Tolling Agreements — Extending Limitations by Agreement Without Filing Suit
Published .
Sometimes neither side wants a lawsuit filed yet.
The parties may be exchanging medical records, evaluating expert opinions, conducting settlement negotiations, waiting for additional treatment, investigating insurance coverage, attempting mediation, or simply trying to determine whether litigation can be avoided.
The problem is that the statute of limitations does not ordinarily stop running because everyone is talking.
A tolling agreement can provide additional time without requiring the plaintiff to file suit merely to preserve the claim.
Properly drafted, it can be extremely useful.
Poorly drafted, it can produce a limitations disaster.
What Is a Tolling Agreement?
A tolling agreement is a contract in which the parties agree concerning the effect that passage of time will have upon specified claims and defenses.
Most commonly, the potential defendant agrees not to assert limitations as a defense for an agreed period while the parties continue investigating or negotiating the dispute.
The agreement does not necessarily mean that either side concedes anything about the merits.
The defendant can continue to deny liability.
The plaintiff can preserve the claim.
Both sides avoid immediate litigation.
Maryland recognizes that ordinary statutes of limitations generally are not jurisdictional and may be affected by agreement or waiver. Ceccone v. Carroll Home Services, LLC, 454 Md. 680, 692–95, 165 A.3d 475 (2017).
Do Not Assume Settlement Negotiations Toll Limitations
This is the first rule.
They ordinarily do not.
The adjuster may be friendly.
The defense lawyer may say that the claim is being seriously evaluated.
The parties may have scheduled mediation for a date after limitations.
The insurer may have requested another set of records.
A settlement offer may be imminent.
None of those facts should cause plaintiff's counsel to assume that limitations has stopped running.
If limitations is approaching, counsel ordinarily has three basic choices:
1. file suit;
2. obtain an effective tolling agreement; or
3. knowingly accept the risk that the claim may become time-barred.
The third is rarely an attractive option.
A Tolling Agreement Is a Contract
This point is more important than the terminology suggests.
The agreement does not necessarily cause the statute itself to stop operating as though someone pressed a pause button.
In Hartford Accident & Indemnity Co. v. Scarlett Harbor Associates Ltd. Partnership, 109 Md. App. 217, 674 A.2d 106 (1996), the Appellate Court of Maryland explained that the particular tolling agreement before it created the parties' own contractual limitations arrangement. The defendant had agreed to waive its limitations defense for claims covered by the agreement if suit was brought within the contractually authorized period.
That distinction has enormous practical significance.
The lawyer must read the agreement itself.
Do not assume that every document labeled "Tolling Agreement" operates the same way.
Does the Clock Stop, or Is the Deadline Extended?
Those are not necessarily the same arrangement.
Consider a claim with 100 days remaining before limitations expires.
The parties enter a six-month agreement.
One possible agreement might provide that limitations is suspended for six months and that the claimant retains the unused 100 days after termination.
Another might provide that the defendant will not assert limitations if suit is filed on or before a particular date.
Another might exclude a defined period from the limitations calculation.
Another might simply waive a limitations defense through a stated date.
Those provisions can produce different filing deadlines.
The agreement should say exactly what happens to the clock.
The Scarlett Harbor Warning
Scarlett Harbor provides a particularly useful Maryland warning about treating a contractual deadline casually.
The parties' tolling agreement expired on January 15, 1993. That date happened to be a court holiday.
The claimant argued that Maryland Rule 1-203 should extend the deadline to the next business day.
The court rejected the argument. Rule 1-203's extension applied to the period prescribed by the applicable statute, not the private contractual deadline created by the tolling agreement. The court enforced the agreement according to its terms.
The practical lesson could hardly be clearer:
Never plan to file on the last day of a tolling agreement.
A weekend, holiday, filing problem, ambiguity, illness, electronic filing failure, or simple calendaring mistake can turn a negotiated extension into a malpractice problem.
Identify the Claims Being Tolled
A tolling agreement should define its subject matter carefully.
Suppose a patient may have claims against a surgeon, hospital, anesthesiologist, and surgical center.
An agreement signed only by the surgeon does not automatically protect claims against everyone else.
Likewise, an agreement concerning "claims arising from the surgery" may generate disputes over whether it encompasses:
• informed consent;
• negligent credentialing;
• postoperative care;
• negligent hiring or supervision;
• vicarious liability;
• separate treatment occurring later; or
• claims against related corporate entities.
