Opinion
No. COA08-913.
Filed June 16, 2009.
Mecklenburg County No. 07 CVS 5312.
Appeal by Plaintiff from order entered 28 February 2008 by Judge Catherine C. Eagles in Superior Court, Mecklenburg County. Heard in the Court of Appeals 28 January 2009.
McNaughton Shelton, PLLC, by Edward J. McNaughton and Gregory L. Shelton, for Plaintiff-Appellant. Smith, Cooksey Vickstrom, PLLC, by Steven L. Smith, for Defendant-Appellee.
The City of Charlotte (the City) hired 7 Star Construction Company, Inc. (Defendant) as general contractor for the Davidson/Matheson Connector Project (the project). APAC-Atlantic, Inc. (Plaintiff) and Defendant entered into a subcontract (the contract) on 6 October 2003 in which Plaintiff was to supply and install asphalt for the project. Pursuant to the contract, Plaintiff sold and delivered asphalt binding and paving materials to Defendant between October 2003 and May 2004. Both Defendant and the City accepted all materials furnished by Plaintiff.
Plaintiff last furnished materials to Defendant on 9 May 2004. The City conducted its final inspection of the project on 9 July 2004. The City made final payment to Defendant on 24 May 2005. Plaintiff invoiced Defendant on 21 June 2006 for all materials Plaintiff provided for the project.
Plaintiff filed a complaint against Defendant on 16 March 2007 for breach of contract and action on account. In its complaint, Plaintiff alleged Defendant failed to pay Plaintiff for materials Plaintiff provided Defendant for the project. Defendant filed an answer and motion to dismiss on 25 May 2007. In its motion to dismiss, Defendant contended that Plaintiff's claims were barred by the statute of limitations. In an order entered 16 November 2007, the trial court denied Defendant's motion to dismiss and granted Plaintiff's request for permission to file a motion for summary judgment up to and including ten days before trial.
Plaintiff filed a motion for summary judgment on 2 January 2008. Plaintiff's motion was calendared for 10 January 2008. However, the hearing for Plaintiff's motion for summary judgment was removed from the calendar without explanation to Plaintiff. Plaintiff's case was called for trial on 14 January 2008. On that day, the trial court granted Plaintiff's request to hear Plaintiff's motion for summary judgment before trial. During the summary judgment hearing, Defendant argued that part of Plaintiff's claims were barred by the statute of limitations. The trial court denied Plaintiff's motion for summary judgment and granted partial summary judgment for Defendant, finding that the statute of limitations barred Plaintiff from seeking payment for "any work done up through February [2004]," for which Plaintiff would have expected to receive payment from Defendant by 17 March 2004. Plaintiff asked the trial court to certify the case for immediate appeal and stay the case pending appeal. The trial court denied Plaintiff's requests. Plaintiff voluntarily dismissed its remaining claims without prejudice that same day. The order granting partial summary judgment for Defendant was entered in open court on 14 January 2008, signed 16 January 2008, and filed 28 February 2008. Plaintiff entered notice of appeal on 24 March 2008.
The trial court's order granting partial summary judgment for Defendant incorrectly states that Plaintiff's claims for work performed prior to March 2003 are barred by the statute of limitations. However, the transcript correctly reflects 17 March 2004 as the cutoff date for Plaintiff's claims under the three-year statute of limitations.
I.
At the outset, we address Defendant's argument that Plaintiff's appeal is moot and should be dismissed. Defendant argues "there is nothing to appeal "because Plaintiff voluntarily dismissed its lawsuit against Defendant after the trial court granted partial summary judgment for Defendant. Defendant cites Lloyd v. Carnation Co., 61 N.C. App. 381, 383-84, 301 S.E.2d 414, 416 (1983), in which our Court held that because the plaintiff took a voluntary dismissal without prejudice, the plaintiff destroyed his right to appeal the trial court's adverse ruling granting the defendant partial summary judgment. However, we find the present case distinguishable from Lloyd. In Lloyd, the plaintiff did not dismiss his case and file a notice of appeal until more than a year after the trial court granted partial summary judgment for the defendant. Id. at 383, 301 S.E.2d at 416 . Therefore, because the plaintiff's appeal in Lloyd was untimely, the appeal was not properly before our Court.
In the present case, Plaintiff voluntarily dismissed its remaining claims on 14 January 2008, the same day the trial court granted partial summary judgment for Defendant. Plaintiff filed notice of appeal on 24 March 2008. It is precisely because Plaintiff voluntarily dismissed its remaining claims against Defendant that the partial summary judgment was a final order from which Plaintiff could immediately appeal. See Davis v. Davis, 360 N.C. 518, 524, 631 S.E.2d 114, 119 (2006) (holding a partial summary judgment order was interlocutory, from which a party cannot generally immediately appeal). We therefore hold that Plaintiff's appeal is properly before us.
