Motion sequence numbers 006, 007, 008 and 009 are consolidated for disposition.

In motion sequence number 006, plaintiffs Rita Cusimano (Rita) and Dominic Cusimano move to dismiss or stay this action pending an arbitration they commenced against the defendants and others on September 13, 2012 (the Arbitration).

Defendants Andrew V. Schnurr, CPA (Schnurr) and Michael Gerard Norman, CPA, P.C. and Michael Gerard Norman, CPA (Norman) cross-move to dismiss the action with prejudice based on the Court's prior rulings that the claims in the original complaint were time-barred and/or insufficiently pled, and plaintiffs' failure to file an amended complaint by the deadline provided. In the alternative, defendants [*2]move, pursuant to CPLR 7503 (b), for a permanent stay of the bulk of the arbitration claims on the ground they are time-barred. Defendants also seek an award of attorneys' fees pursuant to CPLR 3217 (b) and Part 130-1.

In motion sequence numbers 007 and 008, Bernard Strianese (Bernard), who is Rita's father, and Rita's sister, Bernadette Strianese (Bernadette), both of whom are named respondents in the Arbitration, move to intervene in this action and for a permanent stay of the arbitration claims on the ground that all of the claims asserted against them are time-barred.

Finally, in motion sequence 009, defendants move, by order to show cause, to stay the Arbitration until the Court rules on motion sequence 006. The Court granted this motion at oral argument on January 15, 2013, the stay to remain in force pending disposition of the remaining motions (see 1/15/13 Tr. at 32).

In 2010, Rita commenced a proceeding in Nassau County Supreme Court against Bernadette, entitled Matter of Cusimano v The Strianese Family Limited Partnership and Bernadette Strianese, Index No. 008522/10, seeking judicial dissolution of an entity known as the Strianese Family Limited Partnership (FLIP) and an accounting.

In that proceeding, Rita claimed that she and her sister were the 50-50 partners of the FLIP through gifts from their parents and were deadlocked. Bernard and his wife, Carmela Strianese (Carmela), intervened and successfully moved to compel arbitration. Bernard and Carmela thereafter commenced an arbitration against Rita and Bernadette (AAA Case No. 180 Y 1196 10).

On August 12, 2010, Rita sought to interpose a counterclaim claiming that if she was not, in fact, the 50% owner of the FLIP, as reported on its tax returns, she has been falsely induced to take on tax burdens which should have been the obligation of Bernard and Carmela (Heller 1/3/13 Reply Aff., Ex. H, at ¶¶ 58-61). Rita did not, however, pursue that counterclaim (id., Exs. I and J).

A February 10, 2011 arbitration award found that 91.0945% of the FLIP was owned by Bernard and Carmela, and that Rita and Bernadette were only gifted 4.4527% each (Heller 10/22/12 Aff., Ex. F). By order dated August 9, 2011, Justice Ira B. Warshawsky confirmed the award, and that order was affirmed on appeal (Matter of Cusimano v [*3]Strianese Family Ltd. Partnership, 97 AD3d 744 [2d Dept 2012], lv dismissed in part, denied in part 20 NY3d 1001 [2013]).

Rita commenced a second proceeding in Nassau County Supreme Court in July 2010 entitled Matter of Cusimano v Berita Realty LLC and Bernadette Strianese, Index No. 013147/10, seeking the dissolution of another family business known as Berita Realty LLC,^[FN1] owned by Rita and Bernadette as the sole members (Heller 10/22/12 Aff., Ex. J).

In that proceeding, Rita claimed that her father had been replaced as the manager of Berita by Bernadette, without the approval of the two members. Rita also challenged certain transactions, including distributions to Rita in 2001 and 2002, which she claimed she did not fully receive, and excessive management fees for the period 2001 through 2008. Rita also claimed that her demand for access to the books, records and tax returns of the company had not been fully complied with.

The respondents (Berita and Bernadette) cross-moved to compel arbitration, and in a decision and order dated March 2, 2011, Justice Warshawsky granted a stay of the proceeding, and directed arbitration of "all issues, including those of dissolution and accounting" (Heller Aff., Ex. K at 5). Rita has filed an appeal of that order, which is apparently still pending.

The instant action was commenced on September 2, 2011. In the original complaint, plaintiffs accused Schnurr and Norman of committing fraud and other misconduct in connection with the accounting and tax work they performed between the years 1991 and 2009 for the FLIP, Berita, other family-owned real estate companies, and the Cusimanos, individually. The complaint asserted claims for aiding and abetting Bernard and Bernadette's fraud, breach of fiduciary duty and misappropriation; accounting malpractice; and breach of fiduciary duty.

Defendants Schnurr and Norman moved to dismiss the [*4]complaint in this action based, in part, on the expiration of the statute of limitations.

