FORT LAUDERDALE BUSINESS LITIGATION: STATUTE OF LIMITATIONS AND EQUITABLE TOLLING

Time is not always on your side because the law imposes many deadlines. Some can be moved or extended. Others cannot. The statute of limitations is one deadline that cannot be moved or extended as a general matter because it is fixed by the state legislature. Most, if not all, states prescribe the maximum duration a litigant must file its lawsuit. The maximum duration depends on the type of claim asserted and each state’s decision on the maximum duration that type of claim should expire. For example, a contractor has five years to bring a lawsuit against a counterparty for breach of contract in Florida but has six years to bring that same lawsuit in Nevada. Compare, for example, Fla. Stat. § 95.11 (providing 5 years to bring and action for breaching a written contract) with Nev. Stat. § 11.190 (providing 6 years to bring and action for breaching a written contract). If you do not bring the lawsuit within the applicable limitations period, you could be forever barred from bringing the claim. See Hinds v. Credigy Receivables, Inc., 2008 WL 11435771, at *2 (M.D. Fla. Apr. 29, 2008) (dismissing claim based on the statute of limitations). Peter Mavrick is a Fort Lauderdale business litigation attorney, and represents clients in business litigation in Miami, Boca Raton, and Palm Beach. The Mavrick Law Firm represents businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment law, and other legal disputes in federal and state courts and in arbitration.

One of the first questions to ask when analyzing a statute of limitations issue is when did the statute begin to run? Florida law dictates that the limitations period begins running when “a cause of action accrues.” Fla. Stat. § 95.031. In a breach of contract case, a cause of action accrues when the contract is breached. State Farm Mut. Auto. Ins. Co. v. Lee, 678 So. 2d 818, 821 (Fla. 1996) (A “cause of action on a contract accrues and the statute of limitations begins to run from the time of the breach of contract.”); Med. Jet, S.A. v. Signature Flight Support-Palm Beach, Inc., 941 So.2d 576. In a fraud case, however, a cause of action accrues when the plaintiff knew or should have known about the defendant’s misrepresentations. Goodwin v. Sphatt, 114 So. 3d 1092, 1094–95 (Fla. 2d DCA 2013) (“The fraud statute of limitations begins to run when the plaintiff knew or should have known of the defendant’s misrepresentations.”). Distinguishing between the two standards can be important because the contract claim does not include a mens rea component while the fraud claim does. This means the limitations period in a contract case begins running even if the contractor does not know the breach occurred.

The issue can be further complicated because it is possible to toll the running of a limitations period under certain circumstances. Statutory law usually articulates most grounds for tolling. See, e.g., Fla. Stat. 95.051. Therefore, one must review the statutory scheme to determine whether any statutory tolling applies. Tolling can also apply as a matter of equity. See Woods v. United States, 700 F. App’x 982, 983–84 (11th Cir. 2017). (“Equitable tolling is appropriate when a movant untimely files because of extraordinary circumstances that are both beyond his control and unavoidable even with diligence.”). However, the party seeking to equitably toll a statute of limitations faces a high bar. In Echemendia v. United States, 710 Fed. Appx. 823, 827 (11th Cir. 2017), the United States Court of Appeals for the Eleventh Circuit explained that, “[e]quitable tolling is an extraordinary remedy that should be used sparingly.”

Based on the foregoing, it is prudent for an aggrieved party to file its claim as soon as practicable. It is generally unwise to wait until the last possible moment to file because uncertainties surrounding the date a cause of action accrues or whether tolling applies may ultimately cause the demise of a valid claim before it can be determined on the merits.

Peter Mavrick is a Fort Lauderdale business litigation lawyer, and represents clients in Miami, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.