II.
Plaintiff argues that the trial court erred in granting partial summary judgment for Defendant based on the statute of limitations. The trial court held that Plaintiff was barred from seeking payment for "any work done up through February [2004]," for which Plaintiff would have expected to receive payment from Defendant by 17 March 2004.
Summary judgment is properly granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law." N.C. Gen. Stat. § 1A-1, Rule 56(c) (2007). We review an order granting summary judgment de novo. McCutchen v. McCutchen, 360 N.C. 280, 285, 624 S.E.2d 620, 625 (2006) (citing Howerton v. Arai Helmet, Ltd., 358 N.C. 440, 470, 597 S.E.2d 674, 693 (2004)).
The parties agree the applicable statute of limitations for a breach of contract claim is three years pursuant to N.C. Gen. Stat. § 1-52. The date from which the statute of limitations began to run on Plaintiff's claims was the question at the trial court's hearing on the motion for summary judgment, and is the question on appeal.
The relevant portions of the contract state:
Invoices shall be rendered monthly for all work performed under this agreement during any month; payment of such invoices is due and payable within seven [7] days from receipt of payment from [the City]. Final and complete payment for all work performed under this agreement shall be made not later than thirty [30] days after date of final invoice for such work. . . . Payments received will be applied against open items on unpaid invoices in an order and sequence determined by [Plaintiff] in its sole discretion.
Defendant periodically applied for payments from the City for materials Plaintiff provided to Defendant. Defendant received payment from the City on 16 October 2003, 14 November 2003, 28 January 2004, and 5 March 2004 for materials Plaintiff provided to Defendant. However, Defendant did not pay Plaintiff "within seven [7] days from receipt of payment from [the City]" as stated in the contract. The trial court found Defendant breached the contract on24 October 2003, 22 November 2003, 5 February 2004, and 13 March 2004, when Defendant did not pay Plaintiff within seven days of being paid by the City. Therefore, the trial court barred Plaintiff from seeking payment for materials Plaintiff provided to Defendant on 5 October 2003, 26 October 2003, 11 January 2004, and 18 January 2004, in the amount of $143,966.24 because, pursuant to the terms of the contract, Plaintiff should have expected Defendant to pay Plaintiff for these materials before 17 March 2004.
Plaintiff argues that (1) Defendant's breach did not occur seven days after Defendant received payment from the City because Plaintiff had not yet invoiced Defendant, and (2) if Defendant did breach seven days after receiving payment from the City, Plaintiff waived Defendant's breaches by continuing to perform under the contract.
In determining when Defendant breached, we apply general contract principles. See Robbins v. Trading Post, 253 N.C. 474, 477, 117 S.E.2d 438, 440-41 (1960) (applying contract law principles to building and construction contracts). "It is a well-settled rule in North Carolina that a cause of action for breach of contract accrues, and the statute of limitations period begins to run, `as soon as the injury becomes apparent to the claimant or should reasonably become apparent[.]'" ABL Plumbing Heating Corp. v. Bladen Cty Bd. of Educ., 175 N.C. App. 164, 168, 623 S.E.2d 57, 59 (2005) (quoting Liptrap v. City of High Point, 128 N.C. App. 353, 355, 496 S.E.2d 817, 819, disc. review denied, 348 N.C. 73, 505 S.E.2d 873 (1998) (citations omitted)), disc. review denied, 360 N.C. 362, 629 S.E.2d 846 (2006).
Plaintiff argues that although Defendant did not pay Plaintiff within seven days of being paid by the City, Plaintiff's injury was not "apparent" because Plaintiff had not yet invoiced Defendant pursuant to the terms of the contract. However, Dave Normand, the financial controller for Plaintiff, stated in his deposition that "[b]ased upon the work that was performed and who the owner of the job was, [Plaintiff] would have expected to get paid within seven days after [Defendant] got paid ." Therefore, we hold that regardless of Plaintiff's failure to invoice Defendant, Plaintiff's injury was apparent when Defendant did not pay Plaintiff within seven days after being paid by the City pursuant to the contract. Further, we note that N.C. Gen. Stat. § 22C-3 supports this determination in its directive that:
When a subcontractor has performed in accordance with the provisions of his contract, the contractor shall pay to his subcontractor . . . within seven days of receipt by the contractor . . . of each periodic or final payment, the full amount received for such subcontractor's work and materials based on work completed or service provided under the subcontract.
N.C. Gen. Stat. § 22C-3 (2007).
