Fisher Sand & Gravel Co. v. Neal A. Sweebe, Inc.

• Decision Date: 07 June 2011
• Docket Number: Docket No. 297156.
• Citation: 810 N.W.2d 277,293 Mich.App. 66,74 UCC Rep.Serv.2d 842
• Parties: FISHER SAND AND GRAVEL COMPANY v. NEAL A. SWEEBE, INC.
• Court: Court of Appeal of Michigan — District of US

293 Mich.App. 66

74 UCC Rep.Serv.2d 842

810 N.W.2d 277

FISHER SAND AND GRAVEL COMPANY

v.NEAL A. SWEEBE, INC.

Docket No. 297156.

Court of Appeals of Michigan.

Submitted May 13, 2011, at Lansing.Decided June 7, 2011, at 9:10 a.m.

Allan Falk, P.C. (by Allan Falk), Okemos, and McClintic & McClintic, P.C. (by William M. McClintic and Gavin W. McClintic), Mount Pleasant, for plaintiff.

W. Jay Brown PLC (by W. Jay Brown), Midland, for defendant.

Before: OWENS, P.J., and O'CONNELL and METER, JJ.

OWENS, P.J.

In this action concerning an open account related to the sale of goods, plaintiff, Fisher Sand and Gravel Company, appeals as of right the trial court's order granting defendant, Neal A. Sweebe, Inc., summary disposition pursuant to MCR 2.116(C)(7) on the basis of the statute of limitations. We affirm.

Plaintiff provided some concrete supplies to defendant from October 1991 through October 2004. Plaintiff periodically issued invoices to defendant for the goods, and defendant periodically made payments toward the accrued balance. On May 9, 2005, defendant received a delivery of goods for which plaintiff issued an invoice for $152.98. On May 13, 2005, defendant made a payment of $152.98, which was the last date that defendant made any payment to plaintiff. Plaintiff filed this action on August 13, 2009, asserting claims for breach of contract, account stated, and unjust enrichment, and alleging that defendant owed a remaining balance of $92,968.57 (including $3,718.32 in finance charges) as of June 30, 2009. In an amended complaint filed on October 29, 2009, plaintiff added a claim entitled “amount owed on open account.”

Defendant moved for summary disposition on the ground that plaintiff's action was barred by the four-year limitations period in § 2725 of the Uniform Commercial Code (UCC), MCL 440.2725. Plaintiff contended that defendant's obligation to pay an open account was an obligation that was distinct from the underlying contract for the sale of goods and, therefore, its action was instead governed by the general six-year limitations period applicable to contract actions, MCL 600.5807(8). The parties also disputed whether defendant's May 13, 2005, payment was a payment on the open account, or a payment for a distinct transaction that was not part of the open account.

The trial court agreed with defendant that because the parties' open account related to the sale of goods, plaintiff's action was governed by the four-year limitations period in Article 2 of the UCC, MCL 440.2725, rather than the six-year limitations period applicable to contract actions generally, MCL 600.5807(8) and, accordingly, granted defendant's motion.

We review de novo a trial court's ruling on a motion for summary disposition brought pursuant to MCR 2.116(C)(7). Doe v. Roman Catholic Archbishop of the Archdiocese of Detroit, 264 Mich.App. 632, 638, 692 N.W.2d 398 (2004). We must consider all affidavits, pleadings, and other documentary evidence submitted by the parties. Absent a disputed question of fact, the determination whether a cause of action is barred by the statute of limitations is a question of law reviewed de novo. Id.

This case also involves the application of a statute. Issues involving the interpretation or application of a statute are reviewed de novo as questions of law. O'Neal v. St. John Hosp. & Med. Ctr., 487 Mich. 485, 493, 791 N.W.2d 853 (2010). The primary goal of statutory construction is to give effect to the Legislature's intent. McCormick v. Carrier, 487 Mich. 180, 191, 795 N.W.2d 517 (2010). If statutory language is clear and unambiguous, we presume that the Legislature intended the meaning expressed in the language. Id.

Plaintiff first challenges the trial court's determination that its action is governed by the four-year limitations period in § 2725 of the UCC, MCL 440.2725, rather than the six-year period applicable to contract actions generally. The Revised Judicature Act provides a limitations period of six years “for ... actions to recover damages ... due for breach of contract.” MCL 600.5807(8); Citizens Ins. Co. of America v. American Community Mut. Ins. Co., 197 Mich.App. 707, 708–709, 495 N.W.2d 798 (1993). All sales of goods are governed by Article 2 of the UCC, MCL 440.2102. Section 2725 of the UCC, MCL 440.2725, provides that “[a]n action for breach of any contract for sale must be commenced within 4 years after the cause of action has accrued.” Plaintiff argues that an open account is a distinct agreement from an underlying agreement for the sale of goods and, therefore, is not subject to the four-year limitations period in the UCC.

