Click to Chat

Tolling Agreements in Nevada (Contractually Modified Statutes of Limitation)

Posted by: on Mon, Feb 09, 2015

Share this post

For decades, there was some lingering doubt about how the Nevada Supreme Court just would treat tolling agreement.  Finally, in 2013, the Nevada Supreme Court addressed the issue regarding contractually modified statutes of limitations periods.  In Holcomb
Condominium Homeowner’s Association v. Stewart Venture LLC
., 300 P.3d
124 (Nev. 2013), the court stated as follows:

 

“Whether a party may contractually modify a statutory limitations period is an issue of
first impression in Nevada.  However, in other jurisdictions, it is well
established, that in the absence of a controlling statute to the contrary, a
provision in a contract may validity limit, between the parties, the time for
bringing an action on such contract to a period less than prescribed in the
general statute of limitations, provided that the shorter period itself shall
be a reasonable period. (Citations omitted).  The policy underlying this
rule is the recognition of parties’ freedom to contract. (Citations
omitted).  Because Nevada has long recognized a public interest in
protecting the freedom of persons to contract, we join these jurisdictions and
hold that a party may contractually agree to a limitations period shorter than
that provided by statute as long as there exists no statute to the contrary and
the shortened period is reasonable, and subject to normal defenses including
unconscionability and violation of public policy. “

 

The drafter of a tolling agreement should keep in mind that some states,
such as Michigan, have held that in order for a tolling agreement to be enforceable,
it must be for a specific and reasonable time period.  It cannot for an indefinite period of time.  The Michigan Court of Appeals in Pitch v. Blandford (2004) held that indefinite time periods would violate public policy and allow suit to be filed many years after the cause of action
accrued.  Hence, the parties should  negotiate and thenexpressly identify in their tolling agreement a specific deadline that is reasonable.

We have found no cases in Nevada at this writing directly on point with respect to contractually extending or lengthening the statute of limitations period.  We did, however, locate an ALR Report entitled “Validity of Contractual Provision Establishing Period of Limitations Longer
than that provided by Statute of Limitations.”  See, 84 ALR 3d 1172.
Although originally published in 1978, the ALR database is apparently updated
weekly.  This  ALR article suggests that California, Colorado, Montana and
Illinois would recognize such tolling agreements (under a variety of
conditions), but that Alabama and Kentucky have repeatedly refused to recognize
such provisions as being against public policy.  Rather than try and
predict which way the Nevada court may hold, it may be prudent in certain cases to simply
file the complaint and then stipulate to hold the case in abeyance for a time in order to allow
settlement negotiations to continue.

 

About the Authors: The law firm of Albright, Stoddard, Warnick & Albright is an A-V Rated Nevada-based full-service law firm having attorneys licensed in Nevada, California and Utah. Our firm’s practice includes a strong emphasis on real estate, secured finance and litigation.

Note: This article, and any other information you obtain at this website, is not offered as legal advice, nor should it be relied upon as such, nor is it a solicitation for legal services. Only a licensed attorney can advise you with respect to your specific legal needs. We welcome your contacting our firm to discuss such representation. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.

About the Authors: The law firm of Albright, Stoddard, Warnick & Albright is an A-V Rated Nevada-based full-service law firm having attorneys licensed in Nevada, California and Utah. Our firm’s practice includes a strong emphasis on personal injury accidents. Call us at 702-384-7111.

Note: This article, and any other information you obtain at this website, is not offered as legal advice, nor should it be relied upon as such, nor is it a solicitation for legal services. Only a licensed attorney can advise you with respect to your specific legal needs. We welcome your contacting our firm to discuss such representation. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.