On July 17, 2012, the Court dismissed the complaint, with leave to file an amended complaint. The Court found plaintiffs' malpractice claim against defendant Schnurr was time-barred and that the malpractice claim against Norman was time-barred for any acts or omissions preceding 2008 (7/17/12 Tr. at 17, 20). The fraud and breach of fiduciary duty claims were held not to have been pled with the specificity required by CPLR 3016 (b), but the Court gave plaintiffs leave to replead within 20 days (id., 44-45), a deadline which was later extended to September 13, 2012 (Heller 10/22/12 Aff., Exs. B and C).

Plaintiffs did not serve and file an amended complaint by the September 13th deadline. The Cusimanos chose, instead, to commence the Arbitration with the American Arbitration Association (AAA) against Schnurr, Norman, Bernard and Bernadette on that date, entitled Cusimano v Strianese, AAA Case No. 13 115 Y 02030 12 (the Arbitration). The following day, September 14, 2012, the Cusimanos filed their motion for a stay of this action pending the Arbitration.

Like the original complaint, the Cusimanos' 44-page, 210-paragraph Statement of Claim (SOC) attached to their Demand for Arbitration asserts "Counts" sounding in breach of fiduciary duty, fraud, aiding and abetting same, fraudulent concealment, and accounting malpractice (Pegno 9/14/12 Affirm., Ex. A). With respect to Berita, the Cusimanos assert six alleged acts of malfeasance. First, they allege that improper distributions of over $4 million were made to Bernard from Berita between the years 1991 and 2005 (SOC, ¶¶ 53, 56).

Second, they challenge management fees that were paid to Bernard between 1998 and 2005 (SOC, ¶¶ 77-78), and to Bernadette between 2005 and 2009 (id., ¶ 79), as unwarranted. Berita owns only one asset - a 19% "passive minority ownership interest" in Greenbriar Associates (Greenbriar), an entity that owns a hotel on Long Island, and, thus, the Cusimanos contend that "Berita requires no active management" (SOC, ¶¶ 42, 46, 76).

Third, the Cusimanos challenge as improper expenses for life insurance of $12,407 in 2008 and $13,547 in 2009 (id., ¶ 80). Fourth, the Cusimanos allege that, in January of 1998, Bernard, Bernadette and Schnurr "falsely and [*5]fraudulently" caused Berita to record and report the existence of a "fictitious" promissory note payable to Bernard, which note was fully paid off by December 31, 2005 (SOC, ¶¶ 81-82).

Fifth, in 2001, they allege that Berita made an unauthorized $50,000 loan to one of the Seaview corporations, for which no interest was collected over the five years the loan was outstanding (id., ¶ 85). Finally, the Cusimanos challenge as unauthorized and unreported the purchase and sale of Nortel stock between 2000 and 2005 (id.).^[FN2]

The Cusimanos also make several claims with respect to the FLIP. First, they contend that, for the years 2001 through 2008, Bernard, Schnurr, and Norman falsely reported to tax authorities that the FLIP was owned by Rita and Bernadette, and caused Rita to be taxed on income she claims she never received, but which was, in fact, paid to Bernard (SOC, ¶¶ 86-93). Second, Schnurr, at the direction of Bernard and Bernadette, allegedly committed fraud with respect to his depreciation of certain real estate assets of the FLIP between 2001 and 2005 (id., ¶¶ 94-99). Third, the Cusimanos challenge management fees paid to Bernadette and BV Roberts (one of Bernard's d/b/a entities) between the years 2001 and 2010 (id., ¶¶ 100, 106), and other office expenses (id., ¶ 101).

Rita claims that her signature was forged on the following documents pertaining to the family businesses: (1) a check from Berita Realty Corp. for $130,000, dated December 28, 1983, payable to Bernard in repayment of "a loan that was never made but that was fraudulently papered and accounted for by Respondents" (SOC, ¶ 103); (2) a Second Amended and Restated Partnership Agreement, dated February 28, 1986, concerning Greenbriar; (3) "a Partnership Agreement, dated May 30, 2006, concerning a different real estate venture in which the Berita Entities are a partner" (id., ¶ 104); and (4) "several checks involving the FLIP" drawn on a BV Roberts account at the State Bank of Long Island (no time frame is provided).

Rita also claims that, in January 2011, she learned of [*6]a joint account with Bernadette at the State Bank of Long Island, through which hundreds of thousands of dollars were transferred from 2003 through 2011, some to "B.V. Roberts Realty," another of Bernard's d/b/a entities (SOC, ¶ 108).

Finally, Rita contends that the buildings located at 10 and 60 Seaview Boulevard in Port Washington were owned by two entities, 20 Seaview Corporation and 60 Seaview Corporation (Seaview) (SOC, ¶¶ 12, 110). Prior to 2000, Seaview was owned 50% by Bernard, 25% by Bernadette and 25% by Rita (id.). She claims that, in 2000, the Respondents persuaded her to transfer her 25% interest in Seaview for $240,000, after misrepresenting that figure as the fair market value of her interest over and above the existing encumbrances (id., ¶ 111). She further claims that the $240,00 was paid by Berita, and charged to its books as a loan to Rita (id., ¶ 113). The Cusimanos claim that they did not discover this fraud until "in or about 2010" when they learned that just one of the Seaview buildings had been sold for $4.7 million (id., ¶ 112).

