Beware Of The COVID-19 Statute Of Limitations Trap

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COVID-19 Statute of LimitationsViruses and the diseases they cause often have different names. The current global pandemic which has stricken much of the planet is no exception. Although most commonly referred to as COVID-19 (technically the illness caused by the virus), this pandemic also can be referred to as SARS-CoV-2 (“severe acute respiratory syndrome coronavirus 2” — the technical name of this particular strain of coronavirus according to the International Committee on Taxonomy of Viruses), coronavirus (a more general group of related RNA viruses that has RNA as its genetic material), the CCP Virus (attributing the virus name to the Communist Party in China which some blame for not preventing the spread of the virus when it could have been more easily contained), or the Wuhan Flu (naming it for the wet market where it originated in China, similar to the Asian Flu in 1956 and the Spanish Flu of 1918 which killed 50 million worldwide). Regardless of what you call it, the fact is that lives and businesses have been disrupted as a result of it.

Beginning in mid-March, the world of civil litigation was dramatically affected by the outbreak as courts began to close across the country and many states began to suspend statutes of limitations for civil actions. Litigators and subrogation professionals were faced with the dilemma of not being able to file suit and simultaneously having an uncertain date for the tolling of limitations in their cases. It is difficult to diary a file for an unknown date. Many states are now lifting the suspension of the statutes of limitations, and our industry will undoubtedly see many statutes expiring before practitioners ever knew the tolling had been lifted.

It would be safe to say that millions of subrogation claims have statutes of limitations or statutes of repose which were set to expire during the last few months. Subrogation professionals must pay close attention to the text of their applicable state order or court rulings when determining the effect of the order on computing time for a statute of limitations. These orders and rulings also raise significant issues regarding whether the entity issuing the order has the authority to toll the relevant statute of limitation and what effect the order should be given in jurisdictions outside of the state where the order was issued. “Borrowing statutes” also come into play. Generally, when you file suit in a state you must adhere to the statute of limitations for that state. However, some plaintiffs try to file suit in a different state in order to avoid a statute of limitations which has expired and give themselves more time to file. To prevent such “forum shopping”, many states have enacted “borrowing statutes.” These statutes allow a court in one state to use the statute of limitations of the state where the cause of action originated. They are often applied where the other state’s statute of limitations is shorter than the state where the lawsuit was filed. The effect of statute of limitations tolling orders due to the pandemic when applied to borrowing statutes is unknown. Moreover, some jurisdictions have held that their choice-of-law provisions are inapplicable to statutes of limitations unless the particular choice-of-law rule specifically refers to statutes of limitations. In other words, if a contract cause of action is governed by the laws of one state but filed in a second state where a tolling order was issued, there may be some dispute as to whether the tolling order will protect someone filing suit after the limitations period expires.

As states began to close their courts and issue orders tolling, among other things, statutes of limitations in civil action, they all took differing approaches on the question of whether the tolling order affects all statutes of limitations, or just those that would expire during the pendency of the emergency and precisely when the emergency would expire was also often left up in the air. Some orders referred to statutes of limitations and states of repose, while others simply referred to statutes of limitations. Delaware, Ohio, New Hampshire, Tennessee, and West Virginia issued orders providing that statutes of limitations and statutes of repose “that would otherwise expire” during the pendency of the emergency will be tolled. New Hampshire goes so far as to clarify that “[d]eadlines, statutes of limitations, and statutes of repose that are not set to expire [during the emergency] are not extended or tolled by [the] order.” This now requires precise knowledge of the length of the emergency in each state. For example, New Jersey ordered that the days during the emergency will be treated as holidays for the purpose of computing deadlines. These two approaches have different results: a litigant in Delaware facing a statutory deadline right after the end of the emergency would not gain any additional time, whereas in New Jersey the same litigant would gain the additional time.

Connecticut’s order appears to “suspend” limitations for the duration of the emergency. It is not clear whether a deadline not set to expire during the period of the emergency would also be tolled. It is completely possible that a plaintiff with a claim that expires the day after the period of the emergency ends should be able to claim additional time to file because the statute of limitations was “suspended.” And, as if being knowledgeable about the tolling orders in 50 different states and 94 federal judicial districts was not enough, a few states have not issued a statewide order, but local courts are issuing orders tolling deadlines and statutes. Now it becomes imperative to check with the clerk of the applicable court.

Before relying on an order suspending limitations, a potential plaintiff must be confident that the entity which issued the order had the authority to do so. States differ on this issue. In Massachusetts, for example, the Supreme Judicial Court (SJC) issued an order on April 27, 2020, effective May 4, 2020, suspending all statutes of limitations from March 17, 2020 through May 31, 2020. Those relying on the order must be prepared for an argument that the court lacked the authority to issue such an order. While M.G.L. c.211 § 3 appears to give the court “general superintendence of all courts of inferior jurisdiction” and gives it authority to “issue all writs and processes to such courts and to corporations and individuals which may be necessary to the furtherance of justice and to the regular execution of the laws,” the statute goes on to say that that this “general superintendence shall not include the authority to supersede any general or special law unless the supreme judicial court, acting under its original or appellate jurisdiction finds such law to be unconstitutional in any case or controversy.” Given that statutes of limitations are fixed by statute, those relying on the tolling order may expect the argument that the tolling of statutory deadlines exceeds the SJC’s authority.

States are now beginning to lift their suspension orders and subrogation professionals must be on their toes. In Texas, for example, any deadline for the filing or service of any civil case is tolled from March 13, 2020, until June 1, 2020, unless extended by the Chief Justice of the Supreme Court. Pennsylvania’s order tolling limitations expired on April 30, 2020. Massachusetts’ order was extended until May 31, 2020. South Carolina’s order never did toll any applicable statutes of limitations. New Jersey’s order deemed March 16 through March 27, 2020, a legal holiday for “the computation of time periods under the Rules of Court and under any statute of limitations for all matters in all courts, for purposes of filing deadlines.” That order was later extended to the latter of (1) May 1, 2020 or (2) 30 days following the end of the State of Emergency. Courts are opening up and orders are being lifted. We must be prepared or risk losing the ability to file subrogation actions.

The timing of engaging subrogation counsel becomes even more important in these confusing times. If you have a claim in which the statute of limitations or statute of repose could even potentially expire in 2020, it might be advisable to place the file with MWL so the concern about these issues now rests with us. As many of our clients know, MWL has a chart detailing the applicable statutes of limitations in every state. An excellent resource for beginning legal archeology regarding whether a statute of limitations in a particular federal court has been tolled or otherwise affected can be found HERE. An excellent resource for the same issue in state courts can be found HERE.

For questions regarding the filing of subrogation actions anywhere in North America, please contact Lee Wickert at [email protected].

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Lee R. Wickert
Associate Attorney

Lee R. Wickert is an insurance litigation associate in the Austin, Texas branch of Matthiesen, Wickert & Lehrer, S.C. Lee’s practice areas include insurance litigation, subrogation, workers’ compensation, health insurance and ERISA, automobile insurance, property and casualty, and insurance coverage. Lee is licensed to practice in Texas and Wisconsin.