Posted In: Litigation
Litigation Blog: Applicable Statute of Limitations in Declaratory Judgment Actions Depends on the Nature of the Underlying Action
on October 26, 2020
In Naiman Family Partners, L.P. v. Saylor, 2020-Ohio-2978, the 8th District Court of Appeals clarified the statute of limitations applicable to declaratory judgment actions brought under Ohio Rev. Code Chapter 2721. The court further clarified the application of the “continuing tort” doctrine and the discovery rule to statute of limitations disputes.
In Naiman Family Partners, the appellants asserted that the execution of certain documents transferring shares in a family partnership was invalid, causing them damages. The appellants sued the executor of a related beneficiary’s estate, asserting claims for declaratory judgment, conversion, and tortious interference arising from the circumstances under which the documents transferring the shares were executed. The trial court dismissed the appellants claims based upon the applicable statute of limitations, and the appellants’ appealed.
Examining the statute of limitations applicable to the appellants’ claims, the 8th District Court of Appeals noted that Ohio’s declaratory judgment statute does not establish the applicable statute of limitations for declaratory judgment actions. Rather, the limitations period is determined by examining the “underlying nature of subject matter of the claim.” Id. at ¶13. This inquiry does not focus upon the form in which the action is asserted. Rather, it examines “the actual nature or subject matter of the case . . . .” Id. (quoting Hambleton v. R.G. Barry Corp., 12 Ohio St.3d 179, 465 N.E. 2d 1298 (1984)).
Applying this rule, the court examined the underlying nature of the appellants’ claims, finding that the claims underlying the request for declaratory relief were for tortious interference and conversion. Thus, the court held that the declaratory judgment claim was subject to the same four-year limitations period as the conversion and tortious interference claims. Id. at ¶16.
The 8th District further overruled the appellants’ assertion that the “continuing tort” theory applied to the appellants’ claims. Under the continuing tort theory, the statute of limitations period can effectively be extended where the defendant’s actions are continuous and inflict “continuing and accumulating harm.” Id. at ¶20 (quoting Chernett Wasserman Yarger, L.L.C. v. ComScape Holding, Inc., 2014-Ohio-4214, ¶40.) The court refused to apply the doctrine to the appellants’ claims, however, because it is applicable only to continued unlawful acts, not to continuing effects from an original, completed violation. Id. at ¶21. The court found that although the alleged damages continued into the limitations period, the appellee’s alleged wrongful conduct was accomplished outside the limitations period and therefore the continuing tort doctrine was inapplicable. Id. at ¶22.
Naiman Family Partners demonstrates the importance of evaluating the basis for declaratory relief claims and examining the various limitations periods that may apply to those claims. While many declaratory relief claims may sound in contract, thus providing the benefit of the longer limitations period applicable to breach of contract claims, this is not necessarily the case with respect to all declaratory judgment claims. The nature of the underlying relief will determine the applicable limitations period and, in some instances, will make claims subject to a much shorter limitations period than the claimants may have anticipated.
This blog is intended to provide information generally and to identify general legal requirements. It is not intended as a form of, or as a substitute for legal advice. Such advice should always come from in-house or retained counsel. Moreover, if this Blog in any way seems to contradict advice of counsel, counsel's opinion should control over anything written herein. No attorney client relationship is created or implied by this Blog. © 2024 Brouse McDowell. All rights reserved.