T.S. ELLIS, III, District Judge.
At issue in this diversity action is whether plaintiff's claim for breach of contract is barred by the statute of limitations. Ordinarily, a federal court in Virginia must apply Virginia's statute of limitations to state law claims in diversity actions. Yet, pursuant to Virginia's "borrowing statute,"
Plaintiff, Hunter Innovations Company ("HIC"), is a Virginia sole proprietorship that specializes in restoring, repairing, and refurbishing historical real property. HIC is owned by James Hunter. Defendant, The Travelers Indemnity Company of Connecticut ("Travelers"), is a nationwide insurance company with its principal place of business in Hartford, Connecticut.
Travelers provided insurance coverage for certain historical real property located in northwest Washington, D.C. ("insured property"). The insured property was damaged by lightning on August 17, 2003. Thereafter, HIC submitted a written proposal to repair the insured property for $85,209. A property claim representative for Travelers, Stephen Brady, called Hunter on December 12, 2003 to discuss HIC's proposal. Brady placed the call from his office in Maryland and Hunter received the call at HIC's office in Virginia. During
Later that day, Brady sent a letter by facsimile to HIC's office in Arlington, confirming the material terms of the contract. Hunter states that he did not consider the contract to be "complete and binding" until he received the letter. Indeed, Hunter claims that "[h]ad Brady not delivered the terms of the agreement to me in writing, HIC would not have undertaken any work." The letter listed the date of the contract, the parties, and the owner of the insured property. It also stated the subject matter of the contract (i.e., repairs), and confirmed that HIC would be paid for its repair work on a time and materials basis, as follows:
The letter further stated that "[a]t this time, we have advance [sic] $15,000 to the insured in order to get the project going." Finally, at the end of the letter, Brady noted that "[t]he insured is very pleased that you will be the contractor doing the repairs and is anxious to get the repairs started."
After receiving the confirmation letter, HIC began repairing the insured property. On March 7, 2004, HIC informed Travelers and Brady that the costs of repair had already exceeded $100,000. Shortly thereafter, on March 25, 2004, HIC submitted a list of work still needed to finish the project, and it itemized the total cost of completion as $320,000. HIC alleges that, after receiving the cost estimate, Brady and Travelers repeatedly represented to HIC that HIC would be paid its costs in accordance with the terms of the contract. Thereafter, it appears that HIC completed the work and submitted a final statement of costs to Travelers in September 2004, and again in December 2004. The final statement listed the total cost of completing the repairs as $318,555.12, and provided that, after adding overhead and profits and subtracting three advance payments, Travelers still owed HIC a total of $303,193.88 for the contracted work. The evidence in the record does not identify the exact date the repairs were completed, but the complaint does allege that HIC completed the repairs within one year of accepting the contract.
Brady sent HIC a letter on December 14, 2004, stating that Travelers could not make final payment until it received further documentation. The letter also requested that Hunter meet with Michael Shilling ("Shilling") of Meyers Construction Co., Inc. ("Meyers Construction") at the job site to show Shilling the materials that were used by HIC in contemplating performance. Accordingly, Hunter met Shilling on February 1, 2005 and, on that occasion, Hunter showed Shilling a few of the materials used to complete the repair work. During their meeting, Shilling advised Hunter that he was a consultant for Travelers, but Shilling never stated that he was preparing a report that would affect the final payment from Travelers to HIC.
In June 2005, Hunter obtained a copy of a letter sent from Brady to the owners of the insured property. While the letter was dated April 18, 2005, and Hunter was copied on the letter, he did not receive the
Hunter claims that from the date the contract was formed, December 12, 2003, until the date he received the "final check," June 22, 2005, he was not aware that Travelers did not intend to pay the full amount owed. During multiple in-person and telephone conversations, Brady allegedly told Hunter: "[W]e're a responsible company, you're going to be paid." Even after Travelers issued the final check, Hunter alleges that he still believed that Travelers would eventually pay the full amount owed because Brady told him that if HIC "could provide additional information or documentation to [Brady] or Shilling, it would be taken under consideration at that time."
From June 2005 to July 2008, Hunter alleges that he had numerous telephone conversations with Brady and Brady's supervisor, Steve Maloney, concerning the final payment for restoring the insured property. During each phone call, "Travelers and its representatives would tell [Hunter] that the file did not reflect HIC's justification as to documentation for time and material." Travelers would then ask Hunter "to send in written justification." Hunter claims that he sent the requested "written justification" on numerous occasions, but the final payment was never made.
After repeated attempts to obtain final payment from Travelers, HIC filed suit in federal court in the District of Columbia on April 18, 2008, asserting claims for breach of contract, quantum meruit, unjust enrichment, and fraud. The case was eventually dismissed without prejudice, on March 31, 2009, because HIC had not registered its trade name in the District of Columbia. See Hunter Innovations Co. v. The Travelers Indent. Co. of Conn., 605 F.Supp.2d 170, 173-75 (D.D.C.2009).