The Cusimanos maintain that they only discovered the siphoning of funds from Berita to Bernard when, in July 2010, Dominic Cusimano attended a meeting of Greenbriar's interest holders on Rita's behalf, and afterwards obtained the Schedule K-1's provided to Berita by Greenbriar (SOC, ¶¶ 49-53). The Cusimanos further claim that both Schnurr and Norman deliberately withheld the Greenbriar Schedule K-1's from the Cusimanos to hide the fact that Rita was not receiving the correct amount of distributions from Berita, which were being misappropriated by Bernard and misclassified on the company's books and records, first by Schnurr and then by Norman (id., ¶¶ 55-56).

Plaintiffs also allege that tax returns obtained from New York for the years 1995 through 1997 for the original Berita entity, Berita Realty Corp., show that the company reported profits and losses in amounts far different from the amounts reported on the Cusimanos' tax returns (id., ¶¶ 67-68). Rita further claims that even the small amounts of income from Berita that were actually reported on her tax returns was not, in fact, actually received by her (id., ¶ 70).

Schnurr and Norman urge the Court to declare this action dismissed "with prejudice" based on the Cusimanos' [*7]failure to file an amended complaint by the Court's deadline. However, the July 17, 2012 order did not set forth a remedy if the Cusimanos did not timely file an amended complaint, since their counsel gave the Court no indication that his clients were contemplating arbitration, and instead assured the Court that he was "confident we'll be able to focus the complaint and provide specificity that your Honor will be fully satisfied" (Tr. at 48). Thus, this is not a situation where a plaintiff ignores a self-executing court order.

Instead of filing an amended complaint, the Cusimanos commenced the Arbitration and filed, on September 14, 2012, their motion to stay this litigation. The Cusimanos urge the Court to consider the SOC as "the amended, augmented pleading that the Court directed" (Pls. Reply Memo. at 11). Since the Court concludes that the issue of the timeliness of the Cusimanos' claims, as now allegedly amended and augmented, remains with this Court pursuant to CPLR 7503 (b) and 7502 (b), the Court, in its discretion, will not order an outright dismissal of this action "with prejudice" or award attorneys' fees.

All parties agree that if the Federal Arbitration Act (FAA) applies to the arbitration provisions in question, the limitations issue is for the arbitrators to decide (see Matter of Diamond Waterproofing Sys., Inc. v 55 Liberty Owners Corp., 4 NY3d 247, 252 [2005]). The Cusimanos argue, in a footnote to their moving brief, that the FAA applies, because Rita is a Florida resident and the claims concern real property owned by the FLIP in Florida.^[FN3] Rita claims that she became a permanent resident of Florida sometime after this action was commenced on September 2, 2011 (Rita Cusimano 11/27/12 Aff., ¶¶ 2-3). In their reply papers, the Cusimanos further argue that Berita derives its income from a Marriott Residence Inn extended stay hotel on Long Island, and, thus, does business with an international hotel chain that services out-of-state guests and consumes goods and services from out of state. [*8]

Defendants, maintain that the FAA does not apply, because this is an intra-family dispute, and despite Rita's claim that she is a Florida resident, she listed herself as New York resident on both the summons and complaint that she filed in this action and on the Demand for Arbitration.

"The Federal Arbitration Act declares valid and enforceable written provisions for arbitration in any contract evidencing a transaction involving commerce" (Crespo v 160 W. End Ave. Owners Corp., 253 AD2d 28, 31 [1st Dept 1999], citing 9 USC § 2). "[T]he only relevant consideration is the subject matter of the contract," and the citizenship of the parties is not relevant to the applicability of the FAA (Laszlo N. Tauber & Assocs. I, LLC v American Mgt. Assn., 2002 WL 34357997, * 1 [Sup Ct, NY County 2002], affd 304 AD2d 413 [1st Dept 2003]).

Even if the transactions in question, "taken alone, did not have a substantial effect on interstate commerce,' ...[the FAA applies] if in the aggregate the economic activity in question would represent a general practice ... subject to federal control'" (Citizens Bank v Alafabco, Inc., 539 US 52, 56-57 [2003]).

In this case, the arbitration provisions are found in the Operating Agreement for Berita, the FLIP's Partnership Agreement, and the January 1, 2000 agreement between Rita and Bernadette regarding 60 Seaview Corp.

Berita Realty, LLC is New York limited liability company created in 2001 (SOC, ¶¶ 11, 40). Its operating agreement governs the rights of the two members, Rita and Bernadette, as well as Bernard, since, although he is not a signatory to the agreement, he is named therein as the manager of the company (see Pegno Affirm., Ex. B). At the time of its execution, all three individuals were residents of New York.

