Court Applies Michigan Statute of Limitations Despite Contractual Choice of Law Clause

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In Czewski v. KVH Industries, Inc., the Honorable Gordon J. Quist of the United States District Court for the Western District of Michigan followed a line of cases holding that a statute of limitation is a "procedural" rule that is not controlled by a contractual choice of law clause. 

In this case, the parties agreed to a contractual provision stating that "the validity, interpretation, and performance of this Agreement shall be controlled by and construed under the laws of the state of Rhode Island." The contract did not include a choice of venue provision. The plaintiff brought a breach of contract claim in the Western District of Michigan. 

The court cited a number of Michigan state and Federal cases to conclude that the contractual choice of law provision only incorporated Rhode Island substantive law, not Rhode Island procedural law. As a result, issues of procedural law would continue to be governed by the law of the forum where the lawsuit was filed (Michigan). The court also followed a long line of cases holding that, in Michigan, "statutes of limitation are regarded as procedural, not substantive, in nature."

As a result, the court granted defendant's motion to dismiss because Michigan's statute of limitations for breach of contract claims had expired. However, the court dismissed the complaint without prejudice to the plaintiff's ability to refile the lawsuit in Rhode Island, where (presumably) the court would apply Rhode Island's longer statute of limitations to the complaint.

Topics:  Breach of Contract, Choice-of-Law, Statute of Limitations

Published In: Civil Procedure Updates, General Business Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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