The definition of an “open account” is “ ‘1. An unpaid or unsettled account. 2. An account that is left open for ongoing debit and credit entries and that has a fluctuating balance until either party finds it convenient to settle and close, at which time there is a single liability.’ ” Seyburn, Kahn, Ginn, Bess, Deitch & Serlin, P.C. v. Bakshi, 483 Mich. 345, 355–356, 771 N.W.2d 411 (2009), quoting Black's Law Dictionary (7th ed). “In actions brought to recover the balance due upon a mutual and open account current, the claim accrues at the time of the last item proved in the account.” MCL 600.5831. Plaintiff contends that its claim accrued on May 13, 2005, the last date on which defendant made a payment. Assuming, without deciding, that defendant's May 13, 2005, payment may be considered a payment toward the parties' open account, plaintiff's action was filed in August 2009, more than four years after the May 2005 payment. Thus, if plaintiff's action is governed by the four-year limitations period in the UCC, it is untimely.

We have not found any Michigan caselaw that specifically and directly addresses whether payment on an open account that relates to the sale of goods is subject to the four-year limitations period in the UCC. The most relevant case is First of America Bank v. Thompson, 217 Mich.App. 581, 552 N.W.2d 516 (1996). In that case, the plaintiff, an assignee bank under an automobile retail installment sales contract, brought a deficiency action against the defendant, a cobuyer of the automobile, following the repossession and sale of the vehicle. Id. at 582–583, 552 N.W.2d 516. The defendant contended that the plaintiff's action was governed by the four-year limitations period in Article 2 of the UCC. Id. at 584, 552 N.W.2d 516. The plaintiff argued that the UCC did not apply because there was no sale of goods between itself and the defendant. Id. at 584, 552 N.W.2d 516. This Court agreed with other jurisdictions, principally Assoc. Discount Corp. v. Palmer, 47 N.J. 183, 219 A.2d 858 (1966), that a deficiency action is more closely related to the sales aspect of a combined sales-security agreement rather than the security aspect and, therefore, was governed by the four-year limitations period in Article 2 of the UCC. Thompson, 217 Mich.App. at 589–590, 552 N.W.2d 516.

Plaintiff here relies principally on cases that predate this state's enactment of the UCC in 1962,¹ to support its argument that payment on an open account triggers a new obligation, separate and distinct from an underlying agreement. See, e.g., Collateral Liquidation, Inc. v. Palm, 296 Mich. 702, 704, 296 N.W. 846 (1941), Miner v. Lorman, 56 Mich. 212, 216, 22 N.W. 265 (1885), and see also Bonga v. Bloomer, 14 Mich.App. 315, 165 N.W.2d 487 (1968). Although these cases tend to support plaintiff's general argument that payment on an open account may be viewed as a new promise separate from any underlying contract, none of the cases involved the sale of goods subject to the UCC. Thus, they are not helpful in resolving the question presented in this appeal.

Statutes that relate to the same subject matter and share a common purpose are in pari materia and must be read together as one law. Donkers v. Kovach, 277 Mich.App. 366, 370–371, 745 N.W.2d 154 (2007). When two statutes are in pari materia

but conflict with one another on a particular issue, the more-specific statute must control over the more-general statute. Id. at 371, 745 N.W.2d 154. This principle favors applying the limitations period in Article 2 of the UCC in this case, because it pertains specifically to contracts for the sale of goods. Additionally, application of Article 2 is consistent with this Court's decision in Thompson, 217 Mich.App at 589–590, 552 N.W.2d 516, in which this Court determined that the plaintiff's deficiency action was more closely related to the sales aspect than the security aspect of a combined sales-security agreement, and was therefore subject to § 2725 of the UCC. Although plaintiff maintains that an open account is separate and distinct from the underlying sale of goods, the account exists solely to facilitate plaintiff's sale of goods to defendant. The official comment for § 2725 states the purpose of the provision as follows:

To introduce a uniform statute of limitations for sales contracts, thus eliminating the jurisdictional variations and providing needed relief for concerns doing business on a nationwide scale whose contracts have heretofore been governed by several different periods of limitation depending upon the state in which the transaction occurred. This Article takes sales contracts out of the general laws limiting the time for commencing contractual actions and selects a four year period as the most appropriate to modern business practice. This is within the normal commercial record keeping period.

Although the official comments to the UCC do not have the force of law, they are useful aids to the interpretation and construction of the UCC. Prime Fin. Servs. LLC v. Vinton, 279 Mich.App. 245, 260 n. 6, 761 N.W.2d 694 (2008). In addition, “the comments were intended to promote uniformity in the interpretation of the UCC.” Id. The official comment to § 2725 militates in favor of applying the four-year limitations period in this case to promote uniformity and...