The claim that Berita derives income from interstate commerce is without merit. Berita owns only one asset - a 19% "passive investment" in Greenbriar, an entity that owns a Marriott hotel property in Plainview, New York" (SOC, ¶¶ 42, 46). Since Berita does not have a direct interest in the Marriott hotel, a dispute regarding the ownership and management of Berita does not involve interstate commerce. Even if Rita's residency was a relevant factor, Rita was a resident of New York when the events giving rise to the transactions sued upon in the arbitration occurred.

As for the Cusimanos' claims concerning the FLIP,^[FN4] that entity is a limited partnership organized in June of 1998 and existing under the laws of New York with offices in Port Washington, New York (SOC, ¶ 13). While the FLIP owns a national chain drug store in Florida (id. ¶¶ 96, 100), the Cusimanos themselves contend that this investment is "entirely passive, [*9]requiring little or no active management" (id., ¶ 100). The Cusimanos' claims are limited to the allegedly improper tax treatment of the FLIP's assets (id., ¶¶ 94-99); the allegedly improper management fees and other expenses (SOC, ¶¶ 100-101); and an alleged forgery of Rita's name on checks involving the FLIP (id., ¶ 106); all activity occurring in New York, not Florida. Thus, while the FLIP owns commercial real estate in Florida, none of the claims pertain to Florida.

The third arbitration provision is found in an agreement dated January 1, 2000, whereby Rita agreed to sell her 24.5% interest in 60 Seaview Corp. to Bernadette. The agreement was signed in New York, by then New York residents, and concerns 60 Seaview Corp., which is an entity that is incorporated in New York, and owns a building in Port Washington, New York (SOC, ¶¶ 12, 110).

It is important to keep in mind that the Arbitration is not limited to parties that are subject to a mandatory arbitration provision. The accountants are named respondents, yet neither of these individuals are parties to any arbitration agreement. The fact that they are willing to arbitrate on the merits any claims that are not time-barred does not mean that they have ever agreed to give up their statutory right to have the court decide the timeliness of the claims. To the contrary, Schnurr and Norman have consistently asserted their right to have the Court determine whether the Cusimanos' claims against them are barred by the statute of limitations (see 7/17/12 Tr. at 5).

The Court finds that the totality of the economic activity in question has no affect on interstate commerce, and thus, the FAA does not apply to the claims asserted by the Cusimanos in the Arbitration.

The Cusimanos also contend that because the three arbitration provisions referenced above call for arbitration of disputes pursuant to the rules of the AAA, all threshold issues, including the statute of limitations, are for the arbitrator to decide. They rely on Rule 7 (a) of the AAA's Rules and Procedures, which provides that "[t]he arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope or validity of the arbitration agreement."

The First Department has ruled that, where an arbitration clause specifically incorporates a reference to the AAA rules, the question of arbitrability, which includes the existence, scope and validity of the arbitration agreement, is for the arbitrator to determine (see Life Receivables Trust v Goshawk Syndicate 102 at Lloyd's, 66 AD3d 495, 496 [1st Dept 2009], affd 14 NY3d 850, cert denied 131 S Ct 463 [2010], see also Icdas Celik Enerji Tersane Ve Ulasim Sanayi A.S. v Travelers Inc. Co., 81 AD3d 481, 483 [1st Dept 2011]). However, neither of these cases dealt with a statute of limitations defense, which is a very different issue than the question of arbitrability (see CPLR 7503 [b]).

In addition, the Cusimanos have charted their own procedural course via litigation not arbitration. They have consistently sought to litigate their disputes regarding Berita, FLIP and the Seaview entities, both here and in Nassau County Supreme Court. The Cusimanos responded on the merits to the accountants' initial motion to dismiss, and, at oral argument of that motion, counsel for the Cusimanos advised this Court that his clients were not willing to go to arbitration (7/17/12 Tr. at 35). The Cusimanos resorted to AAA arbitration only after receiving an unfavorable ruling from this Court on the timeliness and legal sufficiency of their claims against Schnurr and Norman. [*10]

This is a flagrant example of forum shopping - dressed up as a professed concern for judicial economy - to get a second bite at the apple in arbitration. The Court will not and does not accept such a gaming of the litigation process, and any right that Rita ^[FN5] may have had to insist on arbitration of her claims against the accountants has been waived by her resort to, and aggressive participation in this litigation (see 1/15/13 Tr. at 31-32). As stated by the Court in LZG Realty, LLC v H.D.W. 2005 Forest, LLC (71 AD3d 642, 642-643 [2d Dept 2010]), "[t]he courtroom may not be used as a convenient vestibule to the arbitration hall so as to allow a party to create his own unique structure combining litigation and arbitration [internal quotation marks and citations omitted]."

