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Filing Suit Tolls Any Cross-Claims, Even Merely Permissive Cross-Claims

Tim Kowal     August 25, 2022

After being sued, you have to answer the complaint. That part is obvious. But what about a cross-complaint? If you have cross-claims against the plaintiff, and you don’t assert them right away, can they become time-barred?

Until now, this was a concern. But the recent published opinion in Paredes v. Credit Consulting Servs. (D6 Aug. 8, 2022 No. H048092) holds that the filing of a complaint tolls the statute of limitations for all cross-claims. And the rule applies regardless whether the cross-claim is compulsory or merely permissive.

A collection agency sued Paredes over some dental bills. Based on false representations in the complaint, Paredes had one year to file a claim under both the federal and state Fair Debt Collection Practices Acts.

But Paredes did not file a cross-complaint within one year. Instead, he waited one year and five months. When he filed, the collection agency filed an anti-SLAPP motion, arguing Paredes’s claim was not likely to prevail because of the one-year statute. But the trial court denied the motion, ruling the statute was tolled by the complaint.

Filing a complaint tolls the statute of limitations for all cross-claims, regardless of whether the cross-claims are compulsory or merely permissive.

The Sixth District Court of Appeal affirmed, holding that filing a complaint tolls the statute of limitations for all cross-claims, regardless of whether the cross-claims are compulsory or merely permissive.

The collection agency conceded that a complaint tolls the statute for purposes of cross-claims that are compulsory. Case law is already clear on that point. (E.g., Trindade v. Superior Court (1973) 29 Cal.App.3d 857, 859-860 (Trindade)).

But there is apparently only one case that applied tolling or relation back to cross-claims that are permissive and noncompulsory — that is, to cross-claims against the plaintiff, but not involving the same subject matter as the complaint. The collection agency urged that that case, ZF Micro Devices, Inc. v. TAT Capital Partners, Ltd. (2016) 5 Cal.App.5th 69 (ZF Micro Devices), is an “outlier.”

Writing for the panel, Justice Danner, disagreed, and approved ZF Micro Devices. The ZF Micro Devices court acknowledged that "authors of major California treatises had expressed conflicting views on the subject" (id. at pp. 72-73) such that the "applicability of the tolling doctrine to permissive cross-complaints [wa]s not free of doubt." (Id. at p. 84.)

But as ZF Micro Devices also noted, the Supreme Court has characterized the tolling doctrine as embracing all cross-claims, “regardless of their relatedness to the claims asserted in the complaint." (ZF Micro Devices, supra, 5 Cal.App.5th at p. 91.) And "the rationale for the doctrine—that by filing the complaint 'the plaintiff has thereby waived the [statute of limitations defense] and permitted the defendant to make all proper defenses to the cause of action pleaded' [citation]—appears applicable to both compulsory and permissive cross-complaints." (Id. at p. 92.)

The Upshot:

When assessing options after being served with a complaint, if cross-claims exist, asserting them early is usually a good strategy. But if for whatever reason a cross-claim is not asserted immediately, Paredes provides some assurance that the delay may not result in that claim becoming time-barred.

Tim Kowal is an appellate specialist certified by the California State Bar Board of Legal Specialization. Tim helps trial attorneys and clients win their cases and avoid error on appeal. He co-hosts the Cal. Appellate Law Podcast at CALpodcast.com, and publishes summaries of cases and appellate tips for trial attorneys. Contact Tim at [email protected] or (949) 676-9989.
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