Opposition Brief — AmBase Corp. v. City Investing Co. Liquidating Trust

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No. 03-394

AMBASE CORPORATION,

A Delaware Corporation,

Petitioner,

V.

CITY INVESTING COMPANY LIQUIDATING TRUST,

as successor to City Investing Company, a dissolved

Delaware Corporation, JOHN J. QUIRK, Trustee of

City Investing Company Liquidating Trust, MARION

SCHARFFENBERGER, Executrix of the Estate of George T.

Scharffenberger, EBEN W. PYNE, Individually and as

Trustee of the City Investing Company Liquidating Trust,

and LESTER J. MANTELL, Individually and as Trustee of

the City Investing Company Liquidating Trust,

Respondents.

ON PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

RESPONDENTS’ BRIEF IN OPPOSITION TO

PETITION FOR A WRIT OF CERTIORARI

CRAVATH, SWAINE & Paul M. Dodyk

MOORE LLP Counsel of Record

825 Eighth Avenue 825 Eighth Avenue

New York, NY 10019 New York, NY 10019

Telephone: (212) 474-1000 Telephone: (212) 474-1214

Attorneys for Respondents City Investing Company

Liquidating Trust, John J. Quirk, Marion Scharffenberger,

Eben W. Pyne and Lester J. Mantell

October 15, 2003

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[o £,

TABLE OF CONTENTS

TABLE OF AUTHORITIEG...........::cccsssseeeeeeesseeeeseeeeeseneesenses i]

PERTINENT STATUTORY PROVISIONS. ..........:::::ss0000

COUNTERSTATEMENT OF THE CASE .........::eseseeseeseees

SUMMARY OF THE ARGUMENT. .........::cssseseseseeeeteerees

REASONS FOR DENYING AMBASE’S PETITION

FOR A WRIT OF CERTIORARI .........::sesesesssesesenneteeeeeees

I. RULE 8(C) OF THE FEDERAL RULES OF

CIVIL PROCEDURE DOES NOT APPLY TO

THIS CASE.........:cc.ssscsscccosssssrecessecsecssccesssssesnseeessnsensees

Il. AMBASE’S ARGUMENT THAT CITY TRUST

WAIVED RELIANCE ON THE PRECLUSIVE

EFFECT OF THE DELAWARE CHANCERY

OPINION IS A DISTORTION OF THE

Ill. AMBASE’S DUE PROCESS ARGUMENT

FAILS WITH ITS WAIVER AND RULE 8(C)

ARGUMENTS. .......:scsssccsssecsseesssensssreeessnseeensesseneenesons 21

IV. THIS CASE INVOLVES PETITIONER’S

ASSERTION THAT THE SECOND CIRCUIT

MADE A MISTAKE IN INTERPRETING

STATE LAW. THAT IS NOT A FULL FAITH

AND CREDIT ISSUE.........2:::cssssesssseeecssereesneensneesenesees 22

CONCLUSION .........:sccessccscecsssecssscenerccesccscssccesecensensnneesesees 27

APPENDIX ........cccseeccccsssccsscccsssccescsenscesssseescnseesscessnneoanrers A-i

APPENDIX TABLE OF CONTENTS .........:.s:s+esesseeessesees A-i

i

TABLE OF AUTHORITIES

Page(s)

Cases

Am. Lumbermens Mut. Cas. Co. of Ill. v. Cochrane,

129 N.Y.S.2d 489 (Sup. Ct. 1954), aff'd, 134

N.Y.S.2d 473 (App. Div. 1954), aff'd, 133

N.E.24 461 CY . TRB siccccdnceeeeiaee 8, 11

Atkinson v. Pittsgrove Township, 471 A.2d 1215

(N.J. Super. Ct. Cin. DV. TRB B ccoveccsseciliastenuetenenannens 26

Cahn vy. United States, 269 F.Supp.2d 537 (D.N.J.

2003 ) ...xeseseersesnseeavesnesessininansppatonntsiieinnianiaan nana 26

D. H. Overmyer Co., Inc. v. Frick Co., 405 U.S. 174

(19°72) ......0-rsessessssenssienieiausimananinaa 16, 21

Fender v. St. Louis Southwestern Ry. Co., 392

N.E.2d 82 (il. App. Ct. 19 FP) sccscscemesncnnseeshiaenan 26

Global Fin. Corp. v. Triarc Corp., 715 N.E.2d 482

ONY. 1999) .00-<0rvensceresenensesceieineleeeiemnnaaiaaanan 8, 11

Huddleston v. Dwyer, 322 U.S. 232 (1944) .......... ee eeeeeseees 23

Johnson v. Zerbst, 304 U.S. 458 (1938).......ccceeeeeeeeeeee 16, 21

Kirkland & Ellis v. CMI Corp., No. 95 C 7457,

1999 WL 92257 (N.D. Ill. Feb. 11, 1999)... 16, 21

Loving v. Pirelli Cable Corp., 11 F.Supp.2d 480

(D.Del. 1998), aff'd, 178 F.3d 1279 (3d Cir.

19 99)......erseessenssicnssessiunnnsnesiiiansncen teeta naiann naan 9,25

Lowell Wiper Supply Co. v. Helen Shop, Inc., 235 F.

Supp. 640 (S.D.N.Y. 1964) ...cencessccsersenemenennnnineeeneiaal

Maldonado v. Dominguez, 137 F.3d 1 (1st Cir.

19 9B).......0escseoseiesnsivensvsionsiesss-snnsinnnithessinnnnennnnannn 16

MFS Sec. Corp. v. N.Y. Stock Exch., Inc., 277 F.3d

ESE EE 9, 14, 21

Miles v. Dep’t of the Army, 881 F.2d 777 (9th Cir.

iso ain aacicnniysnonntortin 16

Official Comm. of Asbestos Claimants of G.I.

Holding, Inc. v. Heyman, 277 B.R. 20 (S.D.N.Y.

WI vvccavsnvsevesnnsnensnssensvvecsuvesvernennnensnenstensoneneegasosvonvescenonines 8

Pa. Fire Ins. Co. of Phila. v. Gold Issue Mining and

Milling Co., 243 U.S. 93 (1917) ....seseseeseessssesseesenens 14, 23

Pierson v. Ray, 386 U.S. 547 (1967)....-:ssscsessssessesseensesnenes a

Santos v. Dist. Council of New York City of United

Brotherhood of Carpenters, 619 F.2d 963 (2d

TO, BI cscs sencssesncecesceccnsessnssvesevnnessonsenscnensssnncesonsessn 17, 18

Selkirk v. State, 671 N.Y.S.2d 824 (App. Div. 1998)..........-+ 7

Semtek Int’l Inc. v. Lockheed Martin Corp., 531

U.S. 497 (2001) ......esecssssssssscsscccssssnerseseesecsssssesscasenssnenes 25

Shumway v. United Parcel Serv., Inc., 118 F.3d 60

(2d Cir. 1997) ......s.ssssssssssseeeeeecsessesscseesenesensenenees 9, 14, 21

Stanton v. D.C. Court of Appeals, 127 F.3d 72

(1977) ..cescscssssscscsssssesecssersessnsssesssssssssssnsesesesseasaeneeees 18, 43

Tahoe-Sierra Preserv. Council, Inc. v. Tahoe Reg’!

