The three-year Statute of Limitations is Maryland Canon- if you fail to file a lawsuit for breach of contract or most torts within three years, you are out-of-court. Many lawsuits are dead on arrival where a claim has been filed even one-day beyond the Statute of Limitations.
The Statue of Limitations is memorialized in the Maryland Code, established by the Legislature, and enforced daily by the judiciary at all levels. It is an ancillary fact that a top cause of legal malpractice is missing Statutes of Limitations, resulting in a total loss of client rights to sue. The deadline for filing claims is just that important.
Contracts sued upon often contain arbitration clauses. These give parties to a contract the right to elect privately conducted arbitration, complete with all the trappings of a court case, such as written discovery, depositions, witness subpoenas and evidentiary hearings. For decades, it has been an article of faith that the same three-year Statute of Limitations applicable to court cases also limited the time for filing a demand for arbitration.
But not anymore. On March 25, 2022, Maryland's highest appellate court issued its opinion that the Statute of Limitations does not impose the same three-year limitation on a demand for arbitration that it imposes on a civil court filing.
In Park Plus v. Palisades Parking, the Court held that an arbitration provision in a written contract is not automatically constrained by the Statute of Limitations. The Statute of Limitations applies only to "a civil action at law." A demand for private arbitration is not "a civil action at law."
A decision that may well breathe life into otherwise stagnate and expired claims.
The Court did make clear that parties to a contract are free to impose filing deadlines on arbitration demands. You can expect language doing just this in your next contract, as lawyers throughout the State are now bent over keyboards, pecking out language that will quickly bring arbitration demands to heel within three-years, or less.
