Weekly Law Resume - October 18, 2012: Tolling Agreements vs. Statute of Limitations Waivers

by Low, Ball & Lynch
Contact

Don Johnson Productions, Inc. v. Rysher Entertainment
California Court of Appeal, Second Appellate District

Code of Civil Procedure Section 360.5 allows parties to waive the statute of limitations if the parties follow certain procedures. This case considered whether a written tolling agreement between the parties was subject to the same requirements.

On December 7, 1994, plaintiff Don Johnson Productions, Inc. (“Johnson”) entered into a contract with Rysher Entertainment, LLC (“Rysher”) to provide acting services for the “Nash Bridges” television series. In return, Rysher agreed to fund production. The contract was extended in 1997, 1998 and 1999. Rysher was operated by 2929 Entertainment, LP which later sold Rysher to Qualia Capital, LLC in 2006, which eventually dissolved Rysher (collectively “defendants”).

Prior to the airing of the final 2001 season of “Nash Bridges,” Rysher sold worldwide syndication rights for the series to USA Network. Johnson was not a party to the syndication transaction and did not receive a share in the syndication profits. A dispute ensued between Rysher and Johnson regarding his 50% ownership share in the syndication profits. On May 16, 2002, the parties executed a tolling agreement, providing that Johnson’s time to bring any action related to the Nash Bridges series would be tolled to at least May 14, 2002 until and unless Rysher provided reasonable notice (30 days) to Johnson rescinding the tolling agreement. Neither party attempted to rescind the tolling agreement prior to litigation.

Approximately five years later on February 19, 2007, Johnson filed a complaint related to the syndication profits dispute against Rysher, alleging breach of contract, conversion, unjust enrichment, and interference with prospective economic advantage. The complaint sought compensatory damages, injunctive relief, attorney’s fees, punitive damages and interest. The parties agreed that Johnson’s contract claim vested on March 17, 1998 when the accountant employed by Rysher provided Johnson’s employee with a “participation/distribution statement” for the period ending December 31, 1997 detailing income for the series.

Defendants alleged that Johnson’s 2007 lawsuit was untimely because it was filed more than four years after the parties’ 2002 tolling agreement expired by operation of law. Defendants contended that California Code of Civil Procedure § 360.5 (“Section 360.5”) required that the 2002 tolling agreement be renewed in writing every four years (i.e., 2006). Section 360.5 allows parties to waive the applicable statute of limitations governing a dispute if the waiver is set forth in writing and signed by the person obligated. A Section 360.5 waiver is effective for no more than four years unless successively renewed by parties. Defendants argued that the May 16, 2002 tolling agreement was executed by Pryor more than four years before Johnson’s 2007 lawsuit such that the tolling agreement expired in 2006. Defendants contended that absent timely renewal of the tolling agreement pursuant to Section 360.5, Johnson’s claims were barred under California Code of Civil Procedure §337, setting forth a four-year statute of limitations for written contracts.

The Court of Appeal rejected defendants’ argument that Section 360.5 and its four-year renewal requirement was controlling as to the 2002 tolling agreement between Johnson and Rysher. The court held that the 2002 tolling agreement did not involve a waiver of the right to assert the statute of limitations. Rather, the parties’ 2002 tolling agreement “suspended” the running of the statute of limitations under California law. The court referenced case law noting that “tolling may be analogized to a clock that is stopped and then restarted.” The court pointed out that the legislative intent of Section 360.5 specifically refers to waivers of the statute of limitations, not tolling agreements. After examining the language and legislative history of Section 360.5, the court concluded that the Section 360.5 four-year renewal requirement did not apply to the 2002 tolling agreement. There was no requirement that the tolling agreement be renewed after four years. Rather, the May 16, 2002 tolling agreement tolled the Section 337 statute of limitations. No party rescinded the tolling agreement. Therefore, Johnson’s February 17, 2009 complaint was timely filed.

COMMENT

The court confirmed that tolling agreements will be treated differently from waivers of the statute of limitations. Tolling agreements simply suspend the applicable statute of limitations until an agreed-upon time. Unlike a waiver, a tolling agreement is not subject to Section 360.5 requirements of renewal every four years, but it is very important when fashioning tolling agreements to clearly state when the statute of limitations will be suspended, the length of the tolling period and/or the type of notice required to re-start the running of the statute of limitations.

For a copy of the complete decision see:

http://www.courtinfo.ca.gov/opinions/documents/B225885.PDF


 

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.

© Low, Ball & Lynch | Attorney Advertising

Written by:

Low, Ball & Lynch
Contact
more
less

Low, Ball & Lynch on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.