April 18, 2019

Colorado Court of Appeals: Statute of Limitations for Breach of Contract Continued to Accrue for Each Successive Breach But Tolled for First Breach

The Colorado Court of Appeals issued its opinion in Neuromonitoring Assocs. v. Centura Health Corp. on August 16, 2012.

Breach of Contract—Statute of Limitations—Equitable Tolling—Genuine Issues of Material Fact—Continuing Breach.

In this action for breach of an exclusivity clause in a professional services contract, plaintiff Neuromonitoring Associates appealed the district court’s summary judgment entered in favor of defendants Centura Health Corporation, Catholic Health Initiatives Colorado, and Portercare Adventist Health System. The judgment was affirmed in part and reversed in part, and the case was remanded.

On January 5, 2010, plaintiff commenced this action seeking to recover damages arising out of defendants’ alleged breaches of an Intraoperative Nerve Monitoring Agreement (agreement), which became effective on July 1, 2004 and was valid for a term of one year with automatic renewals for additional one-year terms, unless otherwise terminated with proper notice. Defendants moved for summary judgment, arguing that plaintiff’s claims were barred by the three-year limitations period because plaintiff became aware of the alleged breach in 2005. The court dismissed plaintiff’s claims.

Plaintiff contended the district court erred in applying the three-year limitations period in CRS § 13-80-101(1)(a) rather than the six-year limitations period in CRS § 13-80-103.5(1)(a). Because the amounts plaintiff sought were not ascertainable by reference to the agreement or by simple computation, they are not “liquidated or determinable” within the meaning of § 13-80-103.5(1)(a). Consequently, the three-year breach of contract limitations period applied to plaintiff’s action.

Plaintiff next contended that the district court erred in concluding that defendants’ conduct did not warrant equitable tolling of the limitations period. Plaintiff failed to present evidence indicating that defendants wrongfully impeded its ability to bring its claims, or that it was ignorant of relevant facts that prejudiced its decision whether to file the action. Consequently, the district court properly concluded that equitable tolling of the limitations period was unwarranted.

Plaintiff further contended that there were genuine issues of material fact concerning when its cause of action first accrued. The undisputed evidentiary materials establish that plaintiff was aware beginning in April 2005 that defendant was breaching the agreement’s exclusivity provision. Therefore, the district court properly concluded there was no genuine factual controversy that the three-year limitations period on plaintiff’s cause of action began accruing in April 2005.

Plaintiff alternatively contended that the “continuing nature” of defendants’ conduct resulted in “repeated, successive breaches” and that its breach of contract cause of action must be deemed timely at least as to any breaches occurring within the three years preceding the January 5, 2010 filing of the complaint. In circumstances where a contract contains this type of continuing duty to perform, generally a new claim accrues for each separate breach and the plaintiff may assert a claim for damages from the date of the first breach within the period of limitation. Here, Each time defendants allowed another entity to perform services at one of the designated hospitals, a new alleged contract breach occurred. Insofar as plaintiff seeks recovery based upon alleged breaches occurring in the three-year period before January 5, 2010, when it commenced this action, plaintiff’s action was timely and the district court erred in concluding otherwise. Consequently, the case was remanded for reinstatement of those claims. Defendants’ request for attorney fees and costs incurred in defending this appeal were denied.

Summary and full case available here.

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