Summary
holding that statute of limitations begins to run when the claimant's bill is expressly or constructively rejected
Summary of this case from Liberty Mut. Ins. Co. v. Precision Valve Corp.Opinion
September 12, 1994
Appeal from the Supreme Court, Suffolk County (Gowan, J.).
Ordered that the order is modified, on the law, by deleting the provision thereof which granted that branch of the plaintiff's cross motion which was for summary judgment on its first cause of action, and substituting therefor a provision denying that branch of the cross motion; as so modified, the order is affirmed insofar as appealed from, without costs or disbursements.
On September 22, 1988, the parties allegedly entered into an agreement whereby the defendant Board of Education, Hempstead Union Free School District No. 1 (hereinafter the School District) retained the plaintiff to research, complete, and process tax certorari protests for an 11-year period. Pursuant to the parties' contract, the School District agreed to pay the plaintiff 15% of any proceeds it ultimately recovered from the State. The plaintiff alleges that as a result of its services, the School District ultimately received a reimbursement from the State in the sum of $2,030,391.93. One month later, on November 10, 1989, the plaintiff forwarded an invoice to the defendants, requesting payment of $304,558.79 under the contingency fee agreement.
Over the next four months, the plaintiff made several inquiries regarding the status of its payment request and, at the defendants' request, provided additional information concerning the nature of the services performed. However, the School District did not inform the plaintiff of the fact that a resolution to pay its invoice had been rejected at a meeting of the Board of Education on January 18, 1990. Moreover, in early February 1990, the School District's business manager allegedly asked the plaintiff to provide additional documentation explaining the nature and scope of the services provided, and assured the plaintiff that its documentation would be presented to the Board. The plaintiff did not learn that the defendants were refusing its demand for payment until it received a letter from the defendants' attorneys, dated April 23, 1990, which rejected its invoice upon the ground that "the Board of Education * * * never authorized the retention of your firm to do this work".
One week later, on May 1, 1990, the plaintiff served a notice of claim upon the School District pursuant to Education Law § 3813 (1), and commenced this action by summons and complaint dated July 11, 1990, against, inter alia, the School District and its members. The defendants thereafter moved for summary judgment, contending that the complaint should be dismissed because the plaintiff had failed to file its notice of claim within three months from the accrual of its claim for payment under the contract. In response, the plaintiff cross moved for leave to file a late notice of claim, and for summary judgment. The Supreme Court concluded that the plaintiff's claim accrued, for purposes of Education Law § 3813 (1), no later than November 10, 1989, when the plaintiff forwarded its invoice to the defendants. Although it determined that the plaintiff's May 1, 1990, notice of claim was thus untimely, the court granted the plaintiff's cross motion for leave to file a late notice of claim, and awarded the plaintiff summary judgment on its first cause of action.
On appeal, the defendants contend that the Supreme Court erred in granting the plaintiff leave to file a late notice of claim because the plaintiff's application for such relief was not made within the one-year Statute of Limitations set forth in Education Law § 3813 (2-a) and (2-b). We agree. It is well settled that the term "claim accrued" is not necessarily equatable with the term "cause of action accrued" (see, Pope v. Hempstead Union Free School Dist. Bd. of Educ., 194 A.D.2d 654, 655; Scherman v. Board of Educ., 44 A.D.2d 831), and here, while the plaintiff's "claim" under Education Law § 3813 accrued on November 10, 1989, when its damages became ascertainable, its cause of action for breach of contract did not accrue, and the one-year Statute of Limitations did not begin to run, until the time of the breach (see, Kassner Co. v. City of New York, 46 N.Y.2d 544, 550; Matter of Board of Educ. [Wager Constr. Corp.], 37 N.Y.2d 283, 287; Bri-Den Constr. Co. v. Board of Educ., 200 A.D.2d 605; Matter of Prote Contr. Co. v. Board of Educ., 198 A.D.2d 418). A breach of contract can be said to occur when the claimant's bill is expressly rejected, or when the "party seeking payment should have viewed his claim as having been constructively rejected" (Helmer-Cronin Constr. v Beacon Community Dev. Agency, 156 A.D.2d 543, 544; Arnell Constr. Corp. v. Village of N. Tarrytown, 100 A.D.2d 562, 563, affd 64 N.Y.2d 916; City of New York v. State of New York, 40 N.Y.2d 659, 668; see also, Matter of Prote Contr. Co. v. Board of Educ., supra, at 418). At bar, the plaintiff's cause of action for breach of contract, as distinct from its claim, accrued for purposes of the Statute of Limitations no later than April 23, 1990, when it was advised that the School District had rejected its demand for payment. Accordingly, the plaintiff's October 4, 1991, application for leave to file a late notice of claim was not made within the one year limitation period for commencement of the action, and the court lacked authority to grant the application (see, Pierson v. City of New York, 56 N.Y.2d 950, 955; Stoetzel v. Wappingers Cent. School Dist., 166 A.D.2d 643, 644; cf., Bri-Den Constr. Co. v. Board of Educ., supra; Matter of Prote Contr. Co. v. Board of Educ., supra).
Although the plaintiff's application for leave to file a late notice of claim was untimely, we nevertheless find that the defendants' motion for summary judgment was properly denied because a triable issue of fact exists as to whether the defendants should be estopped from asserting a defense founded upon the plaintiff's failure to file a notice of claim within the requisite three-month period. As a general rule, "where a governmental subdivision acts or comports itself wrongfully or negligently, inducing reliance by a party who * * * changes his position to his detriment or prejudice, that subdivision should be estopped from asserting a right or defense which it otherwise could have raised" (Bender v. New York City Health Hosps. Corp., 38 N.Y.2d 662, 668; see also, Campbell v City of New York, 203 A.D.2d 504). The equitable bar to a defense may arise by virtue of positive acts, or omissions where there was a duty to act, and "[b]y applying the doctrine of equitable estoppel to notice of claim situations, the courts may insure that [such statutes] do not become `a trap to catch the unwary or the ignorant'" (Bender v. New York City Health Hosps. Corp., supra, at 668). Here, the evidence that the School District failed to inform the plaintiff of the Board's vote to reject its invoice, coupled with the plaintiff's assertion that the School District's business manager requested additional documentation of the claim even after the Board's vote, is sufficient to raise an issue of fact with respect to whether the defendants' acts and omissions induced the plaintiff not to file a notice of claim within three months after its claim accrued, which precludes summary judgment (see, Smith v. Sagistano, 186 A.D.2d 180; William J. Thomann, Inc. v. Auburn Enlarged City School Dist., 176 A.D.2d 1235).
Finally, we find that the Supreme Court's award of summary judgment to the plaintiff on its first cause of action was premature, since the record reveals the existence of issues of fact as to whether the individual who entered into the subject contract on behalf of the School District had actual or implied authority to do so, and whether the School District ratified this individual's actions. O'Brien, J.P., Ritter, Santucci and Krausman, JJ., concur.