On July 16, 2008, Travelers sent HIC a letter stating that it would not pay the remaining amount allegedly owed pursuant to the terms of the contract. Hunter claims that the letter was the first time he was made aware that Travelers did not intend to pay the full amount owed under the contract. Specifically, Hunter states that "[b]efore July 16, 2008, neither Travelers nor co-defendant Stephen Brady had ever indicated to me . . . that Travelers would not pay HIC the full amount owed under the contract."
HIC initiated the instant action on July 27, 2010. The allegations in the complaint mirror the allegations previously made in the suit filed in the District of Columbia. Specifically, HIC initially asserted claims for breach of contract, quantum meruit, unjust enrichment, and fraud against Travelers, and it asserted a claim for fraud against Brady. During the course of the litigation, HIC voluntarily dismissed the fraud claim against Brady, and it also voluntarily dismissed the claims against Travelers for quantum meruit, unjust enrichment, and fraud. Travelers then moved to dismiss the breach-of-contract claim on the ground that it is barred by the statute of limitations.
The summary judgment standard is too well-settled to require elaboration here. In essence, summary judgment is appropriate under Rule 56, Fed.R.Civ.P., only where, on the basis of undisputed facts, the moving party is entitled to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Importantly, to defeat summary judgment the non-moving party may not rest upon a "mere scintilla" of evidence, but must set forth specific facts showing a genuine issue for trial. Id. at 324, 106 S.Ct. 2548; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Thus, the party with the burden of proof on an issue cannot prevail at summary judgment on that issue unless he or she adduces evidence that would be sufficient, if believed, to carry the burden of proof on that issue at trial. See Celotex, 477 U.S. at 322, 106 S.Ct. 2548.
The statute of limitations analysis properly begins with the threshold choice of law issue. In a diversity action such as this one, federal courts must apply the choice of law rules of the forum state. See Klaxon v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). In Virginia, it is well-settled that the limitations period is treated as a procedural issue governed by Virginia law. See Hansen v. Stanley Martin Cos., 266 Va. 345, 585 S.E.2d 567, 571 (2003); Hospelhorn v. Corbin, 179 Va. 348, 19 S.E.2d 72, 73 (1942). And, the Virginia law governing the limitations period for breach-of-contract claims includes two statutes pertinent here. First, Virginia Code § 8.01-246(2) provides that the statute of limitations for a breach-of-contract claim is five years for a written contract. See Va.Code § 8.01-246(2) (West 2010).
Under well-established Virginia choice-of-law rules, the nature, validity, and interpretation of a contract is governed by "the law of the place where made." Lexie v. State Farm Mut. Auto. Ins. Co., 251 Va. 390, 469 S.E.2d 61, 63 (1996); CIT Corp. v. Guy, 170 Va. 16, 195 S.E. 659, 661 (1938). And, in Virginia, a contract is "made" at the place "where the final act is done which is necessary to make the contract binding." Chesapeake
Under District of Columbia law, there is no doubt that HIC's breach of contract claim is barred by the three-year statute of limitations. Well-settled District of Columbia law holds that "[a] cause of action accrues, and the statute of limitations beings to run, at the time of the breach." Eastbanc, Inc. v. Georgetown Park Assocs. II, LP, 940 A.2d 996, 1004 (D.C.2008) (quoting 1 Calvin W. Corman, Limitation of Actions § 7.2.1, at 8412 (1991)). A contract is breached, moreover, "if a party fails to perform when performance is due." Id. (citing 9 Arthur L. Corbin, Corbin on Contracts § 943 (interim ed. 2002)). Here, the parties dispute when the contract required Travelers to pay HIC for its repair work. Travelers argues that it was legally obligated to pay HIC upon receipt of HIC's final statement of costs in September 2004. HIC counters that the contract does not specifically identify a payment
Under D.C. law, "[a]s a general rule, an actionable claim accrues, and the statute of limitations begins to run, when a suit thereon could first be maintained to a successful conclusion." Bembery v. District of Columbia, 758 A.2d 518, 520 (D.C. 2000). In this case, the complaint alleges that HIC submitted a final statement of costs in September 2004, and again in December 2004. The evidence in the record does not identify the exact date the repairs were completed, but HIC alleges that it completed the repairs within one year of accepting the contract on December 12, 2003. Thus, by December 2004, HIC had repaired the insured property, and it had submitted its final statement of costs on two occasions. At that point, there is no doubt that HIC could have maintained a suit against Travelers for breach of contract, arising from Travelers's failure to pay for the repair work. See id. (holding that plaintiff had a right to sue the District of Columbia for breach of a lease agreement once plaintiff had submitted its bills for extra rent). Accordingly, HIC's breach-of-contract action is barred by the statute of limitations because the limitations period expired, at the latest, in December 2007, and HIC did not initiate this action until June 2010.