Planning Agency, 216 F.3d 764 (9th Cir. 2000)...........++- 16

Tahoe-Sierra Preserv. Council, Inc. v. Tahoe Reg’l

Townsend v. Chasanov, No. 129, 1995 Del. LEXIS

DET CO. 11, 1DDS) ovecenecsvesiossnsesseresnssevesionnvasvnvvervontesions 9, 24

Triangle Underwriters, Inc. v. Honeywell, Inc., 604

F.26 737 (26 Cis. 1979), .1snssvscvcsverconncrenesensoesssosenevanensonesees 7

United States v. N.Y. Tel. Co., 434 U.S. 159 (1977) ..9, 14, 21

Whitney Holdings Ltd. v. Givotovsky, 988 F.Supp.

732 (S.D.NLY.. 1997) .cvsssererevrersvreeserssenvsverenssnsvsescovonenesscososs 7

William Poultry Co. v. Richardson-Merrell, Inc.,

No. 4-75-Civ 413, 1975 WL 1001 (D. Minn.

ie, 22, STIS acne vcvecinvennstarnnseiecesenanticennstintyaivenniiietusicnantanion 26

Williamson v. Columbia Gas and Elec. Corp., 91

F.Supp. 874 (D.Del. 1950), aff'd, 186 F.2d 464

(3d Cir. 1950) ........000...cecscorssovreseesnonsensvsnaseoesensensoasesenes 9, 25

Statutes

C.P.L.R.. § 202 (2003) ........c-rscreccescensreescenevassnrersroeessess 1, 8, 10

C.P.L.R. § 213 (2003) .......--c.cecerssoeccnseserserverecsesssernsenseossssssoses 8

Del. Code Ann. tit. 10, § 8106 (2003)............::cecsseeeesteeeeneees 8

Respondents City Investing Company Liquidating Trust,

John J. Quirk, Marion Scharffenberger, Eben W. Pyne and

Lester J. Mantell respectfully request that this Court deny

AmBase Corporation’s petition for a writ of certiorari

because the opinion of the Court of Appeals for the Second

Circuit below, see Petitioner’s Appendix (“Pet. App.”) at la

— 24a, raises no issue worthy of review by this Court.

PERTINENT STATUTORY PROVISIONS

Section 202 of the New York Civil Practice Law and

Rules (2003) provides that:

“An action based upon a cause of action accruing

without the state cannot be commenced after the

expiration of the time limited by the laws of either the

state or the place without the state where the cause of

action accrued, except that where the cause of action

accrued in favor of a resident of the state the time limited

by the laws of the state shall apply.”

COUNTERSTATEMENT OF THE CASE

ta tS ts Rn RRs Hh el ene td MLE: DEN Sta eccshriin Seine wiv ;

This case arises out of a much-belated attempt by

petitioner AmBase Corporation (“AmBase”) to avoid its

contractual obligation to pay (or defend against) certain

alleged income tax liabilities of City Investing Company

(“City”) (the “Income Tax Obligation”), which AmBase had

been defending against since 1986. In connection with City’s

liquidation in 1985, City entered into an Assignment and

Assumption Agreement (the “Assignment Agreement”) with

its then-subsidiary AmBase pursuant to which City paid

AmBase $178,767,000 to assume liability for City’s income

tax obligations and certain other obligations. The Income

Tax Obligation arose from an I.R.S. Revenue Agent’s Report

delivered to AmBase in 1986. For well over a decade,

AmBase acted as though it was solely responsible for the

————K

aster ALOR eet.

Income Tax Obligation. It was not until the year 2000—

some 14 years later—that AmBase first asserted that it had

not in fact assumed City’s Income Tax Obligation when it

agreed to the 1985 Assignment Agreement.

In seeking to avoid its liability for City’s Income Tax

Obligation, AmBase first filed suit against City Investing

Company Liquidating Trust (“City Trust” or the “Trust”) in

the Delaware Chancery Court in August 2000. On

December 14, 2000, Vice Chancellor Leo E. Strine dismissed

ali of AmBase’s claims as barred by the Delaware statute of

limitations and the doctrine of laches. Respondents’

Appendix (“Resp. App.”) at A-4 — A-5. Vice Chancellor

Strine subsequently denied AmBase’s petition for

reconsideration in a blistering opinion dated February 7,

2001. See Pet. App. at 38a — 54a.

The Delaware Chancery Court found that AmBase

“could have brought this action against the Trust as early as

1986”, because that was when AmBase began to incur costs

in defending against the I.R.S. assertion of the Income Tax

Obligation. Pet. App. at 43a — 44a. The Chancellor also

rejected all of AmBase’s arguments to toll the running of the

statute of limitations, noting “how thin AmBase’s equitable

tolling argument seemed to be”. Pet. App. at 47a. The Court

found that all AmBase had to do to ascertain any claim it

might have had in 1986 was to review the Assignment

Agreement and the Internal Revenue Code, that “[n]either the

Assignment Agreement nor the I.R.S. Code are secret

documents” and that had there been any doubt as to its

obligations, any “diligent” board would have conducted a

timely, independent inquiry into AmBase’s responsibility to

pay the Income Tax Obligation. Pet. App. at 48a.

Chancellor Strine also rejected AmBase’s attempt to

excuse its delay by making unsupported accusations against

certain AmBase directors and employees who had also been

Trustees of City Trust. Chancellor Strine found that these

directors, who had served as directors of City and AmBase

before the liquidation, came to serve on the AmBase Board

under “the least suspicious of circumstances”, had no

financial incentive to favor the Trust over AmBase and at no

point in time controlled AmBase. Pet. App. at 46a — 47a.

The Chancellor also found that the two AmBase directors

who were Trustees of City Trust left the AmBase Board

seven-and-a-half years before the Delaware suit was filed,

while another Trustee who had served as an AmBase

employee and consultant left AmBase three-and-a-half years

before the suit was filed. Pet. App. at 40a. Because

AmBase’s claims had accrued in 1986, because the relevant

Delaware periods of limitation were not longer than three

years and because all AmBase officers and directors who had

any affiliation with City Trust had left AmBase more than

three years before the suit was filed, the Delaware Chancery

Court dismissed all of AmBase’s claims under Delaware’s

statute of limitations and the Delaware doctrine of laches.

Pet. App. at 50a — Sila.

