Introduced May 21, Ohio H.B. 251 has been referred to the House’s Civil Justice Committee. This bill is essentially a re-introduction of the previously withdrawn H.B. No. 694 from May 2018. H.B. 694 was withdrawn from committee consideration in early December 2018. KWA previously reported on this in January.
H.B. 251 would amend R.C. 2305.06 and R.C. 2305.07 by reducing the statute of limitation on written contracts from eight (8) years to three (3) years and from six (6) years to three (3) years on non-written contracts. Section 4 of the bill mandates for written or non-written contracts that, “the period of limitations for causes of action would be three years from the bill’s effective dates, or the expiration of the period of limitations that was in effect prior to the bill’s effective dates, whichever occurs first.”
The bill’s proponents include its sponsors and the Ohio Alliance for Civil Justice. The bill’s proponents made vague and hard to quantify advantages. They claim the bill:
- Reduces the burden of paperwork and record keeping on small businesses;
- Improves the business climate in Ohio; and,
- Provides Ohio businesses with more “predictability” and “certainty.”
H.B. 251 is being vigorously opposed by creditors’ rights advocates including the Ohio Creditors Attorneys Association, the Ohio Receivables Management Association, Receivables Management Association International, ACA International, the Ohio Bankers League, the Ohio Association for Justice, and the National Creditors’ Bar Association.
Creditor’s rights advocates were highly critical of the proponent’s analysis and argued the reduction in the statute of limitations has no causal relationship to the state’s economic growth or perceived business climate. Regionally, the opponents noted a three year statute of limitation would be the most restrictive and considerably below the national average of 5 to 7 years. Opponents claim the bill:
- Increases the load on courts as creditors become more aggressive and file lawsuits sooner;
- Increases the cost to courts and to creditors due to increased litigation;
- Increases the cost to consumers who may be obligated to pay attorneys’ fees or court costs;
- Reduces out of court settlements;
- Encourages debtors to evade debts and avoid their obligations;
- Increases risk may cause a reduction in lending;
- Diminishes a creditor’s ability to minimize loss and risk by selling its receivables; and,
- Fails to bring predictability or uniformity to Ohio’s various statute of limitations in Ohio for contract actions not governed by R.C. 2305.06 or R.C. 2305.07.
H.B. 251 is presently still in Committee, but will come up for a vote in the near future. The bill is important to keep on any Ohio creditor’s radar of harmful pending legislation. All creditors should track their contracts, be aware of any impending filing deadlines, and consult with a KWA attorney to assist with any questions. In the meantime, this office will monitor H.B. 251 and will keep our clients apprised of any developments.