The agreement should identify the claims broadly enough to accomplish the parties' actual objective without creating unnecessary uncertainty.
Identify the Parties With Equal Care
The same problem exists with parties.
Does an agreement with an insurer bind the insured?
Does an agreement with a physician bind the physician's professional association?
Does an agreement with a corporation protect claims against employees?
Does an agreement with one defendant affect contribution or indemnification claims involving another?
Do not assume.
Name the parties whose rights are being affected.
If affiliated entities, employees, agents, insurers, successors, or other persons are intended to be covered, the agreement should address them expressly.
The Insurer May Not Be the Defendant
Personal-injury lawyers should be particularly careful when negotiating with liability insurers.
The adjuster may be handling the claim, but the tort defendant—not the insurer—may possess the limitations defense.
An insurer's willingness to continue negotiating should not automatically be treated as authority to waive the insured's limitations defense.
If a tolling agreement is being used to protect a tort claim, counsel should make certain that the agreement binds the person or entity against whom the claim will actually be asserted or that the signatory has unquestionable authority to bind that party.
Preserve Existing Defenses
A defendant agreeing to toll limitations ordinarily does not intend to concede liability, causation, damages, jurisdiction, venue, service, immunity, contractual defenses, or anything else.
A well-drafted agreement therefore commonly preserves all defenses other than the limitations consequences expressly modified by the agreement.
From the plaintiff's perspective, however, the reservation language must be read carefully.
A purported tolling agreement is of little value if another provision quietly reserves the very limitations defense the plaintiff believed had been suspended.
The agreement must be internally consistent.
Claims Already Barred
A critical question is whether limitations has already expired when the agreement is signed.
If so, what exactly are the parties agreeing to do?
Are they reviving a barred claim?
Is the defendant expressly waiving an existing limitations defense?
Or is the agreement merely tolling claims that remained timely on the effective date?
The distinction can determine whether the plaintiff has anything at all.
In Scarlett Harbor, the Maryland court recognized that the agreement before it permitted suit even though the statutory limitations period had expired because the defendants had contractually waived their limitations defense during the agreed period.
Do not rely on implication.
If an arguably expired claim is intended to be covered, say so expressly.
Know Exactly When the Agreement Begins
The effective date matters.
Possible choices include:
• the date the agreement is signed;
• the date negotiations began;
• a specified earlier date;
• the date the agreement is fully executed by all parties; or
• another expressly identified date.
If the plaintiff believes negotiations have been protected since June 1 but the agreement becomes effective only when signed on August 15, seventy-five days may have disappeared.
Put the date in writing.
Know Exactly When It Ends
Termination provisions deserve the same precision.
An agreement might terminate:
• automatically on a fixed date;
• a specified number of days after written notice;
• when mediation concludes;
• when one party gives notice;
• when settlement negotiations terminate;
• or upon some other event.
Event-based termination can create uncertainty.
What does it mean for "negotiations to terminate"?
Was it the date an offer was rejected?
The date counsel said negotiations were at an impasse?
The date someone stopped returning telephone calls?
A fixed date or clearly defined written-notice mechanism is generally easier to calendar.
Build in Time After Termination
An agreement that ends immediately upon written notice can create unnecessary danger.
Suppose defense counsel sends a termination notice at 4:45 p.m. on Friday.
Does the plaintiff have to file immediately?
A more workable agreement can provide a defined period—30, 60, or 90 days, for example—after termination notice before the limitations protection ends.
The appropriate period depends upon the case.
The important point is that counsel should know precisely how much time remains.
Put Every Deadline on the Calendar
Once the agreement is executed, calendar:
• its effective date;
• its termination date;
• any notice deadline;
• the earliest possible termination date;
• the date by which an extension must be requested;
• the contractual filing deadline; and
• an earlier internal filing deadline.
The final date should not be the only reminder.
The Scarlett Harbor result demonstrates why. A contractual deadline may not receive the procedural extensions counsel expects for a statutory filing period.
Extensions Should Be Signed Before Expiration
If additional time is required, obtain the extension before the existing agreement expires.
Do not rely upon:
"We're fine with extending it. I'll send you something next week."
An oral understanding about an extension can generate precisely the litigation the tolling agreement was supposed to avoid.
The safer practice is a written, fully executed extension stating the new termination date and confirming that all other provisions remain in effect.
