Thought Leadership

States Toll Statutes of Limitations in Light of COVID-19, Impacting Litigation and Indemnity M&A Claims

Client Updates

Over the last month, many states—including California, Delaware, New York, and Texas—have suspended statutes of limitations for legal actions in response to the novel coronavirus outbreak. These suspensions have implications for companies that may face litigation (or those considering filing a claim), and for companies receiving or providing indemnities in M&A and other transactions where statutes of limitations are invoked for specific survival periods for indemnities related to tax, employee benefit, and fundamental representations.

Parties need to 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 such questions as 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. Given the rapidly changing nature of this situation, potential litigants and parties that have given indemnities should make sure to monitor the jurisdictions where their claims might arise.

Varying State Approaches

As documented in the chart below, as of the date of this alert, many states have taken some form of action to toll or suspend statutes of limitations. However, the various states have taken 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.

Some states, such as Delaware, Ohio, New Hampshire, Tennessee, and West Virginia have 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.” At the other end of the spectrum, New Jersey has stated 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 that faces 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.

Perhaps more problematic, however, are those jurisdictions where it is unclear whether the goal of the order is to cover all statutes of limitations, or just those set to expire during the period of emergency. For example, Connecticut’s order “suspends” statutes of limitations for the duration of the emergency. Thus, it remains unclear whether a deadline not set to expire during the period of the emergency would also be tolled. In other words, could a party that has a claim that expires the day after the period of the emergency ends argue that she should gain the additional time because the statute of limitations was “suspended” during the period of the order? Litigants (and parties defending against litigation) should be mindful of this ambiguity when calculating when a statute of limitations will run for claims in these states.

It is also worth noting that in several states that have not issued a statewide order, local courts are issuing orders tolling deadlines and statutes, so it is important to check the relevant court’s website or with the clerk of the court.

Considerations for Affected Parties

As parties are impacted by these orders, particularly those facing suits or indemnification claims that would have otherwise been time barred, there will be several issues to consider. The first question will be whether the entity issuing the order had the authority to universally toll the statute(s) of limitations. The answer to that question will require an analysis of state statutes and precedent. Some have questioned, for example, whether the Supreme Judicial Court of Massachusetts (“SJC”) has the authority to suspend all statutes of limitations under the statute cited in its order. See M.G.L. c.211 § 3. Under M.G.L. c.211 § 3, the SJC has “general superintendence of all courts of inferior jurisdiction” and “may 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.” However, Section 3 states 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, there may be an argument that the tolling of statutory deadlines exceeds the SJC’s authority.

Another question that will arise is what effect should be given to the order by courts outside of the jurisdiction where the case is filed. For example, some jurisdictions have held that choice-of-law provisions do not apply to statutes of limitations unless the choice-of-law provision specifically calls out statutes of limitations. Thus, if a contract dispute is governed by the laws of but brought outside of the state where the tolling order was issued, there may be some dispute as to whether the tolling order should be given effect. 

Finally, because this is a rapidly changing situation, potential litigants should check in regularly with the court where claims could be filed. Even if a state has not yet issued an order tolling a statute of limitations, it may still issue an order as this crisis continues to unfold. And in states where tolling orders have been issued, those orders may be extended. For example, Massachusetts, New Jersey, Oklahoma, and Virginia have already issued subsequent orders extending their initial emergency orders.

For prior Baker Botts thought leadership regarding COVID-19-related concerns and issues visit our COVID-19 Resources page.

 

State-by-State Analysis[1]

California

On April 6, 2020, the Judicial Council of California adopted 11 emergency rules to the California Rules of Court, including Emergency Rule 9, which “toll[s] the statutes of limitation for all civil causes of action from April 6, 2020, to 90 days after the state of emergency related to the COVID-19 pandemic is lifted.”

Connecticut

On March 10, 2020, Governor Ted Lamont issued an Executive Order suspending, among other things, all “statutes of limitations or other limitations or deadlines relating to service of process, court proceedings, or court filings . . . .” for the duration of the public health and civil preparedness emergency.

Delaware

The Supreme Court of Delaware issued an Administrative Order on March 22, 2020 providing that “[s]tatutes of limitations and statutes of repose that would otherwise expire during the period between March 23, 2020 and April 15, 2020 are hereby extended through April 21, 2020.”

District of Columbia

The Superior Court of the District of Columbia issued an order on March 18, 2020, which was amended on March 19, stating that “[u]nless otherwise ordered by the court, all deadlines and time limits in statutes, court rules, and standing and other orders issued by the court that would otherwise expire before May 15, 2020 including statutes of limitations, are suspended, tolled, and extended during the period of the current emergency.”

