Cunningham & Associates v. Dugan

• Court: D.C. Court of Appeals
• Writing for the Court: Ruiz
• Citation: Cunningham & Associates v. Dugan, 909 A.2d 1001 (D.C. 1996)
• Decision Date: 30 December 1996
• Docket Number: No. 94-CV-500.,94-CV-500.
• Parties: CUNNINGHAM & ASSOCIATES, Appellant, v. Richard W. DUGAN and Ernst & Young, Appellees.

Page 1001

909 A.2d 1001

CUNNINGHAM & ASSOCIATES, Appellant, v. Richard W. DUGAN and Ernst & Young, Appellees.

No. 94-CV-500.

District of Columbia Court of Appeals.

Submitted May 17, 1995.

Decided December 30, 1996.

Joseph F. Cunningham, Alexandria, VA, for appellant.

Daniel M. Gray, Falls Church, VA, for appellee.

Before WAGNER, Chief Judge, and TERRY and RUIZ, Associate Judges.

RUIZ, Associate Judge:

Cunningham & Associates, a law firm, appeals from a dismissal of its claim against Richard Dugan and Ernst & Young, accountants for whom Cunningham performed legal services. Because Cunningham failed to sue Ernst & Young within the three-year statutory period imposed by D.C.Code 12-301(7) (1995), we affirm the judgment of the trial court.

The facts are simple and undisputed. Cunningham performed services for Ernst & Young, of which Richard Dugan was the managing partner. These services were fully rendered by December, 1990, at which time Cunningham billed Ernst & Young for its fee. According to a complaint filed in February, 1994, Ernst & Young never paid Cunningham over $23,000 of its legal fee. D.C.Code 12-301(7) places a three-year limitation on actions to recover for a simple breach of contract.

Cunningham makes three arguments as to why the statute of limitations did not begin to run until September 27, 1991: 1) the cause of action did not accrue until breach by nonpayment occurred, which he claims is the date of the last payment, September 27, 1991; 2) under the discovery rule, Cunningham's cause of action did not accrue until Cunningham knew, or reasonably should have known, of Ernst & Young's breach by nonpayment, which was the same date, September 27, 1991; and 3) Cunningham issued an "account stated" on September 12, 1991.¹

It is a long-established principle of law that fees for services rendered, in the absence of an agreement to the contrary, are due and payable at the time performance is completed or of breach by one of the parties. Sears, Roebuck & Co. v. Goudie, 290 A.2d 826, 830 (D.C.), cert. denied, 409 U.S. 1049, 93 S.Ct. 523, 34 L.Ed.2d 501 (1972); Dawson v. Drazin, 223 A.2d 375, 377 (D.C.1966); Howard Univ. v. Cassell, 75 U.S.App. D.C. 75, 78, 126 F.2d 6, 9 (1941). The parties agree that Cunningham last rendered services before December, 1990, and that payment was then due.² Therefore, the statute of limitations ran no later than December, 1993.

Cunningham is not assisted in this matter by the "discovery rule," which states that an action accrues at the time that the injury is, or should have been, discovered. See Ehrenhaft v. Malcolm Price, Inc., 483 A.2d 1192, 1201-03 (D.C. 1984); Burns v. Bell, 409 A.2d 614, 617 (D.C.1979). The cases articulating that rule, overwhelmingly medical or other professional malpractice cases, rely on the fact that prior to the discovery of the injury, there was no known claim upon which a putative plaintiff could sue. Ehrenhaft, supra, 483 A.2d at 1201-03 (describing the evolution of and rationale for the doctrine). Here, there can be no such assertion. Cunningham knew at the time that it rendered its bill that Ernst & Young had an obligation to pay. Within a number of months — and well within the three-year limitations period — Cunningham knew that Ernst & Young had not performed its part of the agreement, which was to pay Cunningham. Fowler v. A & A Co., 262 A.2d 344, 347 (D.C.1970) (holding that action arises where one has "receiv[ed] something `substantially less or different from that for which he bargained'") (citation omitted). Cunningham's failure to bring an action within the three-year period following completion of its services was at its own peril, and was not due to Cunningham's inability during that time to ascertain that it had a claim against Ernst & Young.³

Cunningham asserts that compliance with this principle will require providers of professional services to file a complaint for damages with each bill for services rendered. We do not share Cunningham's concern: compliance with this principle would only require that a complaint for damages be filed within three years of the services and initial billing.

