On March 16, 2021, Governor DeWine signed into Ohio law Senate Bill 13, the full title of which is "To amend sections 2305.03, 2305.06, 2305.07, and 2505.11 and to enact section 2305.117 of the Revised Code to shorten the period of limitations for actions upon a contract; to make changes to the borrowing statute pertaining to applicable periods of limitations; and to establish a statute of repose for a legal malpractice action." As its full title indicates, this Bill makes many changes that affect the filing and viability of many civil actions in Ohio, and Ohio litigators, both plaintiff-side and defendant-side, should be aware of the changes. Indeed, effective June 16, 2021, "existing sections 2305.03, 2305.06, 2305.07, and 2305.11 of the Revised Code are hereby repealed" and will be replaced with the new provisions. Below is breakdown of some of the changes.
Changes to Statutes of Limitations for Contract Actions, Sections 2305.06 and 2305.07
For those of us who remember, less than ten years ago, an action based on a written contract action had a 15-year statute of limitations. That limitations period was reduced to 8 years in 2012. Senate Bill 13 makes even more significant changes to the limitations periods for contract actions, including actions involving consumer transactions.
- Actions based on contracts in writing must be brought within six (6) years.
- Actions based on contracts not in writing must be brought within four (4) years.
- Certain consumer transactions, whether based on a written contract or not, must be brought within six (6) years.
Old Section 2305.06, which governs contracts in writing, provided the following:
"Except as provided in sections 126.301 and 1302.98 of the Revised Code, an action upon a specialty or an agreement, contract, or promise in writing shall be brought within eight years after the cause of action accrued." (Emphasis added).
Section 2305.06 now states:
"Except as provided in sections 126.301, 1302.98, 1303.16, 1345.10, and 2305.04 of the Revised Code, an action upon a specialty or an agreement, contract, or promise in writing shall be brought within six years after the cause of action accrued." (Emphasis added).
As for contracts not in writing, old R.C. 2305.07 stated:
"Except as provided in sections 126.301 and 1302.98 of the Revised Code, an action upon a contract not in writing, express or implied, or upon a liability created by statute other than a forfeiture or penalty, shall be brought within six years after the cause thereof accrued." (Emphasis added).
Now, Section 2305.07 reads:
"(A) Except as provided in sections 126.301 and 1302.98 of the Revised Code, an action upon a contract not in writing, express or implied, shall be brought within four years after the cause of action accrued.
(B) An action upon a liability created by statute other than a forfeiture or penalty, shall be brought within six years after the cause of action accrued.
(C) Except as provided in sections 1303.16, 1345.10, and 2305.04 of the Revised Code, and notwithstanding divisions (A) and (B) of this section, section 1302.98, and division (B) of section 2305.03 of the Revised Code, an action arising out of a consumer transaction incurred primarily for personal, family, or household purposes, based upon any contract, agreement, obligation, liability, or promise, express or implied, including an account stated, whether or not reduced to writing or signed by the party to be charged by that transaction, shall be commenced within six years after the cause of action accrued. For purposes of this division, a cause of action accrues within thirty calendar days after the date of the last charge or payment by, or on behalf of, the consumer, whichever is later."
It is important to note that Senate Bill 13 also includes provisions for what actions to which these new limitations periods will apply. Generally, the amendments to Sections 2305.06 and 2305.07 will apply to actions in which the cause of action accrued on or after the effective date of the act. However, for actions that accrued prior to the effective date of the act, it depends. "For causes of action that are governed by section 2305.06 of the Revised Code and that accrued prior to the effective date of this act, the period of limitations shall be six years from the effective date of this act or the expiration of the period of limitations in effect prior to the effective date of this act, whichever occurs first." Senate Bill 13, Section 4. "For causes of action that are governed by division (A) of section 2305.07 [contract not in writing] of the Revised Code that accrued prior to the effective date of this act, the period of limitations shall be four years from the effective date of this act or the expiration of the period of limitations in effect prior to the effective date of this act, whichever occurs first." Senate Bill 13, Section 5 (A). "For causes of action that are governed by division (C) of section 2305.07 [certain consumer transactions] that accrued prior to the effective date of this act, the period of limitations shall be six years from the effective date of this act or the expiration of the period of limitations in effect prior to the effective date of this act, whichever occurs first." Senate Bill 13, Section 5 (B).
