• Statute of Limitations in Illinois Shortened for Written Indemnity Agreements From 10 Years to Two Years
  • September 12, 2006 | Author: John E. Sebastian
  • Law Firm: Hinshaw & Culbertson LLP - Chicago Office
  • A recent Illinois Appellate Court decision affects the time period for a surety to bring an indemnity action. (See United General Title Ins. Co. v. AmeriTitle, Inc., 2006 WL 845569 (1st Dist. March 31, 2006)). In its decision, the Court held that the two-year statute of limitations for contribution and indemnity actions arising out of personal injury and property damage claims also applies to actions based upon written indemnity agreements. Arguably, the cause of action begins to run the day a claim is asserted against a bond.

    The United General case was brought to our firm’s attention in the course of handling an appeal on behalf of a surety. In our surety client’s case, the indemnitors won on a motion to dismiss at the trial court level by asserting that the four-year statute of limitation arising our of construction contracts governed an indemnity action.

    On behalf of our surety client, Hinshaw attorneys have appealed the trial court’s decision, arguing that the 10-year limitation period governing written contracts is the applicable limitation period. In their response to our appeal, the indemnitors argued that notwithstanding the four-year limitation, the two-year limitation period (contribution and indemnity) also barred the surety’s action. In our reply, we have argued that the two-year limitation only relates to tort actions and has no application to contractual indemnity claims.

    In support of the indemnitors two-year limitation argument, after the appeal was fully briefed, the indemnitors have cited the recent decision in the United General case as an additional authority. Hinshaw attorneys are responding to the argument, and are taking the extra steps to seek an amicus curie response by the Surety Association of America because of the impact to all sureties with matters in Illinois.

    Until another Illinois Appellate Court decision that differs with United General is issued, a surety with an Illinois matter should either consider entering into a tolling agreement with the indemnitors or bringing a lawsuit before the expiration of two years.