In Huss v. Rucci Oil Company, the Appellate Division, Second Department, discussed the respective burdens of proof based on a defense involving the statute of limitations, which is then countered by a plaintiff’s claim that equitable estoppel failed to toll the statute.
In this case, the plaintiff brought suit for causes of action sounding in breach of contract and negligence based on defendant’s failure to obtain the necessary permits in its installation of a fuel storage tank at plaintiff’s premises. Defendant moved to dismiss as the June 11, 2015, action was time barred given the accrual of both the breach of contract and the negligence claims on December 19, 2008 when defendant installed the fuel tank.
The lower court denied defendant’s motion as plaintiff had raised the issue of whether the doctrine of equitable estoppel was applicable which would constitute a toll of the limitations period for each cause of action and the defendant has not met its burden in establishing the actual accrual of the action.
Typically, the defendant bears the initial burden of establishing that the time in which to commence the action has expired. The burden then shifts to the plaintiff to raise a question of fact as to whether the statute of limitations is tolled or is otherwise inapplicable. Here, the Appellate Division found that defendant satisfied its initial burden. The burden then shifted to plaintiff to establish that a subsequent specific action by the defendant induced the plaintiff to delay timely bringing suit due to plaintiff’s reliance on the defendant’s misrepresentation.
On these facts, when the first of three violations for failure to obtain necessary permits was issued to the defendant in October 2009, defendant’s service manager informed plaintiff that defendant would take care of that violation. Plaintiff claimed they relied on this representation and that he was unaware that defendant had not in fact cured the violation until a subsequent violation had been issued in July 2013, thus allegedly justifying plaintiff’s delay up until June 2015 in commencing the action.
However, the Appellate Division noted that equitable estoppel will not toll a statute of limitations where a plaintiff possesses timely knowledge sufficient to place a plaintiff under a duty to make inquiry and ascertain all the relevant facts prior to the expiration of the applicable statute of limitations. Where the doctrine of equitable estoppel applies, the burden is on the plaintiff to establish that due diligence was exercised in commencing an action within a reasonable time after the facts giving rise to the estoppel ceased to be operational. The court found that plaintiff did not demonstrate the necessary due diligence because plaintiff could have commenced an action within the more than three-and-one-half years remaining on the six-year breach of contract cause of action and the four months remaining on the three-year negligence statute of limitations when the second violation was issued in August 2011. This violation served to provide plaintiff with timely knowledge of the defendant’s failure to cure the initial violation. Thus, the Appellate Division granted defendant’s motion to dismiss.
Thanks to Sara Matscfhke for her contribution to this post and please write to Mike Bono for more information.