Podcast Episode 20—Are You SOL?  Statutes of Limitations Explained

Podcast Episode Timestamps

00:00 — ‘SOL’ stands for ‘statute of limitations’ in the world of civil justice.
00:10 — Intro
00:33 — Statutes of limitations are time-limit rules—deadlines for pursuing a lawsuit.
01:10 — Overview of the eight questions that should be asked to determine the latest a lawsuit should be filed.
03:14 — Question 1: what’s the specific cause of action’s statute of limitation?
–:– — Question 2: not covered in this episode.
04:56 — Question 3: when did the claim accrue?
05:50 — Question 4: can the accrual date be legally deferred?
06:36 — Question 5: tolling—can the time-limit be paused? Seven general reasons that supports tolling of limitations.
09:08 — Question 6: can the defendant be estopped (prevented) from asserting the limitations defense?
10:00 — Question 7: is the plaintiff’s claim cut off before it accrues through a statute of repose?
10:58 — Question 8: is plaintiff’s claim subject to the equitable defense of laches which could serve as a time-limit prior to the end of the statute of limitations?
11:41 — This episode’s takeaways.
12:20 — Please subscribe, check the show notes, and email or schedule a call with your questions.
12:46 — Outro

Legally, ‘SOL’ Means ‘Statute of Limitations’

We’ve all probably heard ‘you’re SOL.’  In the civil justice world, ‘SOL’ stands for ‘statute of limitations’ and means you’re out of luck if you want to assert a cause of action time-barred by the applicable time-limit statute.  A statute of limitations establishes a time limit for a plaintiff to file a lawsuit.  The main reason for these time limits is to avoid lawsuits based on stale or fraudulent claims.  Keep in mind that a court will have jurisdiction over a lawsuit that is filed late.  Limitations is an affirmative defense which much be asserted by the defendant in order for the court to consider it.  

Eight Questions to Ask

To determine the latest date a lawsuit must be filed by, eight questions should be asked.

1. What is the specific cause of action’s statute of limitations?  Different causes of action can have different statutes of limitations.  If the plaintiff has more than one viable cause of action, the lawsuit should probably be filed before the deadline for the cause of action with the shortest time-limit.
2. Is the plaintiff a governmental unit exempt from the limitations period?  Some are exempt and some aren’t.  I won’t go into this question in this post. 
3. When did the claim accrue?  The accrual analysis can be a deep dive that I’m going to try to avoid going too far into in this post.
4. Can the accrual date be legally deferred?
5. Can the limitations period be paused?  When the limitations period can be paused, it is said to be ‘tolled’ during the ‘tolling period.’
6. Can the defendant (the person being sued) be estopped from asserting the statute of limitations defense?  Limitations is an affirmative defense that must be asserted by the defendant in order for the court to consider it.  Under certain circumstances, the defendant can be estopped (or prevented) from effectively asserting the limitations defense.
7. Is plaintiff’s right to bring its claim cut off by another type of time-limit statute, called a ‘statute of repose?’
8. Is the plaintiff’s claim subject to laches (see episode 8 of the Keith Law PLLC Podcast for a discussion of laches in a trademark infringement context).

Causes of Action

As a reminder (or for the first time if you haven’t tuned in before), a cause of action is a legal theory that a  plaintiff (the person suing) must establish for legal relief (such as an injunction or a money judgment) to become available.  The analogy I use is a cake recipe.  Without every ingredient in the recipe, the cake won’t turn out right.  Similarly, without proving every essential element of a cause of action, the plaintiff cannot access a remedy from the court. 

Different causes of action can have different statutes of limitations.  Here is a grab-bag of examples:  

• Trademark infringement.  The Lanham Act (i.e., the federal trademark statute) doesn’t contain a statute of limitations.  So, courts look to a comparable state cause of action’s statute of limitations.  In Texas, the four-year statute of limitations that applies to fraud causes of action also applies to trademark infringement claims.
• Copyright infringement has a three-year statute of limitations.
• Trade secret misappropriation has a three-year statue of limitations.
• Tortious interference with existing contract has a two-year statute of limitations.
• Breach of contract—four years.
• Unfair competition—two years.
• Breach of fiduciary duty—four years (before 1999 it had a two-year statute of limitations).
• Defamation—one year.
• Business disparagement—two years.

Accrual

Accrual is the term that means the date when the cause of action’s limitations period begins to run—meaning, when the plaintiff first becomes legally entitled to bring a lawsuit.  Accrual can be defined by either statute or by common law (i.e., non-statutory law). 

