TEXAS SUPREME COURT LENGTHENS STATUTE OF LIMITATIONS FOR SOME CREDITORS BY RE-DEFINING POINT OF ACCRUAL
A cause of action accrues when facts come into existence that authorize a claimant to seek a judicial remedy. At least that has been the general rule. On February 27, 2015, the Texas Supreme Court created an exception, and thereby revived a creditor's claim that had been dismissed as time-barred by the court below.
A claim against a partner to enforce the partner's liability for partnership debt, says the Court, does not accrue when the underlying claim accrues even though the partner may be sued in addition to the partnership.
Acknowledging that the Texas Legislature has not defined accrual for this type of claim, though it has done so for other types of claims, and even citing the residual statute of limitations in the Civil Practice and Remedies Code (4 years), the Court nevertheless effectively extended the "statute" of limitations for a claim against the partner to many more years (depending on how fast the claim against the partnership is brought and how fast it is litigated to judgment) by holding that the claim for enforcement of the partners' liability on partnership debt does not accrue until judgment is entered against the partnership (plus an additional 90 days, unless an exception applies).
It gives a whole new meaning to statutory construction: Extending the "statute" of limitations beyond the four year statute of limitations for breach of contract claims (and the residual statute of limitations for like number of years) by creating an exception to the general rule of accrual that other plaintiffs have to live by.
American Star Energy and Minerals Corporation v Stowers (Tex Feb. 27, 2015)(Opinon by Jeff Brown).
Coverage of this case elsewhere:
Texas High Court Extends Limitations Period for Unpaid Partnership Liabilities
SCOTX rules on limitations period against partners: American Star Energy and Minerals Corp. v. Stowers
AMERICAN STAR ENERGY AND MINERALS CORPORATION, Petitioner,
RICHARD "DICK" STOWERS, RICHARD W. STOWERS, FRANK K. STOWERS AND LINDA SUE JASURDA, Respondents.
Supreme Court of Texas.
JUSTICE BROWN delivered the opinion of the Court.
JEFFREY V. BROWN, Justice.
In this case we must decide whether Texas partnership law requires a plaintiff seeking to enforce a partner's liability for a partnership debt to sue the partner within the limitations period on the underlying claim against the partnership. Here, a judgment creditor attempted to collect from a partnership after litigating a contract claim for over a decade and a half, only to find the partnership insolvent. When the creditor sought a judgment against the individual partners, the trial court ruled the limitations period began when the underlying cause of action accrued. Because that period had passed, limitations precluded pursuit of the partners' assets. The court of appeals affirmed.
We hold today that the limitations period against a partner generally does not commence until after final judgment against the partnership is entered. Because this action was brought within that period, we reverse the court of appeals' judgment.