As this Court has already ruled, the malpractice claims are subject to a three-year statute of limitations (see CPLR 214 [6]; Maya NY, LLC v Hagler, 106 AD3d 583, 586 [1st Dept 2013]). Assuming the accountants owed a fiduciary duty to the Cusimanos, any claims for breaching that duty are also governed by a three-year statute of limitations (Knobel v Shaw, 90 AD3d 493, 495 [1st Dept 2011]; Kaufman v Cohen, 307 AD2d 113, 118-119 [1st Dept 2003]).^[FN6] Claims for equitable relief are governed by the six-year statute of limitations period of CPLR 213 (1) (IDT Corp. v Morgan Stanley Dean Witter & Co., 12 NY3d 132, 139-140 [2009]).

However, the SOC seeks primarily monetary damages from the accountants. The demands for formal accountings of Berita and the FLIP are made against Bernard and Bernadette only (see SOC, ¶¶ 198-206).

While Count XVI seeks access to the books, records and tax returns of Berita and the FLIP (id., ¶¶ 207-210), Rita was previously granted this relief vis-a-vis Berita from Justice Warshawsky (see Terracciano Reply Affirm., Ex. E at 32-39). As against Schnurr and Norman, this request is in the nature of discovery, and it would be for the arbitrators to decide how far back in time document discovery should be allowed.

As with the original complaint, most of the acts complained of by the Cusimanos in their SOC occurred more than three years prior to the commencement of this action on September 2, 2011. The only alleged wrongdoing that occurred post September 2, 2008 with respect to Berita is the allegedly improper payment of management fees to Bernadette in 2008 and 2009 (SOC, ¶ 79), and the allegedly improper payment of life insurance expenses in 2008 and 2009.

With respect to the FLIP, the Cusimanos claim that, in 2008, Bernard and Norman falsely reported Rita as the 50% owner of the FLIP and caused her to be taxed on income she never received, and that improper management fees were paid to Bernadette and BV Roberts "between 2003 and 2010" (SOC, ¶ 100).

All of the Cusimanos' other claims are time-barred. Indeed, Schnurr ceased performing any accounting duties on behalf of Berita or the Cusimanos, individually, in 2003 (SOC, ¶ 43), [*11]and, thus, Counts III, IV, VII, VIII, XI and XII (to the extent the latter two counts allege aiding and abetting breach of fiduciary duty) of the SOC must be permanently stayed in their entirety as against Schnurr.

A defendant may be equitably estopped from asserting the statute of limitations as a defense if the plaintiffs can, by clear and convincing evidence, establish that they failed to commence their action in a timely fashion due to fraud, deception or misrepresentation by the defendant (Simcuski v Saeli, 44 NY2d 442, 448-449 [1978]; Bayuk v Gilbert, 57 AD3d 227, 227-228 [1st Dept 2008]).

However, the complaint must allege both the tort that is the basis of the action "and later acts of deception by which the defendants concealed their wrongdoing" (Corsello v Verizon NY, Inc., 18 NY3d 777, 789 [2012]). Thus, where the same alleged wrongdoing that underlines the plaintiffs' equitable estoppel argument is also the basis of their tort claims, equitable estoppel will not lie (Ross v Louise Wise Servs., Inc., 8 NY3d 478, 491 [2007]; Nichols v Curtis, 104 AD3d 526, 528 [1st Dept 2013]; Knobel v Shaw, 90 AD3d at 494; Kaufman v Cohen, 307 AD2d at 122).

The Cusimanos' equitable estoppel claim, despite the rhetoric of the SOC, boils down to four basic misdeeds: (1) repeatedly changing the corporate form of Berita; (2) deliberately not providing them with the Schedule K-1s from Greenbriar and/or Berita; (3) misreporting Rita's profits and losses from Berita and the FLIP on her individual tax returns; and (4) manipulating the financial books and records of Berita and the FLIP to hide the improper distributions and management fees paid to Bernard and/or Bernadette.

None of these allegations are new (see Complaint, ¶¶ 1, 2, 27 [a], 29-31, 37, 46-48, 50), and were previously rejected by the Court as a basis to toll the statute of limitations. These allegations also serve as the basis of all of the Cusimanos' tort claims. No separate conduct by the accountants that prevented the Cusimanos from discovering the alleged malfeasance of Bernard and/or Bernadette is identified.

For example, if the accountants, upon Rita's request, provided fictitious Schedule K-1s for Berita in an attempt to hide the distributions from Greenbriar, that might be sufficient to toll the statute of limitations. But the SOC makes no allegations of this nature. Everything Schnurr and Norman are accused of doing happened years ago, and the statute of limitations is a bar to the bulk of the malpractice and breach of fiduciary duty Counts.

The statute of limitations for fraud is the greater of six years from the date the cause of action accrued or two years from the time plaintiff discovers the fraud or "could with reasonable diligence have discovered it" (CPLR 213 [8]; CPLR 203 [g]). The statute of limitations for aiding and abetting fraud is the same (Rostuca Holdings v Polo, 231 AD2d 402, 403 [1st Dept 1996]).