AmBase then appealed Chancellor Strine’s dismissal

Order to the Delaware Supreme Court and simultaneously

filed this action in the United States District Court for the

Southern District of New York ou January 30, 2001, where it

was assigned to the Hon. Louis L. Stanton. City Trust filed

no answer in the New York litigation. On February 23,

2001, City Trust filed a motion to dismiss under Federal Rule

of Civil Procedure (“Fed. R. Civ. P.”) 12, arguing that -

AmBase’s claims were barred by the statute of limitations

and the doctrine of laches and that AmBase was precluded by

Chancellor Strine’s opinion in Delaware. Confronted with a

motion to dismiss, AmBase withdrew its Delaware appeal,

changed its New York counsel miid-stream and filed two

separate waves of briefs opposing City Trust’s motion to

dismiss in the District Court.

4

City Trust’s motion to dismiss AmBase’s New York

action sought its dismissal ‘on the grounds of the statute of

limitations and laches”. Resp. App. at A-7. City Trust’s

brief relied heavily on Chancellor Strine’s decision in

Delaware. In the second sentence of the brief, City Trust

Stated: “This action has already been dismissed on those

grounds by the Delaware Chancery Court.” Resp. App. at

A-7 (emphasis added). City Trust relied on Chancellor

Strine’s opinion throughout its brief and argued that AmBase

was precluded from relitigating the matters decided by

Chancellor Strine. See Resp. App. at A-9 — A-10; A-13 —

A-19. Both City Trust and AmBase consistently regarded all

Delaware law issues as resolved by Chancellor Strine’s

opinion and addressed their arguments to the New York

statute of limitations. At no point in the courts below did

AmBase ever suggest that the Delaware Chancery decision

had not conclusively determined the Delaware law issues.

Assuming that the Delaware law issues had been

conclusively determined by Chancellor Strine’s decision,

City Trust focused its argument in the District Court on the

New York law issues; the Trust argued that AmBase’s causes

of action accrued not later than 1986 when AmBase began to

incur expenses in defending against the LR.S. assertion of the

Income Tax Obligation and that AmBase was collaterally

estopped from challenging that view by Chancellor Strine’s

findings. See Resp. App. at A-10 (“Because Chancellor

Strine found that . .. AmBase could have brought this action

as early as 1986, AmBase is bound by that accrual decision

and estopped from relitigating that issue here.”’).

City Trust countered AmBase’s anticipated tolling

argument by arguing that AmBase could not plead reasonable

diligence because “AmBase . . . is estopped by Chancellor

Strine’s findings”. Resp. App. at A-16. City Trust also

argued that any AmBase claim of tolling would be subject to

the two-year period of limitations imposed by New York

C.P.L.R. 203(g) and that AmBase was collaterally estopped

ashen

from claiming any equitable tolling beyond December 1996

by Chancellor Strine’s findings that “no later than December

1996 AmBase was on full inquiry notice”. Resp. App. at

A-17.

Contrary to its arguments to this Court, AmBase was

well aware of City Trust’s reliance on the preclusive effects

of Chancellor Strine’s decision throughout the proceedings

below. In its brief in opposition to City Trust’s motion to

dismiss in the District Court, AmBase stated: “Principally,

the Defendant [City Trust] argues that AmBase is precluded

from bringing he instant action by a recent decision by the

Delaware Chancery Court dismissing a similar action

brought by AmBase....” Resp. App. at A-22. And again:

“The Defendant [City Trust] . . . even goes so far as to assert

that [the Delaware decision] precludes this Court from

allowing this action to proceed.” Resp. App. at A-25

(emphasis in original).

In AmBase’s supplemental opposition brief filed in the

District Court, AmBase argued that “[t]he decision of the

Delaware Chancery Court has no preclusive effect”. Resp.

App. at A-29. In support of that argument, AmBase argued

that because the Delaware Chancellor’s statute of limitations

ruling is “not a ruling on the merits”, it should not be given

preclusive effect. Resp. App. at A-30. In arguing that “this

Court should not give any preclusive effect to the findings of

the Delaware Court”, AmBase admits that the issue being

addressed by AmBase and City Trust in the District Court

was the preclusive effect of the Chancellor’s findings of fact,

in the context of City Trust’s argument based on the

New York statute of limitations, not the res judicata effect of

the Delaware decision. Resp. App. at A-32 (emphasis

added).

It was in that context that City Trust distinguished

between the collateral estoppel and res judicata aspects of

Chancellor Strine’s decision, arguing that AmBase’s “on the

merits” assertions were irrelevant to City Trust’s collateral

estoppel arguments, and pointing out that City Trust’s

collateral estoppel argument was not a res judicata argument.

At no time during the course of its many arguments in the

District and Circuit Courts did AmBase ever question the

proposition that the Delaware Chancellor’s opinion had

conclusively determined that AmBase’s claims were time-

barred under the Delaware statute of limitations and

preclusive as to that question. At no time did City Trust give

any indication that it was abandoning its reliance on the

Delaware decision as preclusive of relitigation of any

Delaware law limitations issue.

Judge Stanton decided to base the District Court’s

dismissal of AmBase’s claims on the New York statutes of

limitation and on his own review of the pleadings. See Pet.

App. at 25a — 37a. Like Chancellor Strine, Judge Stanton

decided that AmBase’s causes of action accrued in 1986 and

that any equitable estoppel argument AmBase might have

had expired in December 1996, by which time the one

AmBase employee and two AmBase directors who had any

City Trust affiliation had left AmBase. Pet. App. at 32a —

34a. Judge Stanton decided that all but one of AmBase’s

claims were barred by C.P.L.R. §§213(2) and (7), the

relevant New York statutes of limitation, and that AmBase’s

remaining claim of indemnification was unsupported by the

terms of the Assignment Agreement and therefore failed to

state a cause of action. Pet. App. at 3la — 37a. (The

Delaware Chancery Court had dismissed AmBase’s

indemnification argument for the same reason. See Resp.

App. at A-2 — A-3.) Judge Stanton found that any equitable

tolling clam AmBase might have had expired in December

1996, and held that C.P.L.R. 203(g) required AmBase to file

within two years of that date, or by December 1998. Pet.

App. at 32a — 34a. Since AmBase had not sued until

January 30, 2001, Judge Stanton dismissed AmBase’s

New York lawsuit as time-barred by the New York statute of

limitations. Pet. App. at 32a — 34a. AmBase then filed a

motion for reconsideration which Judge Stanton denied on

February 14, 2002. See Pet. App. at 17a.

AmBase once again changed its counsel and appealed to

the United States Court of Appeals, arguing that Judge

Stanton had misconstrued New York law in dismissing

AmBase’s Complaint as time-barred. Once again, AmBase

recognized that City Trust was relying on the “preclusive

effect” of “the decision of the Delaware Court”. Resp. App.

at A-43. AmBase’s appeal brief was largely devoted to the

specious argument (not made by AmBase’s counsel in the

District Court) that AmBase’s fiduciary duty claims did not

accrue under the applicable New York statute of limitations

(C.P.L.R. § 213(7)) until all AmBase employees who had

any relationship with City Trust had left AmBase’s employ,

see Resp. App. at A-49 — A-51, despite clear authority

holding that AmBase’s newly-invented tolling argument was

inapplicable to claims of breach of fiduciary duty by

corporate officers and directors. See, e.g,, Whitney Holdings

Ltd. v. Givotovsky, 988 F.Supp. 732, 741-45 (S.D.N.Y.