Plaintiff next argues that even if Defendant did materially breach the contract by failing to make progress payments to Plaintiff, Plaintiff waived Defendant's breaches by continuing to perform the contract. In Southeastern Drywall, Inc. v. Construction Co., the plaintiff -subcontractor sued the defendant-contractor for breach of contract for failure to pay an 18 October 1972 invoice in November 1972. Southeastern Drywall, Inc. v. Construction Co., 25 N.C. App. 538, 543, 214 S.E.2d 303, 307 (1975). Our Court held the trial court failed to make a finding of fact that the parties' contract required the defendant to pay the invoice in November. Id. Our Court further held: "[T]he findings of fact disclose that [the] plaintiff continued to work until 12 December 1972, which conduct would seem to acquiesce in the delay and to waive payment in November, if such were required by contract." Id. "Strict performance of a contract by one party may be waived by the other party." Id.
In Towery v. Dairy, 237 N.C. 544, 545, 75 S.E.2d 534, 535 (1953), the plaintiffs alleged the defendant originally breached the parties' contract on 16 May 1947. The plaintiffs further alleged facts showing they waived the defendant's 16 May 1947 breach by continuing to perform until a subsequent breach of the entire contract by the defendant in January 1949. Id. at 546, 75 S.E.2d at 536. The trial court dismissed the plaintiffs' action filed on 8 November 1950 as barred by the three -year statute of limitations. Id. at 545-46, 75 S.E.2d at 535. Our Supreme Court stated:
While the breach of a continuing contract may justify a termination of the contract by the innocent party, the mere fact a breach of one of the provisions of the contract has been committed by one party does not necessarily accomplish that result, as the party not in fault may elect to waive the breach and continue performance regardless of the breach.
Id. at 546, 75 S.E.2d at 535-36 (citations omitted). Our Supreme Court held that because the plaintiffs pleaded facts showing waiver of the defendant's breach of contract, the plaintiffs' action was not barred by the three-year statute of limitations. Id. at 547, 75 S.E.2d at 536.
In accordance with N.C.R. App. P. 30(e)(3), Plaintiff also cites an unpublished opinion of this Court, Magaldi v. Belverd, 162 N.C. App. 547, 591 S.E.2d 598 (2004), the full text of which was attached as an addendum to Plaintiff's reply brief. Although Magaldi has no precedential value, we find the reasoning of Magaldi persuasive in analyzing the present case.
In Magaldi the plaintiff entered into a contract with the defendants to perform interior design work at the defendants' home. The contract provided for the plaintiff to submit periodic invoices to the defendants. The plaintiff submitted three invoices which were not paid by the defendants. However, the plaintiff continued to perform and the defendants continued to accept the plaintiff's performance until the defendants terminated the contract. Our Court held the statute of limitations on the plaintiff's breach of contract claim began to run "no earlier than the date upon which [the] defendants refused to pay the amount allegedly due [the] plaintiff under the contract." Although the defendants breached the contract by failing to pay the plaintiff's periodic invoices, our Court held the statute of limitations did not begin to run as to these breaches because the plaintiff waived the defendants' breaches by continuing to perform. Rather, our Court found the plaintiff's claim was not barred by the statute of limitations because the plaintiff's "right to institute an action for breach of the contract . . . accrued no earlier than the date upon which [the] defendants refused to pay the amount" listed in the "final service invoice."
Plaintiff alleged in the present case, and Defendant admitted, that Plaintiff delivered materials to Defendant between October 2003 and February 2004. At the summary judgment hearing, Defendant contested the amount of materials Plaintiff allegedly provided to Defendant after February 2004, but admitted that Plaintiff provided "some amount[s]." Therefore, there is no issue of material fact as to whether Plaintiff continued to perform and Defendant continued to accept Plaintiff's performance after February 2004. Because Plaintiff continued to perform after Defendant breached the contract on 24 October 2003, 22 November 2003, 5 February 2004, and 13 March 2004, Plaintiff waived these breaches. See Southeastern Drywall, Inc.; Towery. Therefore, the statute of limitations did not begin to run from the date of these breaches. See Towery. However, in order to decide if the grant of partial summary judgment was in error, we must still determine the correct date from which the statute of limitations period began to run to assess whether Plaintiff's action was timely filed.
Plaintiff completed work on the project on 9 May 2004. The City made final payment to Defendant on 24 May 2005. Plaintiff's injury thus became reasonably apparent seven days after Defendant received final payment from the City, being 1 June 2005. Therefore, we find 1 June 2005 as the date upon which the statute of limitations began to run on Plaintiff's breach of contract claim against Defendant. Because Plaintiff filed its breach of contract action against Defendant on 16 March 2007, within three years from when the statute of limitations period began to run, the trial court's grant of partial summary judgment to Defendant was in error. We therefore reverse and remand to the trial court.
Defendant did not argue his remaining assignment of error and therefore it is abandoned pursuant to N.C.R. App. P. 28(b)(6). Reversed and remanded.
Judges JACKSON and HUNTER, JR. concur.
Report per Rule 30(e).