Fraud: which statement correctly describes the SOL?

Fraud: which statement correctly describes the SOL?

• A. 4 years from accrual
• B. 2 years from discovery
• C. 6 years from action
• D. Longer of 6 years from action or 2 years from discovery

Answer: (D)

In fraud cases, the time to sue depends on both when the fraud occurred (accrual) and when the plaintiff discovered it. There’s a rule that you use the later of two timeframes: the six-year period from accrual, or the two-year period from discovery. This means you get the benefit of the discovery rule, but you still can’t sue later than six years after the fraud happened if discovery occurs very early; and if discovery happens late, you can sue within two years after discovery, even if that extends beyond six years from accrual. For example, if the fraud happened at year 0 and is discovered at year 1, the two-year-from-discovery window ends at year 3, but the six-year-from-accrual window ends at year 6. The later date is year 6, so you must sue by then. If discovery occurs at year 5, two years from discovery ends at year 7, which is later than year 6, so you may sue by year 7. If discovery is at year 8, the two-year-from-discovery window ends at year 10, which is even later, so you could sue by year 10. That blend of a discovery rule with a cap is why the statement describing the SOL as the longer of six years from accrual or two years from discovery best captures how fraud limitations work.

In fraud cases, the time to sue depends on both when the fraud occurred (accrual) and when the plaintiff discovered it. There’s a rule that you use the later of two timeframes: the six-year period from accrual, or the two-year period from discovery. This means you get the benefit of the discovery rule, but you still can’t sue later than six years after the fraud happened if discovery occurs very early; and if discovery happens late, you can sue within two years after discovery, even if that extends beyond six years from accrual.

For example, if the fraud happened at year 0 and is discovered at year 1, the two-year-from-discovery window ends at year 3, but the six-year-from-accrual window ends at year 6. The later date is year 6, so you must sue by then. If discovery occurs at year 5, two years from discovery ends at year 7, which is later than year 6, so you may sue by year 7. If discovery is at year 8, the two-year-from-discovery window ends at year 10, which is even later, so you could sue by year 10.

That blend of a discovery rule with a cap is why the statement describing the SOL as the longer of six years from accrual or two years from discovery best captures how fraud limitations work.