Oklahoma's Statute Of Limitations For Contracts

The statute of limitation under 12 O.S. § 95 requires that a lawsuit for breach of contract must be brought within five years if the claim arises from a written contract and within three years if the dispute comes from a contract not reduced to writing.  The time in which to file the lawsuit starts at the completion of the contract.  In the case of Kirby v. Jean's Plumbing Heat & Air, 2009 OK 65, the contract for installation of a new sewage pipeline was completed in 1996.  The homeowner did not file his breach of contract suit until eleven years later in 2007.  The statute of limitations had clearly expired and Oklahoma declined to apply the "discovery rule" to suits based upon breach of contract in construction cases. 

One reason for the court's refusal to extend the "discovery rule" to construction cases is that to do so would defeat the intention of the legislature with the statute of repose.  The court, in upholding the intention of the legislature, has determined there should be some outside limit on when a lawsuit can be brought regardless of the circumstances.

What Is A Statute Of Repose?

A statute of repose as well as a statute of limitation is a legislative means of ending or terminating the time in which a lawsuit may be brought.  "In practical terms, a statute of repose marks the outer time boundary for judicial enforcement of a substantive right whereas a statute of limitation interposes itself only procedurally to bar solely the remedy after a substantive right has vested and a claim accrued."  Kirby v. Jean's Plumbing Heat & Air, 2009 OK 65.

Many people are more familiar with statutes of limitation which bar a person from bringing a lawsuit after a certain period of time has expired.  Typically, statutes of limitation are more commonly thought about in situations in which there is a car accident or other negligent act committed.  The time in which to file the suit starts upon learning about the damages resulting from the negligent act.  The damaged party has a certain period in which to file a lawsuit or forever lose the right to do so.

In contrast, a statute of repose marks the absolute end of any available lawsuit.  The courts have allowed statutes of limitation to be tolled or extended because of the "discovery rule".  The discovery rule is simply the device used to trigger the time in which to file a lawsuit after learning about the damage.  Once a person learns about the damage, the lawsuit must be timely filed or the right to judicial relief is surrendered.  With a statute of repose, it doesn't matter if a person learns about the damage after the deadline or not.  The statute of repose bars the lawsuit simply because of the passage of time.

There are some other technical distinctions.  The statute of limitation does not bar the filing of the lawsuit but rather terminates the remedy available or the relief the court may allow.  The statute of repose blocks the entire lawsuit and prohibits it from going forward.

Is Deleting Photographs From A Cell Phone Spoliation Of Evidence?

The "tall building lawyer" found out during the EUO that Bubba took photos of all the hand guns one week before the fire. Bubba was going to send the photos to a disabled vet who just returned home due to a medical discharge for combat injuries.  Bubba has a big heart and wanted to do something for one of our soldiers wounded in the service of our country.  He was going to let this soldier have his pick of any gun he wanted and give it to him as a gesture of appreciation.  The fire destroyed the guns so he never sent the photos.  The insurer learned about the photos and wanted a copy to document the claim.  

The photos no longer exist.  Bubba, while scouting his favorite deer stand, saw a "buck with a rack that makes ya as giddy as a schoolgirl gettin' ready for her first date." He took so many pictures of the buck that he overwrote the photos of the guns.  

The Advisory Committee, in addressing Fed. R. Civ. P. 37(f), noted that once litigation is anticipated or is commenced, a party is under an obligation to halt or alter its destruction policies such that electronically stored information relevant to the litigation will be preserved.

The good faith requirement of Rule 37(f) means that a party is not permitted to exploit the routine operation of an information system to thwart discovery obligations by allowing that operation to continue in order to destroy specific stored information that it is required to preserve. When a party is under a duty to preserve information because of pending or reasonably anticipated litigation, intervention in the routine operation of an information system is one aspect of what is often called a litigation hold.

When evidence is destroyed, an adverse jury instruction can be imposed as a sanction.  See Stevenson v. Union Pac. R.R., 354 F.3d 739, 747-750 (8th Cir. 2003) (although audio tape recordings were destroyed prior to the litigation as a matter or routine subject to the destruction policy, the adverse inference jury instruction spoliation sanction was affirmed as voice recordings were related to the litigation and lawsuit was certain to arise rendering destruction unreasonable and inferring intent.); In re Prudential Ins. Co. Of Am. Sales Practices Litig., 169 F.R.D. 598,615 (D.N.J. 1997) (adverse inference would be drawn from destruction of computer records when company had a haphazard and uncoordinated retention policy). 

If it ends up with a jury deciding whether or not the photos were destroyed to keep the insurance company from seeing them, there better not be any animal rights activists sitting on the jury!

Oklahoma Attorneys Often Use Bad Faith To Increase Damage Awards

Oklahoma lawyers suing insurance companies for breach of contract in first-party cases find themselves limited by the damages which can be awarded for breach of contract.  Under 23 O.S. § 21, the measure of damages for breach of contract is the amount which will compensate a party for the damage.  In Osborn v. Comanche Cattle Industries, Inc., 1975 OK CIV APP 67, 545 P.2d 827, the Oklahoma Court of Appeals explained the reason for limiting damages:

This interest is given legal protection to achieve the paramount objective of putting the promisee injured by the breach in the position in which he would have been had the contract been performed.  

The law philosophically intends for people who have been harmed to receive compensation, not a windfall.  The concept can be illustrated by the employment relationship.  People are paid (compensated) for the work they do -- an employee receives a windfall if the business owner decides to give him a new Porsche!

Bad faith allegations asserted in Oklahoma courts allow the plaintiff lawyer to ask for money in addition to what might be recoverable under the insurance policy such as:

  • financial losses
  • embarrassment and loss of reputation
  • mental pain and suffering
  • punitive damages

Oklahoma plaintiff attorneys file bad faith claims to try to recover for damages not available under the terms of the insurance policy.  Although it is technically "compensation" for damages, a bad faith claim places the insurance company at greater risk than just what the policy covers.  Problems develop when unscrupulous attorneys or vindictive insureds falsely accuse the insurer of wrongdoing simply as leverage to get their claim paid.  Oklahoma judges, however, protect insurance companies from paying damages for bad faith if the underlying disagreement is a legitimate dispute.