"The test as to when a plaintiff should have discovered an alleged fraud is an objective one" (Prestandrea v Stein, 262 AD2d 621, 622 [2d Dept 1999]). Thus, "plaintiffs will be held to have discovered the fraud when it is established that they were possessed of knowledge of facts from which [the fraud] could be reasonably inferred" (Erbe v Lincoln Rochester Trust Co., 3 NY2d 321, 326 [1957]; see also Sargiss v Magarelli, 12 NY3d 527, 532 [2009]). The statute of limitations is not tolled if a plaintiff has a reasonable basis to suspect wrongdoing, but shuts her eyes to facts which may call for some investigation (Gutkin v Siegal, 85 AD3d 687, 688 [1st [*12]Dept 2011]).

The Court finds that Rita was on inquiry notice long before July 2010 of the alleged wrongdoing committed by her father and sister with respect to all of the partnerships and investments which she made with her father for at least three reasons.

First, Rita signed a promissory note in 1999 whereby she and Bernadette personally promised that Berita would pay Bernard the sum of $485,426 with 10% interest over an eight-year period (see Heller Aff., Ex. W).

Bernadette submits an affidavit in which she attests that Rita signed this note in her presence, and that it represented a partial repayment of the approximately $5.5 million that Bernard had invested in Berita (Bernadette Strianese Aff., ¶¶ 6-9). Although Rita does not deny signing this note (see Heller 1/4/13 Reply Aff., Ex. F, at ¶ 4), she claims it is a "fictitious" note and lacks any consideration (SOC, ¶ 81). Yet, Rita fails to dispute the documentary evidence showing that Bernard injected over $5 million into Berita in the form of loans to that entity (see Heller 10/22/12 Aff., Ex. E). Nor does she offer any proof of how the company was funded, if not by Bernard.

Certainly, no proof has been offered by Rita as to any funds that she invested in the company. The January 1, 1998 promissory note signed by Rita and Bernadette does establish inquiry notice that Bernard was taking money out of Berita, rightly or wrongly, and if Rita had an objection to his actions, she should have taken appropriate steps to protect her interests at that point in time.

Second, in the complaint filed in this action, plaintiffs admitted that she received from Schnurr the 1998 Schedule K-1 for Berita, and that it reflected a $890,000 distribution from Greenbriar as though it was paid on a 50/50 basis to Rita and Bernadette, yet Rita claims that she never actually received any of her $445,000 (Complaint, ¶ 29). Likewise, her tax returns for the years 1998 through 2001 reported income from Berita totaling over $450,000 (see Heller 10/22/12 Aff., Exs. S - V), money which she now claims that she never actually received.

Rita admits that she readily accepted, without question, the explanation that these were retained earnings of the company (see SOC, ¶ 65), but never once questioned what was happening with the company's substantial earnings.

Third, Rita admits that, prior to this "current dispute," she had asked for information on a number of occasions regarding Berita and the other entities in which she had an interest, but that the accountants directed her to Bernard (see Heller 12/22/12 Aff., Ex. X: Rita Cusimano 4/19/12 Aff., ¶ 4). Bernard, in turn, assured her he was looking out for Rita and Bernadette's interests, and that he "was often annoyed that I would ask about these matters" (id.). By her own admissions, Rita wanted more information about the family real estate businesses, and yet she did nothing for at least eight years.

Accordingly, the Court finds that a six-year statute of limitations applies to Counts X, XI and XII (to the extent the latter two Counts allege aiding and abetting fraud), and XIII of the SOC. The fraud claims against Schnurr are permanently stayed, and to the extent that Norman is accused of fraud, aiding and abetting fraud, or fraudulent concealment based on conduct which commenced before September 2, 2005, those arbitration claims are permanently stayed.

Intervention by Bernard and Bernadette

Pursuant to CPLR 1012 (a) (2), a person shall be permitted to intervene in an action when [*13]"the representation of the person's interest by the parties is or may be inadequate and the person is or may be bound by the judgment."

CPLR 1013 provides that "a court may, in its discretion, permit intervention when, inter alia, the person's claim or defense and the main action have a common question of law or fact, provided the intervention does not unduly delay determination of the action or prejudice the rights of any party" (Yuppie Puppy Pet Prods., Inc. v Street Smart Realty, LLC, 77 AD3d 197, 201-202 [1st Dept 2010]). Intervention is now liberally allowed, and will be permitted "where the intervenor has a real and substantial interest in the outcome of the proceedings" (Berkoski v Board of Trustees of Inc. Vil. of Southampton, 67 AD3d 840, 843 [2d Dept 2009]).

Here, there is no dispute that Bernard and Bernadette have a real and substantial interest in the outcome of the their co-respondents' statute of limitations defense to the Cusmianos' arbitration claims.

The Court has already ruled that the FAA does not apply to the arbitration agreements at issue, that the rules of the AAA do not displace CPLR 7503 (b) and 7502 (b), and, thus, it is for the Court to decide the statute of limitations issues.