1997); Triangle Underwriters, Inc. v. Honeywell, Inc., 604

F.2d 737, 744-45 (2d Cir. 1979). The balance of AmBase’s

argument was devoted to the equally baseless argument that

its time-barred contract-based claims were resurrected every

time AmBase incurred any additional expense alleged to

arise from City Trust’s alleged 1986 breach of contract, see

Resp. App. at A-44 — A-49, despite a plethora of authority

holding that all of AmBase’s claims under any conceivably

applicable theory of law accrued in 1986. See, e.g., Whitney,

988 F.Supp. at 743; Selkirk v. State, 671 N.Y.S.2d 824, 825

(App. Div. 1998); Lowell Wiper Supply Co. v. Helen Shop,

Inc., 235 F. Supp. 640, 644 (S.D.N.Y. 1964). Conspicuously

absent from AmBase’s Court of Appeals brief was any

suggestion that the Delaware Chancery decision did not

8

conclusively determine the time-barred status of AmBase’s

claims under the Delaware law of limitations.

Under § 202 of the New York C.P.L.R. (2003), the

courts of the state of New York are instructed that:

“An action based upon a cause of action accruing

without the state cannot be commenced after the

expiration of the time limited by the laws of either the

state or the place without the state where the cause of

action accrued, except that where the cause of action

accrued in favor of a resident of the state the time limited

by the laws of the state shall apply.”

In other words, if a non-resident sues in New York, the

State courts will apply the shorter of the New York period of

limitations or that of the state where the cause of action

accrued. AmBase is a Delaware corporation and had no

office in New York at any relevant time. AmBase is,

therefore, a non-resident of New York. Under New York

law, a cause of action alleging economic loss accrues in a

corporation’s state of incorporation. See, e.g., Global Fin.

Corp. v. Triarc Corp., 715 N.E.2d 482, 485 (N.Y. 1999)

(action accrues in state of residence); Am. Lumbermens Mut.

Cas. Co. of Ill. v. Cochrane, 129 N.Y.S.2d 489, 491 (Sup. Ct.

1954) (corporation is resident of state of incorporation), aff'd,

134 N.Y.S.2d 473 (App. Div. 1954), aff'd, 133 N.E.2d 461

(N.Y. 1956); but see Official Comm. of Asbestos Claimants

of G.I. Holding, Inc. v. Heyman, 277 B.R. 20, 30 (S.D.N.Y.

2002). In this case, that means a New York state court would

apply the shorter of the periods of limitation of New York or

Delaware. Because Delaware’s relevant period of limitations

is three years, see Del. Code Ann. tit. 10, § 8106 (2003), and

New York’s is six years, see C.P.L.R. § 213 (2003), New

York C.P.L.R. § 202 would mandate the application of

Delaware law to this case.

9

The Court of Appeals decided to affirm Judge Stanton’s

dismissal of AmBase’s action on grounds other than those

relied on by Judge Stanton, as it was clearly entitled to do.

See, e.g., Thigpen v. Roberts, 468 U.S. 27, 28 (1984); United

States v. N.Y. Tel. Co., 434 U.S. 159, 166 n.8 (1977); MFS

Sec. Corp. v. N.Y. Stock Exch., Inc., 277 F.3d 613, 617 (2d

Cir. 2002) (citing Shumway v. United Parcel Serv., Inc., 118

F.3d 60, 63 (2d Cir. 1997)). The Court took as its point of

departure the cases of Loving v. Pirelli Cable Corp., 11

F.Supp.2d 480 (D.Del. 1998), aff'd, 178 F.3d 1279 (3d Cir.

1999), and Williamson v. Columbia Gas and Elec. Corp., 91

F.Supp. 874 (D.Del. 1950), aff'd, 186 F.2d 464 (3d Cir.

1950). Both Loving and Williamson involved the question of

whether a decision that the plaintiff's lawsuit was barred by

the Delaware statute of limitations precluded the plaintiff

from relitigating that issue in a subsequent lawsuit. Not

surprisingly, both courts reached the conclusion that

relitigation of the Delaware limitations issue was barred by

res judicata. The Delaware Supreme Court reached the same

result as to Delaware’s statute of limitations in Townsend v.

Chasanov, No. 129, 1995 Del. LEXIS 367 (Oct. 11, 1995):

“It is well settled that a plaintiff who receives a decision

on the merits of a controversy from a court of competent

jurisdiction is precluded thereafter by the doctrine of res

judicata from bringing a subsequent action in another

court based upon the same matter. . . . We therefore

agree with the Superior Court’s holding that Townsend’s

later lawsuit was barred by the doctrine of res judicata.”

1995 Del. LEXIS 367, at * 2 — * 3.

Following these cases, the Second Circuit applied Delaware

law to AmBase’s New York action and held that AmBase

was precluded from relitigating whether its claims were time-

barred by Delaware law. Since Delaware law is applicable to

AmBase’s claims under § 202 of the C.P.L.R. (because

AmBase was not a resident of New York, because AmBase’s

10

breach of contract claims accrued in Delaware and because

Delaware’s relevant statute of limitations is shorter), the

Second Circuit’s decision holding that AmBase is barred

from relitigating the Delaware statute of limitations issue by

the preclusive effect of Chancellor Strine’s decision is clearly

correct. Since C.P.L.R. § 202 mandates the application of

either the law of Delaware or the law of New York and since

Judge Stanton held that AmBase’s claims were time-barred

under the New York statute of limitations, the result in this

case would be the same even if Delaware law did not

apply—dismissal of AmBase’s lawsuit as time-barred.

SUMMARY OF THE ARGUMENT

Petitioner AmBase comes to this Court after: (1) the

Delaware Chancery Court (Hon. Leo E. Strine, Jr.) dismissed

its Delaware action because AmBase’s claims against City

Trust are barred by the Delaware statute of limitations and

the doctrine of laches; (2) the United States District Court for

the Southern District of New York (Hon. Louis L. Stanton)

dismissed AmBase’s New York action because its claims are

barred by the New York statute of limitations; and (3) the

United States Court of Appeals for the Second Circuit

correctly decided that Delaware law applied, accorded res

judicata effect to the decision of the Delaware Court and

affirmed the dismissal of AmBase’s New York action.

In cases brought by non-resident plaintiffs, the courts of

the State of New York apply the shorter of the statute of

limitations of New York or the statute of the state in which

the cause of action accrued, under C.P.L.R. § 202.' Since

'C.P.L.R. § 202: “An action based upon a cause of action accruing

without the state cannot be commenced after the expiration of the time

limited by the laws of either the state or the place without the state where

the cause of action accrued, except that where the cause of action accrued

AmBase is a Delaware corporation that had no place of

business in New York at any relevant time, and AmBase’s

causes of action for economic loss accrued in its state of

incorporation, Delaware, New York courts would apply the

statute of limitations of either New York or Delaware. See,

e.g., Triarc Corp., 715 N.E.2d at 485; Cochrane, 129

N.Y.S.2d at 491. AmBase has never argued that the statute

of any other state should apply. Since the relevant Delaware

period of limitations is three years, while the New York

period is six years, New York courts would apply Delaware

law to this case.

