California Court Discusses Statutes of Limitations and Bankruptcy Extensions in California Claims

When a debtor sues a municipality for property damage, overlapping legal deadlines can complicate even the strongest claims. A recent California decision in a case involving a fallen tree limb and extensive home damage illustrates how strictly courts enforce statutes of limitation even when bankruptcy and emergency tolling rules come into play. If you have questions with regard to how filing for bankruptcy may impact your rights,  it is essential to consult a knowledgeable Sacramento bankruptcy attorney immediately.

Facts of the Case and Procedural History

It is reported that the plaintiff filed a claim against the defendant city after a tree branch allegedly owned by the municipality fell on her home in January 2018, rendering the property uninhabitable and causing extensive damage. Allegedly, within days of the incident, the plaintiff filed a claim for damages under California’s Government Claims Act. The city acknowledged receipt and informed her that if the claim were denied, she would have six months from the denial date to initiate litigation.

Allegedly, over the following months, the city’s claims adjuster corresponded with the plaintiff, at one point suggesting that she should contact her insurance company to cover repairs. The plaintiff contended that during a group call, the adjuster stated that the city would pay her claim, prompting her to proceed with repairs. The adjuster denied making such representations. Reportedly, city officials later conducted site inspections and exchanged emails with the plaintiff through late 2018, but no final determination or settlement was issued. The plaintiff sought more than $830,000 in damages, including structural losses, mold abatement, destroyed artwork, and loss of rental income.

It is alleged that in 2019, after months without a resolution, the plaintiff wrote to the city attorney demanding immediate payment. Receiving no response, she filed a Chapter 11 bankruptcy petition in June of that year. During the bankruptcy, the city questioned inconsistencies between her tort claim and her bankruptcy filings, including discrepancies about whether she possessed valuable artwork. In 2020, the city sent a detailed letter disputing several components of her claim and requesting signed authorizations to inspect property and review medical records. The plaintiff’s attorney indicated she would sign the authorizations but never did, and communications ceased.

It is reported that more than two years later, the plaintiff filed an adversary complaint against the city in bankruptcy court, which was later deemed filed in state court as of August 2021. The trial court bifurcated the matter to first address whether the action was time-barred. After a seven-day bench trial, the court ruled that the suit was untimely because it was filed nearly two months after the applicable statute of limitations expired. It further rejected the plaintiff’s claims of equitable estoppel and equitable tolling, entering judgment for the city.

The Court’s Evaluation of Statutory and Bankruptcy Tolling

It is alleged that on appeal, the plaintiff argued that her claim was preserved under the Bankruptcy Code’s two-year extension and that California’s Emergency Rule 9, enacted during the COVID-19 pandemic, should further toll the period. The court disagreed, explaining that California’s Government Claims Act ordinarily provides two years from the date of injury to file suit when a public entity fails to act on a claim. Because the tree limb fell in January 2018 and the claim was deemed rejected by operation of law in March 2018, the plaintiff had until January 2020 to sue. Her June 2019 bankruptcy filing invoked section 108(a) of the Bankruptcy Code, which extends deadlines for debtors to bring actions by the later of the state period or two years after the bankruptcy petition. Consequently, she had until June 30, 2021, to file suit.

The court held that Emergency Rule 9, which tolled certain state statutes of limitation from April to October 2020, could not extend the federal two-year period in section 108(a). Citing precedent, the court reasoned that the federal statute’s structure indicates Congress intended the two-year extension to be fixed and controlling, preempting state rules that would otherwise add time. Applying the state’s pandemic tolling provision, the court explained, would effectively vacate the congressional deadline and contravene the supremacy clause. Because the plaintiff filed her adversary complaint in August 2021, nearly two months after the extended federal deadline expired, her claim was barred.

Meet with a  Trusted California Bankruptcy Attorney

Navigating claims against public entities becomes especially complex when bankruptcy proceedings overlap. The statutory and procedural timelines can quickly foreclose recovery if not precisely observed. If you are facing litigation affected by bankruptcy or seeking to preserve claims while reorganizing your financial affairs, consulting with an experienced California bankruptcy attorney is essential. The seasoned California bankruptcy attorneys at the Law Office of Matthew Roy provide knowledgeable guidance in complex California litigation matters. To schedule a confidential consultation, contact us at (916) 361-6028 or use our online form.