The parties disagree on when the claims against Bernard and Bernadette were interposed. Bernard contends that the claims against him were interposed on October 5, 2012, when the Demand for Arbitration was served on him. According to Bernadette, the applicable date is September 13, 2012, when the Arbitration was commenced. The Cusimanos, on the other hand, contend that the claims were interposed on either the filing of this action on September 2, 2011, or, alternatively, the filing of the Berita dissolution proceeding in Nassau County Supreme Court in July 2010.

A claim made in an arbitration proceeding is deemed interposed for purposes of tolling the statute of limitations when the demand for arbitration is served (Allied Wholesale v Asia N. Am. Eastbound Rate Agreement, 212 AD2d 472 [1st Dept 1995]). Thus, Bernard is correct that the claims against him were interposed on October 5, 2012, and since Bernadette does not indicate when the Demand for Arbitration was served on her, the filing date of September 13, 2012 will be utilized.

The Cusimanos' argument, that all of the claims against Bernard and Bernadette in the Arbitration were interposed upon the filing of the Berita dissolution proceeding in Nassau County Supreme Court in July 2010, takes the relation back doctrine to a whole new level. The claims and relief sought in that proceeding were limited to the judicial dissolution of Berita and an accounting, and Bernard and Frank Cusimano were not even parties to that proceeding (see Heller 10/22/12 Aff., Ex. J). The exception is Count XIV of the SOC which demands a formal accounting of the affairs of Berita.

The Court deems this claim was interposed on July 12, 2010, and is governed by the six-year statute of limitations found in CPLR 213 (7) (Vays v 139 Emerson Place, 94 AD3d 480, 481 [1st Dept 2012]).

The Cusimanos next rely on CPLR 203 (b) and (c), arguing that the claims against Bernard and Bernadette relate back to the date this action was filed, because they are "united in interest" with the defendants Schnurr and Norman.

"A claim against a new party will relate back to the date upon which the plaintiff's claim was interposed against the original defendant where (1) both claims arose [*14]out of the same conduct, transaction, or occurrence, (2) the new party is "united in interest" with the original defendant and (3) the new party knew or should have known that the action would have been against him as well, but for an excusable mistake by the plaintiff as to the identity of the proper parties [internal citations omitted]"

The Court of Appeals in Buran eliminated the requirement that the mistake referred to in the third prong of this test be excusable (Buran v Coupal, 87 NY2d at 176). The Court of Appeals also stated that "[w]hen a plaintiff intentionally decides not to assert a claim against a party known to be potentially liable, there has been no mistake and that plaintiff should not be given a second opportunity to assert that claim after the limitations period had expired" (id. at 181; see also Soto v Bronx-Lebanon Hosp. Ctr., 93 AD3d 481 [1st Dept 2012]).

Parties are "united in interest" "when because of some legal relationship between the defendants they necessarily have the same defenses to the plaintiff's claim, they will stand or fall together and are therefore united in interest" (Connell v Hayden, 83 AD2d 30, 43 [2d Dept 1981]; see also Valmon v 4 M & M Corp., 291 AD2d 343, 344 [1st Dept 2002]). "Codefendants are united in interest only when one defendant is responsible for the acts or omissions of the other" (Kitson v Atlantic Ref. & Mktg. Corp., 227 AD2d 971, 971 [4th Dept 1996] [independent contractor not united in interest with company who hired it to perform certain excavation work]; see also Capital Dimensions v Samuel Oberman Co., 104 AD2d 432, 433 [2d Dept 1984] [joint tort-feasors "are not united in interest because each tort-feasor, acting independently, is liable to the plaintiff only because of his own fault"]).

By these standards, Bernard and Berdadette are not united in interest with Schnurr and/or Norman. Indeed, in connection with the plaintiffs' earlier motion to disqualify the firm of Heller, Horowitz & Feit, P.C. from defending the accountants in this action, plaintiffs had argued that Bernard and the accountants had "directly adverse legal interests" (Heller 1/3/13 Reply Aff., Ex. D: Calica 11/1/11 Affirm., at ¶ 1; emphasis in original).

The fact that Bernard and the accountants, in December of 2011 and in response to that motion, agreed: (1) to waive any conflicts of interest; (2) to release each other from any potential claims as a result of the litigation; and (3) that Bernard would fund some of the accounts' legal fees (see Pegno 11/29/12 Reply Aff., Ex. 28) does not change this result.

In addition, the decision not to initially sue Bernard and Bernadette was not a mistake, but a calculated decision on the part of the Cusimanos, and thus the second prong of the relation back test has not been met. A draft complaint circulated by counsel for the Cusimanos in July 2011 had named Bernard and Bernadette as defendants along with Schnurr and Norman (see Heller 1/3/13 Reply Aff., Exs. A-C), but the Cusimanos deliberately decided not to pursue litigation against these parties at that time, presumably as a result of the proceedings undertaken in Nassau Supreme Court.