By arguing that it should not be bound by the statute of limitations because Ernst & Young did not signal with sufficient clarity that it intended to breach its part of the bargain until it made its final payment on September 27, 1991, Cunningham appears to claim that until that point, Ernst & Young "lulled" Cunningham into believing that it would be paid. Even assuming Cunningham's claim to be true, the "lulling" doctrine does not create a delay in the accrual of an action, but merely estops the assertion of a statute of limitations defense where the defendant lulled the plaintiff into inaction for the full statutory period. Howard University, supra, 75 U.S.App. D.C. at 81, 126 F.2d at 12 (citing Glennan v. Lincoln Inv. Corp., 71 App.D.C. 365, 110 F.2d 130 (1940); Thompson v. Park Sav. Bank, 68 App. D.C. 272, 96 F.2d 544 (1938)). Thus here, as in Howard University, even if there had been any "lulling," Cunningham "had ample time and opportunity to bring [t]his suit before the bar of the statute fell." Id.

Affirmed.

WAGNER, Chief Judge, dissenting:

A de novo review of the record, which we are obligated to conduct,¹ leads inescapably to the conclusion that reversal is required because Ernst & Young is not entitled to judgment as a matter of law before answer on its defense of limitations. The undisputed facts of record show that on December 1, 1990 and September 12, 1991, Cunningham rendered to Ernst & Young a statement for the balance claimed due for services in the amount of $78,382.63 and that Ernst & Young made two payments by check on the debt thereafter. Ernst & Young made one payment on September 12, 1991 for $19,993.36, and the other, on September 27, 1991 for $34,940.30. Cunningham filed the complaint for the remaining balance of its claim on February 23, 1994, which is within the three year statutory period of limitations. See Stern Equipment Co. v. Pogue, 117 A.2d 447, 448 (D.C.1955) (citations omitted). It has long been the law in this jurisdiction that "[s]uch `part[ial] payment on a debt or obligation interrupts or tolls the statute of limitations.'" Feldman v. Gogos, 628 A.2d 103, 105 (D.C.1993) (citing Dulberger v. Lippe, 202 A.2d 777, 778 (D.C.1964)) (other citation omitted); Stern Equipment Co., 117 A.2d at 448; see also Jenkins v. Karlton, 329 Md. 510, 620 A.2d 894, 905 (1993) (acknowledgement of the debt prior to the expiration of the period of limitations "both tolls the running of limitations and establishes the date of the acknowledgement as the date from which the statute will now run").² Indeed, it is provided by statute that either the acknowledgment of a debt or a promise to pay it in writing by the party to be charged is sufficient to remove the bar of the statute of limitations. D.C.Code 28-3504 (1996); Dulberger, 202 A.2d at 778 (citations omitted).

Since we cannot say on this record that Cunningham "`can prove no set of facts in support of [its] claim which would entitle [it] to relief,'" reversal is required. Vicki Bagley Realty, Inc. v. Laufer, 482 A.2d 359, 363 (D.C.1984) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)); McBryde v. Amoco Oil Co., 404 A.2d 200, 202 (D.C.1979) (citations omitted). The result is the same under the summary judgment standard because Cunningham's "legal theory . . . remains viable under the asserted version of the facts."³ Lee v. Jones, 632 A.2d 113, 115 (D.C.1993); Nickens v. Labor Agency of Metro. Washington, 600 A.2d 813, 816 (D.C.1991) (To prevail on a motion for summary judgment, "[t]he moving party has the burden of demonstrating the absence of material disputed issues and the right to judgment as a matter of law.") (emphasis added).

The majority states as its reason for declining to consider the effect of Ernst & Young's partial payment on the limitations question that Cunningham did not argue the point.⁴ However, Cunningham argued repeatedly in the trial court and on appeal that the statute of limitations did not begin to run until the date of Ernst & Young's last payment on the debt. In opposition to the motion to dismiss, Cunningham asserted:

In September of 1991, Ernst & Young provided Cunningham & Associates with two checks. The first check was dated September 12, 1991 and was in the amount of $19,993.36 and the second check was dated September 27, 1991 and was in the amount of $34,940.30. After the two payments there remained an outstanding balance of $23,448.97. Despite subsequent timely statements, bills and requests for payment of the outstanding balance by Cunningham & Associates, Ernst & Young failed to pay for the legal services provided.

It was not until September 27, 1991, when Ernst & Young issued its last payment and refused to remit further payments on the outstanding remaining balance, did a breach occur and the statute of limitations begin to run. Only following receipt of Ernst & Young's September 27, 1991 check, and upon Cunningham & Associates subsequent requests for payment, did the plaintiff's cause of action accrue. It was only at this time that plaintiff[s] had a cause of action that could be maintained to successful conclusion.

Cunningham made other references in its pleading in the trial court that the statute of limitations did not commence to run until Ernst & Young's last payment.⁵ Cunningham makes the same arguments in its brief on appeal, including distinguishing its case from Howard, supra note 5. Cunningham also argues that

prior to the partial payment by Ernst & Young in September of 1991, Cunningham & Associates had no reason to believe the total outstanding balance would not be paid. To the contrary, Ernst & Young was paying on the contract through September of 1991, leading Cunningham & Associates to believe it was going to be paid in full.

In light of these arguments, it cannot...