This is exactly what the Court of Appeals did in

applying Delaware law and according preclusive effect to the

Delaware Chancery decision dismissing AmBase’s action

under Delaware’s statute of limitations. Even if the Second

Circuit somehow erred in applying Delaware iaw, it would

make no difference to the outcome of this case because

AmBase’s action would then be governed by New York law

and Judge Stanton, sitting in the Souther District of

New York, applied New York law and correctly found that

AmBase’s action was barred by the New York statute of

limitations. AmBase’s complaint has thus been dismissed as

time-barred under the laws of both states whose laws could

be applicable to this case under C.P.L.R. § 202. Should

AmBase now wish to claim that the law of some third state

should apply to the timeliness of its claims, the short answer

is that AmBase has never before made such a claim and is,

therefore, barred from raising that issue now. All of which

raises the question why this case is now before the Supreme

Court of the United States.

in favor of a resident of the state the time limited by the laws of the state

shall apply.”

12

AmBase claims that we are here because the Second

Circuit’s reliance on the res judicata principle was barred by

Fed. R. Civ. P. 8(c), which requires that a defendant’s answer

plead any available defense of res judicata, and because the

Circuit Courts are in conflict over the consequences of a

defendant’s failure to so plead. AmBase is wrong.

City Trust never filed an answer in this case. Rule 8(c),

which is limited to the “pleadings” enumerated in Fed. R.

Civ. P. 7(a), is therefore inapplicable. City Trust filed a

motion under Fed. R. Civ. P. 12, which is not a “pleading”,

seeking dismissal of AmBase’s action because it was time-

barred. Rule 12 does not require that the moving party join

an available res judicata motion when it moves to dismiss on

other Rule 12 grounds. To the contrary, Rule 12(h)(1) only

requires a party who makes a Rule 12 motion to move on all

available personal jurisdiction, venue, process and service of

process grounds, on pain of waiver. Rules 12(g) and 12(h)(2)

expressly provide that the defense of failure to state a claim

under Rule 12(b)(6), pursuant to which res judicata and

statute of limitations defenses are customarily made, is not

waived and may be made even during the trial on the merits.

The express language of Rule 12 therefore leaves no room

for any argument that the omission of an available res

judicata or statute of limitations defense from a Rule 12

motion operates as a waiver of that defense.

AmBase also claims that City Trust decided for some

mysterious reason to surrender its right to rely on the res

judicata effect of the judgment that the Trust had earlier

secured from the Delaware Chancery Court at considerable

effort and expense. City Trust did no such thing.

AmBase knew from the outset of the New York

litigation that City Trust sought to rely on whatever

preclusive effect the Trust could derive from the Delaware

decision. As AmBase admitted in its brief in opposition to

13

the Trust’s motion to dismiss in the Southern District of New

York: “The Defendant [City Trust] . . . even goes so far as to

assert that [the Delaware Chancery Opinion] precludes this

Court from allowing this action to proceed.” See Resp. App.

at A-25 (emphasis in original). Indeed, City Trust built its

entire motion to dismiss in the District Court around the

preclusive effect of Chancellor Strine’s Delaware Chancery

Opinion.

AmBase’s argument before this Court is based on its

distortion of City Trust’s response to AmBase’s argument

below that the Trust could not rely on the preclusive effect of

factual findings made by the Delaware Chancellor, in the

context of an argument based on the New York statute of

limitations. AmBase argued that the Delaware statute of

limitations decision was not a decision “on the merits” and so

did not qualify for res judicata treatment. The Trust

responded, in the context of its argument based on the

New York statute of limitations, that it was asserting that

AmBase was barred from relitigating certain factual

determinations by principles of collateral estoppel. It was in

that limited context that City Trust stated it was not relying

on a res judicata argument. By ignoring the limited nature of

the Trust’s res judicata comments and their limiting context,

AmBase misleadingly distorts the meaning of the Trust’s

collateral estoppel argument. To suggest that an argument

made by City Trust in support of its right to make preclusive

use of the Delaware decision for collateral estoppel purposes

manifested its intention to abandon reliance on the res

judicata implications of that decision is nothing short of

bizarre.

AmBase attempts to transform its attack on the Second

Circuit’s Delaware law decision into a denial by the Second

Circuit of full faith and credit. Whatever else may be said of

the Second Circuit’s decision, it is not a denial of full faith

and credit. To the contrary, the Second Circuit did its best to

14

\

determine and apply Delaware law and its efforts to do so,

whether right or wrong, cannot constitute a denial of full

faith and credit. See Pa. Fire Ins. Co. of Phila. v. Gold Issue

Mining and Milling Co., 243 U.S. 93, 96 (1917) (Holmes, J.).

The Second Circuit simply applied Delaware law to

AmBase’s New York action and held that the Delaware

Chancery decision barred AmBase from relitigating whether

AmBase’s claims were barred by the Delaware statute of

limitations. Both of these decisions are unquestionably

correct. Under C.P.L.R. § 202, the Delaware statute of

limitations applies to this case. And under widely-accepted

principles of res judicata and collateral estoppel, the

Delaware Chancery Court decision precludes AmBase from

relitigating the Delaware limitations issue in the Southern

District of New York.

AmBase cites no case law or other authority which in

any way supports its argument that it should be permitted to

relitigate the time-barred status of its claims under Delaware

law. Nor does AmBase suggest any reason that it should be

permitted to do so.

Although AmBase argues that it has been deprived of

due process, AmBase invokes no applicable exception to the

well-established law which empowers a Circuit Court to

affirm a District Court decision on any ground supported by

the record. See, e.g., Thigpen, 468 U.S. at 28; New York Tel.

Co., 434 U.S. at 166 n.8; MFS Sec. Corp., 277 F.3d at 617;

Shumway, 118 F.3d at 63. AmBase’s only arguments in

support of its due process claim are based on Fed. R. Civ. P.

8(c), which does not apply to this case, and on an alleged

watver which never took place.

Nor did the process of the Second Circuit deprive

AmBase of any meaningful right. AmBase was granted

ample opportunity to argue that its claims were not barred by

15

the Delaware statute of limitations in the Delaware Chancery

Court. In this case, District Judge Stanton gave AmBase a

generous opportunity to argue that its rights were not barred

by New York law, to the point of allowing a supplemental

wave of briefing when AmBase changed its legal horses

mid-stream and proceeding to address the issue a third time

on AmBase’s petition for reconsideration. After due

consideration by the Delaware Chancery Court and the

District Court below, AmBase’s lawsuit was dismissed by

both of those courts as time-barred by the statutes of

limitation of Delaware and New York. Since the only laws

applicable to AmBase’s claims under C.P.L.R. § 202 are

those of Delaware or those of New York, AmBase has surely

had all of the process which it is due.

