Tiger Steel Eng'g, LLC v. Symbion Power, LLC, 17-CV-339

• Citation: 195 A.3d 793
• Decision Date: 08 November 2018
• Docket Number: No. 17-CV-339,17-CV-339
• Parties: TIGER STEEL ENGINEERING, LLC, Appellant, v. SYMBION POWER, LLC, et al., Appellees.
• Court: Court of Appeals of Columbia District

195 A.3d 793

TIGER STEEL ENGINEERING, LLC, Appellant,

v.SYMBION POWER, LLC, et al., Appellees.

No. 17-CV-339

District of Columbia Court of Appeals.

Argued February 14, 2018

Decided November 8, 2018

Edmond M. Amorosi, with whom Zachary D. Prince was on the brief, for appellant.

Erik H. Beard, with whom Timothy A. Diemand was on the brief, for appellees.

Before Fisher and Thompson, Associate Judges, and Farrell, Senior Judge.

Thompson, Associate Judge:

Appellant Tiger Steel Engineering, LLC ("Tiger Steel") challenges (1) a March 3, 2017, order of the Superior Court entering summary judgment in favor of appellees Symbion Power, LLC and Symbion Power Services U.S., Inc. (together, "Symbion") on the ground that Tiger Steel's action for breach of contract was time-barred, and (2) the court's October 4, 2016, order awarding Tiger Steel only $500 in attorney's fees and expenses for its efforts in pursuing a successful motion to compel discovery.

For the reasons stated herein, we hold that Tiger Steel's action on Symbion's failure to pay as Symbion promised in a debt acknowledgment letter is subject to the general three-year limitations period applicable to actions for breach of contract rather than the four-year limitations period applicable to actions for breach of contracts for sale under the Uniform Commercial Code ("UCC"), even though the debt arose out of the parties' contract for the sale of goods.¹ We also agree with the Superior Court's determination that Symbion did not lull Tiger Steel into inaction so as to excuse Tiger Steel's failure to file its Complaint before the end of the three-year limitations period. We therefore affirm the trial court's grant of summary judgment. However, we vacate the October 4, 2016, order and remand for further proceedings with respect to the award of Tiger Steel's reasonable expenses, including attorney's fees, incurred in connection with its motion to compel.

I. Factual and Procedural Background

Between December 2008 and March 2009, Tiger Steel, a manufacturer of steel goods used in construction projects, and Symbion, the general contractor for a power plant construction project, executed three purchase orders and a related change order, under which subcontractor Tiger Steel was to fabricate and deliver, and Symbion was to purchase, steel products for the project, at a total price of approximately $3.2 million. Symbion did not pay as agreed, and Tiger Steel stopped performing between May and June 2009 after Symbion failed to honor its requests for payment.

On September 15, 2009, the parties agreed that Symbion would pay Tiger Steel $666,988.60, in addition to "compensation ... for the current late payment/delay," i.e., interest (at a rate of 6% per annum). In the months that followed, Symbion continued to default on payment. In 2011, Tiger Steel asked Symbion to send it a letter confirming its intent to pay the debt to address concerns expressed by Tiger Steel's auditors. On November 23, 2011, Symbion sent Tiger Steel a letter (the "debt acknowledgment letter") signed by "Group Financial Director" Mike Madden acknowledging its indebtedness. The debt acknowledgment stated:

This letter serves as confirmation that Symbion Power LLC owes an amount of USD 707,007.92 [t]o Tiger Steel Engineering.

Such amount is correctly recorded within the Company's financial statements and will be paid in full and in due course.

We will appraise you of any developments periodically and in the meantime will ensure that full settlement is effected soonest.

The acknowledged amount, rounded to $711,008, is the amount that the record shows had been the "final account agreed" to by the parties on September 15, 2009.

Symbion had still not paid any of the acknowledged debt amount when, on September 28, 2013, Symbion sent Tiger Steel a letter that discussed the financial difficulties Symbion had experienced from the collapse of a major project and the four years of arbitration that had followed, and that set out what Symbion called a "final settlement offer." Writing that "[i]t is quite frankly a miracle that Symbion survived" and that the company had "lost a significant amount of money ... and is still losing money," Symbion stated that it was "in the unavoidable circumstance of urging [Tiger Steel] to take a ‘hair cut’ on the original amount due" and offered Tiger Steel $300,000. Tiger Steel rejected that offer. On November 20, 2013, Symbion informed Tiger Steel that it could not "realistically make any improvement on the offer at this time."

