| Verizon N.Y., Inc. v Sprint PCS |
| 2007 NY Slip Op 06737 [43 AD3d 686] |
| September 13, 2007 |
| Appellate Division, First Department |
| Verizon New York, Inc., Appellant, v Sprint PCS et al.,Respondents. |
—[*1] Anderson Kill & Olick, P.C., New York (David A. Solomon of counsel), forrespondents.
Order, Supreme Court, New York County (Helen E. Freedman, J.), entered on or aboutDecember 13, 2006, which granted defendants' motion to dismiss the complaint, reversed, on thelaw, without costs, the motion denied and the complaint reinstated.
Inasmuch as there is no indication that plaintiff had reason to know, or should have known,that defendants would refuse to pay the contract price, its cause of action for breach of contractaccrued, for purposes of the statute of limitations, on November 10, 2000, by which dateplaintiff's October 10, 2000 invoice demanded payment, and defendants failed to pay (seeJohn J. Kassner & Co. v City of New York, 46 NY2d 544, 550 [1979]). Defendants' positionthat the cause of action accrued on April 6, 1999, the date of the contract, is unavailing becauseplaintiff waived the contractual requirement that prepayment be made before work would begin.The alternative argument that the cause of action accrued, at the very latest, in April 2000, whenplaintiff completed its work, is also unavailing because this claim is for payment on the contract(see Matter of Bombardier Transp.[Holdings] USA, Inc. v Telephonics Corp., 14 AD3d 358 [2005]), not for defectiveconstruction or consequential damages (cf. Amedeo Hotels Ltd. Partnership v Zwicker Elec.Co., 291 AD2d 322 [2002]). Concur—Tom, J.P., Andrias, Sweeny and Kavanagh, JJ.
McGuire, J., dissents in a memorandum as follows: Supreme Court correctly determined thatplaintiff's action is time-barred. Accordingly, I respectfully dissent.
On April 6, 1999, the parties entered into a contract pursuant to which plaintiff agreed todiversify cable routes for defendant. Under the contract, plaintiff estimated that the cost of thework would be $100,000, and defendant was to pay that amount within 60 days of the date of thecontract. The contract contemplated that the work might be completed either over or under the[*2]estimate; plaintiff was to bill defendant for any additionalcost over the $100,000 estimate and, if the work cost less than the estimate, refund to defendantany overpayment. While the $100,000 payment was not made by defendant within the 60-dayperiod, the work began in July 1999 and was completed in April 2000. By an invoice datedOctober 10, 2000, plaintiff billed defendant $109,800 for the work and demanded payment byNovember 11, 2000. Defendant never paid the invoice.
On June 21, 2006, plaintiff commenced this action to recover the $109,800. In lieu ofanswering, defendant moved to dismiss the complaint pursuant to CPLR 3211 (a) (5), claimingthat the action was time-barred. Supreme Court granted the motion and dismissed the complaint,and this appeal ensued.
"In contract cases, the cause of action accrues and the Statute of Limitations begins to runfrom the time of the breach" (John J. Kassner & Co. v City of New York, 46 NY2d 544,550 [1979]; see Ely-Cruikshank Co. v Bank of Montreal, 81 NY2d 399 [1993]). Where acause of action is asserted to recover a sum of money owed pursuant to a contract, the cause ofaction accrues when the plaintiff possesses a legal right to demand payment (Swift v New York Med. Coll., 25AD3d 686, 687 [2006]; see City of New York v State of New York, 40 NY2d 659,668 [1976]).[FN*]"[W]hen the right to final payment [under a contract] is subject to a condition, the obligation topay arises and the cause of action accrues, only when the condition has been fulfilled" (JohnJ. Kassner & Co., 46 NY2d at 550). In the absence of a condition precedent to payment,however, the cause of action accrues "on completion of the actual physical work even thoughincidental matters relating to the project remained open" (Phillips Constr. Co. v City of NewYork, 61 NY2d 949, 951 [1984]; see Superb Gen. Contr. Co. v City of New York, 39 AD3d 204, 204[2007]; Grace Indus., Inc. v New YorkCity Dept. of Transp., 22 AD3d 262, 263 [2005], lv denied 6 NY3d 703 [2006];645 First Ave. Manhattan Co. v Silhouette Drywall Sys., 212 AD2d 394, 396 [1995];Haig, Commercial Litigation in New York State Courts § 86:21 [4B West's NY PracSeries 2d ed] ["The six-year statute of limitations governing actions for breach of contractcommenced by a contractor against an owner, and by an owner against a contractor, begins to runupon substantial completion of the actual physical work"]).
Here, there was no condition precedent to final payment under the contract. Thus, plaintiff'scause of action accrued when the work it was retained to perform was completed. According toplaintiff, the work was completed in April 2000. Since the action was not commenced until June2006, after the six-year statute of limitations had expired (see CPLR 213 [2]), it istime-barred.
The majority's assertion that the cause of action accrued on November 10, 2000, the date bywhich plaintiff, in its October 10, 2000 invoice, demanded payment, is erroneous. As discussedabove, absent a condition precedent to final payment, a cause of action for breach of [*3]contract accrues "on completion of the actual physical work"(Phillips Constr. Co., 61 NY2d at 951). John J. Kassner & Co. (supra)and Matter of Bombardier Transp.(Holdings) USA, Inc. v Telephonics Corp. (14 AD3d 358 [2005]), cited by the majority,both involved contracts that imposed conditions precedent to payment and the plaintiffs' causesof action for breach of contract did not accrue until those conditions were fulfilled. Moreover, inconcluding that plaintiff's cause of action accrued on the date by which plaintiff, in its invoice,demanded payment, the majority permits plaintiff, through the submission of invoices,improperly to extend the statute of limitations (see Town of Brookhaven v MIC Prop. & Cas.Ins. Corp., 245 AD2d 365 [1997], lv denied 92 NY2d 806 [1998]; State of NewYork v City of Binghamton, 72 AD2d 870 [1979]). The majority's assertion that plaintiff'scause of action did not accrue when the work was completed "because this claim is for paymenton the contract, not for defective construction or consequential damages" (citations omitted) isnot supported by—and in fact is contrary to—the case law.
Accordingly, I would affirm the order.
Footnote *: I agree with the majority thatplaintiff's cause of action did not accrue on the date the parties entered into the contract. Whilethe contract called for payment by defendant of the $100,000 estimate within 60 days of the dateof the contract, plaintiff waived compliance with that provision. In light of this waiver, defendantcould not have breached that provision of the contract.