Appeal by plaintiff from order dated 27 October 2004 by Judge
Ola M. Lewis in Superior Court, Bladen County. Heard in the Court
of Appeals 14 September 2005.
Safran Law Offices, by Perry R. Safran and Brian J. Schoolman,
for plaintiff-appellant.
Tharrington Smith, L.L.P., by Michael Crowell and Rod Malone,
for defendant-appellee Bladen County Board of Education.
Womble Carlyle Sandridge & Rice, PLLC, by Matthew S. Healey,
and Allison B. Schafer for the North Carolina School Board
Association; and James B. Blackburn for the North Carolina
Association of County Commissioners, amicus curiae.
McGEE, Judge.
ABL Plumbing & Heating Corporation (plaintiff) entered into a
contract with the Bladen County Board of Education (the Board of
Education) on 15 December 1999. Under the contract, plaintiff
agreed to perform plumbing work on the East Bladen High School
construction project (the project) for the Board of Education. Sigma Construction Company (Sigma) was the original general
contractor for the project. Shuller Ferris Lindstrom & Associates
(Shuller) was the architect for the project and the Board of
Education's representative throughout the project.
Sigma filed a petition in bankruptcy and defaulted on its
obligations as general contractor on 1 March 2001. The Board of
Education declared Sigma to be in default in April 2001. Plaintiff
continued to work on the project through 13 April 2001, when the
Board of Education halted work on the project. Plaintiff submitted
its first claim to the Board of Education on 24 April 2001 in the
amount of $223,252.37. The claim was for damages allegedly
suffered as a result of Sigma's default and was to be submitted to
Sigma's surety. Plaintiff did not receive a response to its claim.
The Board of Education directed plaintiff to resume work on
the project on 11 June 2001. However, plaintiff informed the Board
of Education on 18 June 2001 that it would not resume work until
issues concerning "the job completion date, schedule and change
order amount for damages incurred" by plaintiff were resolved by
the Board of Education or by Sigma's surety.
Plaintiff and the Board of Education entered into a
remobilization agreement on 31 July 2001. The remobilization
agreement stated that "[plaintiff] intend[ed] to file a claim
against [the Board of Education] regarding the alleged damages"
incurred by plaintiff "as a result of Sigma's default on the
[p]roject and the subsequent suspension of work." Paragraph seven
of the remobilization agreement specified that if plaintiff wishedto pursue a claim related to Sigma, it would submit a formal claim
to the Board of Education by 31 August 2001. The remobilization
agreement also provided that "[t]his agreement shall not be
construed as a release of any claims or defenses [the Board of
Education] and [plaintiff] have or may have in the future relating
to damages incurred on the [p]roject." Plaintiff resumed work on
the project in August 2001.
Plaintiff submitted a second claim to the Board of Education
in the amount of $261,456.83, on 31 August 2001. The amount of
plaintiff's 31 August 2001 claim differed in amount from the 24
April 2001 claim. However, the categories of the damages in the
two claims were the same. The Board of Education rejected
plaintiff's second claim on 28 September 2001.
Plaintiff filed a complaint on 26 August 2003 alleging various
claims against the Board of Education and Shuller. However,
plaintiff voluntarily dismissed its claims against Shuller on 28
October 2004.
Plaintiff alleged the Board of Education breached its contract
with plaintiff by failing to properly supervise Sigma.
Specifically, plaintiff alleged that
[the Board of Education] and Shuller
. . . were aware that [Sigma] was in breach of
its contract with [the Board of Education] and
that said breach included but was not limited
to abandoning the project schedule,
performance of its work without plan or
coordination, and the presence of project-wide
evidence of defective workmanship.
Plaintiff further alleged "[the Board of Education] and Shuller
. . . failed to respond to [Sigma's] Breach of Contract in a timelymanner by allowing [Sigma's] material breach to continue."
Plaintiff also alleged the Board of Education breached its contract
by failing to pay the contract balance to plaintiff in June 2002.
Plaintiff also alleged that "[p]rior to and after [Sigma's]
bankruptcy filing, the [Board of Education] . . . failed to
adequately monitor the project's progress. . . . Such failures
includ[ed] . . . [a] failure to provide adequate contract drawings
and specifications." Accordingly, plaintiff alleged that the Board
of Education breached an implied warranty because the "drawings,
plans, specifications and bidding documents furnished by [the Board
of Education] were not sufficient for their intended purpose."
