New Statute Addresses Legal Malpractice Claims; Amends Certain Statutes of Limitation
On March 16, 2021, Governor DeWine signed into law Senate Bill 13 which has four significant implications on civil causes of action in Ohio; the creation of a statute of repose for legal malpractice actions, a shortened statute of limitations for causes of action based on contracts, the creation of a statute of limitations for causes of action arising out of consumer transactions, and modification of Ohio’s “Borrowing Statute.”
Statute of Repose for Legal Malpractice
Currently, Ohio law includes a statute of limitations for claims of legal malpractice that requires those causes of action to be brought within one (1) year of the date of discovery of the alleged malpractice. However, depending upon when the alleged malpractice is discovered, a claim for legal malpractice could be made against a lawyer at any time for the rest of their life, and up to one (1) year after they die. The passage of this law establishes a statute of repose of four (4) years for malpractice actions against attorneys in the state, affording them time limit protections already afforded to other licensed professionals, such as physicians, nurses, and architects who practice in Ohio.
A statute of repose, in contrast to a statute of limitations, does not take in to consideration when the injury is discovered, but instead will bar claims after the passage of a period of time. As such, if an injury is discovered five (5) years after the act or omission occurred, it would be barred by the statute of repose. This provides certainty to legal professionals who will no longer have perpetual fear of suit because a former client could theoretically discover an injury at any time. Similar to other statutes of repose in Ohio, there would be exceptions for certain disabilities, and additional time to file if a party discovers the injury in the last year that could not have been discovered earlier.
Shortened Statute of Limitations for Contracts
In order to provide more certainty for business owners, more opportunity for business growth, and thus, make Ohio more business friendly, the law also shortens the statute of limitations for causes of action based upon written contracts from eight to six years, and causes of action for oral contracts from six (6) to four (4) years. The Ohio legislature has now reduced the amount of time for bringing causes of action based upon written contracts twice in the past decade, whereas prior to 2012, Ohio had maintained a fifteen (15) year statute of limitations on such causes of action. While this seems to be drastic change over a short period, it is in keeping with the average, as Ohio will now be in line with twenty-two other states with the same six (6) year limitation period. The provisions will become effective on June 14, 2021. However, for causes of action that have accrued prior to this effective date, the period of limitations shall be six (6) or four (4) years from the effective date of the bill or the expiration of the period of limitations in effect prior to the effective date, whichever occurs first.
Statute of Limitations for Consumer Transactions
The law further creates a six (6) year statute of limitations for contracts in consumer transactions, whether or not they are in writing. This limitations period will be added to O.R.C. 2305.07 and would begin accruing thirty (30) days from the last charge or payment by the consumer. Exceptions to the new and shortened statute of limitations periods include actions relative to real property and commercial paper.
Modifications to Ohio’s “Borrowing Statute”
In causes of action arising from another state where the other state’s statute of limitations has already expired, the Ohio Borrowing Statute (O.R.C. 2305.03) applies to allow Ohio courts to “borrow” the statute of limitations from the other state to bar the cause of action and prevent forum shopping. The new law narrows the applicability of the statute by limiting its applicability to only tort actions, whereas it was previously applicable to all civil actions. In other words, only actions seeking damages for injury, death, or loss to person or property, and not damages for breach of contract.
The law further adds sections relative to post-default and post charge-off interest in consumer transactions in an effort to reduce claims brought in Ohio attempting to use a neighboring state’s interest rate if that state’s statute of limitations has run. Notably, the modifications to the borrowing statute would take retroactive effect to the dates of the passing of the Ohio Tort Reform Act, April 7, 2005.
With these new changes shortening the time in which claimants can bring a cause of action, it is important to consult with an attorney to ensure that a potential action is commenced timely. Please feel free to contact any of our attorneys with any questions you might have.
