Hunter Innovations Co. v. the Travelers Indem. Co. of Conn.

• Decision Date: 19 November 2010
• Docket Number: Case No. 1:10cv832.
• Citation: 753 F.Supp.2d 597
• Parties: HUNTER INNOVATIONS COMPANY, Plaintiff,v.The TRAVELERS INDEMNITY COMPANY OF CONNECTICUT, et al., Defendants.
• Court: U.S. District Court — Eastern District of Virginia

753 F.Supp.2d 597

HUNTER INNOVATIONS COMPANY, Plaintiff,

v.The TRAVELERS INDEMNITY COMPANY OF CONNECTICUT, et al., Defendants.

Case No. 1:10cv832.

United States District Court, E.D. Virginia,Alexandria Division.

Nov. 19, 2010.

Geoffrey Martin Bohn, Bohn & Kouretas PLC, Arlington, VA, for Plaintiff.Elizabeth E. Stanulis Skilling, Harman Claytor Corrigan & Wellman, Richmond, VA, for Defendants.

MEMORANDUM OPINION

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,” ¹ a breach-of-contract claim is governed by the statute of limitations of another state if that state's law governs the contract and its statute of limitations is more restrictive than Virginia's. For the reasons that follow, this case fits squarely within Virginia's borrowing statute; District of Columbia law governs the contract at issue, and because the District of Columbia applies a more restrictive three-year statute of limitations to breach-of-contract claims, plaintiff's claim is barred.

I.²

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 the course of the phone conversation, Travelers rejected HIC's original bid, but it offered HIC a time-and-materials contract to restore the insured property. HIC accepted the contract over the telephone.

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:

In follow-up to our recent telephone conversation regarding the above mentioned repairs, thank you very much for your time and cooperation. We have agreed to approach this loss on a time and material basis. You will be able to document your project costs through time and material to me for justification of the claim. We will then pay 10% profit and 15% overhead on your total time and material costs.

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 letter until months later because it was mailed to the wrong address. Hunter claims that he only received a copy of the letter after Brady referenced it during a telephone conversation, which prompted Hunter to request a copy. Notwithstanding HIC's final statement of costs, the letter claimed that the total cost of completion was only $210,214.21. After subtracting the amount of advances paid to HIC from the total cost of completion, the letter further stated that a “final check” in the amount of $114,214.21 would issue under separate cover. On June 22, 2005, approximately seven to ten days after Hunter received Brady's letter, Travelers issued the “final check,” which HIC deposited. After depositing the check, HIC alleges that Travelers still owed $189,193.88.

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.

II.

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....