“Before you can win a game, you have to not lose it.”
— Chuck Noll.
There comes a time when those who may have a cause of action must file their claim or risk losing it entirely. The Supreme Court recently barred a lawsuit by plaintiffs who sought damages for contamination from an electronics manufacturing plant because they did not file their claim until 24 years after the company sold the property, even though they did not know about the contamination until 22 years after the sale of the property. This is a lesson that should be learned by prospective plaintiffs, as well as companies seeking to limit their liability for conditions they created years ago.
In CTS Corporation vs. Waldburger, CTS operated an electronics plant from 1958 to 1985 and during its operation, used and stored hazardous chemicals on it. CTS sold the property in 1985. Later, portions of the property were sold, but none of the buyers were aware of the existence of the contamination until 2009, when the Environmental Protection Agency informed the new owners that their wells were contaminated with the same types of chemicals used by CTS.
The new property owners sued CTS for nuisance in state court, seeking remediation of existing conditions and damages to compensate them for past and future damages. The federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) allows parties to force cleanup or recovery response costs. As CERCLA does not provide recovery for nuisance damages, the plaintiffs likely decided to seek justice in the state court instead.
Nuisance claims are “tort” claims, that is, claims for damages for injuries resulting from a breach of a duty owned to the plaintiff by the defendant. Each state governs tort claims. States commonly restrict making tort claims based on the timeliness of claims, which are known as “statutes of limitation” and “statutes of repose.”
A statute of limitation provides that a plaintiff may not bring a claim if too much time has passed, based on when the plaintiff has suffered an injury or becomes aware that he has suffered an injury. A statute of repose has a similar, but different purpose, which is to bar suits that are brought after a specific time period after the defendant’s alleged act, regardless of when the plaintiff has discovered his injury. A statute of repose was at issue in this suit.
CERCLA recognizes that claims related to environmental contamination may have a long latency period. It provides that the time does not start ticking for statute-of-limitations purposes for all state law claims related to personal injury or property damages until the plaintiff knew or had reason to know that his injuries was the result of a particular hazardous contaminant.
But what was at issue with CTS is that the state had a statute of repose that barred causes of action that are brought against a defendant later than 10 years after the “last culpable act” by the defendant. The Supreme Court determined that the “last culpable act” was when CTS sold the property in 1985.
The plaintiffs argued that CERCLA required an extension of that time period because they were unaware of the existence of contamination. The Supreme Court disagreed. Unlike a statute of limitation, legislatures that provide a statute of repose do so to provide relief to a defendant so that it could “be free from liability after the legislatively mandated period of time” and that doing so allows a defendant “a fresh start or freedom from liability.” As CERCLA referenced the ability to extend the time under a state statute of limitation, but not for a state statute of repose, the Supreme Court concluded that Congress did not intend to extend time to file suits on states’ statutes of repose.
Michigan has a statute of limitations. It also has statutes of repose for medical malpractice claims, legal malpractice claims and other types of malpractice claims. However, Michigan does not have a statute of repose similar to that of the one in the CTS case. However, both plaintiffs and defendants should be mindful that if a plaintiff sleeps on its rights, a defendant is well within its rights to dismiss what could otherwise be a valid legal claim.
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