REASONS FOR DENYING AMBASE’S PETITION

FOR A WRIT OF CERTIORARI

I. RULE 8(C) OF THE FEDERAL RULES OF CIVIL

PROCEDURE DOES NOT APPLY TO THIS CASE.

The principal reasons AmBase advances for granting

certiorari in this case are that the Second Circuit supposedly

transgressed Fed. R. Civ. P. 8(c) in affirming the dismissal of

AmBase’s New York action and that the Circuit Courts of

Appeal are conflicted over whether a Court of Appeals may

consider on appeal an issue that a party has waived under

Rule 8(c). The short answer is that Rule 8(c) does not apply

to this case because City Trust did not file an answer.

Rule 8(c) requires a defendant who files an answer to plead

certain enumerated defenses, including res judicata.

Rule 8(c) is applicable only to “pleadings”. Fed. R. Civ. P.

7(a), which defines that term, refers only to complaints,

answers, answers to crossclaims, replies to counterclaims

and third party complaints and answers. Rule 7(a) does not

include Rule 12 motions in its definition of “pleadings”. See,

e.g., Tahoe-Sierra Preserv. Council, Inc. v. Tahoe Reg'l

16

Planning Agency, 216 F.3d 764, 788 (9th Cir. 2000) (“A

motion to dismiss is not a pleading.”); Maldonado vy.

Dominguez, 137 F.3d 1, 11 n.8 (1st Cir. 1998) (same); Miles

v. Dep't of the Army, 881 F.2d 777, 781 (9th Cir. 1998)

(same).

City Trust filed a motion to dismiss under Rule 12

seeking dismissal of AmBase’s New York action on statute

of limitations and laches grounds. Rule 12(h)(1) provides

that a party making a Rule 12 motion waives any available

personal jurisdiction, improper venue, insufficiency of

process or insufficiency of service of process defense that it

does not raise in that motion. Rule 12 does not provide that

the omission of an available res judicata ground for dismissal

from a Rule 12 motion constitutes a waiver of the res judicata

defense. The fact that Rule 12(h)(1) enumerates the specific

defenses that are waived if not raised in a Rule 12 motion and

that res judicata and statute of limitations defenses are not

among them leaves no room for any argument that an omitted

res judicata ground for dismissal is waived under Rule 12,

particularly given the long-standing federal policy against

imposing waivers of substantive right upon: litigants under

uncertain or ambiguous circumstances. As AmBase

concedes in its petition, “waiver is the ‘intentional

relinquishment or abandonment of a known right”. See

Petition for Writ of Certiorari, dated September 10, 2003

(“Pet.”), at 19 (quoting Johnson v. Zerbst, 304 U.S. 458, 464

(1938)) (emphasis added); see also D. H. Overmyer Co., Inc.

v. Frick Co., 405 U.S. 174, 185-86 (1972); Kirkland & Ellis

v. CMI Corp., No. 95 C 7457, 1999 WL 92257, at * 12 (N.D.

Ill. Feb. 11, 1999).

Rule 12(g) provides that if a party makes a Rule 12

motion and omits available Rule 12 defenses from the

motion, that party may not make a second Rule 12 motion,

subject to certain exceptions. Under Rule 12(g), the only

consequence of omitting an available defense is the inability

17 :

to file a second Rule 12 motion—not waiver of the defense.

Even more importantly, Rule 12(g) excepts motions covered

by Rule 12(h)(2) from its ambit. Rule 12(h)(2) provides that

the defense of failure to state a claim under Rule 12(b)(6)

may be made in any pleading permitted or ordered under

Rule 7, by a motion on the pleadings or even at the trial on

the merits. Since defenses based on res judicata or statutes of

limitation are customarily asserted as Rule 12(b)(6) defenses,

Rules 12(g) and 12(h)(2) make it clear that any such defense

is not waived by omission from a Rule 12 motion.

Indeed, the Advisory Committee Notes to the 1966

Revision of Rule 12 expressly state that Rule 12(h)(2) was

revised to make clear that the omission from a Rule 12

motion of an available Rule 12(b)(6) grounds for dismissal

does not operate as a waiver:

“It is to be noted that while the defenses specified in

subdivision (h)(1) are subject to waiver . . . the more

substantial defenses of failure to state a claim . . . and

failure to state a legal defense to a claim .. . are

expressly preserved against waiver by amended

subdivision (h)(2) and (3).”

As the Second Circuit observed in Santos v. Dist.

Council of New York City of United Brotherhood of

Carpenters, 619 F.2d 963 (2d Cir. 1980):

“By the express terms of Rule 12(h)(2), a 12(b)(6)

defense ‘may be made in any pleading permitted or

ordered under Rule 7(a), or by motion for judgment or

the pleadings, or at the trial’, and, by the express terms

of Rule 12(g), is not waived by failure to include it in a

Rule 12 motion raising other defenses.” 619 F.2d at 967

n.4.

18

The relationship between Rule 8(c) and Rule 12 is not a

novel question. ~All of the Circuit Courts that have decided

the issue have unanimously held that Rule &(c) is

inapplicable to Rule 12 motions. See, e.g., Stanton v. D.C.

Court of Appeals, 127 F.3d 72, 77 (D.C. Cir. 1977) (“{W]e

_ know of no case in which a court has prevented a party from

pleading res judicata in its answer simply because it failed to

do so in an earlier motion to dismiss.”); Santos, 619 F.2d at

967; Tahoe-Sierra Preserv. Council, Inc. v. Tahoe Reg’l

Planning Agency, 992 F.Supp. 1218, 1223-26 (D. Nev.

1998), aff'd in relevant part, 216 F.3d 764, 787-89 (9th Cir.

2000). None of the Circuit Court cases cited by AmBase

holds to the contrary.

In short, AmBase’s principal argument for certiorari, see

Pet. at 8-18, asks this Court to review an issue which is not

part of this case. Since Rule 8(c) is addressed to “pleadings”,

such as an answer, and since City Trust never filed an answer

in this case, Rule 8(c) is not applicable to this case. City

Trust filed a motion to dismiss under Rule 12(b)(6). There is

no provision in Rule 8, Rule 12 or any other Federal Rule

which suggests that City Trust was required to raise an

available res judicata defense in that motion. Indeed, the

structure of Rule 12, requiring in Rule 12(h)(1) the raising of

all personal jurisdiction, venue, process and service of

process defenses, and expressly providing in Rules 12(g) and

12(h)(2) that 12(b)(6) defenses for failure to state claim, such

as res judicata and statute of limitations defenses, need not be

asserted in a Rule 12 motion made on other grounds, is

fatally inconsistent with AmBase’s waiver arguments.

19

Il. AMBASE’S ARGUMENT THAT CITY TRUST

WAIVED RELIANCE ON THE PRECLUSIVE

EFFECT OF THE DELAWARE CHANCERY

OPINION IS A DISTORTION OF THE RECORD.

