Mitigation: Failure to File Suit Upon Learning of Error

Defenses frequently include comparative fault, failure to mitigate, third party fault, offset, contribution, impleading a third party, laches, and many others. How do you handle these defenses? Can the defendant's witness explain facts to support the asserted defenses?
David A. Szwak

Mitigation: Failure to File Suit Upon Learning of Error

Postby David A. Szwak » Mon Dec 12, 2005 9:53 pm

CAVEAT: THIS MAY NOT BE A DEFENSE WHERE CERTAIN STEPS MUST BE TAKEN BEFORE A CAUSE OF ACTION ACCRUES.

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Swafford v. Memphis Individual Practice Ass'n
Not Reported in S.W.2d, 1998 WL 281935
Tenn.App.,1998.

In Hyde v. Hibernia National Bank, supra, the plaintiff was aware of the erroneous credit report three years before he was denied credit based on the report. He filed suit for negligence under the FCRA. The Hyde Court held that the limitations period for the cause of action in tort began to run when the erroneous information was transmitted from the credit agency to the potential user. The Court observed:
The failure of the consumer to mitigate his damages by filing suit when he is first injured, thus permitting a more widespread circulation of the credit information, should have a "bearing [only] on the [calculation of] damages."
Id. at 450 (quoting Prosser & Keaton on the Law of Torts § 113, at 800 (5th ed. 1984)).
In Schneider, supra, the plaintiffs knew of the erroneous credit report at the time the defendants filed the report with the credit reporting agency. As in this case, the defendants contended that the statute of limitations should begin to run from the date the plaintiff knew of the report. The Schneider Court held:
If a plaintiff is aware of the facts giving rise to a cause of action which accrued before the cause of action on which he is suing based on the same defamatory matter as his earlier cause of action but based on a separate publication, the statute of limitations on the later cause of action does not run from the time of accrual of the first cause of action. Therefore, the fact that [plaintiffs] had knowledge that defamatory information was published by respondents when they supplied the credit information to [the credit reporting agency] does not preclude the application of the rule that a party has a cause of action for libel each time the defamatory matter is published, even if the originator of the defamatory matter did not republish the defamatory matter, as long as republication should have been reasonably foreseeable by the originator.
Schneider, 256 Cal.Rptr. at 75.
In this case, we need not determine whether a cause of action for libel arose at the point of transmission of the information to the Data Bank or at the point of discovery by Dr. Swafford. As noted above, both dates are beyond the one-year statute of limitations. However, since we hold that the single publication rule is inapplicable and a separate limitations period attaches to each publication, we must determine when the limitations period commenced for each claim arising out of a publication that occurred within one year prior to the filing of the complaint.
As in Schneider, Dr. Swafford had knowledge of the allegedly defamatory information before it was published to health care entities. Both Dr. Swafford and the Defendants could reasonably foresee that such publication would occur. However, as in Schneider, Dr. Swafford's prior knowledge of the defamatory information "does not preclude the application of the rule that a party has a cause of action for libel each time the defamatory matter is published," Schneider, supra, at 75, so long as the publication is "reasonably foreseeable." A separate claim arises out of each publication, and a separate injury occurred with each publication. For each claim, "the statute of limitations begins to run at the time such dissemination takes place." Shell, 893 S.W.2d at 422. See also Wilson v. Porter, Wright, 921 F.Supp. at 761 ("The alleged violations of the FCRA committed by [the credit reporting agency] took place when the credit reports were issued ..."). Therefore, we hold that the limitations period for each claim commenced on the date on which the potential user received the information from the Data Bank.
*11 The record does not clearly indicate when the Data Bank transmitted the information to users such as Baptist Hospital and St. Francis Hospital. This must be determined on remand. The grant of summary judgment to the Defendants must be reversed as to claims arising out of instances in which the Data Bank transmitted information to a potential user within one year prior to the filing of Dr. Swafford's lawsuit. This holding is predicated on Dr. Swafford's prior knowledge of the existence of the information in the Data Bank. [FN10]


FN10. It should be noted that this Court recently addressed a situation in which the plaintiff had no prior knowledge of the potential for libel and the plaintiff discovered the libel at a date later than the point of dissemination. See Leedom v. Bell, No. 03A01-9704-CV-00136, 1997 WL 671918, at *7 (Tenn.App. Oct.29, 1997) (adopting the Mississippi Supreme Court's holding that the statute of limitations should run from the point of discovery "in that limited class of libel cases which, because of
the secretive or inherently undiscoverable nature of the publication the plaintiff did not know, or with reasonable diligence could not have discovered, that he had been defamed." (quoting Staheli v. Smith, 548 So.2d 1299, 1303 (Miss.1989))).

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