Diakonikolas v New Horizons Worldwide Inc.
Annotate this CaseDecided on December 6, 2010
Supreme Court, New York County
Anthony Diakonikolas, on behalf of himself and all other consumers similarly situated who opt-in to this civil action, Plaintiff,
against
New Horizons Worldwide Inc., NEW HORIZONS EDUCATION CORP., COMPUTER LEARNING CENTER OF METROPOLITAN NEW YORK INC., and MARK A. MILLER, Defendants.
112565/09
Joan A. Madden, J.
Defendants New Horizons Worldwide Inc. (New Horizons Worldwide),
New Horizons Education Corp. (New Horizons Education), Computer Learning Center of
Metropolitan New York Inc. (Learning Center) move for an order (1) granting reargument of that
part of this court's decision and order dated July 21, 2010 ( the original decision") denying the
motion to dismiss the first cause of action as time barred and, upon reargument, (2) dismissing
the first cause of action. Plaintiff Anthony Diakonikolas (plaintiff) opposes the motion, which is
granted for the reasons below.
Background
From March 2002 through September 2004, plaintiff was a student at the Learning Center, an unlicensed computer certification school allegedly owned and operated by New Horizons Education, and its parent New Horizons Worldwide. The defendant Miller is the principal of New Horizons Worldwide.
Plaintiff answered defendants' advertisement for a job interview, which was found by the The New York State Education Department Bureau of Proprietary School Supervision (BPSS) to be false and misleading. Instead of a job interview, plaintiff was sold classes and job placement services. Plaintiff obtained loans totaling $16,466.95 and in exchange he alleges that he received unauthorized courses and non-existent job placement services.
The first cause of action in the complaint alleges that defendants violated Education Law § 5004 (5) when they "solicited and enrolled Plaintiff, as well as other similarly situated students, in courses not certified pursuant to New York State Law." (Complaint, ¶ 33). The second cause of action is for breach of contract. The third cause of action is for fraud in the inducement. defendants. The complaint, pleaded as a class action, seeks damages in the sum of $16,466.95 together with attorneys' fees, costs, disbursements and interest.
At oral argument, plaintiff conceded that the fraud cause of action was not viable and that the second cause of action only states a claim as against the Learning Center. Accordingly, the [*2]original decision addressed the motion to dismiss as to the first cause of action against both defendants, and the second cause of action only against the Learning Center. The court found that the second cause of action stated a cause of action against the Learning Center, and defendants do not challenge this aspect of the original decision.
The only issue on this motion is whether the first cause of action, which alleges a violation of Education Law § 5004, is barred by the statute of limitations. Education Law § 5004 permits a student to make a full recovery on a contract for instruction, if the person paid to procure the student either was unlicensed, or made fraudulent claims.
Education Law § 5004 (5) provides, in relevant part:
full recovery shall be made on any contract for or in connection with any instruction
if the student or enrollee was procured, solicited or enrolled outside or on the school premises by
a person paid to procure, solicit or enroll students but not having a valid private school agent's
certificate pursuant to the provisions of this section at the time that the contract was negotiated or
executed or the sale of the instruction was made, or by a person who holds such a certificate but
has made fraudulent or improper claims.
In its original decision, the court rejected defendants' argument that CPLR 214 (2) which
provides a three-year statute of limitations where the action is "to recover upon a liability, penalty
or forfeiture created or imposed by statute except as provided in sections 213 and 215," applied
to the first cause of action. Instead, the court found that CPLR 213 (2), which provides a six-year
statute of limitations where the action is one based "upon a contractual obligation or liability,
express or implied ..." was applicable. The court explained that:
Where, as here, the action is based upon both a "contractual obligation" and upon a
"liability, penalty or forfeiture created or imposed by statute," the longer, six-year statute of
limitations, as provided in CPLR 213 (2), is applied to the exclusion of the three-year statute of
limitations provided in CPLR 214 (2) (Mandarino v Travelers Property Casualty Ins. Co., 37 AD3d 775
[2d Dept 2007]). This conclusion is consistent with the language of CPLR 214 (2), which
specifically excepts from its coverage actions based either on a contractual obligation (CPLR 213
[2]), or on fraud (CPLR 213 [8]).
The court then concluded that plaintiff timely commenced this action on September 2, 2009, less than six years after he graduated in September 2004, and that the first cause of action for violation of Education Law § 5004 was therefore timely.
In the instant motion to reargue, defendants assert that the court erred as the first cause of action accrued on March 5, 2003, the date of plaintiff's enrollment agreement and not in September 2004.
A motion for reargument is addressed to the discretion of the court, and is intended to give a party an opportunity to demonstrate that the court overlooked or misapprehended the relevant facts, or misapplied a controlling principle of law. See, Foley v Roche, 68 AD2d 558, 567 (1st Dept 1979).
Under this standard, defendants' motion for reargument is granted and, upon reargument, the first cause of action is dismissed as time-barred. For statute of limitations purposes, a breach of contract claim accrues at the time of the alleged breach. Ely-Cruikshank Co., Inc. v. Bank of Montreal, 81 NY2d 399 (1993)Here, the breach alleged in connection with the first cause [*3]of action is that defendants violated Education Law § 5004 (5) when they "solicited and enrolled Plaintiff, as well as other similarly situated students, in courses not certified pursuant to New York State Law." (Complaint, ¶ 33). Thus, the first cause of action accrued, at the latest, when plaintiff was enrolled, which was on March 5, 2003. As this action was not commenced until September 2, 2009, or more than six years after plaintiff entered into the enrollment agreement, the first cause of action must be dismissed as untimely.
Next, while plaintiff points out that Education Law § 5004 (5) allows for recovery upon contracts based on the lack of proper certification or when a school had such certification but made "fraudulent and improper claims," the complaint does not allege a cause of action based on "fraudulent or improper claims," and plaintiff does not seek leave to amend. As for plaintiff's argument that the Learning Center may have been certified when plaintiff enrolled and subsequently lost its certification within the statute of limitations period, the complaint does not contain allegations consistent with this theory. Finally, contrary to plaintiff's position, the motion cannot be denied based on defendants' purported failure to raise the accrual issue in connection with the original motion. Although defendants' original motion to dismiss the first cause of action focused on the applicability of the three-year statute of limitations provided under CPLR 214(2), defendants alternatively raised the accrual issue in their reply .
In view of the above, it is
ORDERED that defendants' motion to reargue is granted and, upon reargument, the first cause of action is dismissed; and it is further
ORDERED that the remaining parties shall appear on January 13, 2011, for a status
conference in Part 11, room 351, 60 Centre Street, New York, NY 10007.
DATED: December 6, 2010
J.S.C.
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