SENATE BILL 13
Governor DeWine recently signed into law Senate Bill 13. The Bill goes into effect on June 14, 2021, and modifies a number of different statute of limitations.
Ohio, for the second time in the last ten years, has shortened the statute of limitations applicable to written contracts. Originally, the statute of limitations for breach of a written contract was 15 years. In 2012, that was shortened to 8 years. Senate Bill 13 reduces the statute of limitations on written contracts yet again, from 8 years down to 6 years.
In addition to shortening the statute of limitations for written contracts, Senate Bill 13 also shortens the statute of limitations on oral, non-written contracts from 6 years down to 4 years.
Both the six year statute of limitations applicable to written contracts and the four year statute of limitations applicable to oral contracts, run from when the cause of action accrues. Generally, under Ohio law, a breach of contract claim accrues when the breach occurs or when the complaining party suffers actual damages as a result of the breach. Senate Bill 13 addresses certain actions arising out of consumer transactions incurred primarily for personal, family or household purposes, which it provides must be brought within six years after the cause of action accrues. With respect to these claims, the Bill expressly states that these causes of action accrue “thirty calendar days after the date of the last charge or payment by, or on behalf of, the consumer, whichever is later.” It appears that this provision is designed to deal with debt like credit cards, and to make it easy to calculate when the cause of action accrues and the statute of limitations runs.
With respect to claims that have already accrued prior to the effective day of the statute, the notes to Senate Bill 13 provide that the period of limitations shall be four or six years, depending on whether it is a written or oral contract, “from the effective date of the statute or the expiration of the period of limitations in effect prior to the effective date of the act, whichever of those occurs first.” So, if for example, you have a breach of a written contract that accrued more than six years ago, you will not lose the cause of action and will still have until the expiration of the prior statute of limitations to bring your claim.
In addition to modifying the statute of limitations with respect to written and oral contracts, Senate Bill 13 also adopted a statute of repose with respect to claims of legal malpractice. The statute of limitations on a claim for legal malpractice remains one year. Ohio courts have long recognized that this one year statute of limitations accrues upon the latter of (1) when the client discovers or should have discovered that they suffered an injury as a result of the attorney’s negligence or (2) when the attorney-client relationship for a particular transaction terminates. Senate Bill 13, however, has modified this general rule by providing for a statute of repose in Ohio Section 2305.117 (B)(1), which provides that “no action upon a legal malpractice claim against an attorney or 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.” Ohio Revised Code Section 2305.117(C)(1) provides one exception to this statute of repose, and indicates that if the client “in the exercise of reasonable care and diligence could not have discovered the injury resulting from the act or omission constitute in the alleged basis of the claim within three years after the occurrence of 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 provision (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 the act or omission.” Ohio Revised Code Section 2305.117(C)(2), provides that any person relying on the provisions of Ohio Revised Code Section 2305.117(C)(1) to extend the statute of repose past four years has the burden of proving by clear and convincing evidence that they could not, with reasonable care and diligence, discovery the injury resulting from the negligence that is the basis of the legal malpractice claim within three years of the negligence occurring. Thus, even if the client does not discover the malpractice or the representation continues, the claim may still become time barred as a result of the new statute of repose.
Finally, Senate Bill 13 also provides that certain actions based on substantive laws from another state are barred, if either the statute of limitations from the foreign jurisdiction or from Ohio has expired. These provisions apply to claims seeking either post default interest or post charge off interest, and also appear to be largely aimed at credit card providers who are attempting to rely on laws from other states to charge interest in excess of what would be permitted under Ohio Revised Code Section 5703.47, which sets forth the statutory interest rate on judgments in Ohio.