ZF Micro Devices, Inc. v. TAT Capital Partners, Ltd.
Annotate this CaseZF, a microchip company, sued NSC and obtained a $20 million settlement in 2004. Afterwards, venture capital firms that had invested in ZF, including TAT, successfully sued ZF for fraudulent transfer of the NSC settlement proceeds. ZF filed a cross-complaint, alleging breach of fiduciary duty by TAT, but later severed that claim and consolidated it into a third suit, in which ZF alleged that Putney, a TAT representative who was a ZF board member, breached fiduciary duties owed to ZF. TAT argued that ZF’s 2009 claim, which accrued in 2002, was barred by a four-year statute of limitations. ZF contended that the statute of limitations was tolled by the 2005 filing of TAT’s lawsuit. TAT replied that this tolling doctrine applied only to compulsory cross-complaints; because the ZF cross-complaint was permissive (unrelated to TAT’s complaint), its filing did not relate back to the date the complaint was filed. The trial court held the tolling doctrine applied only to compulsory cross-complaints. The jury found ZF’s cross-complaint time-barred. The court of appeal reversed, agreeing that ZF’s cross-complaint was permissive but concluding the tolling doctrine applies to both permissive and compulsory cross-complaints. The filing of ZF’s permissive cross-complaint related back to the date TAT filed its complaint.
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