In Nevada, the general rule concerning statutes of limitation is that a cause of action accrues when the wrong occurs and a party sustains injuries for which relief could be sought. An exception to the general rule has been recognized by the Nevada Supreme Court is the so-called “discovery rule.” Under the discovery rule, the statutory period of limitations is tolled until the injured party discovers or reasonably should have discovered facts supporting a cause of action.[1]

The rationale behind the discovery rule is that it is not fair to bar suit before a party even knows they have been injured or what caused the injury even if the deadline to file suit has passed.

So, when does the discovery rule apply in Nevada and why should the surety care? Well, the Nevada Supreme Court has held that the discovery rule applies to contract actions when the operative statute of limitations is silent as to when accrual begins.[2]

Recent Nevada Supreme Court case law clarifies further that the discovery rule does not apply to all contracts, but only some.[3]

In Golden Gate, the Nevada Supreme Court addressed whether the discovery rule tolls the statute of limitations for breach of implied warranty claims under the Nevada Uniform Commercial Code (UCC).

In 2008 Golden Gate ordered an underground storage tank manufactured by Modern Welding for use at a new gas station. Modern Welding’s express warranty expired in 2009. The four-year UCC warranty statute of limitations expired in 2013. In 2016, Golden Gate discovered a crack in the tank rendering it unusable. After the insurer denied the claim and Modern Welding refused to replace it, Golden Fate filed its complaint for breach of implied warranty in July 2019, 11 years after it was installed.

Golden Gate argued that the discovery rule should toll the limitations period until the defect was discovered. Effectively, this would mean that the implied warranty lasts forever or at least doesn’t begin until an injury is discovered.

The Court rejected this argument, holding that discovery tolling does not apply to breach of implied warranty claims under the UCC because the UCC contained specific language as to when the breach accrued, in this case “A breach of warranty occurs when tender of delivery is made, except that where a warranty explicitly extends to future performance…”.[4] Because Golden Gate’s claim was made on an implied warranty it was, by definition, not explicit.

So, where there are potential statute of limitations defenses, it is important to carefully examine both the specific facts of your case, the language of the contracts at play, as well as the specific language of the statute of limitations involved. The discovery rule could mean that a claim that looks time-barred on its surface, may not be.

[1] Petersen v. Bruen, 106 Nev. 271, 274, 792 P.2d 18, 20 (1990).

[2] Bemis v. Est. of Bemis, 114 Nev. 1021, 1025 & n.1, 967 P.2d 437, 440 & n.1 (1998).

[3] Golden Gate/S.E.T. Retail of Nevada, LLC v. Modern Welding Co. of California, Inc., 141 Nev. Adv. Op. 12, 565 P.3d 1, 4 (2025)

[4] N.R.S. 104.2725(2).