Bankruptcy Stay Does Not Toll Service Time on Non-Bankrupt Defendants

Higgins v. Superior Court, No. D071353 (D4d1 Sept. 28, 2017)

P filed a complaint in May 2012. She named D1 and a bunch of Does, serving D1 soon thereafter. D1 proceeded to go Chapter 7, staying P’s case. Two-and-a-half years later, the bankruptcy case was discharged, lifting the stay. Based on stuff she claims to have learned during the BK case, P subbed in D2 for a Doe and served her in August 2016.

D2 moved to dismiss under Code of Civil Procedure § 583.210(a), which requires dismissal for failure to serve within three years unless the time is tolled. P argued that the stay due to D1’s bankruptcy merited two years of tolling. The trial court seemingly agreed and denied the motion. D2 took a writ.
Under § 583.240(b), the three-year limit is tolled when a case is stayed. But P’s problem is that an automatic BK stay applies to claims against the debtor. But it does not automatically apply to non-debtor defendants like D2. And while the trial court may have had the discretion to stay the whole case in light of D1’s bankruptcy, the record did not reflect it did so here. 

P also argues that service is timely under some concepts that apply to the statute of limitations, like the delayed discovery rule and the relation back doctrine. But those concepts don’t apply to a motion to dismiss for failure to timely serve. Indeed, § 583.240(d) specifically says that “[f]ailure to discover relevant facts or evidence” is not a grounds for tolling.

Writ granted.

Although the opinion doesn’t mention it, a dismissal for failure to timely serve is without prejudice. See § 581(g). That said, the pendency of an action where defendant wasn’t served does not toll the statute of limitations against that defendant. 

So in this case, the delayed discovery rule might apply to toll the statute of limitations against D2 even if it doesn’t toll the service cutoff. Given the issues presented on appeal, the court’s description of the underlying claims is understandably brief, so it is not clear whether or not that’s a viable argument. But it is certainly possible that P could re-file and have an actionable non-time-barred case against D2, notwithstanding the voluntary dismissal here.