Statutes of limitations prescribe specific time periods by which a claimant must commence an action for breach of contract. If the lawsuit is not started within the statutory time after the right to bring the action accrues, the cause of action will be legally barred. Under New York’s statute of limitations, a breach of contract action must be brought within six years from the date the cause of action accrued. Claimants should be aware, however, that by contract agreement, the parties may legally reduce the six-year statute of limitations to a substantially shorter time period.
In addition, problems arise as to when the cause of action accrues to commence the limitation period. In the recent case of Mulvihille Electrical Contracting Corp. v. Nab Construction Corp., the court applied the shorter contractual statute of limitation and addressed the question of when a subcontractor’s claim accrued to trigger the contractual limitation period by which the subcontractor must start suit.
Mulvihill Electrical Contracting Corp., an electrical subcontractor, contracted with Nab Construction Corporation, a general contractor, to perform certain electrical work. The parties’ subcontract contained a six-month time limitations period in which to commence suit. The limitation period was to begin running from the earlier of: (1.) acceptance of the subcontractor’s work as complete by the owner; (2.) acceptance of the subcontractor’s work as complete by the general contractor; or, (3.) the issuance of a certificate of occupancy. The subcontractor commenced suit in 2004, claiming that the general contractor failed to pay for certain subcontract work.
The general contractor moved for summary judgment dismissing the complaint as time-barred on account of the six-month limitation period. According to the general contractor, the contractual six-month limitation period had long since expired. The general contractor pointed out that the subcontractor submitted an application to the New York City Department of Transportation in 2000 for a certificate of compliance, which was approved. In addition, the general contractor argued that in 2002 it was paid in full by the project owner, so as to demonstrate that under the prime contract the subcontractor’s work was accepted as complete by the owner.
The trial court granted the general contractor’s motion for summary judgment, and dismissed the subcontractor’s claims. The subcontractor appealed.
The appellate court reversed the trial court’s decision. In so doing, the appellate court strictly construed the parties’ subcontract. According to the court, the NYCDOT’s approval of the subcontractor’s application had no bearing on when the six-month limitations period began to run. This was so because the NYCDOT’s approval was not acceptance by the owner, acceptance by the general contractor, or the issuance of a certificate of occupancy, as was required to begin the contractual six-month limitation period.
The appellate court also rejected the general contractor’s argument that the owner accepted the subcontractor’s work because the general contractor was paid in full by the owner. The court held that there was insufficient documentary evidence to establish that the subcontractor was paid in full.
There is little else in the law that can destroy a case so quickly as a short time period for the bringing of an action. The courts do not have any discretion to extend the statutory or contractual time limitations periods no matter how good the reasons for delay in bringing the action may be. In this case, the subcontractor was fortunate to avoid the short six month contractual limitation period because of the general contractor’s failure to prove that the claim accrued more than six months before the suit.