’s own complaint, the shares were allocated ‘as of’ 1996 and [it was] seeking charges from that date.”[4] The motion court noted that “according to the terms of the Proprietary Lease, a shareholder [could] only be obligated to pay rent based off an additional allocation of shares ‘from and after the date of issuance.’”[5] Thus, concluded the motion court, “[t]o the extent that Plaintiff alleges that the additional shares were not issued until 2024, by the terms of the Proprietary Lease they are not permitted to attempt to retroactively apply charges before the date of issuance.”[6]
Second, said the motion court, plaintiff’s claim for declaratory relief accrued in 2014, “if not earlier.”[7] The motion court pointed to the “undisputed” fact that “from 2011 to 2014, multiple members of the Board, operating under the belief that any cause of action was time[-]barred, repeatedly attempted to get Defendant to voluntarily accept the additional shares and that she refused.”[8] The motion court noted that “Plaintiff attempted to allocate shares to Defendant by at least 2014, and Defendant definitively refused to accept such a proposed allocation.”[9] “It is at that time, if not earlier,” concluded the motion court, “that Plaintiff’s cause of action accrued.”[10] Thus, the motion court concluded that plaintiff’s claim was time-barred in 2024.[11]
The motion court rejected plaintiff’s argument that defendant “did not definitively repudiate the allocation until 2024.” [12] The motion court noted that plaintiff did not send the letter notice to defendant “first stating that additional shares had been allocated to her account until after filing the complaint (where [it] aver[red] that Defendant had refused to accept the allocation).”[13] “By Plaintiff’s own complaint and records,” concluded the motion court, “[d]efendant made what Plaintiff considers to be a definitive repudiation worthy of judicial intervention at some time prior to the official notification of the share allocation.”[14]
Finally, the motion court held that because defendant was successful in her defense to the complaint, under the terms of the proprietary lease and the Real Property Law, she was entitled to collect attorneys’ fees.[15]
Takeaway
The motion court’s decision in Southgate Owners serves as a reminder of the critical importance of timely legal action and adherence to contractual frameworks. The motion court’s dismissal of plaintiff’s declaratory judgment claim under CPLR 213 reinforces the principle that accrual begins to run not when a party chooses to act, but when a justiciable controversy arises—in Southgate Owners, no later than 2014, when defendant rejected the proposed share allocation. As discussed, plaintiff’s records and prior counsel’s acknowledgment of the limitations issue were pivotal in establishing the timeline for accrual of the claim.
Southgate Owners also serves as a good reminder that the parties should check any agreements between them to see if the agreement governs their dispute. As noted, the language in the proprietary lease prohibiting retroactive charges prior to the date of issuance was a dispositive fact relied upon by the motion court.
Finally, the decision highlights the financial and strategic risks of pursuing stale claims, particularly when internal communications and prior legal assessments acknowledge those risks. In Southgate Owners, plaintiff’s delay in formalizing the share allocation and initiating legal proceedings resulted not only in dismissal of its claim but also an award of attorneys’ fees to defendant.
[1] Trump Vil. Section 4, Inc. v. Young, 217 A.D.3d 711, 714 (2d Dept. 2023).
[2] Id.
[3] Slip Op. at *4.
[4] Id.
[5] Id.
[6] Id.
[7] Id.
[8] Id.
[9] Id.
[10] Id.
[11] Id.
[12] Id. at *5.
[13] Id.
[14] Id.
[15] Id.
