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Statute of Limitations for Compulsory Counterclaims

Posted by James Juo | Feb 14, 2023 | 0 Comments

The filing of a complaint tolls the statute of limitations for compulsory counterclaims in many courts. See, e.g., Burlington Indus., Inc. v. Milliken & Co., 690 F.2d 380, 389 (4th Cir. 1982); UST Capital Corp. v. Charter Nat'l Life Ins. Co., 684 F. Supp. 757, 759 (D. Mass. 1986). But this conclusion has not been unanimous. See, e.g., Hartford Accident & Indem. Co. v. Pro-Football, Inc., 127 F.3d 1111, 1118–19 (D.C. Cir. 1997) (holding that under the law of the District of Columbia the filing of a complaint does not toll the statute of limitations on a counterclaim).

Whether, and to what extent, the filing of a complaint waives or tolls the statute of limitations for compulsory state law counterclaims must be resolved with reference to the applicable state lawFull Draw Productions v. Easton Sports, Inc., 85 F. Supp. 2d 1001, 1009 (D. Colo. 2000); Hartford v. Gibbons & Reed Co., 617 F.2d 567, 569 (10th Cir.1980); cf. 6 Wright, Miller Kane § 1419 (“The test of Rule 13(a) itself does not offer any solution to the problem of whether the institution of an action tolls the running of the limitations period on compulsory counterclaims or reflect any federal policy on the question.”).

Colorado's Counterclaim Revival Statute

Under Colorado law, a “counterclaim or setoff arising out of the transaction or occurrence which is the subject matter of the opposing party's claim shall be commenced within one year after service of the complaint by the opposing party and not thereafter.” Colo. Rev. Stat. § 13-80-109.

Thus, Colorado's counterclaim revival statute permits otherwise time-barred claims to be filed as counterclaims, if compulsory, within one year of service of the complaint that includes the claim that gives rise to the counterclaims. See E-21 Eng'g, Inc. v. Steve Stock & Assocs., Inc., 252 P.3d 36, 40 (Colo. App. 2010).

Notably, the Colorado revival statute's one-year limitations period runs from the service date of the initial complaint, and not from the date of the last-filed amended complaint (except with respect to new claims asserted in an amended complaint). Mareen v. Hailey, 381 P.3d 337 (Colo. App. 2015).

The purpose of the counterclaim revival statute is to allow a party to assert time-barred compulsory counterclaims in certain circumstances. Plains Metropolitan Dist. v. Ken–Caryl Ranch Metropolitan Dist., 250 P.3d 697, 702 (Colo. App. 2010).

One Year, and No Longer

In Full Draw Productions v. Easton Sports, the complaint was filed in the District of Colorado on May 30, 1997, asserting anti-trust and tortious interference with prospective business advantage claims. Id., 85 F. Supp. 2d 1001 (D. Colo. 2000). A Rule 12(b)(6) motion to dismiss was filed. That motion was granted, but later was reversed and remanded by the Tenth Circuit in 1999. After remand back to the district court, an amended complaint was filed. In the answer, counterclaims of common law trade libel and business disparagement were asserted. The allegedly disparaging statements were made in 1995 and 1996.

The trade libel counterclaim was not yet barred by the applicable two-year statute of limitations when the complaint was filed in May 1997. But the trade libel counterclaims were not filed until September 15, 1999, roughly three years after the last of the allegedly offending statements and approximately two-and-one-half years after the 1997 complaint was filed.

The question presented in Full Draw was whether Colorado's counterclaim revival statute's limitation period was tolled during the pendency of a motion to dismiss. Mareen v. Hailey, 381 P.3d 337, 2015 COA 181 (Colo. App. 2015).

The Full Draw court held that the plain language of § 13-80-109 gave the counterclaimant one year from the May 30, 1997 date of the complaint, and no longer, to file a counterclaim for trade libel and business disparagement. Id., 85 F. Supp. 2d at 1009. The initial answer and counterclaims were filed outside of the two-year statute of limitations for tort claims (§ 13-80-102(a))—and outside of the one-year limitations period from the filing of the complaint under Colorado's counterclaim revival statute (§ 13-80-109)—so, the counterclaims were untimely. Id. 

Relation Back

A previously-omitted counterclaim that is added later in an amended pleading outside that one-year period, however, could relate back to a timely original answer filed within that one-year period—if the amended pleading asserting that counterclaim meets the requirements of C.R.C.P. 15(c). See also Kelso v. Rickenbaugh Cadillac Co., 262 P.3d 1001, 1003 (Colo. App. 2011) (“Because the Colorado rule and Federal Rules of Civil Procedure 15(e)(1)(B) are substantially similar as relevant here, case law interpreting the federal rule is persuasive in our analysis of C.R.C.P. 15(c).”).

Numerous federal courts have held that an amended answer adding a counterclaim can relate back to the original answer, even when no counterclaim was originally asserted, if the counterclaim arose out of the same transaction alleged in the earlier-filed answer. See, e.g., Banco Para El Comercio Exterior de Cuba v. First Nat'l City Bank, 744 F.2d 237, 243 (2d Cir. 1984); Perfect Plastics Indus., Inc. v. Cars & Concepts, Inc., 758 F. Supp. 1080, 1083 (W.D. Pa. 1991); Local 1316, Int'l Bhd. of Elec. Workers v. Superior Contractors & Assocs., Inc., 618 F. Supp. 488, 489 (N.D. Ga. 1985); Milam v. Massey-Ferguson, Inc., 580 F. Supp. 879, 881 (S.D. Miss. 1984).

And the Colorado Court of Appeals agreed in Mareen v. Hailey, 381 P.3d 337 (Colo. App. 2015), which held that the later-filed counterclaims related back to the original answer, and therefore were timely under Section 13-80-109.

“Relation back is intimately connected with the policy of the statute of limitations,” as the doctrine ameliorates the effect of such limitations periods. Beaver Creek Prop. Owners Ass'n v. Bachelor Gulch Metro. Dist., 271 P.3d 578, 583 (Colo. App. 2011) (citation omitted).

The attorneys at Thomas P. Howard, LLC litigate cases nationwide and in Colorado.

About the Author

James Juo

James Juo is an experienced intellectual property attorney. He has successfully litigated various intellectual property disputes involving patents, trademarks, copyrights, and trade secrets. He also has counseled clients on the scope and validity of patent and trademark rights.


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