Statutes of Repose Are Different
One of the most dangerous assumptions is that a tolling agreement necessarily affects every time bar associated with the claim.
A statute of limitations and a statute of repose are not the same thing.
A limitations period ordinarily operates from accrual of a cause of action. A statute of repose may impose an outside deadline tied to another event regardless of when the injury or claim was discovered.
Whether parties may alter a particular repose period depends upon the governing statute and law.
The agreement should therefore identify whether it purports to affect:
• statutes of limitations;
• statutes of repose;
• contractual limitations periods;
• notice provisions;
• conditions precedent; and
• other time-based defenses.
Do not assume that the word "tolling" captures all of them.
Governmental Claims Require Special Caution
Claims against governmental entities present additional problems.
A statutory notice requirement or filing requirement connected to a waiver of sovereign immunity may not operate like an ordinary limitations defense that a private defendant can freely waive.
Maryland appellate decisions have repeatedly emphasized that some governmental filing requirements have consequences tied directly to sovereign immunity. For example, the courts have characterized the Maryland Tort Claims Act's three-year filing requirement as both a limitations provision and a condition precedent to the State's waiver of sovereign immunity.
Accordingly, counsel should not assume that an agency employee, adjuster, government lawyer, or private claims administrator can contractually enlarge a statutory waiver of sovereign immunity.
Government cases require examination of the particular statute and the actual authority of the person purporting to agree.
Tolling Does Not Necessarily Extend Notice Requirements
A related trap is confusing limitations with pre-suit notice.
An agreement tolling "the statute of limitations" may do nothing to extend:
• governmental notice requirements;
• contractual notice provisions;
• claim-presentation deadlines;
• administrative filing requirements;
• conditions precedent; or
• statutory pre-suit procedures.
Those requirements should be separately identified and addressed.
Medical Malpractice Requires Particular Care
A medical malpractice case may involve more than a simple three-year calendar.
Maryland's medical-malpractice limitations statute, Courts and Judicial Proceedings Article § 5-109, contains specialized timing provisions. Claims also implicate the Health Care Malpractice Claims Act and its pre-suit procedures.
A tolling agreement should not be drafted as though every medical-negligence claim is governed solely by the general three-year limitations statute.
Counsel should identify all potentially applicable deadlines before deciding what the agreement must accomplish.
Minors and Other Statutory Tolling
Maryland law itself tolls certain limitations periods in specified circumstances.
Courts and Judicial Proceedings Article § 5-201 addresses minority and mental incompetence. Other statutory provisions address different circumstances.
A contractual tolling agreement is distinct from statutory tolling.
The lawyer should determine the actual limitations posture before negotiating the agreement rather than assuming that a contractual extension is necessary—or that it provides all the protection required.
Tolling Agreements and Arbitration
Arbitration clauses create another potential trap.
A lawyer may believe that pursuing arbitration eliminates the need to worry about limitations.
Not necessarily.
In Kumar v. Dhanda, 426 Md. 185, 43 A.3d 1029 (2012), the Supreme Court of Maryland discussed the need for parties to take timely action where limitations and contractual arbitration obligations intersect. The Court recognized options that may include timely initiating the required process, entering a further tolling agreement, or filing suit and requesting a stay pending arbitration depending upon the circumstances.
The existence of an arbitration provision is therefore not a reason to stop calendaring limitations.
Tolling Can Facilitate Mediation
One of the best uses of a tolling agreement is to permit meaningful pre-suit mediation.
Without tolling, a plaintiff approaching limitations may have no rational choice but to file suit before mediation occurs.
That filing creates costs, adversarial momentum, service issues, responsive pleadings, discovery obligations, and sometimes unnecessary publicity.
A limited tolling agreement can give the parties enough time to exchange essential information, select a mediator, prepare submissions, and conduct mediation without forcing a protective lawsuit.
If mediation fails, the plaintiff can then file.
But Do Not Let Tolling Become Endless Drift
Repeated extensions can create their own problems.
Witness memories deteriorate.
Records become harder to locate.
Employees leave.
Experts become unavailable.
Defendants reorganize or disappear.
Insurance issues become more complicated.
Clients become impatient.
A tolling agreement should serve a purpose.
It should not become an excuse for a claim to sit indefinitely because neither side wants to make a decision.
Tolling Agreements Can Protect Both Sides
Although plaintiffs frequently request tolling, defendants can benefit as well.
