Texas Court Confirms State Statute Of Limitations Tolled By Filing Of Class Action

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On March 24, the Texas Third District Court of Appeals (sitting in Austin) issued an important decision regarding the application of the state’s statute of limitations in a class action lawsuit. The case is Asplundh Tree Expert Co. v. Abshire, at al. The Court of Appeals affirmed the District Court’s order denying Asplundh Tree Expert Co.’s (Asplundh) motion for summary judgment, confirming that the Texas two-year statute of limitations set forth in Tex. Civ. Prac. & Rem. Code § 16.003 was tolled by the filing of a class action, as contemplated in the 1974 U.S. Supreme Court’s decision in American Pipe and Construction Co. v. State of Utah.

Following a devastating 2011 fire in Bastrop County, Texas, which damaged scores of homes, hundreds of lawsuits were filed against Asplundh, a utility contractor that conducts tree pruning and vegetation management. It was hired by the local electric utility to maintain electric easements in the area in which the fire started and spread with calamitous results.

The original plaintiffs, mostly home and business owners and their insurers, alleged that the acts or omissions of Asplundh led to the ignition of the fire that damaged their properties. These claims were settled. However, in May 2012, a class action was filed on behalf of a second set of plaintiffs (numbering in the hundreds), known as the “Bastrop Plaintiffs.” Initially, their claims were based on claims of alleged negligence, gross negligence and nuisance. The complaint was amended to base their damage claims on a decline in property values, while seeking actual and exemplary damages. The District Court denied the class certification in March 2015, finding “that the requirements for class certification were not met, and explained that liability, causation, and damages ‘cannot be resolved on a class-wide basis.'”

Three groups of the Bastrop Plaintiffs thereafter filed separate lawsuits in March and April 2015. Asplundh then filed a motion for summary judgment arguing that the applicable two-year statute of limitations has expired with respect to all claims except those based on a diminution in land values. In response, the District Court held that the filing of the class action and its subsequent amendments tolled the statute of limitations. The District Court, however, permitted Asplundh to seek permissive review in the Third District Court of Appeals.

The Court of Appeals has now affirmed the lower court, premised on the U.S. Supreme Court’s American Pipe decision, which held that the State of Utah’s statute of limitations was tolled by the filing of a class action. On appeal, Asplundh argued that American Pipe’s tolling doctrine only applied to federal claims, and a similar tolling doctrine has “not been explicitly adopted by the Texas Supreme Court.” While acknowledging that the Texas Supreme Court has not been asked to determine whether a tolling doctrine similar to that recognized by American Pipe applies in Texas, the Court of Appeals noted that every Texas intermediate appellate court that has addressed this issue has held that a similar doctrine does indeed exist in Texas.

As noted by the Court of Appeals, on appeal in American Pipe, the U.S. Supreme Court held that “the commencement of the original class suit tolls the running of the statute for all purported members of the class” and that the motions to intervene “were timely” because the intervenors filed their motions eight days after the trial court determined that the suit filed by the State of Utah could not be maintained as a class action and because “[t]he class suit brought by Utah was filed with 11 days yet to run in the” tolled statute of limitations. As noted by the Court of Appeals, thereafter, the U.S. Supreme Court on several occasions had determined that tolling applies to class members who later seek to file individual actions and not just to intervenors or named plaintiffs, citing Crown, Cork, & Seal Co. v. Parker, Bowen v. New York, and Chardon v. Soto.

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