McCarthy v. Bristol Laboratories, Division of Bristol-Myers Co.

• Decision Date: 19 April 1982
• Docket Number: BRISTOL-MYERS
• Parties: Evelyn McCARTHY, et al., Respondents, v. BRISTOL LABORATORIES, DIVISION OFCOMPANY, et al., Appellants.
• Court: New York Supreme Court — Appellate Division

Page 280

449 N.Y.S.2d 280

86 A.D.2d 279

Evelyn McCARTHY, et al., Respondents, v. BRISTOL LABORATORIES, DIVISION OF BRISTOL-MYERS COMPANY, et al., Appellants.

Supreme Court, Appellate Division Second Department.

April 19, 1982.

Richard L. Stern, New York City (Edward P. Carroll, New York City, of counsel), for appellant Bristol Laboratories, Division of Bristol-Myers Co.

Dewey, Ballantine, Bushby, Palmer & Wood, New York City (Thomas C. Mazza and Sanford N. Berland, New York City, of counsel), for appellant Eli Lilly and Co.

Barry, McTiernan & Moore, New York City (Richard J. Nealon, New York City, of counsel), for respondents.

Before LAZER, J. P., and MANGANO, O'CONNOR and BROWN, JJ.

BROWN, Justice.

The facts underlying this action are undisputed. In October, 1971, while traveling through Pennsylvania, plaintiff Evelyn McCarthy, then a New York resident, was stricken with a kidney ailment and hospitalized at Montefiore Hospital in Pittsburgh. It is alleged that between October 24 and December 9, 1971, while she was hospitalized, Mrs. McCarthy was treated with two prescription drugs, Kantrex and Keflin. Kantrex is manufactured by defendant Bristol Laboratories ¹ and Keflin is manufactured by defendant Eli Lilly and Company. It is alleged that as a result of the administration of these antibiotics, Mrs. McCarthy sustained personal injuries including blindness.

Plaintiffs commenced their action against defendants on October 23, 1975. Mrs. McCarthy sought recovery under four legal theories: (1) negligence, (2) breach of warranty, (3) negligence by reason of alleged statutory violations and (4) strict liability. In a separate cause of action, plaintiff Florence McCarthy, Mrs. McCarthy's husband, sought damages for loss of services. By their bill of particulars, it was alleged that Mrs. McCarthy's injuries first manifested themselves on November 1, 1971.

Thereafter, defendants moved to dismiss the complaint and for summary judgment on the ground that the action was not timely brought within the limitation period prescribed by CPLR 214 (subd. 5), which requires that actions to recover for personal injury be commenced within three years. Plaintiffs conceded that the causes of action based on negligence, statutory violations and strict liability were untimely and, accordingly, on June 2, 1976, Special Term dismissed said causes of action. It refused, however, to dismiss the cause of action that was based upon breach of warranty and the derivative action, holding that the four-year Statute of Limitations prescribed by section 2-725 of the Uniform Commercial Code was applicable thereto. The defendants thereupon appealed and this court affirmed (McCarthy v. Bristol Labs, Div. of Bristol-Myers Co., 61 A.D.2d 196, 401 N.Y.S.2d 509).

Discovery proceedings were thereafter initiated. The facts developed during said proceedings disclosed that Montefiore Hospital had made no direct purchases of either Kantrex or Keflin from the defendants. Lilly's Keflin was sold to independent drug wholesalers and was then resold to Central Pharmacy, the drug marketing department of University Health Center Hospitals, Inc., which in turn sold the antibiotics to Montefiore Hospital. The hospital's stock of Kantrex was also purchased through Central Pharmacy, which had purchased directly from Bristol Laboratories, the manufacturer. It became clear, therefore, that there existed no direct contract of sale between either of the plaintiffs and the defendant manufacturers, and plaintiffs do not on this appeal maintain otherwise. ²

Accordingly, and based on the facts adduced through the discovery procedures which demonstrated that no contract for sale existed, Lilly moved for leave to renew its motion for summary judgment, and, upon the granting of such leave, for summary judgment on plaintiffs' remaining cause of action. Defendant Bristol cross-moved for similar relief on the same ground.

Plaintiffs did not controvert the contract for sale issue before Special Term but argued that: (a) defendants were attempting to relitigate the Statute of Limitations applicable to their breach of warranty claim which had already been determined by this court; and (b) in addition to the application of the procedural four-year New York statute, since the claim arose in Pennsylvania, the substantive law of that State, which permits an action in breach of warranty in the absence of privity, should be applied. Special Term concluded that plaintiffs were correct in their assertions that neither the absence of privity nor the Statute of Limitations were valid defenses. It is from this ruling that defendants appeal. We reverse.

Special Term improperly concluded that this court's determination upon the prior appeal stood for the proposition that the defense of the Statute of Limitations as to plaintiffs' breach of warranty claim was not available to defendants. What we said was that the cause of action for personal injury arising from breach of warranty, to which the four-year Uniform Commercial Code Statute of Limitations would be applicable if a contract for sale was involved, could stand pending development of the factual issue of whether or not a "contract for sale" was involved (see Uniform Commercial Code, §§ 2-318, 2-725). ³ Mr. Justice HOPKINS, writing for this court, made it abundantly clear that a determination as to whether the four-year breach of warranty Statute of Limitations was applicable had not been made in view of the posture of the case at that time when he said "A second assumption which underlies the conclusion that the four-year time limit of the code applies as against the general time limit of the CPLR, is that a 'contract for sale' is here involved. This assumption is more debatable, because the complaint alleges merely that the defendants 'sold and distributed' the drugs * * * and that the plaintiff wife 'did take' the drugs. The affidavits of both sides submitted on the motion are not any more informative as to the facts * * * On this state of the record, we believe that a sale of the drugs to the plaintiff wife may not be summarily ruled out.

"under the circumstances of this case, the plaintiff as a patient in a hospital receiving medication may be assimilated to the status of a remote user, or is a direct purchaser from the manufacturer or from the hospital, are all issues which should not be determined on the bare pleadings." (61 A.D.2d 196, 200, 203, 401 N.Y.S.2d 509, emphasis supplied.)

Clearly, a limitations defense was not foreclosed in the event that a contract of sale was not shown to exist.

In determining the limitations period applicable to the case at bar, we must look to New York law. CPLR 202 provides:

"An action based upon a cause of action accruing without the state cannot be commenced after 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." (Emphasis supplied.)

Thus, where a cause of action accrues without the State but an action is commenced in New York, the New York "borrowing statute" requires the use of the shorter limitations period of either New York or the state of accrual. The exception to this rule is where the cause of action is in favor of a New York resident. The timeliness of an action brought in New York by a resident of the State upon a cause of action which accrued elsewhere is governed by the applicable New York Statute of Limitations and the New York "borrowing statute" is inapplicable (CPLR 202; Alex v. Grande, 29 A.D.2d 616, 285 N.Y.S.2d 909; see 1 Weinstein-Korn-Miller, N.Y.Civ.Prac., par. 202.01; Siegel, New York Practice, 1979-1980 supp., ...