Few of us know exactly what “statute of limitations” means; even fewer know how long one has before it’s “too late”, and even fewer know the exceptions to the rules.
There’s this great moment in “Philadelphia“, the movie starring Tom Hanks as a fired lawyer with AIDS, when he is being told that the complaint for a lawsuit, which has to be filed today, is missing. The computer files associated with it are all missing as well, and Hanks just happens to be out of the office that day (in the days before email, etc.). You share the panic in Hanks’ face; it’s the feeling you get like the bottom just dropped out and you’d do anything to turn back time, even if just for one day. Eventually, the complaint is found, and timely filed.
It is not uncommon for a most of us to be aware that if you “miss the statute of limitations”, you are forever barred from bringing your lawsuit, no matter how good a case you have, and no matter the excuse. Most of us somehow know this intuitively, like stopping for red lights (most of us). Fewer of us, though, know exactly what “statute of limitations” means; even fewer know how long one has before it’s “too late”, and even fewer know the exceptions to the rules (when too late isn’t).
Each different type of lawsuit, or “cause of action”, has its own statute of limitations. The word “statute” refers to the actual law, and the word “limitations” refers to the limit of time in which a person can file his or her lawsuit with the court. These statutes of limitations (for lawsuits in California) are found, for the most part, in the California Code of Civil Procedure.
One type of lawsuit, or “cause of action”, is a breach of contract. Two people promise to do something, and one of those people breaks the promise. If the promise was in writing, then a person has four years from the time the promise is broken, or the “breach of contract”, to file the lawsuit. If the agreement is verbal (i.e., not written, but a handshake), then one has only two years to file a lawsuit. If there is negligence, and damage to real property, the time limit is generally three years to bring the lawsuit.
First of all, why is there a time limit to bring a lawsuit to begin with. It just seems like people are being rushed for no reason. Well, memories fade, people move or die, and evidence disappears, making lawsuits that much more difficult to prove, or defend, if not prosecuted within a certain period of time.
Seems easy enough. For the most part it is. And many lawsuits are stopped dead in their tracks at this point (usually and hopefully with that first phone call to a lawyer).
But what do you do if someone keeps the breach a secret by covering tracks, telling lies, making misrepresentations’ In such a case, the time to bring an action is extended, or “tolled”, during the time the plaintiff is prevented from discovering the breach.
However, if, through reasonable due diligence, the breach could have been discovered anyway, the time to bring the lawsuit will not be tolled. This is known as the “discovery rule”, which says that statute of limitations does not begin to run until the damage is actually discovered, or could have been discovered through reasonable diligence. Angeles Chem. Co. v Spencer & Jones (1996, 2nd Dist) 44 Cal App 4th 112. For example, two people contract for personal services, and, unbeknownst to the boss, the subordinate hadn’t provided any such services in months. The boss had no reason to believe that the services were not being performed, but discovered this fact eight months after the services had stopped. As a result, the boss would have four years and eight months to bring the lawsuit (though there would be no reason to wait that long anyway).
However, it is the breach, or defect, that is protected by the discovery rule. For example, if the breach has been discovered, but the culprit has yet to be exposed, do not wait. Because the time you take to discover the wrong-doer is not time that tolls the statute, nor is time to discover the law itself.
What happens if the defect, say, in a construction matter, is not discovered for a very long time. You know how that can happen: a building is constructed, and that small pipe leak, or that concrete that was mixed improperly, is not sufficiently appreciable to reveal itself as a defect until years down the line. Do you still have four years (or three for negligence) from the date of discovery to file your lawsuit? Yes, and no. When it comes to construction, you do, in fact, still use the discovery rule. However, the first question that has to be asked is: has it been ten years since substantial completion of the construction project? If the answer is yes, then, generally speaking, absent some other exception, the time has run, even if there’s another, say, two years to go since discovery. So, if the defect is discovered in the ninth year since construction, there is only one year left before the time runs, not three – or four – years.
Lawsuits can be, and have been, brought to their knees based on a defense of the statute of limitations. Don’t wait; be proactive in this process. It will not wait for you.