Georgia

The Supreme Court of Georgia on March 14, 2020 issued an order that “suspends, tolls, extends, and otherwise grants relief from any deadlines or other time schedules or filing requirements imposed by otherwise applicable statutes, rules, regulations, or court orders, whether in civil or criminal cases or administrative matters . . . .” during the period of the order. The order expires on April 13, 2020 at 11:59 p.m. unless otherwise extended.

Hawaii

The Supreme Court of Hawaii issued an order on March 20, 2020 providing “that all deadlines, time schedules, and filing requirements imposed by statutes, rules, or court orders, in all civil, criminal, and administrative matters in the circuit, district and family courts in the State of Hawai’i that expire between March 23, 2020 through and including April 3, 2020, are extended to April 6, 2020.”

Indiana

On March 23, 2020, the Indiana Supreme Court issued an order that tolled deadlines for appellate filings due between March 23, 2020 and April 6, 2020. The Indiana Supreme Court subsequently issued another order clarifying the deadlines for filings that would have otherwise been due during that period.

Iowa

On March 17, 2020, the Supreme Court of Iowa issued an order tolling “[a]ny statute of limitations, statute of repose, or similar deadline for commencing an action in district court . . . from March 17 to May 4 (48 days).”

Kansas

Through Administrative Order 2020-PR-016, the Kansas Supreme Court suspended until further order “all statutes of limitations and statutory time standards or deadlines applying to conducting or processing judicial proceedings . . .” Further, during the effective dates of the Administrative Order, no action will be dismissed for lack of prosecution.

Louisiana

Proclamation Number JBE 2020-30, issued on March 16, 2020, suspends all “[l]egal deadlines, including liberative prescription and preemptive periods applicable to legal proceedings in all courts, administrative agencies, and boards . . . until at least Monday, April 13, 2020.”

Maryland

On April 8, 2020, the Court of Appeals of Maryland issued an amended administrative order providing that: “[a]ll statutory and rules deadlines related to the initiation of matters required to be filed in a Maryland state court, including statutes of limitations, shall be tolled or suspended, as applicable, effective March 16, 2020, by the number of days that the courts are closed to the public due to the COVID-19 emergency by order of the Chief Judge of the Court of Appeals.”

 

Massachusetts

On March 17, 2020, the Supreme Judicial Court of Massachusetts issued an order providing that “[a]ll statutes of limitations are tolled form the date of this Order through April 21, 2020.” The Supreme Judicial Court subsequently issued an order repealing and replacing the prior order, which provides that “[a]ll statutes of limitations are tolled from March 17, 2020 through May 3, 2020.”

Michigan

On March 23, 2020, the Michigan Supreme Court issued an order stating that “any day that falls during the state of emergency” is not included for purposes of computation of time for “all deadlines applicable to the commencement of all civil and probate case-types, including but not limited to the deadline for the initial filing of a pleading . . . .” The order “is intended to extend all deadlines pertaining to case initiation and the filing of initial responsive pleadings in civil and probate matters during the state of emergency declared by the Governor related to COVID-19.”

New Hampshire

The Supreme Court of New Hampshire issued an order on March 16, 2020, and a subsequent order on March 27, 2020, addressing statutes of limitations. As a result of the orders, “[d]eadlines set forth in court rules, court orders, statutes, ordinances, administrative rules, administrative orders or otherwise that are set to expire between April 7, 2020, and May 3, 2020 and/or the last day of a Declared State of Emergency are . . . extended to May 4, 2020 and/or the last day of a Declared State of Emergency. Statutes of limitations and statutes of repose that would otherwise expire during the period between April 7, 2020, and May 3, 2020 and/or the last day of a Declared State of Emergency are . . . extended to May 4, 2020 and/or the last day of a Declared State of Emergency.” However, the order clarifies that “[d]eadlines, statutes of limitations, and statutes of repose that are not set to expire between April 7, 2020, and May 3, 2020 and/or the last day of a Declared State of Emergency are not extended or tolled by [the] order.”

New Jersey

The New Jersey Supreme Court issued an order on March 17, 2020 stating that “[i]n the computation of time periods under the Rules of Court and under any statute of limitations for matters in all courts, for purposes of filing deadlines, March 16 through March 27, 2020 shall be deemed the same as a legal holiday.” A subsequent order issued on March 27, 2020 extended this treatment through April 26, 2020.

