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Exceptions to Shortening the Statute of Limitations by Contract

August 5, 2020

In the case of Ceccone v. Carroll Home Services LLC, Plaintiffs Richard and Daphne Ceccone (“Plaintiffs”) filed a tort and contract claim against Defendant Carroll Home Services, LLC (“CHS”). CHS provided oil and maintenance services to the Plaintiffs’ furnace. An incident arose with the furnace which caused damage to the Plaintiffs’ home. A section of the residential furnace agreement signed by Plaintiffs included a provision that reduced the period for a consumer to bring a tort or contract claim against CHS from the statutory three years to one year, although it did not limit the time period for CHS to make a claim against a consumer.

Plaintiffs filed their complaint before the three year statute of limitations expired, but arguably over a year after their claims accrued. The District Court of Maryland dismissed the case and entered a judgment in favor of CHS based on the shortened limitations period laid out in the parties’ maintenance agreement. Plaintiffs filed a de novo appeal to the Circuit Court for Anne Arundel County. The issue on appeal was whether the shortened one-year period of limitations in the maintenance agreement replaces the three-year statutory period of limitations.

Plaintiffs’ complaint alleged material and fraudulent misrepresentations made by CHS and that CHS failed to respond to discovery on this subject. The Circuit Court did not evaluate those allegations in assessing the limitations provision in the contract, but entered judgment in favor of CHS based on the limitations period set forth in the contract. Plaintiffs then appealed to the Court of Special Appeals which transferred the appeal to the Court of Appeals of Maryland, Maryland’s highest court. The Court of Appeals held that contractually shortened limitation periods may be valid, but that the Circuit Court failed to undertake the necessary analysis, including potential contract defenses, and to render a reasonable finding. The Court of Appeals vacated the judgment of the Circuit Court and remanded the case to determine whether the contractual provision was enforceable and reasonable.