A defendant may want additional time to:
• investigate before litigation;
• obtain insurance coverage determinations;
• avoid litigation expense;
• conduct an audit;
• pursue settlement;
• preserve a business relationship;
• complete repairs;
• evaluate indemnification rights; or
• participate in mediation.
A tolling agreement can therefore be a rational business decision rather than a concession that the plaintiff's claim has merit.
Never Assume Everyone Means the Same Thing by “Toll”
The most dangerous sentence in this area may be:
"We'll agree to toll limitations for six months."
What does that mean?
Does six months get added to the original deadline?
Does the limitations clock stop for exactly six months?
Does the plaintiff receive whatever time remained when the agreement began?
Does the defendant merely promise not to plead limitations until a particular date?
Are already-barred claims revived?
Are counterclaims included?
Are repose periods affected?
Does the agreement apply to unknown claims?
Does it bind affiliates?
Does it cover notice requirements?
The phrase sounds precise.
It is not.
The written agreement must supply the precision.
A Simple Example
Assume a claim arguably accrued on January 15, 2024, and the parties believe Maryland's general three-year limitations period applies.
The anticipated limitations date is therefore January 15, 2027.
On October 15, 2026, with approximately three months remaining, the parties want to mediate but cannot obtain a suitable date until February.
They enter a tolling agreement.
One version states that the running of limitations is suspended from October 15, 2026 through February 15, 2027, after which the unused portion resumes.
Another states simply that the defendant will not assert limitations as to a covered claim filed on or before May 15, 2027.
Those agreements may reach roughly similar practical outcomes.
Legally, however, they are structured differently.
Counsel should understand which one was signed.
The Safest Question
When reviewing a tolling agreement, do not merely ask:
"Does this toll limitations?"
Ask:
"If settlement fails, what is the last date on which I can safely file this particular claim against this particular defendant, and exactly which language in the signed agreement gives me that date?"
If the answer is not immediately apparent, the agreement is not sufficiently clear.
Practical Drafting Checklist
Before relying upon a tolling agreement, confirm:
• the correct parties signed it;
• the signatories possess authority to bind those parties;
• the covered claims are defined;
• the covered defenses are defined;
• the effective date is explicit;
• the termination mechanism is explicit;
• the effect upon the running limitations period is explicit;
• any post-termination filing period is explicit;
• already-expired claims are addressed if relevant;
• statutes of repose are addressed if relevant;
• contractual limitations periods are addressed if relevant;
• governmental or statutory notice requirements are separately considered;
• counterclaims and crossclaims are addressed if necessary;
• all non-tolled defenses are identified appropriately;
• amendment or extension procedures are stated;
• the agreement is fully executed; and
• every relevant date has been independently calendared.
Then calendar an internal filing deadline comfortably before the contractual deadline.
Related Maryland Cases and Authorities
• Md. Code, Cts. & Jud. Proc. § 5-101 — Maryland's general three-year limitations provision for civil actions when another statutory period does not apply.
• Md. Code, Cts. & Jud. Proc. §§ 5-201 through 5-203 — statutory provisions addressing specified circumstances affecting limitations, including disability and fraud.
• Ceccone v. Carroll Home Services, LLC, 454 Md. 680, 165 A.3d 475 (2017) — explains that ordinary limitations periods are generally not jurisdictional and recognizes that parties may lengthen limitations through waiver or tolling agreements; also addresses contractual shortening of limitations.
• Hartford Accident & Indemnity Co. v. Scarlett Harbor Associates Ltd. Partnership, 109 Md. App. 217, 674 A.2d 106 (1996) — important Maryland decision enforcing a tolling agreement according to its contractual terms and rejecting an attempt to apply the ordinary weekend/holiday computation rule to the agreement's contractual expiration date.
• Milton Co. v. Council of Unit Owners of Bentley Place Condominium, 121 Md. App. 100, 708 A.2d 1047 (1998), aff'd, 354 Md. 264, 729 A.2d 981 (1999) — addresses interpretation and scope of a tolling agreement in litigation involving multiple statutory and common-law claims.
• Kumar v. Dhanda, 426 Md. 185, 43 A.3d 1029 (2012) — discusses limitations in the arbitration context and the importance of timely protective action, including tolling or filing suit where appropriate.
• Park Plus, Inc. v. Palisades of Towson, LLC, 478 Md. 35, 272 A.3d 607 (2022) — considers limitations issues arising from an arbitration dispute in which the parties had entered a tolling agreement.