When is a Claim for Damages too Late?

The short answer is when the claim is filed after the time deadline has expired.  That deadline is known as the statute of limitations.  In many state and federal cases, “too late” often means three years and a day from the date that the claim “arose.”  Simple enough.  But, what appears simple is often more complicated.

When the claim “arose” has been the subject of argument in too many state and federal cases to be counted.  Court rulings deciding when a claim actually “arose” are probably in the hundreds of thousands.  That, alone, tells us that “too late” is not too simple.

Some of the reasons giving rise to the many disputes are easily understood.  The most obvious is that claims filed even a single day after the limitations’ statute has expired are too late and will be dismissed – forever.  Some dismissed cases may involve fortunes and be economically devastating to the tardy claimant.  Others, especially if it is in your claim, are no less important.

What are the Rules of Statutes of Limitations?

Since statutes of limitations are set by each state legislature and by Congress, they can be different in each jurisdiction and for each type of wrongdoing.  Sometimes, they can be very short.  The deadline to file a slander or libel claim is only one year in many jurisdictions.  The time for claims against an estate may be even shorter.

Depending in what state one’s claim is filed, limitations can cause an adverse outcome regardless of the claim’s underlying merit.  For example, in Maryland and many other states, the right to sue for a breach of contract expires three years from the date of the breach.  Yet, in New York, expiration of limitations for a written contract occurs six years from the date of the breach.  But, one cannot file a claim in New York or in any other state if the facts and parties have nothing to do with that state.  Most claims are limited by their facts to filing in a single state and are governed by that state’s limitations’ period because the events of any consequence occurred in that state, including facts like where the parties reside or are transacting business.

On top of differences between states on when the time to sue or arbitrates expires, there are conflicts in the laws among the interested states.  For example, what is the governing time deadline if a contract is signed in Maryland between a company from California and one from New Jersey for work to be performed in New York with supplies to be bought in Maryland and a lawsuit for breach of the contract is filed in California?  A host of legal and factual considerations will determine the outcome.

How are Limitations and Deadlines Changing in the Court System?

Courts and scholars have sought over time to soften the inflexibility of limitations’ deadlines.  One measure widely used in many states is known as the “discovery rule.”  That “rule,” in some form or another, goes back to at least the 1870’s.  The “rule,” as currently applied, does not explicitly enlarge the statutes of limitations time, but instead extends the starting date when the limitations time begins and be counted against a claimant.  Thus, by delaying the start of the limitations period, courts have effectively extended the deadline for filing a claim.  But how?

State courts which have adopted the “discovery rule” start the count of the limitations period for some claims as beginning only when the injured party discovers the existence of a claim.  They pay less heed to the date of the occurrence of the event giving rise to the claim.  Consequently, in a breach of contract case when a contractor used defective materials in a building project, the time for the injured party to file a claim may be counted from the day that party reasonably should have discovered the bad conduct of using faulty materials and not from the date the wrong materials were actually installed.  Of course, the fact for the court to resolve is at what time a reasonable person should have discovered the defect.

Nonetheless, notwithstanding the long history of the “discovery rule,” the Supreme Court of the United States recently decided that federal courts interpreting federal statutes may no longer apply the “discovery rule” unless the Congress expressly provides for its application.  Until that decision, some federal courts were applying the “discovery rule” while others were not.

How do Limitations Apply to FINRA Cases?

In securities fraud and negligence arbitration cases, claims may be brought by the injured investor not beyond six years from the injury.  That is called the “time of repose,” regardless of whether, for some reason, limitations had not yet expired.  The time of repose for securities arbitration is set by the rules of the Financial Industry Regulatory Authority (FINRA), which arbitrates most investors’ claims against securities’ industry brokers.  However, some states, Florida being among the first, have made it clear that when its law applies in a FINRA case, its state statute of limitations will control the deadline for a claim.  Thus, the time of a claim’s repose may be of no benefit to a claimant facing a three-year limitation period.  The time of expiration of limitations will, in most states, always be earlier than the time of repose.

Accordingly, it is clear that, while every FINRA claim is barred after six years, many claims because of limitations will have to be filed well before that.  Moreover, since the Supreme Court decision, in a securities claim, relying solely on a federal statute, the “discovery rule” will be of no avail to a delayed claim without specific congressional inclusion of the discovery rule in the statute at issue.  One must remember that, even when a state applies the “discovery rule,” the rule’s application may not be universal.  Maryland adopted the “rule,” but, for example, has declined to extend it to its securities’ statute for wrongful conduct against investors.

Contact The Tobin Law Offices

Best advice: (a) if a wronged person has a claim, do not be lulled by extended settlement negotiations, watch the calendar and file timely and (b) if one thinks a claim is “too late,” promptly see a lawyer because what you think is “too late” maybe just in time. Contact The Tobin Law Offices by calling (301) 444-4413.