New York

On March 20, Governor Andrew Cuomo issued Executive Order 202.8, which tolled through April 19, 2020 “any specific time limit for the commencement, filing, or service of any legal action, notice, motion, or other process or proceeding . . . .”

Ohio

HB 197, signed into law on March 27, 2020, tolls the period of limitations of commencement for a civil action that is “set to expire between March 9, 2020, and July 30, 2020 . . .” The tolling applies retroactively to March 9, the date the emergency was declared, and will expire on the date the period of emergency ends or July 30, 2020, whichever is sooner.

Oklahoma

The Supreme Court of Oklahoma issued an order on March 16, 2020, and a second order on March 27, 2020, under which “[s]ubject only to constitutional limitations, all deadlines and procedures whether prescribed by statute, rule or order in any civil, juvenile or criminal case, shall be suspended through May 15, 2020.” Further, “[i]n any civil case, the statute of limitations shall be extended through May 15, 2020.”

Pennsylvania

On March 16, 2020, the Supreme Court of Pennsylvania issued orders authorizing the presiding judges of the district courts and appellate courts to suspend, on a jurisdiction-by-jurisdiction basis, deadlines and time calculations for the purposes of time computation. However, on April 1, 2020, the Supreme Court of Pennsylvania issued an order stating that “[u]nless otherwise indicated . . . . all time calculations for purposes of time computation relevant to court cases or other judicial business, as well as time deadlines, ARE NOW SUSPENDED through April 30, 2020, subject to additional orders.” The order further clarifies that “any legal papers or pleadings which are required to be filed between March 19, 2020, and April 30, 2020, SHALL BE DEEMED to have been timely filed if they are filed by May 1, 2020, or on a later date as permitted by the appellate or local court in question.” Nevertheless, a Supplemental Order of the Supreme Court clarifies that the list of essential functions that courts must continue to undertake includes allowing parties to commence a civil action by praecipe for a writ of summons for the purposes of tolling a statute of limitations.

Tennessee

The Supreme Court of Tennessee issued an order on March 25, 2020 providing that “Statutes of limitations and statutes of repose that would otherwise expire during the period from Friday, March 13, 2020, through Tuesday, May 5, 2020, are hereby extended through Wednesday, May 6, 2020.”

Texas

On March 13, 2020, the Supreme Court of Texas issued an order that provides that “[a]ll courts in Texas may extend the statute of limitations in any civil case for a stated period ending no later than 30 days after the Governor’s state of disaster has been lifted . . . .” (emphasis added). However, in its eighth emergency order regarding the COVID-19 state of disaster, issued April 1, 2020, the Supreme Court of Texas declared that “[a]ny 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.” The April 1, 2020 order clarifies that this tolling “does not include deadlines for perfecting appeal or for other appellate proceedings, requests for relief from which should be directed to the court involved and should be generously granted.”

Virginia

On March 16, 2020, the Supreme Court of Virginia issued an order declaring a judicial emergency stating that “all deadlines” were “tolled and extended, pursuant to Va. Code § 17.1-330(D), for a period of twenty-one (21) days.” The Supreme Court subsequently issued an order extending that timeframe. The order provides that “the declaration of judicial emergency be in effect and continue beginning April 6 through April 26, 2020, for all district and circuit courts of the Commonwealth.” The subsequent order provides that, with certain limited exceptions, “all applicable deadlines, time schedules and filing requirements, including any applicable statute of limitations which would otherwise run during the period this order is in effect, are . . . tolled and extended, pursuant to Va. Code § 17.1-330(D), for the duration of [the] Order.”

West Virginia

On March 22, 2020, the Supreme Judicial Court of West Virginia issued an order stating that “[d]eadlines set forth in court rules, statutes, ordinances, administrative rules, scheduling orders, or otherwise that are set to expire between March 23, 2020, and April 10, 2020, are . . . extended to April 11, 2020. Statutes of limitations and statutes of repose that would otherwise expire during the period between March 23, 2020, and April 10, 2020, are . . . extended to April 11, 2020.” The order clarifies that “[d]eadlines, statutes of limitations, and statutes of repose that are not set to expire between March 23, 2020, and April 10, 2020, are not extended or tolled by [the] Order.”



 

[1] This chart also includes orders extending deadlines that appear to apply to statutory deadlines, even if the order does not explicitly mention a statute of limitations.

 

 



 

 

[1] This chart also includes orders extending deadlines that appear to apply to statutory deadlines, even if the order does not explicitly mention a statute of limitations.

 

Please note: This chart is current as of 4/13/2020.

 

 


 

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