The Board of Education filed a motion for summary judgment
dated 15 October 2004. In support of its motion, the Board of
Education argued, inter alia, that plaintiff's claims were barred
by the applicable statute of limitations. The trial court granted
partial summary judgment for the Board of Education on plaintiff's
breach of contract claim. The trial court noted that "[w]ith
respect to Plaintiff's Breach of Contract Claim, the sole issue
remaining for trial [was] whether Plaintiff [was] entitled to its
contract balance." The trial court granted summary judgment for
the Board of Education on plaintiff's entire breach of warranty
claim. Plaintiff appeals.
I.
[1] Plaintiff argues the trial court erred in granting partial
summary judgment for the Board of Education on plaintiff's breach
of contract claim to the extent the trial court ruled thatplaintiff's claim was barred by the applicable statute of
limitations. The parties do not dispute the applicable statute of
limitations period was two years.
See N.C. Gen. Stat. § 1-53(1)
(2003) (stating that a two-year limitations period applies to "[a]n
action against a local unit of government upon a contract,
obligation or liability arising out of a contract, express or
implied"). The parties disagree as to the accrual date of
plaintiff's breach of contract claim.
Summary judgment is proper when "the pleadings, depositions,
answers to interrogatories, and admissions on file, together with
the affidavits, if any, show that there is no genuine issue as to
any material fact and that any party is entitled to a judgment as
a matter of law." N.C. Gen. Stat. § 1A-1, Rule 56(c) (2003). On
an appeal from a grant of summary judgment, our Court must
determine "whether there is any genuine issue of material fact and
whether the moving party is entitled to a judgment as a matter of
law."
Bruce-Terminix Co. v. Zurich Ins. Co., 130 N.C. App. 729,
733, 504 S.E.2d 574, 577 (1998). We must view the evidence in the
light most favorable to the nonmoving party.
Id. If a plaintiff's
claim is barred by the running of the applicable statute of
limitations, summary judgment in favor of a defendant is
appropriate.
McCutchen v. McCutchen, 170 N.C. App. 1, 5, 612
S.E.2d 162, 165 (2005).
It is a well-settled rule in North Carolina that a cause of
action for breach of contract accrues, and the statute of
limitations period begins to run, "[a]s soon as the injury becomesapparent to the claimant or should reasonably become apparent[.]"
Liptrap v. City of High Point, 128 N.C. App. 353, 355, 496 S.E.2d
817, 819,
disc. review denied, 348 N.C. 73, 505 S.E.2d 873 (1998)
(citing
Pembee Mfg. Corp. v. Cape Fear Constr. Co., 313 N.C. 488,
493, 329 S.E.2d 350, 354 (1985)). Further damage incurred after
the date of accrual is only an aggravation of the original injury
and does not restart the statutory limitations period.
Id.
Plaintiff asks this Court to adopt a new rule applicable to
actions on construction contracts, under which a cause of action
would not accrue until substantial completion of performance.
Plaintiff cites public policy reasons for this requested change.
Specifically, plaintiff argues that a change in the accrual date of
actions on construction contracts would encourage completion of
construction projects and avoid abandonment and litigation.
Plaintiff also argues that a change in the law would encourage
nonjudicial resolutions of controversies. However, plaintiff's
policy arguments are more appropriately addressed to the General
Assembly.
In the present case, plaintiff claimed the Board of Education
breached its contract with plaintiff as a result of the Board of
Education's failure to adequately supervise Sigma. Sigma defaulted
on its obligations as general contractor for the project on 1 March
2001. Therefore, any breach of contract arising out of Sigma's
actions or omissions should have accrued by 1 March 2001. Also,
the record tends to show that plaintiff was aware of its injury at
least by 24 April 2001 when plaintiff submitted its first claim tothe Board of Education for damages allegedly suffered as a result
of Sigma's default. Accordingly, plaintiff's cause of action for
breach of contract accrued at the latest by 24 April 2001. Any
subsequent damage allegedly suffered by plaintiff merely aggravated
plaintiff's original injury.
See Liptrap,
128 N.C. App. at 355,
496 S.E.2d at 819. Because plaintiff did not file its action until
26 August 2003, plaintiff's breach of contract claim was barred by
the applicable two-year statute of limitations. Accordingly, the
trial court did not err in granting partial summary judgment for
the Board of Education. Because we hold that plaintiff's claim was
statutorily barred, we need not address the other potential grounds
for the trial court's grant of partial summary judgment.
II.
[2] Plaintiff also argues the trial court erred by granting
summary judgment for the Board of Education on plaintiff's breach
of warranty claim. "[A] construction contractor who has followed
plans and specifications furnished by the owner, or his architect
or engineer, will not be responsible for consequences of defects in
those plans or specifications."
Gilbert Engineering Co. v. City of
Asheville, 74 N.C. App. 350, 362, 328 S.E.2d 849, 857,
disc. review
denied, 314 N.C. 329, 333 S.E.2d 485 (1985).
