The following papers were read on Defendant's Motion to DISMISS,

Plaintiff initiated this instant action by summons and complaint dated March 29, 2023 seeking to recover $12,040.00 which represents the value of two checks issued by defendant in the amounts of $4,800.00 and $7,200.00, respectively, and a $40.00 returned check fee. Defendant moves, pre-answer, seeking dismissal of the complaint pursuant to CPLR 3211(a)(1),(a)(5), and (a)(7) arguing that the claim is time barred by the applicable statute of limitations.

The undisputed facts are as follows. Defendant is a general contractor. Defendant subcontracted a company named Glass Doctor of Richmond County (hereinafter "Glass Doctor") to provide commercial grade windows for a project. Defendant issued the subject checks on or about May 9, 2019, payable to Glass Doctor in exchange for the merchandise. Defendant asserts that upon opening the boxes and discovering that the glass was residential grade glass rather than the commercial grade glass it contracted for, it issued a stop payment on the checks. Glass [*2]Doctor subsequently visited plaintiff, a check cashing corporation, and cashed both checks. Thereafter, when plaintiff indorsed the checks and duly presented them to the appropriate bank for payment, the checks were returned, costing plaintiff $40.00 in returned check fees.

Defendant argues, in its motion and at oral argument, that the six-year statute of limitations for breach of contract is not applicable here as plaintiff has no privity of contract with defendant. Instead, defendant argues, the three-year statute of limitations applies here as plaintiff's claim is one of conversion. Defendant posits that plaintiff's only claim on these facts is a possessory claim to the funds represented by the check, and thus plaintiff may properly assert that defendant, by refusing to honor the check, has converted funds that plaintiff is entitled to. Defendant further asserts that insofar as the applicable three-year statute of limitations has run, the action is now time barred and must be dismissed. Defendant also avers that pursuant to UCC§ 4-404 the subject checks became stale after six months.

In opposition and at argument, plaintiff contends that pursuant to UCC§1-201(21) Glass Doctor, as the payee with respect to the subject check, was also a holder of the check. Plaintiff further contends that holders are allowed to negotiate a commercial written instrument pursuant to UCC§ 3-301. As such, plaintiff argues that following the exchange for value with Glass Doctor, plaintiff is now a holder of the check and is entitled to demand payment. Furthermore, plaintiff asserts that the language of UCC§ 3-413 ^[FN1] clearly establishes that plaintiff's claim is contractual. Thus, the applicable statute of limitations is six years making plaintiff's claim timely.

During oral argument, counsel for defendant conceded that the issuing of a check does in fact create contractual liability. However, in further support of its argument, counsel attempted to rebut the applicability of UCC §3-413 by reasserting the position that the parties to this action have no contractual relationship with each other. Counsel posited that UCC§ 3-413, in this instance, applies to the contracts formed by defendant with its bank and with Glass Doctor, but could not be construed to create a contract between two unacquainted parties.

On a motion to dismiss a cause of action pursuant to CPLR 3211(a)(5) because it is time barred by the applicable statute of limitations, a defendant bears the initial burden of establishing, prima facie, that the time in which to sue has expired and the court must take all allegations in the complaint as true and resolve all inferences in favor of the plaintiff (Benn v Benn, 82 AD3d 548, 548 [1st Dept 2011] [internal quotation and citation omitted]). Then, the burden shifts to the plaintiff to establish that the statute of limitations should have been tolled or that the defendant should have been estopped from asserting a statute of limitations defense (see Putter v North Shore Univ. Hosp., 7 NY3d 548, 552-553 [2006]; Zumpano v Quinn, 6 NY3d 666, 673 [2006]).

Under New York law, conversion is defined as the "unauthorized assumption and exercise of the right of ownership over goods belonging to another to the exclusion of the owner's rights" (State v Seventh Regiment Fund, 98 NY2d 249 [2002] citation and internal quotation marks omitted). The Court of Appeals has stated that there are two key elements of conversion, "(1) plaintiff's possessory right or interest in the property and (2) defendant's dominion over the property or interference with it, in derogation of plaintiff's rights" (Pappas v. [*3]Tzolis, 20 NY3d 228 [2012]).

To prevail on a breach of contract claim, plaintiff must demonstrate the "the existence of a contract, the plaintiff's performance thereunder, the defendant's breach thereof, and resulting damages (Harris v Seward Park Hous. Corp., 79 AD3d 425, 426 [1st Dep't 2010]).

