Each type of lawsuit has a prescription period that explains that a plaintiff must file suit before a certain amount of time. Often, the period depends on the seriousness of the crime or certain facts of the crime, such as whether the injury was intentional or just a grave mistake. The prescription period encourages plaintiffs to file suit right away while the evidence and memories are fresh. In addition, it also allows the party that could potentially be sued to not have to wait around in fear of being sued for wrongdoing.
A case appealed to the Fourth Circuit for the State of Louisiana from Orleans Parish explains the prescription period for a number of potential causes of action. In that case, an individual sought the help of a lawyer for tax and investment purposes. She allowed the lawyer to be in charge of her trust account; however, he made several “loans” to friends from her trust account and charged her fees that she was unaware would be charged. As a result, she initially settled with the lawyer when she found out about the fees, but that settlement did not address the “loans.”
The investor, plaintiff, claimed that she did not fully understand that the lawyer was making loans until the lawyer was indicted by the Grand Jury regarding investment fraud and various other claims. However, she did ask for an accounting statement in 2003, which listed all of the loans that the lawyer made from her account. Additionally, the lawyer worked for Bank One, which the plaintiff was also aware of in 2003. Therefore, plaintiff sued both Bank One, and the lawyer, among others.
Initially, the lower court barred the plaintiff’s claim because the prescription period had already run. However, the Fourth Circuit Court of Appeals for the State of Louisiana explained that the court should consider each prescription period for each individual claim. This is necessary because the prescription period often varies by the type of claim. Therefore, the Court walked through each of her eight claims to determine whether the claim would apply and what the prescription period should be.
First, plaintiff argued a violation under the Louisiana Racketeering Act under La. R.S. 15:1351-56. The Court determined that the Racketeering Act had a prescription period of one year. Then, plaintiff argued unjust enrichment, that is, the bank profited from the lawyer’s wrongdoing. However, the Court pointed it out that this claim can only apply if there are no other claims that the plaintiff can use, even if those other claims are barred by the prescription period. Therefore, the Court did not determine a prescription period for unjust enrichment because the plaintiff could not use it regardless of the prescription period. Third, plaintiff argued breach of fiduciary duty and breach of contract, which has a one-year prescription period.
Fourth, plaintiff argued that the lawyer committed fraud. There is a longer prescription period for deliberate fraud, ten years, and a shorter period for fraud that occurred by carelessness or mistake, which is only one year. The Court determined that this fraud was deliberate, so it should be subject to the ten-year limitation. Then, the plaintiff argued negligent misrepresentation, which has a one-year prescription period. Next, plaintiff argued that she detrimentally relied on the lawyer’s recommendations and misrepresentations in the contract. Under this claim, non-action on a contract has a ten-year limitation, and acting on the contract incorrectly has a tort prescription of only one year. The Court determined that since the lawyer acted on the contract, although incorrectly, then the one-year period should apply.
Lastly, plaintiff brought a claim for conspiracy. However, under the Louisiana Code, the claim of conspiracy is not a crime in itself because it must be connected to some other crime. That is, you must conspire to do something illegal, just not conspire generally. The prescription period, then, depends on what the individual is conspiring to do. In this case, the alleged crime is conspiracy to commit misrepresentation, and since misrepresentation has a one-year prescription period, then the conspiracy claim does as well.
The Court then determined when the period started. The plaintiff argued that the doctrine of contra non valentem agree nulla currit praescriptio should apply–allowing the prescription period to begin only when the plaintiff knew about the fraud or misrepresentation. The plaintiff explained that she did not fully understand the misrepresentation until 2011, but the Court disagreed, stating that she should have known about it when she received the accounting for her trust in 2003. When the plaintiff should have reasonably known, that is known as constructive knowledge. The Court determined that since she had constructive knowledge in 2003, then her fraud claim is the only active claim since it had a prescription period of ten years.
This case explains that the prescription periods can be very complicated, depending on the nature of your claim. It also emphasizes that you should act quickly if you have a potential claim. While the one-year period may seem like a long time, it takes a considerable amount of time to gather all the information and documents needed to bring a case to court.
If you may have a claim, act quickly and contact The Berniard Law Firm toll free at 504-521-6000. We would be happy to discuss your legal options with you.