The rationale for the
rule is that "there is an implied warranty by the owner that the
plans and specifications are suitable for the particular purpose,
and that if they are complied with[,] the completed work will be
adequate to accomplish the intended purpose."
Id. at 363, 328
S.E.2d at 857. A party asserting such a claim must show that "theplans and specifications were adhered to, that they were defective,
and that the defects were the proximate cause of the deficiency in
the completed work."
Id.
In
Battle Ridge Cos. v. N.C. Dep't of Transp., 161 N.C. App.
156, 160, 587 S.E.2d 426, 429 (2003),
disc. review denied, 358 N.C.
233, 594 S.E.2d 191 (2004), our Court noted that "plans and
specifications constitute 'positive representations upon which [a
contractor is] justified in relying.'"
Id.
(quoting
Lowder, Inc.
v. Highway Comm., 26 N.C. App. 622, 638, 217 S.E.2d 682, 692,
cert.
denied, 288 N.C. 393, 218 S.E.2d 467 (1975)). We further
recognized that "'a contracting agency which furnishes inaccurate
information as a basis for bids may be liable on a breach of
warranty theory[.]'"
Id. (quoting
Lowder, Inc., 26 N.C. App. at
638, 217 S.E.2d at 692).
In the present case, plaintiff alleged the following:
15. Prior to and after [Sigma's] bankruptcy
filing, [the Board of Education] through
[its] architect representative, Shuller
. . . failed to adequately monitor the
project's progress. Such failures
include, but were not limited, to:
failure to timely review change orders,
failure to monitor project progression,
and failure to provide adequate contract
drawings and specifications. All such
failures of [the Board of Education]
operated to hinder the work of
[plaintiff] on the [p]roject.
. . . .
37. [The Board of Education] had a duty to
provide [p]laintiff . . . with drawings,
plans, specification[s], bidding
documents and other information free of
defects and omissions. [Plaintiff] was
entitled to rely and did rely upon theadequacy of the bidding documents, plans
and specification[s]. The drawings,
plans, specifications and bidding
documents furnished by [the Board of
Education] were not sufficient for their
intended purpose.
38. [The Board of Education], despite [its]
awareness that the Designer/Engineer
failed to perform his contract, failed to
make allowances to [plaintiff] and has
unreasonably and unjustly failed to
extend the time for [plaintiff's]
performance on the contract and provide
payment for [plaintiff's] expenses
suffered on the project.
39. As a result of the above mentioned
defects and omissions, [the Board of
Education] breached its duty and as a
result of said breach of warranty,
[p]laintiff . . . has incurred costs and
expenses and has been damaged in an
amount in excess of Ten Thousand Dollars
($10,000.00) in an amount to be proven at
trial at the highest interest rate
allowed by law with interest accruing
from the date of breach, plus court costs
and attorneys' fees where applicable.
Assuming
arguendo, without deciding,
that plaintiff stated a
claim for breach of an implied warranty of plans and
specifications, plaintiff's claim was barred by the applicable
statute of limitations. Plaintiff's breach of warranty claim was
also governed by a two-year statute of limitations period pursuant
to N.C.G.S. § 1-53(1) because the claim was "[a]n action against a
local unit of government upon a contract, obligation or liability
arising out of a contract, express or implied." As we noted
earlier, a cause of action accrues, and the statute of limitations
period begins to run, when a plaintiff is, or should have been,
aware of its injury.
Liptrap, 128 N.C. App. at 355, 496 S.E.2d at819. Further damage incurred after the accrual of a cause of
action only aggravates the original injury and does not restart the
running of the statutory limitations period.
Id.
Plaintiff alleged in its complaint that its breach of warranty
claim arose out of alleged deficiencies in the "drawings, plans,
specifications and bidding documents" provided to plaintiff by the
Board of Education. The record includes only the original plans
set forth in the 15 December 1999 contract. The record shows that
plaintiff was aware of its injury at least by 24 April 2001 when
plaintiff submitted its first claim to the Board of Education.
Accordingly, plaintiff's cause of action for breach of warranty
accrued by 24 April 2001. Any damage allegedly suffered by
plaintiff after that date merely aggravated plaintiff's original
injury.
See Liptrap,
128 N.C. App. at 355, 496 S.E.2d at 819.
However, plaintiff did not file its complaint until 26 August 2003,
more than two years after plaintiff's cause of action had accrued.
Therefore, the trial court properly granted summary judgment for
the Board of Education on the ground that plaintiff's breach of
warranty claim was statutorily barred, and we overrule these
assignments of error.
Affirmed.
Judges McCULLOUGH and JACKSON concur.
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