Lastly, the Cusimanos contend that the claims against Bernard and Bernadette were interposed when this action was first commenced, because they are united in interest with Berita and FLIP. Berita and the FLIP, however, are named as plaintiffs, not defendants, and clearly a plaintiff suing a defendant cannot be united in interest. In the case on which the Cusimanos rely, [*15]Marvin Neiman, P.C. v Adar Importing & Distrib. Co. (243 AD2d 408 [1st Dept 1997]), a shareholder was deemed to be united in interest with the plaintiff corporation, but was being brought into the lawsuit by defendant as an additional defendant on a counterclaim.

There is no doubt that Bernard and Bernadette were aware of the filing of this action against Schnurr and Norman and of the Cusimanos' accusations of fraud, breach of fiduciary duty and mismanagement. However, actual notice is not the sole criterion for the application of the relation back doctrine. The Cusimanos, for whatever reasons they thought best, did not interpose the claims made in the SOC until they commenced the Arbitration and served their papers on Bernard and Bernadette in the Fall of 2012.

Counts I and II, alleging claims against Bernard and Bernadette for breach of fiduciary duty are governed by a three-year statute of limitations. Count V, alleging misappropriation of assets rightfully belonging to the Cusimanos, is, in essence, a cause of action for conversion, and, thus, subject to the three-year statute of limitations of CPLR 214 (IDT Corp. v Morgan Stanley Dean Witter & Co., 12 NY3d at 141). Thus, any alleged acts of misconduct by Bernard prior to October 5, 2009 are time-barred, and any acts of misconduct by Bernadette prior to September 13, 2009 are time-barred.

Count VI of the SOC, alleging misappropriation of the assets of Berita, the FLIP and the Seaview corporations, is governed by the six-year statute of limitations found in CPLR 213 (7). Likewise, Counts IX, X and XIII, all based on fraud, are subject to the six-year statute of limitations found in CPLR 213 (8). Since the Cusimanos admit that they and their advisors had actual knowledge of purported facts constituting Bernard's alleged wrongdoing no later than July 2010 (see SOC, ¶¶ 49-53), which is more than two years from the commencement of the Arbitration, they cannot benefit from the two-year discovery rule. Therefore, the court finds that these Counts must be stayed as to any alleged acts of misconduct by Bernard occurring prior to October 5, 2006 and prior to September 12, 2006 vis-à-vis Bernadette.

For the foregoing reasons, it is

ORDERED that plaintiffs' motion (seq. no. 006) is granted only to the extent of ordering the parties to proceed forthwith with the arbitration entitled Cusimano v Strianese, AAA Case No. 13 115 Y 02030 12 (the Arbitration) in accordance with the rulings of this court regarding the expiration of the statute of limitations with respect to certain claims, and the motion is otherwise denied; and it is further

ORDERED that defendants' cross motion is granted to the following extent:

— granting a permanent stay of the Arbitration as against defendant Andrew V. Schnurr, CPA;

— holding that a three-year statute of limitations applies to Counts III, IV, VII, VIII, XI and XII (to the extent the latter two counts allege aiding and abetting breach of fiduciary duty) of the Statement of Claim, and, thus, these claims are permanently stayed as against Michael Gerard Norman, CPA, P.C. and Michael Gerard Norman, CPA for acts or omissions occurring prior to September 2, 2008; and

— holding that a six-year statute of limitations applies to Counts X, XI and XII (to the extent the latter two counts alleges aiding and abetting fraud), and XIII of the Statement of Claim, and, thus, these claims are permanently stayed as against Michael Gerard Norman, CPA, P.C. and Michael Gerard Norman, CPA for acts or omissions occurring prior to September 2, 2005;

ORDERED that the motion of Bernard Strianese (seq. no. 007) to intervene in this action is granted, and granting a permanent stay of the Arbitration to the following extent:

— holding that a three-year statute of limitations applies to Counts I, II and V of the Statement of Claim, and, thus, these claims are permanently stayed as against Bernard Strianese for acts occurring prior to October 5, 2009; and

— holding that a six-year statute of limitations applies to Counts VI, IX, X and XIII of the Statement of Claim, and, thus, these claims are permanently stayed as against Bernard Strianese for acts or omissions occurring prior to October 5, 2006; and

— holding that a six-year statute of limitations applies to Count XIV of the Statement of Claim seeking an accounting of Berita Realty, LLC, and the claim is deemed interposed as of July 12, 2010; and

ORDERED that the motion of Bernadette Strianese (seq. no. 008) to intervene in this action is granted, and granting a permanent stay of the Arbitration to the following extent:

— holding that a three-year statute of limitations applies to Counts I, II and V of the Statement of Claim, and, thus, these claims are permanently stayed as against Bernadette Strianese for acts or omissions occurring prior to September 13, 2009; and

— holding that a six-year statute of limitations applies to Counts VI, IX, X and XIII of the Statement of Claim, and, thus, these claims are permanently stayed as against Bernadette Strianese for acts or omissions occurring prior to September 13, 2006; and

ORDERED that the defendants' motion (seq. no. 009) for a temporary stay of the Arbitration pending resolution of the previous motions is now moot.

Dated: July 3, 2013

ENTER:

_______________________________J.S.C.