New York law gives investors who say they were duped into buying flawed mortgage bonds six years to sue. But does the clock start ticking on the day the bonds were packaged or after problems with the loans came to light?

On Thursday, New York’s highest court confronted that question as it considered an appeal by investors seeking to force a Deutsche Bank AG unit to buy back bad loans packaged into securities before the financial crisis. The eventual ruling by the state Court of Appeals could open the door to many more such cases if the investors’ trustee prevails.

Paul Clement, a lawyer for the trustee, told the court that the six-year statute of limitations begins to run only after the flaws are discovered — and not, as the bank argued, when the bonds were packaged and sold years earlier.

“This is a contract that extends for 30 years,”…