A few examples where statutes define the accrual include breach of warranty which accrues when delivery is made, wrongful death cause of action which accrues when the injured person dies, DTPA (Deceptive Trade Practices Act) cause of action that accrues when the consumer discovered or should have discovered the occurrence of false, misleading, or deceptive act or practice.

Deferring Accrual

Can the accrual date be legally deferred?  There are two legal mechanisms for deferring the accrual date: the discovery rule and fraudulent concealment.  The discovery rule defers the accrual of a cause of action until the plaintiff knows, or by exercising reasonable diligence should know, of the facts giving rise to the claim.  After that, the limitations period begins to run.  Similarly, fraudulent concealment defers the accrual of a cause of action until the plaintiff discovers or should have discovered the deceitful conduct or facts giving rise to the cause of action.

Tolling

Can the limitations period be paused?  When the limitations period can be paused, it is said to be ‘tolled’ during the ‘tolling period.’  Unlike deferral which postpones accrual, tolling suspends the running of the time-limit after accrual of the cause of action.  There are seven general reasons for which limitations may be tolled:

1. Legal disability such as being under 18 years old or being of unsound mind. On the date the disability is removed, the tolling of the limitations period ends.
2. Military service tolls the limitations period under the Servicemembers Civil Relief Act during active service or active duty.
3. Death tolls limitations for the twelve months following the death of a person against whom or in favor of whom there may be a cause of action unless the estate’s personal representative (such as an executor) is appointed before the twelve months expires, in which case the tolling ends at the time of the appointment of the executor.
4. Absence from the state.  When an individual or corporation is absent from the state, the limitations period is tolled.  “Absence” for this this rule requires a detailed analysis that exceeds the scope of this post.
5. Lack of jurisdiction.  If the plaintiff files the lawsuit in the wrong court and the court dismisses for lack of jurisdiction (meaning the court doesn’t have the legal authority to decide the case) then limitations is tolled for 60 days during which plaintiff should file in a proper court.
6. Misnomer & misidentification.  When a plaintiff misnames or misidentifies party in a lawsuit, limitations may be tolled, subject to an analysis that exceeds the scope of this post.
7. Equitable tolling.  Under very limited circumstances limitations can be tolled for equitable reasons.  

Estoppel

Can the defendant (the person being sued) be estopped from asserting the statute of limitations defense?  Limitations is an affirmative defense that must be asserted by the defendant in order for the court to consider it.  Under certain circumstances, the defendant can be estopped (or prevented) from effectively asserting the limitations defense.  The doctrine of equitable estoppel can legally prevent a defendant from raising the defense of limitations when the defendant, or its agent or representative made representations that induced the plaintiff to delay filing the lawsuit until after limitation had run.

Statute of Repose

Is plaintiff’s right to bring its claim cut off by another type of time-limit statute, called a ‘statute of repose?’  In certain limited circumstances, the plaintiff’s cause of action can be cut off before it even accrues.  This means that unless the plaintiff’s cause of action arises within the time allowed, the plaintiff cannot have a cause of action regardless of plaintiff’s diligence after discovering the defect or problem.  A few examples where there are statutes of repose include the 10-year statutes of repose protecting architects, engineers, design professionals, residential construction contractors, and surveyors.  The general idea behind a statute of repose is to prevent or reduce liability risk related to work done long ago.

Laches

Is the plaintiff’s claim subject to laches (see episode 8 of the Keith Law PLLC Podcast for a discussion of laches in a trademark infringement context). Under the equitable defense called laches, a plaintiff can be legally prevented from having its lawsuit heard even when limitations has not yet expired.  Defendant has to assert this defense and prove (1) unreasonable delay that caused (2) a detrimental change in the defendant’s position, and (3) that there are extraordinary circumstances that justify the application of laches.

Takeaways

The legal ability to bring a lawsuit has time limits.  But, the time-limits are not always simple to determine in light of exceptions and exceptions-to-exceptions that often require detailed analysis.  The most important takeaway is to not sleep on your rights.  If you have a claim that you may want or need to handle eventually, it is best to consult with your attorney sooner rather than later to avoid becoming inadvertently prejudiced by a statute of limitations, statute of repose, or laches.

Disclaimer: This audio and blog post are for informational purposes only and should not be misinterpreted as legal or other professional advice. If you have a legal question, you should consult with an attorney in your jurisdiction. Thank you for tuning in to Keith Law, PLLC.

(Photo by Djalma Paiva Armelin from Pexels)