New (And Differing) Statutes Of Limitation For Equitable Indemnity And Contribution Claims
Equitable Indemnity and contribution are two common causes of action available to a defendant seeking recovery against a co-defendant/third-party defendant which owed no duty to defendant or with which no privity of contract existed. A claim for contribution (governed by N.R.S. 17.225) allows a tortfeasor who has paid more than his share to recover the excess amount from a joint tortfeasor. A claim for equitable indemnity (governed by a string of Nevada case authority beginning with Reid v. Royal Insurance Co., 80 Nev. 137, 390 P.2d 45 (1964)) allows him to attempt to shift the entire burden to said joint tortfeasor. While the doctrines are similar in many respects (and are often used interchangeably by less experienced attorneys), there are critical differences. The Nevada Supreme Court recently established one of those differences, holding the two doctrines have different statute of limitation periods (one year for contribution, four years for equitable indemnity).
In the case of Saylor v. Arcotta, 126 Nev. Adv. Op. No. 9 (March 9, 2010), a passenger in a taxi was injured in an accident, and two weeks later died of a heart attack. The family of the passenger sued the taxi company and the driver (“Defendants”), alleging the heart attack and ultimate death were triggered by the accident. Defendants filed a third-party complaint for equitable indemnity and contribution against the passenger’s doctors, alleging he died as a result of medical malpractice, not the accident. The doctors moved for and were granted summary judgment on the basis that the statute of limitations for medical malpractice actions prescribed by N.R.S. 41A.097 (four years from injury or two years from the discovery of the facts that formulate the claim) had expired, thus barring the claim.
On appeal, Defendants contended the statute of limitations periods for equitable indemnity and contribution were applicable, not the period for malpractice actions. The Court agreed, holding equitable indemnity and contribution are separate, independent claims not governed by the limitations period applicable to the underlying tort. But the question remained: what are the applicable periods for equitable indemnity and contribution claims? For contribution claims, the answer was simple, as N.R.S. 17.285 prescribes a specific limitation period of one year after the entering of final judgment. However, there was no similar statute related to equitable indemnity, nor was there any guidance in Nevada case authority. The Court fashioned a holding that since equitable indemnity claims are based on a theory of implied contract, the four year limitation period for implied contract cases prescribed by N.R.S. 11.190(2)(c) is applicable to such claim, with said period beginning to run upon the suffering of “actual loss” (i.e. the paying of a settlement or underlying judgment). Since neither final judgment had been entered nor had any settlement been paid, neither limitations period had begun to run let alone expired. Thus the Court reversed the granting of summary judgment.
The impact of this decision is unlikely to affect cross-claims or third-party complaints as such claimants are not likely to have suffered “actual loss” or had final judgment entered against them. However, the effect could be significant on original post-judgment/post-settlement claims. If one waits longer than one year to file, he will lose his contribution claim, and shifting an entire burden to a joint tortfeasor as is required in an equitable indemnity claim is more difficult than merely proving he is responsible for a portion of it.
By: Leland Eugene Backus