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Tolling Agreement

December 12, 2014

Tolling Agreement

CaseCircle C Construction, LLC v. D. Sean Nilsen, Et Al.

Issue: Does a tolling agreement between parties preclude the application of the savings statute set forth in Tenn. Code Ann. § 28-1-105(a)?

Facts: Plaintiff contemplated a legal malpractice action against a firm but the parties entered into a statute of limitation tolling agreement. The Plaintiff filed suit, non-suited, and then commenced a second suit but beyond the tolling agreement.  The trial court dismissed and the intermediate court affirmed.

Appellate Decision: The intermediate court noted that the tolling statute, Tenn. Code Ann. § 28-1-105(a), applies “[i]f the action is commenced within the time limited by a rule or statute of limitation.” By its terms, therefore, subsection (a) applies to periods of limitation established by “rule or statute of limitation.” Here, the applicable time limitation is established by contract, not by “rule or statute of limitation.” The court held “that the savings statute of Tenn. Code Ann. § 28-1-105(a), by its terms, does not trump the deadline established by the parties in the tolling agreement.” The intermediate court agreed with the trial court that the tolling agreement does preclude application of the savings statute and that the plaintiff’s legal malpractice action is barred by the termination date established in the agreement.

Review Granted:  November 20, 2014.

Prediction:  David believes the Court will affirm in a divided opinion. The parties contracted the tolling agreement and functionally the plaintiff is attempting to tack the saving provision on the agreement. There may be a dissent claiming that the saving statute trumps the agreement, but that does violence to the ability of the parties to contract a tolling agreement clear in its terms.