Cavanaugh v. City of Omaha

• Decision Date: 02 July 1998
• Docket Number: No. S-96-491,S-96-491
• Citation: 580 N.W.2d 541,254 Neb. 897
• Parties: Timothy CAVANAUGH, Appellant, v. CITY OF OMAHA, Appellee.
• Court: Nebraska Supreme Court

Page 541

580 N.W.2d 541

254 Neb. 897

Timothy CAVANAUGH, Appellant, v. CITY OF OMAHA, Appellee.

No. S-96-491.

Supreme Court of Nebraska.

July 2, 1998.

Syllabus by the Court

1. Limitations of Actions: Time. The point at which a statute of limitations commences to run must be determined from the facts of each case. A cause of action accrues and the statute of limitations begins to run when the aggrieved party has the right to institute and maintain suit. Generally, this is true even though the plaintiff may be ignorant of the existence of the cause of action.

2. Actions: Contracts: Time. A cause of action in contract accrues at the time of the breach or failure to do the thing that is the subject of the agreement.

3. Limitations of Actions: Time: Damages. One need not know the full extent of one's damages before the limitations period begins to run, as a statute of limitations can be triggered at some time before the full extent of damages is sustained.

4. Actions: Contracts: Time. A cause of action in contract accrues at the time of the breach or failure to do the thing agreed to, irrespective of any knowledge on the part of the plaintiff or of any actual injury occasioned to him or her.

5. Breach of Contract: Words and Phrases. A "breach" is a nonperformance of a duty.

Thomas F. Dowd, of Dowd, Dowd & Fahey, Omaha, for appellant.

Kent N. Whinnery, Deputy Omaha City Attorney, and Wendy E. Hahn, Omaha, for appellee.

WHITE, C.J., and CAPORALE, WRIGHT, CONNOLLY, GERRARD, STEPHAN, and McCORMACK, JJ.

GERRARD, Justice.

INTRODUCTION

The City of Omaha (City) is required to conduct promotion examinations according to the terms of the collective bargaining agreement (CBA) between the City and its police union. Undisputedly, the City failed to conform to the timetable of the CBA with respect to posting notice of a lieutenant examination and administering that examination during late 1989 and early 1990. As a result of the City's actions, an otherwise ineligible sergeant was allowed to take the lieutenant examination that was administered on April 13, 1990, and he was later promoted. Timothy Cavanaugh also took the examination; however, he was not promoted. Cavanaugh brought this breach of contract action against the City as a third-party beneficiary of the CBA. The district court determined that Cavanaugh's action was barred by the statute of limitations. The Nebraska Court of Appeals reversed, holding that the district court failed to identify a breach which brought the action within the limitations period. See Cavanaugh v. City of Omaha, 5 Neb.App. 827, 567 N.W.2d 592 (1997). Because we conclude that the Court of Appeals incorrectly applied the rule for determining when a cause of action for breach accrues, we reverse the decision of the Court of Appeals and remand the cause with direction to affirm the judgment of the district court.

FACTUAL BACKGROUND

The City is required by ordinance to maintain an eligibility list of candidates qualified for promotion within the Omaha Police Division. Each eligibility list, once established, has a limited duration of 2 years. Article 33, § 1, of the CBA between the City and the police union, which was adopted as an ordinance of the City of Omaha by action of the Omaha City Council, mandated that an examination to establish a new eligibility list take place 60 days prior to the expiration of the current eligibility list and that notice of the promotional examination be given 90 days before the administration of the examination.

The City's eligibility list for promotion to the rank of lieutenant was to expire on April 7, 1990. The CBA, therefore, required that the examination for the establishment of a new list be commenced on or before February 7 and that notice of the examination be posted on November 7, 1989. The City failed to comply with the terms of the CBA, however. Instead of posting notice of the upcoming examination on November 7, 1989, the City posted notice on January 8, 1990. Then, instead of administering the examination on February 7, the examination was administered on April 13.

