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Saving Statute Not Always Precluded by Tolling Agreements

Circle C Construction, LLC v. D. Sean Nilsen Et Al., (Tenn. Mar. 7, 2016)

The Tennessee Supreme Court sent a clear warning in Circle C. Construction, LLC v. D. Sean Nilsen; craft tolling agreements with clear intentions and even clearer language. The Court decided that absent specific language in a tolling agreement, a plaintiff retains the right to refile suit under the Tennessee savings statute. The Tennessee savings statute allows a party to refile suit within one (1) year after a voluntary nonsuit, if the first action was commenced within the time limited by a rule or statute of limitation. Tenn. Code Ann. § 28-1-105(a).

In Circle C, Circle C Construction and the Nilsen law firm entered into a tolling agreement regarding Circle C’s claim against Nilsen for professional negligence. The tolling agreement provided that Circle C’s claim would be tolled until 120 days after the Sixth Circuit issued an opinion on the appeal brought by Circle C in the case in which Nilsen defended Circle C. Following the Sixth Circuit’s decision, Circle C filed a professional negligence suit against Nilsen within the extended statute of limitations. Circle C then voluntarily nonsuited its action. Circle C then refiled the suit within one year of the nonsuit in compliance with the savings statute; however, the refiling was not within the contractually set statute of limitations. Nilsen moved for summary judgment on the basis that Circle C was precluded from refiling suit outside of their contractually set statute of limitations.

After carefully evaluating the tolling agreement, and touting the remedial nature of the savings statute, the Court stated that “in the absence of evidence of contrary intention, the parties must be held to have contemplated the application of that law to the terms of their agreement.” Accordingly, Circle C’s cause of action against Nilsen was allowed to persist under the savings statute despite the tolling agreement.

In light of this ruling, it will continue to be important to carefully craft tolling agreements to include language specifically precluding plaintiffs from utilizing the savings statute.

For more information, please contact Sean W. Martin at swmartin@carrallison.com. Ashley Baxter (abaxter@carrallison.com), associate in the Chattanooga office assisted with this post.

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