Action on a judgment not barred by 8-year statute of limitations, because statute was tolled by acknowledgment and partial payment of the debt.

Flex-A-Seal, Inc. v. Safford, 2015 VT 40 (27-Feb-2015)


REIBER, C.J. Plaintiff appeals from the dismissal of its complaint to renew a judgment.. The trial court found the complaint barred by the statute of limitations, 12 V.S.A. § 506. On appeal, Plaintiff argues that:the statute of limitations was tolled by by Defendant’s acknowledgment and partial payment of her debt. We reverse the trial court’s decision.

The statute as amended in 2010, now provides that “[a]ctions on judgments and actions for the renewal or revival of judgments shall be brought by filing a new and independent action on the judgment within eight years after the rendition of the judgment, and not after.” 12 V.S.A. § 506.

In October 2002, the court issued a stipulated judgment order pursuant to the parties’ agreement, granting judgment to Plaintiff against Defendant in the amount of $230,000. After plaintiff later filed a motion for trustee process against earnings, the court in November 2004 issued a stipulated order stating the original judgment amount, the judgment amount with interest as of October 28, 2004, and providing for the suspension of post-judgment interest.

In April 2012, Plainiff filed this action to renew its judgment..The court sua sponte questioned if the action was timely filed. The court ultimately rejected Plaintiff's argument that the relevant final judgment for purposes of 12 V.S.A. § 506 was the 2004 stipulated order rather than the 2002 judgment. The court cited Ayer v. Hemingway, 2013 VT 37, 193 Vt. 610, 73 A.3d 673, where we held a stipulated payment plan was not a new “final judgment” from which a new eight-year statute-of-limitations period began to run. Id. ¶ 18

In light of Ayer v. Hemingway, and Nelson v. Russo, 2008 VT 66, 184 Vt. 550, 956 A.2d 1117 (mem.), the trial court concluded that the common law rule that an acknowledgment of the existence of a debt “has the effect of starting the statute of limitations running anew” no longer applies to judgments. In Nelson, this Court clarified that under 12 V.S.A. § 506, a plaintiff must file a new and independent action to renew a judgment and cannot do so by motion. 2008 VT 66, ¶ 9. The Court reiterated this principle in Ayer, 2013 VT 37, ¶ 15.

Our case law holds that the same tolling rule applicable to contract actions applies to actions on judgment debts,  Olcott v. Scales, 3 Vt. 173, 178 (1831), like the instant case, involved a plaintiff’s attempt to collect a judgment debt. The Olcott court expressly held that in such cases, the acknowledgement of a debt, in terms that admit it to be due, removes the effect of the statute of limitations. 3 Vt. at 178. In Gailer v. Grinnel, 2 Aik. 349, 1828 WL 1161 (1828), the Court similarly held that, in actions of debt on judgment, an acknowledgment of the debt within the statute-of-limitations period removed the statutory bar. Id. at 354 The Court held that:

The defendant’s liability was fixed by the judgment, and as the statute goes upon the presumption of payment after the lapse of eight years, the acknowledgment of the debt within eight years shows that it has not been paid, and thus, by removing the presumption, takes the case out of the statute. The acknowledgment . . . revives the debt ab initio, and the plaintiff recovers, not on the ground of having a new right of action, but that the statute, by reason of the acknowledgment, does not apply to bar the old one.

Id. at 353

Defendant has neither argued nor briefed the question of whether we should overrule Gailer and Olcott in light of the holdings and rationales of Ayer and Nelson. While we note some possible tension among those decisions, we leave to another day, following complete briefing, any consideration of that issue.

As our case law holds that the same tolling rule applicable to contract actions applies to actions on judgment debts, we reverse the court’s decision to dismiss and we remand for further proceedings.