The minimum number of years' experience required for an applicant to be eligible to take the police lieutenant examination is 2 years in the rank of police sergeant. Cavanaugh met the 2-year eligibility requirement at the time the testing was to be performed in accordance with the CBA. Sgt. Donald Thorson did not have the requisite 2 years' experience at the time of the deadline under the CBA. Thorson did, however, have 2 years' experience under the City's delayed notice and testing timetable.

After the eligibility examination, Thorson ranked second on the eligibility list and Cavanaugh ranked eighth. There was a total of eight promotions made from the eligibility list prior to its expiration. Candidates ranking first through seventh and an affirmative action candidate who ranked ninth were promoted. Cavanaugh was not promoted before the list expired on July 22, 1992. Cavanaugh asserts that as a direct and proximate result of the City's administering the eligibility examination on April 13, 1990, in violation of the specific terms of the CBA, he was denied a promotion to the rank of lieutenant by virtue of Thorson's admittance to the eligibility testing and subsequent promotion.

Cavanaugh brought this action against the City on February 22, 1995, claiming that he is a third-party beneficiary to the CBA and that the City's delayed notice and testing constituted breaches of the CBA. The City asserted in its answer that the CBA was effectively amended by a memorandum of understanding between the parties to the Cavanaugh appealed the district court's decision to the Court of Appeals. The Court of Appeals held that the CBA was not effectively amended because such an amendment would require a vote by the police union members and approval by the Omaha City Council, neither of which occurred in this case. Cavanaugh v. City of Omaha, 5 Neb.App. 827, 567 N.W.2d 592 (1997). The Court of Appeals then addressed the statute of limitations issue. The court found that not only had breaches of the CBA occurred at the three points in time identified by the district court, but that a breach also occurred on April 13, 1990, when the examination was actually administered and Thorson was allowed to sit for the examination. Id. Accordingly, the Court of Appeals reversed the district court's decision because it found that Cavanaugh brought this action within the 5-year statutory period of the April 13 breach. Id. The City petitioned this court for further review of the Court of Appeals' holding with respect to the statute of limitations issue only, and we granted further review.

CBA and also asserted that the action was barred by a 5-year statute of limitations. The district court found that the CBA was effectively amended by the memorandum of understanding. Additionally, the district court found that even if the CBA was breached, those breaches occurred (1) on November 7, 1989, when notice was supposed to be posted pursuant to the CBA; (2) on February 7, 1990, when the examination was supposed to be administered pursuant to the CBA; and (3) on January 8, 1990, when posting of notice actually occurred. The district court found that based on these dates, Cavanaugh's action was barred by the statute of limitations, and dismissed Cavanaugh's petition with prejudice.

ASSIGNMENT OF ERROR

Restated, the City asserts in its assignment of error that the Court of Appeals incorrectly applied the "occurrence rule" for determining when a breach occurs when it held that the City breached the CBA by administering the eligibility examination on April 13, 1990, and by allowing Thorson to sit for the examination, thereby bringing the action within the statute of limitations period.

STANDARD OF REVIEW

When reviewing a question of law, an appellate court reaches a conclusion independent of the lower court's ruling. Veskerna v. City of West Point, 254 Neb. 540, 578 N.W.2d 25 (1998).

ANALYSIS

The statute of limitations issue in this case is governed by Neb.Rev.Stat. § 25-205(1) (Reissue 1995), which provides that an action upon a written agreement or contract "can only be brought within five years." The point at which a statute of limitations commences to run must be determined from the facts of each case. A cause of action accrues and the statute of limitations begins to run when the aggrieved party has the right to institute and maintain suit. Generally, this is true even though the plaintiff may be ignorant of the existence of the cause of action. Gordon v. Connell, 249 Neb. 769, 545 N.W.2d 722 1996); Upah v. Ancona Bros. Co., 246 Neb. 585, 521 N.W.2d 895 (1994). A cause of action in contract accrues at the time of the breach or failure to do the thing that is the subject of the agreement. See Brtek v. Cihal, 245 Neb. 756, 515 N.W.2d 628 (1994).

The Court of Appeals correctly stated that one need not know the full extent of one's damages before the limitations period begins to run, as a statute of limitations can be triggered at some time before the full extent of damages is sustained. See Gordon, supra. See, also, Steuben v. City of Lincoln, 249 Neb. 270...