As this action is regarding a check, Article 3 of the New York Uniform Commercial Code (hereinafter "UCC") controls, as it regulates commercial paper. Pursuant to UCC § 3-104, checks are a form of negotiable commercial instruments and operate as a draft.

There are typically three parties to a draft, an acceptor or drawee, a drawer, and a holder or payee. Here, defendant is the drawer, and plaintiff claims to be a holder. UCC §4-413, titled "Contract of Maker, Drawer and Acceptor," details the obligations and liabilities created between a drawer and a holder/payee when a check is negotiated and/or created. According to UCC §3-413(2), "the drawer engages that upon dishonor of the draft and any necessary notice of dishonor or protest he will pay the amount of the draft to the holder or to any indorser who takes it up."

In other words, as the drawer of the check, defendant made an enforceable promise to pay the enumerated funds. Additionally, the right to enforce said promise vests not only to defendant's intended recipient, the payee, but also to any person to whom the original payee has transferred or negotiated the check. Any subsequent person who is rightfully in possession of the check would be deemed a "holder" and would possess the right to enforce defendant's promise to pay. Simply put, defendant's liability is not to any specific party, but rather, runs with the check.

Therefore, when defendant issued a stop-payment and the check was dishonored, defendant gave rise to a cause of action in favor of any holder. Thus, while it is true, as defendant argues, that there is no meeting of the minds between these parties, insofar as plaintiff claims to be a holder, they have properly plead a cause of action to demand payment.

However, contrary to both parties' contentions, the court's interpretation of the UCC is such that an action to enforce a draft, in this instance a check, is its own independent cause of action provided for by statute. Therefore, the court need not determine whether plaintiff's action is more properly plead as breach of contract or conversion, as neither apply.

Furthermore, turning to the issue of statute of limitations, the court looks first at the statute that controls. UCC Article 3 does not prescribe a limitation for the commencement of actions on drafts; nor does the CPLR. Pursuant to CPLR 213(1), if no limitation is specifically prescribed by law, then the action must be commenced within six (6) years. As such, plaintiff's claim is timely.

Assuming, arguendo, that the UCC does not itself provide an independently cognizable cause of action, and thus the issue of statute of limitations is to be determined by the court's categorization of the instant claim, defendant's argument that the claim sounds in conversion is without merit. Conversion is a cause of action stemming from liabilities created by possessory rights. As noted above, conversion actions deal with a defendant's dominion over a plaintiff's property. Defendant's attempt to characterize the nature of plaintiff's claim as regarding defendant's dominion over the funds plaintiff seeks is misguided. The UCC does not provide for any such possessory right to the funds referenced or promised for in any commercial instrument. UCC§ 3-419, titled "Conversion of Instrument," describes a payee or holders right to physical possession of the check itself, not to any associated funds. A check itself, is a holder's property for which they may bring conversion. Thus, on these facts, there is no action for conversion, as possession or dominion of the check itself is not at issue.

As defendant concedes, UCC§ 3-413 creates a contractual liability between the three original parties to the check: defendant the drawer, Glass Doctor the payee, and the drawee bank. Similarly, subsequent sections of UCC Article 3 Part 4 describe the liabilities taken on by potential additional parties such as indorsers or guarantors. These liabilities are also contractual in nature (UCC §3-414-3-416). Based on the foregoing, this court would be inclined to find that the legislative intent of this statute was to establish contractual liability for any parties dealing in the commercial value of an instrument. As such, the court would be inclined to hold that the instant claim sounds more in contract liability and should carry a statute of limitations of six years.

Notwithstanding the foregoing, the court nonetheless holds that under the UCC this action to enforce a commercial instrument is not prescribed a statute of limitations and as such CPLR 213(1) would nonetheless require this court imposes a statute of limitations of six (6) years.

All remaining arguments have been considered and are either without merit or need not be addressed given the findings above. Accordingly, it is hereby

ORDERED that, defendant's motion to dismiss is denied; and it is further

ORDERED that, this matter is scheduled for trial on April 3, 2024 at 11:15 a.m. in Part 15 in Room 529B 851 Grand Concourse Bronx, NY 10457; and it is further

ORDERED that, defendant shall file and serve an answer on or before January 22, 2024; and it is further

ORDERED that, parties shall serve any discovery demands on or before February 2, 2024; and responses to same shall be served on or before March 1, 2024.

This constitutes the decision and order of this court.