If you are a construction attorney like me (or anyone that takes cases to court), you deal with statutes of limitation on a daily basis. These statutes seem pretty simple. A party has “X” amount of time in which to file its lawsuit after accural of the cause of action. In a breach of contract suit, the accrual is the date of breach. Easy, right? Wrong, at least in some circumstances.
Take for example, the case of Fluor Fed. Sols., LLC v. PAE Applied Techs., LLC out of the 4th Circuit Court of Appeals. In this unpublished opinion the Court looked at “continuous breach” versus “series of separate breaches.” The basic facts are that in 2000 Flour entered into a contract with PAE whereby PAE requested and claims to have received consent from Flour to a 2.3% administrative cost cap on Flour’s work on an Air Force contract. Flour claimed that it did not agree to this cap. In 2002, Flour begain billing PAE for its costs plus the 2.3% administrative markup and billed in this fashion for the first full year. However, in subsequent years and for the next 11 years, Flour billed PAE at a higher markup rate than the 2.3%. PAE disputed the increased markup and paid Flour at the 2.3% rate. Flour periodically protested but made no move to court until it filed suit in March of 2016. After a bench trial, the district court found that Flour had agreed to the cap and found for PAE.
On appeal, the 4th Circuit Court of Appeals affirmed the victory for PAE, but on different grounds. After a great analysis of continuous versus a series of separate breaches (that I commend to your reading) he appeals court found that, if Flour had not in fact agreed to the cap, it had to bring its cause of action within 5 years of the first time that PAE failed to pay the increased markup because the alleged breach by PAE as evidenced by its allegedly unilateral 2.3% cap caused a singular continuous breach because all of the harm to Flour arose due to this decision and that the statute of limitations began to run at the first instance of this continuous breach. The Court stated its position as follows:
Fluor’s entire harm flowed directly from PAE’s initial decision to cap G&A costs. That Fluor’s alleged damages increased over the course of the contract does not alter the fact that the breach was single and continuous. Virginia law makes clear that “the running of the statute is not postponed by the fact that the actual or substantial damages do not occur until a later date.”
In short, the fact that the full harm to Flour was not known for close to 12 years did nothing to toll or otherwise postpone the countdown of the statute of limitations.
The takeaway? Don’t sit on your rights and be sure that you are counting from the right date.
As always, I look forward to hearing from you with any thoughts on this or other cases.
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