Illinois Supreme Court Holds That "Savings Provision" Allows Time-Barred Counterclaim For Contribution
December, 2005
In Volume 3 of our 2004 CM Report and Volume 1 of our 2005 CM Report, we reported on the First District’s August 24, 2004 ruling in Barragan v. Osman, 352 Ill. App. 3d 33, 815 N.E.2d 842 (2004), and subsequent appeal to the Illinois Supreme Court. In Barragan, the issue was whether Section 13-207 of the Illinois Code of Civil Procedure “saved” an untimely counterclaim, otherwise barred by the two-year statute of limitations proscribed by Section 13-204. Section 13-207 provides that a defendant may plead a counterclaim that is otherwise barred by the applicable statute of limitations. Section 13-204 provides, in pertinent part, that no action for contribution or indemnity may be filed more than two years after the party seeking contribution or indemnity has been served with process in the underlying action. In a split decision, the Appellate Court majority determined that the filing of a counterclaim for contribution or indemnity is governed by §13-204 and is thus time-barred if not filed within two years, regardless of its technical status as a counterclaim. On January 26, 2005, the Illinois Supreme Court accepted the petition for leave to appeal filed by petitioner/defendant Osman Construction Corporation.
Facts
On September 22, 2005, the Illinois Supreme Court reversed the Illinois Appellate Court, finding that the “saving provision” of Section 13-207 allowed an otherwise time-barred counterclaim for contribution. Barragan involved an architect who filed a counterclaim for contribution against a codefendant contractor more than two years after being served with process in the underlying suit. The architect’s counterclaim was also filed about 1- 1/2 years after the contractor filed its own counterclaim against the architect. The contractor’s counterclaim was filed four days after the architect’s two-year statute of limitations under Section 13-204 expired.
Analysis
The Illinois Supreme Court held that the counterclaims between the two defendants placed them in an adversarial relationship and the architect’s counterclaim was a “responsive counterclaim” and not merely a counterclaim against a passive codefendant. The architect became a “plaintiff” and the contractor became a “defendant” for purposes of the savings clause contained in Section 13-207. Therefore, the contribution claim was owned by the architect before the contractor’s counterclaim was barred by the two year statute of limitations under Section 13-204. Finding that the purpose of the savings provision contained in Section 13-207 is to preserve claims rather than to bar them and to protect parties who have shorter periods of limitations than their opponents, the Illinois Supreme Court allowed the architect’s counterclaim for contribution against the contractor to proceed.
Learning Point:
The Court did not expressly address the applicability of the savings provision in Section 13-207 when a counterclaim is filed against a passive codefendant. In such a situation, however, it appears that the two-year statute of limitations under Section 13-204 applies and that the savings provision of Section 13-207 will not protect an otherwise time-barred
counterclaim. •
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