Statute of Limitations Leaves Plaintiff SOL

Finding his claims were time-barred, the Fourth Circuit recently affirmed the dismissal of Appellant’s complaint in Ferro v. Volvo Penta of the Americas, LLC, No. 17-2129, 2018 WL 2068665 (4th Cir. May 3, 2018) (“Ferro II”). The decision is a good example of why it is important for defense counsel to identify each claim’s statute of limitations accrual point and duration.

The facts of Ferro are straightforward. In 2007, plaintiff purchased a 2006 Cruisers Yacht equipped with two Volvo Penta model engines, which included an XDP outdrive. Ferro v. Vol Vo Penta of the Americas, LLC, No. 5:17-CV-194-BO, 2017 WL 3710071, at *1 (E.D.N.C. Aug. 28, 2017) (“Ferro I”). Ferro alleged in his complaint that he experienced XDP outdrive failure beginning in August 2008. Ferro detailed that he had to replace the engine parts in July 2008, August 2009, June 2011 and June 2013. Id. Ferro pointed the district court to a two-year warranty on all replacement parts, and argued that the two-year warranty period restarted with each purchase of a replacement part.

The district court, however, granted Defendants’ motion to dismiss, finding that nearly all of Ferro’s claims, including his breach of warranty under the Magnusson-Moss Warranty Act (MMWA) and violations of North Carolina’s Unfair and Deceptive Trade Practices Act (UDTPA) were time barred.  The remaining claims were dismissed pursuant to North Carolina’s economic loss rule.  Ferro appealed the dismissal to the Fourth Circuit.

Under North Carolina law, a claim for breach of warranty for a sale of goods pursuant to MMWA is subject to a four-year statute of limitations time period. Id. The claim accrues either (1) upon tender of delivery; or (2) when the breach should have been discovered. Id. citing N.C. Gen. Stat. § 25-2-725(2) (2017). The Plaintiff argued that the start of the limitations clock should be delayed because his claim did not accrue upon the original purchase of the defective component, but instead restarted upon each purchase of replacement parts to repair the engine – buying himself nearly 7 years. Id. at *2. Indeed, Ferro had attached the two-year warranty for replacement parts to his complaint to try to highlight that the two-year warranty period was stated each time he bought and installed a replacement part on the boat’s engine. The Fourth Circuit rejected this argument, finding “that the replacement parts do not provide an independent accrual date for his breach of express warranty claim under the facts alleged.”). Ferro II at *2

The Fourth Circuit found that a UDTPA claim is similarly subject to a four-year statute of limitations, accruing when the alleged violation occurred. Id. A violation arises where the defendant acts in such a way that has a “tendency to deceive the average consumer.” Id. (internal citations omitted). Because Ferro acknowledged in his complaint that he was on notice by March 2013 of Defendants’ alleged omissions underlying the UDTPA claim, the Court found that the complaint failed to allege that “any such representations or omissions potentially actionable under the UDTPA [occurred] within the four-year limitations period.” Id.

While statute of limitations often times present factual issues, the Ferro case – although perhaps simple in its analysis – provides a useful reminder that defense counsel should closely examine a particular jurisdiction’s statute of limitations and the allegations in plaintiff’s complaint.  Lurking in Plaintiffs’ allegations may be an admission that will lead to a successful motion to dismiss on statute of limitations grounds.