Iowa’s Savings Statute Clarified

Working away in your office, an opposing attorney calls you and states: “We’ve decided to dismiss your client, the defendant, from this lawsuit.  We will do this with a dismissal without prejudice.”  As you work hard to contain your glee and good fortune, you double-check the applicable statute of limitations, and determine that it has expired.  Your initial thought is that since the statute has expired, the dismissal “without prejudice” is, in effect, a dismissal with prejudice, and the case can never be re-filed. But until a recent Iowa Supreme Court case, it was difficult to advise a client as to whether the case was truly “dead” or not.

On September 30, 2011, the Iowa Supreme Court decided Furnald v. Hughes and EMCASCO Insurance Co., No. 10-0180.  In Furnald the Court clarified a section of Iowa statutory law that had been troublesome to defendants, the Iowa Savings Statute, Iowa Code §614.10.

The Iowa Savings Statute provides as follows:

If, after the commencement of an action, the plaintiff, for any cause except negligence in its prosecution, fails therein, and a new one is brought within six months thereafter, the second shall, for the purposes herein contemplated, be held a continuation of the first.

As a practical matter, if this statute applies, a case may be dismissed, without prejudice, by plaintiff, and even if the applicable statute of limitations has expired in the interim, the case may be re-filed as a “continuation” of the first case so long as it is done so within six months of the dismissal.  The lack of case law interpreting this statute had always injected an unwanted degree of unpredictability into the law.

In Furnald, the plaintiff brought a personal injury lawsuit arising out of an automobile accident.  Shortly before trial, the plaintiff dismissed the case without prejudice, and claimed that he needed more time to develop expert testimony on the issue of permanent injuries sustained by plaintiff.  The lawsuit was then re-filed two months later.

After the case was re-filed, defendant filed a summary judgment motion, seeking dismissal of the case based on the fact that the plaintiff was not entitled to the protection of the savings statute.  The trial court granted summary judgment to defendant.  Plaintiff appealed, the Iowa Court of Appeals affirmed the dismissal, and the Iowa Supreme Court granted further review.

The question squarely presented by Furnald was whether the voluntary dismissal of the case under these circumstances met the requirement of the savings statute that it had “failed” without “negligence in its prosecution.”  The Iowa Supreme Court found that the case did not meet the requirements of the statute, and found that the trial court properly dismissed the case.

Before Furnald, the law was unclear in Iowa as to when the provisions of the savings statute might apply to “resurrect” a previously-dismissed lawsuit.  After Furnald, it is clear that a plaintiff who is in a jam, based on lack of discovery, lack of experts, or the failure to exercise due diligence in moving the case forward, may not engage in procedural gamesmanship and use this aspect of the Iowa Code to escape the jam by dismissing the case, without prejudice, and re-filing the suit within six months.  The facts presented in Furnald presented a worst-case scenario for defendants; plaintiff there claimed that he merely needed more time to “develop” more testimony to support his client’s claim of permanent disability. Yet, the Iowa Supreme Court said “no,” we are not going to allow this to occur.  The Court could have just as easily concluded that these facts do not constitute “negligence in the prosecution of the case,” but it did not.  Furnald thus adds a measure of certainty to the law in clarifying how statutes of limitation operate in Iowa.  Please contact Product Liability Practice Group chair Kevin Reynolds at Reynolds@whitfieldlaw.com for more information.