One of the strongest legal defenses is the generally unyielding statute of limitations. If it runs then a lawsuit is time barred. But when that powerful shield is used as a sword then you run the risk of giving a plaintiff more time to bring a lawsuit.
That’s the take away in the recent case of William Ussery v. BB&T. Ussery missed the statute of limitations, by years, but the North Carolina Court of Appeals, in a 2-1 decision, allowed him more time to bring his lawsuit against BB&T stating:
North Carolina courts have recognized and applied the principle that a defendant may properly rely upon a statute of limitations as a defensive shield against ‘stale’ claims, but may be equitably estopped from using a statute of limitations as a sword, so as to unjustly benefit from his own conduct which induced a plaintiff to delay filing a suit
So what happened to trigger this equitable, “Golden Rule” remedy?
Plaintiff Ussery claimed that Mabe, a BB&T employee, “assured” him that he would qualify for a $450,000 government backed small business loan for his chair business. On that assurance Ussery claims he took out several loans with BB&T.
Subsequently, Mabe informed Ussery and Ussery’s partner, Barker, that to Mabe’s ”surprise” they hadn’t qualified for the government backed loan. Further research indicated, however, that Mabe didn’t submit the loan package on time because “he didn’t believe that they would qualify.”
Ussery and Barker were forced to close their company and in an attempt to mitigate their losses they obtained another loan from BB&T, this time in the amount of $425,000.
Barker was unable to sustain his payments so he filed suit against BB&T. Ussery did not join that action because Ussery alleges that BB&T:
(1) informed him that ”everything would be worked out in the Barker litigation”
(2) told him to “hold off on instituting any action to allow resolution of the Barker matter [and his own claims against BB&T]” and
(3) informed him the loan would be forgiven and he would be reimbursed for all expenses incurred related to BB&T’s failure to obtain the government backed loan.
The lawsuit between Barker and BB&T was settled after the statute of limitations for Ussery to bring a claim. And guess what? Not everything “worked out.” Ussery alleged that BB&T didn’t honor its “assurances” so he brought a lawsuit against BB&T.
The NC Court of Appeals ruled that Ussery’s claims against BB&T were time barred but it was a jury question as to whether BB&T was equitably estopped from asserting the statute of limitations. Unfortunately, we will never know what a jury or the NC Supreme Court would have decided in this case because it was settled after the Court of Appeals’ decision.
The lesson? This case doesn’t represent an erosion of the statute of limitations – equitable estoppel has been around since folks were actually using swords and shields. Equitable estoppel rarely works in North Carolina to push back a statute of limitations. And when it does it’s front page news in legal circles.
