June 6, 2012

Statute of Limitations

Timing is everything.

The law is no different.

A person's ability to enforce a legal claim is restricted by timing as well. Even if the litigant has a colorable claim, they must file their claim in a timely manner. This is known as the statute of limitations. The following illustration highlights the importance of the statute of limitations.

Danny Decedent mistakenly signed the wrong trust. His neighbor John Brown had taken an incorrect trust from Danny's file cabinet and gave it to him prior to Danny having the trust notarized at his bank. Danny had drafted many versions of his trust but unfortunately kept them in the same stack of papers. The incorrect trust stated that the sole beneficiary was San Diego State University and the trustee was John Brown. The correct trust stated that the sole beneficiary was Danny's brother Abraham, his next of kin, and John was again the trustee. A short time later, Danny passed away in a tragic hot air balloon accident.

Per Danny's executed trust, John was instructed to sell the home and donate the proceeds to SDSU. He asked Abraham to assist him in cleaning Danny's home because he thought Abraham might want to take some family photos that Danny possessed. The two agreed to meet at Danny's home one weekend morning. 

During the cleaning, Abraham found Danny's revised trust and notes in his file cabinet, stating that this trust was the one to be signed. Abraham took these documents to a local attorney who explained to him that mistake was grounds to set aside a trust.  Walton v Bank of Cal. (1963) 218 CA2d 527, 542. 

Since Abraham was Danny's next of kin, he would inherit Danny's estate if the trust was invalidated, namely through intestate succession. Thereby he definitely had an incentive to contest the trust's validity. Furthermore, and most importantly for this article, the attorney explained to Abraham that the statute of limitations for an action challenging the validity of a trust based on mistake was 5 years, since real property was involved. CCP § 318. Thus, Abraham had a 5-year time window to file an action to invalidate the trust. If Abraham waited too long, e.g. 7 years, his claim would be time-barred and SDSU could file for a dismissal on the grounds that the statute of limitations had expired. This dismissal would be granted even though Abraham had a compelling legal case.

The statute of limitations for various probate and trust claims vary. For example, within 120 days of being admitted to probate, a will contest must be filed (Prob C § 8270); within 4 years a trust contest involving an incompetent settlor must be filed (CCP § 337) and within 3 years a trust contest involving mistake or fraud that deals with personal property must be filed (CCP § 338(d).