N.C. S.Ct.: Christenbury Eye Center, P.A. v. Medflow Inc.- Date from which Statute of Limitations Runs

Summary:

In an unfulfilled business agreement, over a period of fourteen (14) years, Medflow, Inc. never made any royalty payments, never provided a written sales reports ,and never obtained consent for restricted sales. When Christenbury Eye Center, P.A. brought suit for such, the trial court dismissed the case as the various claims were stale under the applicable Statutes of Limitations. On appeal, Christenbury argued that the business agreement should be treated as “an installment contract”, with a new limitations period beginning upon the failure to make each payment, allowing recovery on royalty payments due within the three years before the filing of its complaint.

The Supreme Court began by restating the importance of Statutes of Limitations and that a ” cause of action is complete and the statute of limitations begins to run upon the inception of the loss from the contract, generally the date the promise is broken.” See Jewell v. Price, 264 N.C. 459, 461, 142 S.E.2d 1, 3 (1965). Pursuant to N.C.G.S. § 25-2-612(1), an ‘installment contract’ requires or authorizes the delivery of goods in separate lots to be separately accepted. This is not limited to the sale of goods, but must be “capable of ‘apportionment’ or separate allocation the one to the other, as indicated in the contract itself.” Neal v. Wachovia Bank & Tr., 224 N.C. 103, 107, 29 S.E.2d 206, 208 (1944). The business agreement here, however, show no indication that each royalty payment and sales report were divisible, but actually instead “demonstrate a mutual dependency” such that it was a “unified” contract.

Commentary:

While subsequent payments on a debt can ratify an obligation, restarting the Statute of Limitations, this opinion would preclude most creditors holding consumer claims, including private student loans, from asserting that each payment was independent from the preceding payments allowing for a “rolling” default date.

For a copy of the opinion, please see:

Christenbury Eye Center, P.A. v. Medflow Inc.- Date from which Statute of Limitations Runs

About

1. Bachelor of Arts degree in English Literature from Washington University, 1993. 2. Juris Doctor degree from George Washington University, 1996. Admissions to Practice of Law: North Carolina Bar, 1996. Federal District Courts for the Eastern and Middle Districts of North Carolina. Specialty Certification: North Carolina State Bar: Certified as a Specialist in Consumer Bankruptcy. Areas of Practice: Practice limited to consumer and business debtor bankruptcy law, 1998 to present. Memberships: National Association of Consumer Bankruptcy Attorneys (NACBA). North Carolina Academy of Trial Lawyers (NCATL). North Carolina Bar Association, Bankruptcy Section. Lectures prepared and presented: North Carolina Academy of Trial Lawyers seminar on bankruptcy; Topic: Counseling the Consumer Debtor Prior to Court - C.Y.A. Forms to Help 'Gird They Loins'; 2001. Middle District Bankruptcy Seminar; Topic: Preparing Chapter 13 Plans; 2002. NACBA National Convention; Topic: Efficient Office Practices; 2003. NACBA National Convention; Topic: Chapter 7 vs. Chapter 13 Debates; 2004. Middle District Bankruptcy Seminar; Topic: Chapter 7 & 13 Hot Issues; 2004. Positions held: NACBA National Convention; Convention Chair; 2008. NACBA National Convention; Panel Moderator: Topic: Basic Bankruptcy Issues; 2008. NACBA National Convention; Panel Moderator; Topic: Chapter 13-Disposable Income and Other Issues; 2007. NACBA National Convention; Panel Moderator; Topic: Representing Members of the Military and Their Families; 2007. NACBA, Member of National Board of Directors, 2006 to present. NCATL, Chair of the Bankruptcy Section, 2003 to 2007. NACBA, Chair of the North Carolina Section, 2003 to 2007. NC Bar Association, Bankruptcy Section, Bankruptcy Council Member, 2004 to present.

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