AmBase’s argument that City Trust waived reliance on

the preclusive effect of Chancellor Strine’s opinion as to

Delaware law is a misleading distortion of the record and

inconsistent with the positions taken by AmBase in the courts

below. City Trust built its entire motion to dismiss in the

District Court around the preclusive effect of Chancellor

Strine’s opinion. City Trust argued that the Delaware

opinion collaterally estopped AmBase from relitigating two

of Chancellor Strine’s factual findings, which together

doomed AmBase’s New York action to dismissal under the

New York statute of limitations—namely, that all of

AmBase’s causes of action accrued in 1986 and that any

argument AmBase might have had for equitable tolling

expired in December 1996. Resp. App. at A-9 — A-10; A-13

— A-19. Contrary to AmBase’s posturing before this Court,

AmBase was fully aware throughout this litigation that City

Trust sought to rely on whatever preclusive effect the Trust

could secure from Chancellor Strine’s opinion. In the

District Court, AmBase observed: ‘“[P]rincipally, the

Defendant [City Trust] argues that AmBase is precluded

from bringing the instant action by a recent decision by the

Delaware Chancery Court dismissing a similar action

brought by AmBase....” Resp. App. at A-22. In the Court

of Appeals, AmBase again admitted that City Trust was

relying on the “preclusive effect” of “the decision of the

Delaware Court.” Resp. App. at A-43.

In opposing City Trust’s motion to dismiss in the

District Court, AmBase argued that Chancellor Strine’s

opinion was not entitled to preclusive effect because it was

not a decision “on the merits”. Resp. App. at A-30. City

Trust rejoined that AmBase’s “merits” argument was

20

irrelevant because City Trust was arguing that AmBase was

collaterally estopped from relitigating certain dispositive

factual findings by Chancellor Strine which barred AmBase’s

actions under the New York statute of limitations. Resp.

App. at A-36 — A-39. It was in that limited context that City

Trust said that it was not arguing that Chancellor Strine’s

opinion was res judicata, as indeed the Trust was not. But

that is a far cry from saying that City Trust had abandoned

the argument that the Chancellor’s opinion had conclusively

resolved all Delaware law issues decided or was entitled to

res judicata effect.

At no time did AmBase ever question that Chancellor

Strine’s opinion had conclusively determined all decided

issues of Delaware law. At no time did City Trust suggest

that it was abandoning any preclusive effect that it might

derive from Chancellor Strine’s decision. Indeed, in both the

District Court and the Court of Appeals, City Trust insisted

that AmBase’s New York action should be dismissed

because of the preclusive effect of the Delaware opinion.

Since both parties regarded the Delaware law issues to have

been resolved, the argument in the courts below focused on

the collateral estoppel effects of the Chancellor’s opinion in

the context of the New York statute of limitations. City

Trust’s continuing insistence on the collateral estoppel

effects of Chancellor Strine’s opinion in the Courts below

precludes any good-faith assertion by AmBase that it

honestly believed that City Trust intended to waive any

preclusive effect it could derive from Chancellor Strine’s

opinion.

This Court has repeatedly observed that a waiver of

substantial rights should not be inferred from ambiguous

circumstances. Rather, to sustain a claim of waiver the Court

has required that the party against whom the waiver is

asserted must be proved to have made a deliberate, informed

decision to waive by unambiguous record evidence. See e.g.,

21

Zerbst, 304 U.S. at 464; Frick Co., 405 U.S. at 185-86; CMI

Corp., 1999 WL 92257, at * 12.

In short, City Trust did not waive its right to rely on any

of the preclusive effects of the Delaware Chancery decision

and the record leaves no room for any good-faith claim on

AmBase’s part that AmBase ever believed that City Trust

had intended any such waiver.

Ill. AMBASE’S DUE PROCESS ARGUMENT FAILS

WITH ITS WAIVER AND RULE &(C)

ARGUMENTS.

AmBase itself admits that its due process argument

collides with the long-standing rule that a Court of Appeals

may affirm a lower court decision on any ground supported

by the record. See Pet. at 18-19; see also, e.g., Thigpen, 468

U.S. at 28; New York Tel. Co., 434 US. at 166 n.8; MFS Sec.

Corp., 277 F.3d at 617; Shumway, 118 F.3d at 63. AmBase’s

attempt to avoid the consequences of that principle rests

solely on its waiver and Rule 8(c) arguments, both of which

are shown above to be baseless. See pp. 15 — 21, supra.

AmBase’s claim that it is entitled to constitutional protection

of expectations supposedly engendered by City Trust’s

alleged waiver fails because the record conclusively proves

that AmBase had no such expectations and that there is no

basis in the record for a good-faith claim that AmBase ever

had any such expectations.

Nor has AmBase been deprived of the opportunity for

any hearing which could make any difference to the outcome

of this case. Under § 202 of the C.P.L.R., the only

limitations laws potentially applicable to this case are those

of New York or Delaware. Lower courts have found

AmBase’s claims to be barred by the laws of both states.

AmBase has never suggested that the limitations statute of

any other state should apply, and it is too late to do so now.

22

AmBase’s problem is that it is attempting to sue on claims

that accrued in 1986 and has no basis for any equitable

tolling argument beyond December 1996. Those two facts

mean that any conceivably actionable claims AmBase may

have had are time-barred by the laws of both Delaware and

New York, as Chancellor Strine and District Judge Stanton

found—as well as by the law of any other state known to

counsel.

AmBase has been given the most generous opportunity

to argue that its claims are not time-barred under the laws of

Delaware or the laws of New York, including a second wave

of briefing permitted by Judge Stanton when AmBase

switched legal counsel mid-stream in the District Court and

three petitions for reconsideration, each of which was denied.

AmBase has therefore had ample opportunity to present

argument on all of the issues necessary and sufficient for the

dismissal of its claims. In short, AmBase has plainly had all

of the process which it is due—some would say even more.

IV. THIS CASE INVOLVES PETITIONER’S

ASSERTION THAT THE SECOND CIRCUIT

MADE A MISTAKE IN INTERPRETING STATE

LAW. THAT IS NOT A FULL FAITH AND

CREDIT ISSUE.

In its attempt to secure this Court’s review, AmBase

misdescribes its attack on an interpretation of state law by

the Second Circuit as a full faith and credit issue, which this

case does not present. Whatever else might be said about the

Second Circuit’s opinion, it was clearly not a denial of full

faith and credit to the laws of Delaware. The Second Circuit

did not decline to follow what it perceived to be Delaware

law. To the contrary, the entire thrust of the Second Circuit’s

opinion was an attempt to determine and to apply Delaware

law. The fact that AmBase’s counsel profess to disagree

with what the Second Circuit has determined the law of

23

Delaware to be does not mean that the Second Circuit is in

any sense denying Delaware law full faith and credit. Any

contrary view would transform any petitioner’s attack on a

Circuit Court interpretation of a state law into a federal full

faith and credit issue.

