Western U. Telegraph Co. v. Massman Const. Co.

• Citation: 402 A.2d 1275
• Decision Date: 19 June 1979
• Docket Number: No. 13821.,13821.
• Parties: WESTERN UNION TELEGRAPH COMPANY, Appellant, v. MASSMAN CONSTRUCTION COMPANY and Fred J. Early, Jr., Company, Inc., Appellees.
• Court: Court of Appeals of Columbia District

402 A.2d 1275

WESTERN UNION TELEGRAPH COMPANY, Appellant, v. MASSMAN CONSTRUCTION COMPANY and Fred J. Early, Jr., Company, Inc., Appellees.

No. 13821.

District of Columbia Court of Appeals.

Argued April 16, 1979.

Decided June 19, 1979.

Kevin W. Carmody, Washington, D. C., for appellant. Michaela M. Twomey, Washington, D. C., also filed an appearance for appellant.

J. Joseph Barse, Washington, D. C., for appellees.

Before NEWMAN, Chief Judge, and KERN and HARRIS, Associate Judges.

KERN, Associate Judge:

Appellant Western Union seeks reversal of the trial court's ruling that its claim against appellees for recovery of damages is grounded in tort, not contract, and therefore must be dismissed as untimely filed under the applicable statute of limitations, D.C.Code 1973, § 12-301(3), which commenced in its view to run from the date of damage to appellant's facilities. The court, in dismissing the complaint, rejected appellant's theory that it was a third-party beneficiary of a contract to which appellees were promisors. Instead, the court found that appellant was merely an incidental beneficiary to the contract and therefore unable to assert rights under it.

The record reflects that in May 1972, the Washington Metropolitan Area Transit Authority (WMATA) contracted with appellees (operating as a joint venture under the name of Early-Massman) for the construction of part of the McPherson Square section of the Metro subway system. As part of the contract Early-Massman agreed to maintain, protect and restore those utilities affected by the construction, to perform the construction in such a manner as to keep existing utilities in operation and to repair at its expense all damage to utilities caused by its work. Among the utilities named in the contract were "Telegraph Company Facilities." No work could begin until Early-Massman had located utility facilities and submitted its plans to appellant and other utility owners for approval. The contract further required collaboration between Early-Massman and all utility owners in preparation of schedules and working drawings that affected the utilities.

On June 20, 1973, Early-Massman struck and damaged appellant's underground equipment. Appellant made temporary repairs on its facilities in order to maintain service and sent Early-Massman a bill on March 11, 1974 for $807.21. Early-Massman forwarded the bill to National Loss Control Service Corporation (NLCSC),¹ an insurance adjuster for Lumbermens Mutual Casualty Company which had issued a policy for liability insurance to WMATA with appellees named as the insured.

On April 5, 1974, appellant sent Early-Massman a second bill for $2,765.12, representing additional expenses incurred in repairing the damage to its equipment. By a letter of May 21, 1974, Early-Massman advised appellant that it had sent both bills to NLCSC and had requested expedited payment by the insurance carrier. A representative of NLCSC sent appellant a letter on December 10, 1974, stating that the company would "take care" of the two bills but preferred to wait until final repairs were completed so as to pay all of the bills at one time. Six days later, appellant responded requesting immediate payment.

On April 22, 1975, appellant received a letter from NLCSC stating that Early-Massman was not legally responsible for the damage and that appellant would not be reimbursed for making repairs to its facilities. After further unsuccessful negotiations among the parties, appellant again demanded payment of NLSC in February 1977. NLCSC refused on March 7 stating that the statute of limitations had expired. Appellant filed suit on May 20, 1977, claiming $3,572.33 for Early-Massman's negligent damage to its equipment. Appellees moved for judgment on the pleadings claiming that the three-year statute of limitations had already expired before the filing of the suit and hence precluded the claim. In late August appellant filed an amended complaint which included as its theory of recovery that it was a third-party beneficiary to the WMATA-Early-Massman contract and claimed $19,186.48 in damages ($3,752.33 plus $15,614.15 for final repairs).²

The trial court held that appellant was, at best, only an incidental beneficiary to the WMATA-Early-Massman contract concerning construction of part of the Metro system and therefore had no right to recover as a third-party beneficiary. Finding the suit grounded on tort, the court dismissed appellant's complaint as untimely filed under D.C.Code 1973, § 12-301(3).

Appellant urges that the court erred in its determination that appellant was not a third-party beneficiary to the WMATA-Early-Massman contract, and that since it did have rights under this contract the statute of limitations would not preclude suit because either (1) no breach occurred until the NLCSC letter to appellant of April 22, 1975, and that the three-year statute of limitations, D.C.Code 1973, § 12-301(7), may only begin to run from that date, or (2) NLCSC's (Early-Massman's agent's) letter of December 10, 1974, to appellant was an acknowledgment of a debt from which time the statute began to run anew under D.C. Code 1973, § 28-3504. We conclude that appellant was a third-party beneficiary and that the breach of contract did not occur until, at the earliest, April 22, 1975. Hence, appellant's suit was...