A Primer on Wisconsin's Borrowing Statute
Seventh Circuit applies Wisconsin law to shorten statute of limitations for breach of contract claim from 6 years to 4 years
Suppose a company from Wisconsin contracts with a company from Florida to manufacture and deliver goods to companies in New York and Texas. If those goods turn out to be defective, which state’s statute of limitations governs the subsequent contract claim? Is it Wisconsin because that’s where the goods were manufactured? Florida, where the party that contracted for those goods is located? Or New York and Texas, where the goods were delivered?
The Seventh Circuit addressed this question in RCBA Nutraceuticals, LLC v. ProAmpac Holdings, Inc., No. 2:23-cv-305-WED, a decision issued late last week. Back in 2018, RCBA Nutraceuticals contracted with ProAmpac for the manufacture and delivery of plastic zipper pouches to hold protein powder produced by RCBA. ProAmpac manufactured the zipper pouches at a manufacturing facility it owns in Wisconsin. Although RCBA is a Florida company, the contract directed ProAmpac to deliver the zipper pouches to companies in New York and Texas. Those companies would then fill the zipper pouches with RCBA’s protein powder and deliver the filled products to RCBA’s distributors and customers.
Trouble arose when RCBA began receiving complaints from its customers that the seams on the zipper pouches were prone to splitting, which caused the protein powder to spill out (presumably to the chagrin of gym rats everywhere). After a misbegotten suit against ProAmpac in Florida was dismissed for lack of personal jurisdiction, RCBA sued in the Eastern District of Wisconsin, alleging that ProAmpac breached its contract with RCBA and breached various warranties concerning the pouches. RCBA’s suit in Wisconsin commenced in 2023, five years after the alleged delivery of the defective pouches.
This set up an interesting question. In Wisconsin, the statute of limitations for breach of contract is six years.1 In Florida, the limitations period is five years.2 And in New York and Texas, contract claims are barred if they are not brought within four years of accrual.3 Depending on which statute of limitations applied, RCBA’s claim either would or wouldn’t be time-barred.
Like many states, Wisconsin has a law—dubbed the “borrowing statute”—which governs which statute of limitations controls in situations like this. The statute, Wis. Stat. § 893.07, provides as follows:
(1) If an action is brought in this state on a foreign cause of action and the foreign period of limitation which applies has expired, no action may be maintained in this state.
(2) If an action is brought in this state on a foreign cause of action and the foreign period of limitation which applies to that action has not expired, but the applicable Wisconsin period of limitation has expired, no action may be maintained in this state.
In other words, assuming a claim qualifies as a “foreign cause of action,” the borrowing statute directs courts to apply the shortest available statute of limitations—whether that is the foreign state’s limitations period or Wisconsin’s limitations period. This clear-cut rule eliminates an incentive to forum shop for the most favorable limitations period, and it avoids what would often be a complicated conflict-of-law analysis to decide which state’s statute of limitations applies.
But Wisconsin’s borrowing statute begs the question: What qualifies as a “foreign cause of action”? To answer this question, the Wisconsin Supreme Court previously adopted a “final significant event” test in Abraham v. General Casualty Co. of Wisconsin.4 The Abraham court explained, “a claim sounding in contract is a ‘foreign cause of action’ when the final significant event giving rise to a suable claim occurs outside the state of Wisconsin.”
Over the years, several state and federal decisions applying Wisconsin’s borrowing statute have expanded on what the “final significant event” test contemplates:
In Abraham, the Wisconsin Supreme Court held that a claim against an insurer was not foreign because the insurance company’s refusal to pay occurred in Wisconsin. The Abraham court expressly rejected alternatives to the “final significant event” test, including a “place of injury” test and a “significant contacts” or “center of gravity” test.
In Terranova v. Terranova, Wisconsin-based defendants refused to indemnify plaintiffs in California. The district court determined that the breach occurred in Wisconsin, which was where the defendants were when they rejected the demand for indemnification. The court held this was not a “foreign cause of action” because the final significant event—the breach—occurred in Wisconsin.5
In Ristow v. Threadneedle Insurance Co., the Wisconsin Court of Appeals considered which of the following was the final significant event in a contract action: (a) the plaintiff’s nonreceipt of a settlement check in Wisconsin, or (b) the defendant’s failure to issue a check from South Carolina. The court selected answer (b), making the claim a foreign cause of action.6
In Edgewood Manor Apartment Homes LLC v. RSUI Indemnity Co., the Eastern District of Wisconsin held that the final significant event for a contract claim occurred where the contractual duty was rejected or not followed.7
In Haley v. Kolbe & Kolbe Millwork Co., the Western District of Wisconsin considered whether warranty claims for defective windows were governed by Wisconsin’s statute of limitations or the statutes of limitations for the states where the windows were installed and later failed. The court held the final significant event was the failure of the windows in the foreign states, meaning the foreign states’ statutes of limitations applied.8
Turning back to this case, in a clean and clear opinion by Judge Brennan, the Seventh Circuit distilled that “the final significant event occurs where a contractual duty is breached: for example, where the insurance company improperly rejected coverage, or where the nonconforming goods were delivered.” Or, put differently, if the breach occurred in Wisconsin, apply Wisconsin’s statute of limitations; but if the breach occurred in another state, apply that state’s statute of limitations.
The Seventh Circuit rebuffed several alternative conceptions of what qualifies as the final significant event for a contract claim—including theories that the accrual of damages, discovery, or notice might qualify as the final significant event. In rejecting these theories, the court held, “Per Wisconsin’s ‘final significant event’ test, the correct inquiry is the location of the breach, not the location of notice, discovery, or significant contacts.”
Getting back to the protein powder zipper pouches at issue in this case, the court held that the final significant event (i.e., the alleged breach) was the delivery of the allegedly defective pouches in New York and Texas. ProAmpac’s contract with RCBA directed ProAmpac to deliver the pouches to companies in New York and Texas, and RCBA alleged that ProAmpac breached by delivering defective pouches in those states. Thus, Wisconsin’s borrowing statute required the court to apply the statutes of limitations from New York and Texas. RCBA filed its claim five years after it accrued, which was more than the four-year limitations period prescribed by New York and Texas law. Accordingly, RCBA’s complaint was properly dismissed.
Borrowing statutes may not be a staple of law school curriculums, but they’re crucial. Nationwide, statutes of limitations for contract claims range from two to ten years. In our era of interstate commerce, borrowing statutes clarify which statute of limitations applies, but they can also be a trap for the unwary.
Wis. Stat. § 402.725(1).
Fla. Stat. § 95.11.
N.Y. U.C.C. Law § 2-725(1); Tex. Bus. & Com. Code Ann. § 2.725(a).
217 Wis. 2d 294, 311-12, 576 N.W.2d 46 (1998).
883 F. Supp. 1273 (W.D. Wis. 1995).
220 Wis. 2d 644, 583 N.W.2d 452 (Ct. App. 1998).
No. 08-C-0920, 2010 WL 11492420 (E.D. Wis. Mar. 8, 2010).
No. 14-cv-99, 2015 WL 3774496 (W.D. Wis. June 16, 2015).