HIC's argument that its claim did not accrue until it received Travelers's July 16, 2008 letter stating that it did not intend to pay the final amount owed is both legally and factually incorrect. It is legally incorrect because a claim for breach of contract accrues under D.C. law at the time of the breach, and not when the promisee receives notice that the promisor does not intend to pay. See id. (rejecting plaintiff's argument that the claim for breach of contract did not accrue until it received a letter from the District of Columbia stating that it did not intend to pay the bills for extra rent). And while D.C. uses the "discovery rule"
HIC's argument is factually incorrect because the evidence in the record clearly shows that HIC was aware that Travelers did not intend to pay the full amount of HIC's final bill in June 2005. Specifically, Hunter attached a declaration to the complaint filed in his case in the District of Columbia in which he stated:
Thus, even if the discovery rule were applicable in this case, HIC's cause of action
Moreover, HIC's claim does not survive on the ground that Travelers is estopped from asserting the statute of limitations as a defense. In the District of Columbia, "[a] defendant is estopped from raising the statute of limitations as a defense if that defendant has `done anything that would tend to lull the plaintiff into inaction and thereby permit the statutory limitation to run against him.'" P'ship Placements, Inc. v. Landmark Ins. Co., 722 A.2d 837, 842 (D.C.1998) (quoting Property 10-F, Inc. v. Pack & Process, Inc., 265 A.2d 290, 291 (D.C.1970)). Importantly, "[t]he effect of such an estoppel is not necessarily to toll the running of the statute." Interdonato v. Interdonato, 521 A.2d 1124, 1135 (D.C.1987). Under well-settled D.C. law, "[i]f ample time to file suit within the statutory period exists after the circumstances inducing delay have ceased, there is no estoppel against pleading the bar of the statute." Property 10-F, Inc., 265 A.2d at 291.
Here, HIC alleges that Travelers made multiple representations that had the effect of lulling it into inaction. First, HIC alleges that from the time it entered into the contract, on December 12, 2003, until the time it received the purported "final check" from Travelers in June 2005, Brady repeatedly told Hunter: "we're a responsible company, you're going to be paid." Even assuming that a jury concluded that these representations lulled HIC into not filing suit between December 2004 and June 2005, the statute of limitations would still bar HIC's claim. The lulling effect of the representations ended when Travelers issued a "final check" in 2005 and the amount of the check was less than the total amount requested in HIC's final statement. At that point, HIC knew or should have known that the parties disputed the total cost of repairing the insured property. And, because the lulling period ceased in June 2005, there was ample time thereafter for HIC to file suit for breach of contract within the limitations period, which did not expire until December 2007. See Property 10-F, Inc., 265 A.2d at 291 (holding that defendant could assert a statute of limitations defense where plaintiff still had over two years to file suit after the lulling activity ceased).
HIC's claim that the "lulling" activity continued past June 2005 is unpersuasive. In his sworn declaration, which is undisputed by Travelers, Hunter states that after he received the "final check" in June 2005, Brady told him that if HIC "could provide additional information or documentation to [Brady] or Shilling, it would be taken under consideration at that time." In addition. Hunter states that from June 2005 until July 16, 2008, he called Travelers on numerous occasions to inquire about the final payment. During each phone call. Travelers told Hunter that "the file did not reflect HIC's justification as to documentation for time and material," and Travelers requested that Hunter submit "written justification." Hunter states that he sent the "written justification" on multiple occasions, but each time he called to follow-up, the process simply repeated itself; he was told the record did not justify additional payment and that he needed to submit written documentation justifying his claim.
These representations do not establish a claim for equitable estoppel that survives summary judgment because no reasonable juror could conclude that the representations were capable of lulling HIC into not filing suit. Travelers never promised to pay HIC the disputed amount if HIC provided
Finally, HIC's breach-of-contract claim is not saved by a "savings statute." HIC argues that its claim is not barred by the statute of limitations because the Virginia savings statute provides additional time to file its claim. The Virginia savings statute provides as follows:
Va.Code § 8.01-229(E)(1). According to HIC, it had five years to file its claim, and because the savings statute operated to toll the statute of limitations during the pendency of its earlier action in the District of Columbia, the limitations period did not expire until September 2010, at the earliest. But HIC's argument that the Virginia savings statute operates to save its claim is predicated on the mistaken position that Virginia's statute of limitations governs the instant action. Because the borrowing statute applies in this case, D.C. law governs the statute-of-limitations issue, and the District of Columbia is one of the minority jurisdictions that does not have a savings statute that tolls the statute of limitations under circumstances similar to those provided in Virginia's statute. See East v. Graphic Arts Indus. Joint Pension, 718 A.2d 153, 156 (D.C.1998).
Accordingly, plaintiff's breach-of-contract claim is barred by the District of Columbia's three-year statute of limitations governing contract claims.
An appropriate Order will issue.
Va.Code § 8.01-247 (West 2010).