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.
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.
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