IN MISSOURI, WHAT IS THE STATUTE OF LIMITATIONS ON A “BAD FAITH” CASE?

Sometimes the black letter law passed by the legislature is unclear. The legislature can’t anticipate every possible fact scenario when they pass a law, so it lay to the courts to interpret the law and give guidance to what it means. This interpretation is called case law. When the court decides a certain meeting to the law it essentially answers a legal question. Lawyers and other courts then can rely on that ruling when they have a similar issue in their case. The following case answers the question above.

Rowling v. Nestle Holdings, Inc., 437 S.W.3d 180 (Mo. 2014).

This case addresses the following issue:

When does the ten-year statute of limitations of Section 516.110 apply to bad-faith claims?

This case details when the extensive ten-year statute of limitations for “any writing…for the payment of money” applies to bad-faith claims. Id. at 181. Normally, the five-year “default” statute of limitations applies to bad-faith claims. Id. The court found that, in this case, the default statute did apply. Id. The court did, however, outline scenarios in which the longer statute of limitations would apply. Id.

In this case, the Plaintiff was a shareholder of a company which was merging with Defendant. Id. The merger agreement required that all shareholders of the company being absorbed be paid a set amount per share on a specific date. Id. However, the payment was delayed by six days without cause or excuse. Id. Just prior to the ten-year anniversary of the occurrence, Plaintiff filed a class action lawsuit on his behalf and for all similarly situated former shareholders. Id.

The court noted that the five-year statute of limitations is much more inclusive than the ten-year statute. Id. at 182. This statute of limitations covers all actions based on contracts, aside from those identified in Section 516.110. Id. Bad-faith claims are based on contracts, and thus, fall under the five-year statute—unless Section 516.110 applies. Id.

Section 516.110 is reserved for “actions upon any writing, sealed or unsealed, for the payment of money or property.” Id. Though the contract at issue here was one dealing with payment for shares, the court found that this wasn’t enough by itself. Id. Instead, the focus must be on what the lawsuit is seeking. Id. at 183. If the lawsuit seeks “payment of money the defendant agreed to pay in a written contract,” Section 516.110 applies. Id. However, the longer statute of limitations “does not apply to an action alleging a breach of written contract and that seeks money damages, such as interest.” Id. Because the claim here was for vexatious refusal to pay, but not for a continued refusal to pay, the only damages available were interest and attorneys’ fees. Id. Without seeking payment promised in a written contract, the default five-year statute of limitations applied. Id.