Except in the rarest of cases, this Court does not grant

writs of certiorari to review Circuit Court interpretations of

state law. See, e.g., Pierson v. Ray, 386 U.S. 547, 558 n.12

(1967) (“We do not ordinarily review the holding of a court

of appeals on a matter of state law . . . .”); Huddleston v.

Dwyer, 322 U.S. 232, 237 (1944) (“{O]jrdinarily we accept

and therefore do not review, save in exceptional cases, the

considered determination of questions of state law by the

intermediate federal appellate courts.”) (citation omitted).

AmBase’s invocation of federal full faith and credit

principles in this case is nothing more than an attempt to

avoid that limitation and should be rejected out of hand.

As Justice Holmes observed in Gold Issue Mining, 243

US. at 96:

“There is nothing to suggest that it [the Missouri

Supreme Court] was not candidly construing the

Colorado statutes to the best of its ability, and even if it

was wrong, something more than an error of

construction is necessary in order to entitle a party to

come here under ArticleIV, §1 [the Full Faith and

Credit Clause].” .

The Delaware state courts have described their state’s

statutes of limitation in varying ways. For example, in

2 Although Gold Issue Mining dealt with the Full Faith and Credit

Clause, this Court’s practice of reviewing federal appellate court

interpretations of state law only in extraordinary circumstances should

apply equally to issues arising under the Full Faith and Credit Act.

24

Townsend, the Delaware Supreme Court described its statute

of limitations in the following way:

“It is well-settled that a plaintiff who receives a decision

on the merits of a controversy from a court of competent

jurisdiction is precluded thereafter by the doctrine of res

judicata from bringing a subsequent action in another

court based upon the same matter.” 1995 Del. LEXIS

367, at * 2.

As this and other cases reveal, the proper

characterization of any state’s limitation laws is based on the

particular form those laws take in that state as defined by

state statutes and state case law. That particularity destroys

any argument that the decision below conflicts with the

decision of any other Circuit. AmBase points to no Circuit

Court case that conflicts with the decision of the Second

Circuit in construing Delaware law.

Inter-Circuit conflicts cannot be ascertained by asking

whether Circuit opinions use the term “on the merits”, as

opposed to “substance and procedure”, or by attempting to

distinguish between what AmBase calls “deeper” inquiries

and “shallower” inquiries. See Pet. at 23-30. Because the

analysis of any state’s statute of limitations is particular to

that state, any attempt to find a conflict among different

Circuit Court analyses by analyzing the infinitely varying

language of their opinions is doomed to futility.

AmBase’s assault on the cases relied upon by the Second

Circuit in reaching its decision similarly raises no certiorable

issue. In both Loving and Williamson, the federal courts

applied Delaware statute of limitations law to federal causes

of action and held that prior decisions holding the actions to

be time-barred would be given “res judicata” effect and

barred subsequent suits arising from the same allegations.

Neither the Loving court nor the Williamson courts gave any

25

hint that their decisions depended on the fact that those cases

involved the application of state limitations law to federal

causes of action. Those courts did not suggest in any way

that the outcome would have differed if the cases had

involved state law claims. Indeed, the courts cited to

generally-applicable principles of law which have been

applied by both state and federal courts. See, e.g.,

Williamson, 91 F. Supp. at 877-81, 186 F.2d at 466-70;

Loving, 11 F. Supp. 2d at 490-92. There is therefore no

reason to believe that any of those courts would have reached

a different result in a diversity case involving state law

claims.

AmBase’s reliance on this Court’s opinion in Semtek

Int’l Inc. v. Lockheed Martin Corp., 531 U.S. 497 (2001), is

likewise beside the point because the Semtek case involved

the relevance of Fed. R. Civ. P. 41(b) to the effect which

should be given to the judgment of a federal court in a

subsequent state court proceeding—a circumstance which is

present neither in this case nor in Loving or Williamson,

rendering AmBase’s discussion of Rule 41(b) completely

irrelevant to the issues at hand.

AmBase’s most revealing error in its attempt to conjure

a federal full faith and credit issue where there is none is its

attempt to ignore the cases relied upon by the Second Circuit

on the grounds that those cases address the preclusive effect

of dismissals on statute of limitations grounds only in

subsequent proceedings in courts of the same jurisdiction.

There is absolutely nothing in any of those cases to indicate

that any of those courts attributed any significance to that

fortuity. The point made in all of those cases is that the

dismissal of an action because it is time-barred under the law

of Delaware precludes the litigant from relitigating that

Delaware law issue in another court in any jurisdiction,

whether of the same state or another, whether the subsequent

court is state or federal. The cases so holding are legion and

26

uniform in result and provide no suggestion that their

preclusion of the subsequent suit is in any way dependent on

whether the later court is in the same state system as the

earlier court. See, e.g., Cahn v. United States, 269 F.Supp.2d

537, 544-45 (D.N.J. 2003); William Poultry Co. v.

Richardson-Merrell, Inc., No. 4-75-Civ 413, 1975 WL 1001,

at *2 (D. Minn. Dec. 22, 1975); Atkinson v. Pittsgrove

Township, 471 A.2d 1215, 1217 (N.J. Super. Ct. Ch. Div.

1983); Fender v. St. Louis Southwestern Ry. Co., 392 N.E.2d

82, 85 (Ill. App. Ct. 1979). AmBase seeks to ignore that fact

because it is fatal to its petition and its case.

AmBase manages to get through its entire petition

without once mentioning that under § 202 of the C.P.L.R.

only the law of New York or the law of Delaware can be

applied to determining the timeliness of its suit in the

Southern District of New York. Since AmBase is a non-

resident of New York, since the causes of action in this case

accrued in Delaware and since the relevant Delaware statute

of limitations is shorter, § 202 mandates the application of

Delaware law, whether one accepts the Second Circuit’s

analysis or not. The Delaware Chancery Court has of course

decided that AmBase’s claims are time-barred under

Delaware law and no one—not even AmBase here

petitioning the fourth tribunal to consider these issues—has

suggested any reason why it is not precluded from

relitigating that issue. Finally, even if Delaware law for

some reason does not apply, it would make no difference.

The only other law which could be applicable is the law of

New York, which District Judge Stanton applied and

correctly decided barred AmBase from bringing this action in

New York. All of which brings us back to the initial and still

unanswered question of what this case is doing in the

Supreme Court of the United States.

27

CONCLUSION

For the reasons stated, Respondents respectfully request

that this Court deny the petition for certiorari.

October 15, 2003

Respectfully submitted,

Paul M. Dodyk

- Counsel of Record

825 Eighth Avenue

New York, NY 10019

(212) 474-1214

CRAVATH, SWAINE & MOORE LLP

825 Eighth Avenue

New York, NY 10019

(212) 474-1000

Attorneys for Respondents City

Investing Company Liquidating

Trust, John J. Quirk, Marion

Scharffenberger, Eben W. Pyne

and Lester J. Mantell