Statutes of limitation require that claims be brought within a specified period of time, and if they are not brought within that specified period of time, they are forever barred. Statutes of limitation for some tort claims can be as short as one year; claims for breach of contract can be as long as four years (if the contract is written); and the statute of limitations for latent construction defects is 10 years. Statutes of limitation begins running when the cause of action “accrues.”
Typically, a cause of action “accrues,” when the last thing occurs that gives rise to the cause of action. There are typically multiple, and in some cases several, essential elements which a plaintiff must allege in order to state a valid cause of action. When the last of those essential elements occurs, the cause of action has accrued. Generally, the last essential element occurs when the plaintiff suffers damage or injury, either personal or economic.
However, an exception to the general rule of “accrual” of causes of action is the “delayed discovery” rule. The delayed discovery rule applies to both tort claims and contract claims. The delayed discovery rule provides that a cause of action will not accrue upon the occurrence of the last of the essential elements necessary to create the claim, if the plaintiff at that time did not know, and in the exercise of reasonable diligence, could not have known of the claim. In that situation, the accrual of the cause of action is suspended until such time that the plaintiff knew, or in the exercise of reasonable diligence, should have known that he had a claim, or should have known of facts that would put him on notice that he might have a claim.
Damage or injury, either personal or economic, must be “appreciable” in order for it to start the running of the statute of limitations. Damage or injury that is insubstantial or nominal, or that causes only speculative harm or a threat of potential future harm, will not start the running of the statute of limitations. Whether the damage or injury is appreciable is typically a question of fact. However, if damage or injury is appreciable, but significantly worsens over time. the statute will begin running as soon as the damage or injury becomes appreciable, and will not begin at a later time based on significantly increased harm at a later date.
Whether or not a plaintiff has become aware of facts that would put him on notice of the need for further inquiry or investigation, or has exercised due diligence in conducting that further inquiry or investigation is also typically a question of fact. However, if no one acting reasonably could conclude that the plaintiff lacked sufficient facts to put him on inquiry, the issue will be decided as a matter of law – in that instance, it will be determined that the plaintiff did have such notice and the statute began to run when he had such notice. Conversely, if no one acting reasonably could conclude that the plaintiff did have notice of facts putting him on inquiry at a particular point in time, it will be determined as a matter of law that the statute did not begin to run at that point in time.
If the statutory period has run before the plaintiff files an action, the plaintiff has the burden of pleading and proving that the delayed discovery rule applies. Initially, the plaintiff must allege (1) when and how he discovered the facts giving rise to the cause of action, and (2) how and why he was not able to discover those facts earlier in time in the exercise of reasonable diligence.
The plaintiff must plead and prove that he had neither actual knowledge nor “presumptive” knowledge of facts giving rise to the cause of action. Presumptive knowledge is knowledge of facts that would put a person on inquiry that he might have a claim. It is not knowledge of the legal significance of the facts that is relevant, but simply knowledge of the facts, which starts the running of the statute of limitations.
The degree of “presumptive” knowledge required to start the running of the statute of limitations will often depend on the relationship of the parties. For instance, it will typically take more in the way of knowledge of facts giving rise to a claim if the defendant owes a fiduciary duty to the plaintiff. That is because a fiduciary owes the highest duty of care, good faith and loyalty to the plaintiff. That being the case, the plaintiff is typically justified in trusting the defendant and has less reason to make inquiry or conduct an investigation.
In some cases, a plaintiff may discover that he has a claim, but will not know the identity of the person against whom he has a claim. Nevertheless, the statute will begin to run when the plaintiff has knowledge or notice of the claim. That is because the identity of the defendant is not an essential element of a claim.
As an example, in a medical malpractice case, multiple doctors may have treated the plaintiff and it is not known at the time plaintiff realizes he has suffered an injury the identity of all of the physicians who contributed to his injury. In that instance, the plaintiff may assert a claim against DOE defendants, and substitute one or more names for those DOE defendants when their identities later become known.
The delayed discovery rule should not be confused with the rules for “tolling” the running of the statutes of limitation. The rules which toll, or suspend the running of the limitations periods, are not based on delayed discovery, but on other principles described in the various tolling statutes. The subject of tolling is discussed in another article published by this firm.
The Law Office of William J. Tucker is familiar with issues involving statutes of limitation applicable to tort and contract claims, and provides free initial phone consultations to individuals and companies dealing with such issues. Feel free to Schedule an Appointment.