So You Think You Can Sue? Beware of Laches!

 

The Statute of Limitations May No Longer be Your Deadline to Bring a Claim

 


By:  Lee J. Morehead, Esq.

I remember sitting in my first year civil procedure class when Professor John Greabe said,

“The way to remember the statute of limitations defense is S.O.L. If you do not bring your claim before the statute runs, your client is S.O.L.”

In Colorado, this is still true but thanks to a recent opinion by the Colorado Supreme Court, even if the statute of limitations has not expired, a plaintiff may still be “S.O.L.” because of the doctrine of laches.  In Hickerson v. Vessels, the Colorado Supreme Court held the doctrine of laches may defeat a lawsuit that was filed within the statute of limitations.  316 P.3d 620, 623 (Colo. 2014).  This ruling has caused me, and my fellow Colorado trial attorneys, many a sleepless night.  Practitioners and litigants alike thus need to be aware that waiting too long to file your lawsuit could mean you lose your claim completely.

The doctrine of laches is a common law doctrine that limits the time a plaintiff has to bring a claim.  Keller Cattle Co. v. Allison, 55 P.3d 257, 260 (Colo. App. 2002).  A statue of limitations is similar, but is a specific statutory provision that bars a claim from being filed after a set time period.  See  C.R.S. § 13-80-101(1) (2013).  For example, a party to a contract that believes a breach has been committed typically has to bring a lawsuit to recover damages for that breach within 3 years of the time the breach occurred.  The doctrine of laches sounds eerily similar to a statute of limitations.   However, for many practitioners and litigants, when and whether laches would apply was something of a guessing game, whereas when the statute of limitations ran out was relatively easy to determine.

Based on the Colorado Supreme Court’s recent ruling in Hickerson, the statute of limitations is now not the only limit to when a litigant may bring suit.

“What the statute of limitations gives in time, the doctrine of laches may take back.”

316 P.3d at 624.  For example, when someone has been defrauded, the victim must bring their claim within three years of discovering the fraud, pursuant to the statute of limitations.  C.R.S. § 13-80-101(1)(c) (2013).  However, what the statute gives the doctrine of laches takes.  Under the doctrine of laches, the victim of the fraud may have to bring her suit earlier than three years if (a) she had full knowledge of the facts, (b) she unreasonably delayed her assertion of the fraud, and (c) the tortfeasor or someone else had come to rely on the lack of prosecution or is prejudice by the delay.  Hickerson, 316 P.3d at 623 (quoting City of Thornton v. Bijou Irr. Co., 926 P.2d 1, 73 (Colo. 1996).  So for a fraud victim, the statute of limitations states she has to bring her claim within three years, but the doctrine of laches may make that time period much shorter if these three elements are present.

What does this mean for parties bringing a lawsuit in Colorado? It means in addition to looking at when the statute of limitations may expire on your claim, other factors must also be considered lest a zealous defense attorney seek to dismiss your claim because you delayed in filing your lawsuit.  Gone are the days of relying solely on the statute of limitations to determine when a claim must be filed.

The result in Hickerson may at first blush seem harsh and uncertain, but the doctrine of laches is not the only legal doctrine that can shrink or expand the time in which a party has to file a lawsuit.  Throughout both common and statutory law there are other mechanisms to shrink or extend a deadline to file suit.  When a litigant files suit, pursuant to Colorado Rule of Civil Procedure 13, the defendant must bring all of its counterclaims arising from the same transaction or occurrence as the plaintiff’s claim regardless of the deadline set by the applicable statute of limitations.  C.R.C.P. 13(a); see also C.R.S. § 13-80-109 (2013).  Also, within the statute of limitations itself are tolling provisions extending the deadline a litigant may file suit in specific situations.  See C.R.S. 13-80-113 (2013) (stating payment on a debt starts the statute of limitations period over).  Lastly, the doctrine of res judicata may bar a litigant from pursuing a claim they should have included in the initial suit.  See Argus Real Estate, Inc. v. E-470 Public Highway Authority, 97 P.3d 215 (Colo. App. 2003).  Thus, the statute of limitations is not the only statute or common law that may affect the deadline to file suit.

It is unclear how provisions of Colorado law that toll a statute of limitations will now be interpreted in light of the Colorado Supreme Court’s recent ruling that the doctrine of laches may nevertheless bar a claim that was filed before the statute of limitations expired.  What is clear is that litigants and practitioners must now add laches as another deadline setting paradigm in determining when the deadline is by which a lawsuit must be filed.  The problem with the doctrine of laches being added to this analysis is that laches has its roots in equity and, as such, its use and applicability are determined on a case-by-case basis.  City of Thornton, 926 P.2d at 73.  One court may deem a certain set of facts to trigger laches and bar suit where another court with similar facts may determine laches does not bar suit.  Because the doctrine of laches is determined on a case-by-case basis, there is no clear guideline about when the doctrine will apply and when it will not.

For now, to avoid uncertainty, those individuals and businesses who believe they may have a case should consult an experienced litigation attorney sooner rather than later.  The clear message from the Colorado Supreme Court is to file before it is too late.  Since the statute of limitations is no longer the only deadline for determining when a lawsuit is filed too late, acting quickly is the only sure way to make sure you are not S.O.L.

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