From late 2013, through May 2014, Tiger Steel repeatedly reached out to Symbion's CEO Paul Hinks and other Symbion representatives by email, in the expressed hope that Symbion "would come up with a better proposal." Symbion staff informed Tiger Steel on multiple occasions that Hinks was "traveling" and therefore unavailable. On January 8, 2015, Symbion's in-house counsel contacted Tiger Steel regarding "the pending settlement offer." Tiger Steel asserts that it was only at this point that it realized that Symbion would never voluntarily repay the debt it had acknowledged in the November 23, 2011, debt acknowledgment letter. Tiger Steel filed its Complaint in this matter, alleging breach of contract, ten months later, on November 18, 2015.

In its Answer and in subsequent discovery responses, Symbion denied that Madden had actual authority to sign the debt acknowledgment letter. Tiger Steel moved to compel discovery relating to the issue, and the trial court granted Tiger Steel's motion (and Symbion eventually stipulated that it would not contest that Madden had apparent authority to issue the debt acknowledgment letter). Without seeking input from the parties relating to reasonable attorney's fees expenses and without explaining its reasoning, the court issued an order awarding Tiger Steel $500 in "costs and fees."

After the close of discovery, Symbion filed a motion for summary judgment arguing, inter alia , that Tiger Steel's complaint was time-barred. Both sides agreed that the November 23, 2011, debt acknowledgment letter had extended the statutory limitations period. See D.C. Code § 28-3504 (2012 Repl.). The parties disagreed, however, as to the length of that extension. Symbion argued that the debt acknowledgment had extended the limitations period only by three years, the limitations period generally applicable to actions for breach of a simple contract (with the result that the November 18, 2015, Complaint was untimely), while Tiger Steel contended that the extension was for four years, the limitation period that applies with respect to claims of breach of a contract for the sale of goods under § 2-275 of the UCC. See D.C. Code § 28:2-725 (1) (2012 Repl.) ("An action for breach of any contract for sale must be commenced within four years after the cause of action has accrued."). Tiger Steel argued in the alternative that Symbion was estopped from raising the statute-of-limitations bar because its conduct had lulled Tiger Steel into inaction.

On March 3, 2017, the Superior Court granted Symbion's motion for summary judgment, concluding that Tiger Steel's claim was time-barred. The court reasoned that "a debt acknowledgment ... becomes a new contract, with a new [three-year] statute of limitations[,]" that had run by the time Tiger Steel filed suit, and also that the lulling doctrine did not apply. This appeal followed.

II. Analysis

This court reviews the trial court's grant of summary judgment de novo . Farmer-Celey v. State Farm Ins. Co. , 163 A.3d 761, 765 (D.C. 2017) (citing Young v. U-Haul Co. , 11 A.3d 247, 249 (D.C. 2011) ). Summary judgment is proper if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." Farmer-Celey , 163 A.3d at 765.

In the absence of material issues of fact, "[e]xpiration of the statute of limitations is a question of law, ..." which we review de novo . Bailey v. Greenberg , 516 A.2d 934, 940 (D.C. 1986) ; Daniels v. Potomac Elec. Power Co. , 100 A.3d 139, 143 (D.C. 2014).

A. The Limitations Period

In our jurisdiction, "decisional law regards an acknowledgment [of a debt] as an implied promise to pay [the] preexisting debt, supported by past consideration in the form of an obligation to honor the old debt." Griffith v. Butler , 571 A.2d 1161, 1165 (D.C. 1990) (citations omitted).² "[The] effect [of the acknowledgment] on the statute of limitations is to extend the period for enforcing the debt: the creditor's remedy is not barred by the statute of limitations period until the lapse of the full period commencing with the time of the new promise."³ Id. (internal quotation marks and italics omitted).

D.C. Code § 28-3504 (2012 Repl.), which we applied in Griffith , provides in pertinent part that:

In an action upon a simple contract, an acknowledgement [sic], or promise, by words only is not sufficient evidence of a new or continuing contract whereby to take the case out of the operation of the statute of limitations or to deprive a party of the benefit thereof unless the acknowledgement [sic], or promise, is in writing, signed by the party chargeable thereby.

We said in Griffith that the acknowledgment of a debt "is enforceable as a new promise, and the creditor's rights are measured by it, not the old promise ." 571 A.2d at 1165 (italics added). Tiger Steel acknowledges that statement, but asserts that what are measured by the new promise are matters such as the sum owed and the payment terms, not the length of the limitations period. Emphasizing that Griffith does not address what limitations period applies to enforcement of the new promise, Tiger Steel again urges that the full limitations period that commenced upon the new promise set out in the November 23, 2011, debt acknowledgment letter is not the three-year limitations period established by § 12-301 (7),⁴ but...