The Ohio House Judiciary Committee took testimony April 3 on HB170 which would shorten the period of limitations for actions upon a contract in writing.
Mark Johnson, a partner at the Columbus office of Baker Hostetler LLP, testified in support at the request of the Ohio Alliance for Civil Justice.
He said Kentucky and Ohio are the only two states that allow 15 years to bring a suit on a written contract. Twenty-two states have a statute of limitations of six years, while 18 have a limitation period of between three to five years, and eight states set the limitation period at eight or 10 years.
Johnson said there is no sound reason to allow for 15 years to bring a suit, and said it negatively impacts businesses in Ohio, who face class action suits on an inflated size of that class, and must pay extra costs to maintain documents for longer periods of time.
As an example, he said a business may face a class size of 100,000 people under the current statute. If each person gets $100, the exposure to the company could be $10 million. If the limitation is six years, the class could be 40,000 with an exposure of $40 million.
He also noted the cost of keeping documents directly and indirectly affects the ability of businesses to be competitive. He said that in cases where the documents do exist, the people who drafted or performed the old contracts may be retired or have moved on and may not remember the details.
Johnson said research showed that the limitation was adopted in 1803 when Ohio became a state, requiring that contracts under seal have a 15-year statute of limitations. In 1824, the under seal requirement was dropped but the statute was kept.
Rep. Stebelton asked if the legislation would cover construction of a building that may fail 10 years later. Johnson said it would depend on what the suit is over, noting that personal injury cases are covered by separate statutes.