Creation of Statute of Repose for Legal Malpractice Actions
As many may know, Ohio already has existing statutes of repose for various tort actions, including one that covers medical malpractice claims. (See my recent blog Ohio's Savings Statute (Again) Does not Save All. Ohio's Medical Claims Statute of Repose is True Statute of Repose and the Savings Statute Does not Apply or Alter It. There was, however, no statute of repose specifically for legal malpractice claims. Senate Bill 13 changed that. Newly-created Section 2305.117 provides a statute of repose for legal malpractice claims and states the following:
"(A) Except as otherwise provided in this section, an action upon a legal malpractice claim against an attorney or a law firm or legal professional association shall be commenced within one year after the cause of action accrued.
(B) Except as to persons within the age of minority or of unsound mind as provided by section 2305.16 of the Revised Code, and except as provided in division (C) of this section, both of the following apply:
(1) No action upon a legal malpractice claim against an attorney or a law firm or legal professional association shall be commenced more than four years after the occurrence of the act or omission constituting the alleged basis of the legal malpractice claim.
(2) If an action upon a legal malpractice claim against an attorney or a law firm or legal professional association is not commenced within four years after the occurrence of the act or omission constituting the alleged basis of the claim, then, any action upon that claim is barred.
(C)(1) If a person making a legal malpractice claim against an attorney or a law firm or legal professional association, in the exercise of reasonable care and diligence, could not have discovered the injury resulting from the act or omission constituting the alleged basis of the claim within three years after the occurrence of the act or omission, but, in the exercise of reasonable care and diligence, discovers the injury resulting from that act or omission before the expiration of the four-year period specified in division (B)(1) of this section, the person may commence an action upon the claim not later than one year after the person discovers the injury resulting from that act or omission.
(2) A person who commences an action upon a legal malpractice claim under the circumstances described in division (C)(1) of this section has the affirmative burden of proving, by clear and convincing evidence, that the person, with reasonable care and diligence, could not have discovered the injury resulting from the act or omission constituting the alleged basis of the claim within the three-year period described in that division." (Emphasis added).
A few important highlights of this new legal malpractice claim statute of repose:
- the statute of limitations for a legal malpractice claim remains at 1 year.
- the statute of repose is 4 years from the date of the act or occurrence that is the basis of the alleged malpractice – any legal malpractice action brought after 4 years is barred.
- the only exception (apart from the usual minority or of unsound mind exceptions) is if, "in the exercise of reasonable care and diligence" the party could not have discovered the injury within 3 years, then the party gets one additional year from the date of discovery of the injury to bring the action.
- to be able to take advantage of the exception, however, the party has the "affirmative burden" of proving by "clear and convincing evidence" that the party could not have discovered the injury using reasonable care and diligence.
Changes to Ohio's Borrowing Statute, Section 2305.03
Senate Bill 13 also made changes to Section 2305.03, Ohio's borrowing statute, which sets time limits on the filing of lawsuits in Ohio based on acts that occurred in other states. Old Section 2305.03 stated:
"(A) Except as provided in division (B) of this section and unless a different limitation is prescribed by statute, a civil action may be commenced only within the period prescribed in sections 2305.04 to 2305.22 of the Revised Code. If interposed by proper plea by a party to an action mentioned in any of those sections, lapse of time shall be a bar to the action.
(B) No civil action that is based upon a cause of action that accrued in any other state, territory, district, or foreign jurisdiction may be commenced and maintained in this state if the period of limitation that applies to that action under the laws of that other state, territory, district, or foreign jurisdiction has expired or the period of limitation that applies to that action under the laws of this state has expired."
Under Senate Bill 13, two new parts (C) and (D) have been added to Section 2305.03, and the word "civil action" in part (B) has been change to "tort action, as defined in section 2305.236 of the Revised Code…." The new parts (C) and (D) provide specific time limitations on the filing of contract actions that have post-default or charge-off interest rates that are governed by another state's law and that are in excess of the rates allowed by Ohio law:
"(C) No action upon a specialty or an agreement, contract, or promise in writing, other than an action described in division (C) of section 2305.07 of the Revised Code, that seeks post-default interest at a rate governed by or provided in the substantive laws of any other state, territory, district, or foreign jurisdiction, and in excess of the rate of interest provided by section 5703.47 of the Revised Code, may be commenced and maintained in this state if the period of limitation that applies to that action under the laws of that other state, territory, district, or foreign jurisdiction has expired or the period of limitation that applies to that action under the laws of this state has expired.
(D) No action described in division (C) of section 2305.07 of the Revised Code that seeks post charge-off interest at a rate governed by or provided in the substantive laws of any other state, territory, district, or foreign jurisdiction, and in excess of the rate of interest provided by section 5703.47 of the Revised Code, may be commenced and maintained in this state if the period of limitation that applies to that action under the laws of that other state, territory, district, or foreign jurisdiction has expired or the period of limitation that applies to that action under the laws of this state has expired."
Again, be aware of these changes, and remember they become effective in June.
