Counterclaim Filed After Statute of Limitations Expired Permitted to “Relate Back” to Timely Filed Complaint

In New Jersey, personal injury actions must be filed within two years of the accrual of the action. What happens if the complaint is filed on the last day of the statute of limitations and the defendant wishes to file a counterclaim arising out of the same incident? Is the counterclaim barred? That was the question answered by the Appellate Division in Barley v. Barley, 2017 Unpub. LEXIS 2648 (App. Div. Oct. 20, 2017).

The plaintiff Veronica Barley and defendant Arnell Barley were stepsisters with, apparently, a less than harmonious family relationship. On April 5, 2013, they had a verbal dispute that turned into a physical altercation, during which time the plaintiff claimed that defendant scratched plaintiff’s arms and tried to run her over with a car, causing plaintiff to fall and suffer injuries. However, according to the defendant, plaintiff was the aggressor and caused her injuries that required medical treatment.

On April 6, 2015, plaintiff filed a complaint against defendant for injuries suffered in the April 5, 2013 incident. Because April 5, 2015 was a Sunday, the complaint was deemed timely filed. The defendant filed a responsive pleading, which included a counterclaim for injuries she suffered in the incident.

Plaintiff filed a motion to dismiss the counterclaim based upon the statute of limitations. That motion was granted because the judge concluded that the relation-back doctrine and equitable tolling did not apply to permit the untimely counterclaim. The defendant contended that the relation-back doctrine, contained in Rule 4:9-3 should be applied in this case but that argument was rejected by the trial court. This rule provides that: “whenever the claim or defense asserted in the amended pleading arose out of the conduct, transaction or occurrence set forth or attempted to be set forth in the original pleading, the amendment relates back to the date of the original pleading.”

On appeal, the defendant argued that based upon equity and fairness, the counterclaim should be permitted to relate back to the original filing date of the complaint so as not to be barred by the statute of limitations. The statute of limitations was designed to protect defendants from stale claims but, by barring a germane counterclaim, the defendant argued that ruling would undermine the principal consideration behind the fairness of statutes of limitations to defendants – especially when the complaint is filed on the last day of the statute of limitations.

The Appellate Division examined both the relation-back rule, as well as tolling principles to determine if this counterclaim should be barred by the statute of limitations. It cited to prior case law in finding that tolling principles should apply to a counterclaim filed in the first responsive pleading. This principle would preclude plaintiff from delaying the institution of an action until the statute has almost run on defendant’s counterclaim. If the claim and counterclaim arise from the same transaction, the plaintiff would not apt to be prejudiced by the tolling of the statute because presumably he has notice of the counterclaim at the time he commences his action.

The Appellate Division ruled that, because the plaintiff delayed filing her complaint until the last day of the statute of limitations, leaving the defendant with no time within which to file a counterclaim before the running of the statute, justice required that the defendant’s germane counterclaim be protected from the bar of the statute of limitations. The Court found that either the relation-back doctrine or the tolling rationale saved the counterclaim from dismissal. Hence, the Appellate Division reversed the trial court’s decision dismissing the counterclaim.

Tags: counterclaim, motion to dismiss, relation-back doctrine