Opinion ID: 795373
Heading Depth: 3
Heading Rank: 2

Heading: Dismissal of JCI's Claims on the Basis of Untimeliness

Text: 13 The district court concluded that JCI's claims for overpayments arising over four years prior to the filing of the suit were untimely; JCI did not appeal this conclusion. Jay asserts that JCI's claims after February 1998 are also barred by the four-year statute of limitations for breach-of-contract claims. See MICH. COMP. LAWS § 440.2725(1) (U.C.C. § 2-725). 3 Jay claims that the district court improperly applied the continuing violations or continuing breach doctrine in allowing JCI's claims to go forward, Appellant Br. at 19; 4 the continuing wrong doctrine recognizes that `[w]here a defendant's wrongful acts are of a continuing nature, the period of limitation will not run until the wrong is abated.' Blazer Foods, Inc. v. Rest. Props., Inc., 259 Mich.App. 241, 673 N.W.2d 805, 809 (Mich.Ct.App.2003) (alteration in original) (internal quotation marks omitted). 14 However, the continuing breach theory is not relevant to the case 5 because the VN127 agreement is an installment contract. 6 Michigan Compiled Laws § 600.5836 states that claims on an installment contract accrue as each installment falls due. Thus, each overcharge was a distinct breach that fell within the four-year statute of limitations. 1 J.A. at 362 (Dist. Ct. Mem. & Order Re: Post Trial Mots. (Dist. Ct. Mem. & Order) at 10). Jay offers several arguments regarding the applicability or effect of § 600.5836. First, Jay asserts that the amortization contract was distinct from the VN127 pedestal contract and thus only lasted approximately seven months. JCI's fourth amended complaint clearly asserts that the packaging agreement was a part of the VN127 contract. See 1 J.A. at 129 (Verified Fourth Amended Compl. ¶ 8) (The Returnable Container Program that is a subject of this Complaint is part of the 1994 Agreement . . .). In addition, there is evidence in the record to support the conclusion that the packaging agreement was negotiated in the context of the overall agreement for the sale of pedestals. See, e.g., 3 J.A. at 941 (Letter from Todd Gensheimer to Vic Bohacheff dated Dec. 6, 1994) (discussing amortization in the context of the pedestal agreement as a whole). As we are required to view the facts in the light most favorable to JCI, we conclude that the packaging agreement was not a distinct agreement from the VN127 installment contract. 7 15 Finally, Jay claims that § 600.5836 is inapplicable because it is relevant only for the payment of money, rather than the delivery of goods. Instead, Jay asserts that the relevant rule is U.C.C. § 2-612, 8 which states that [a]n `installment contract' is one which requires or authorizes the delivery of goods in separate lots to be separately accepted. According to § 2-612(3), a breach of the whole contract occurs at the time that the contract is substantially impaired; Jay claims that the contract was substantially impaired prior to February 1998. However, we see no reason that the general contract principle set forth in § 600.5836 should not apply in this case. See Bay Area Laundry & Dry Cleaning Pension Trust Fund v. Ferbar Corp. of Cal., 522 U.S. 192, 195, 118 S.Ct. 542, 139 L.Ed.2d 553 (1997) (Consistent with general principles governing installment obligations, each missed payment creates a separate cause of action with its own six-year limitations period.). Because the agreement was an installment contract for the delivery of goods, each installment after February 1998 was substantially impaired. See 2 J.A. at 523 (Dist. Ct. Mot. to Dismiss Order at 12) ([T]he thousand of dollars in overcharges per order serves as a substantial impairment.). JCI's claims arising after February 1998 are not barred by the statute of limitations.
16 The district court concluded that U.C.C. § 2-607 applies in this case. 9 The parallel Michigan statutory provision provides: 17 (3) Where a tender has been accepted 18 (a) the buyer must within a reasonable time after he discovers or should have discovered any breach notify the seller of breach or be barred from any remedy . . . . 19 MICH. COMP. LAWS § 440.2607(3). Although the jury found that JCI failed to reasonably notify Jay in accordance with § 2-607(3), the district court concluded that JCI was entitled to recover damages for overcharges occurring after notice was given. 1 J.A. at 362 (Dist. Ct. Mem. & Order at 10). 20 Jay argues that the district court should have dismissed all of JCI's claims, because the failure to provide reasonable notice prevents JCI from seeking  any remedy. Appellant Br. at 30. It is true, as Jay points out, that the Michigan Court of Appeals has broadly construed the term any remedy. Am. Bumper & Mfg. Co. v. Transtechnology Corp., 252 Mich.App. 340, 652 N.W.2d 252, 256-57 (Mich.Ct.App. 2002). However, the district court correctly found that JCI was entitled to recover damages for the post-notice overcharges for two reasons. First, the district court explained that U.C.C. § 2-607(3) only applies by its own terms [w]here a tender has been accepted; at the point at which JCI notified Jay of the overcharges, the goods in the subsequent installments had not yet been tendered or accepted. 1 J.A. at 362 (Dist. Ct. Mem. & Order at 10). Second, because the sales between JCI and Jay were in the nature of installment contracts, each overcharge was a distinct breach and JCI was not required to give notice prior to the occurrence of the breach. 1 J.A. at 362 (Dist. Ct. Mem. & Order at 10).
21 Finally, Jay claims that JCI waived its alleged contract right to a lower price by promising and continuously paying to Jay its purchase order prices during [the time that the pedestals were shipped]. Appellant Br. at 35-36. Michigan Compiled Laws § 440.2208 (U.C.C. § 2-208) states: 22 (1) Where the contract for sale involves repeated occasions for performance by either party with knowledge of the nature of the performance and opportunity for objection to it by the other, any course of performance accepted or acquiesced in without objection shall be relevant to determine the meaning of the agreement. 23 . . . 24 (3) Subject to the provisions of the next section on modification and waiver, such course of performance shall be relevant to show a waiver or modification of any term inconsistent with such course of performance. 25 JCI first responds that Jay waived this claim by failing to object to the lack of an appropriate jury instruction. JCI acknowledges that Jay requested a course-of-performance instruction that included a passing reference to waiver, but states that there was no objection to the failure to provide a substantive waiver instruction. Appellee Br. at 30 n. 51. Jay's requested instruction, which was based on U.C.C. § 2-208, stated, [t]he parties' course of performance is also relevant to show a waiver or modification of any term inconsistent with such course of performance. 2 J.A. at 638 (Jay's Revised Proposed Jury Instructions at 12). Contrary to JCI's arguments, Jay's requested instruction clearly raised the issue of waiver. 26 As to the merits of Jay's claim, JCI did not waive its rights regarding the packaging payments according to Michigan law. The Michigan Supreme Court has explained that a waiver is a voluntary and intentional abandonment of a known right. Quality Prods. & Concepts, Co. v. Nagel Precision, Inc., 469 Mich. 362, 666 N.W.2d 251, 258 (Mich.2003). Jay is correct in stating that a party's conduct can establish waiver; in fact, Quality Products acknowledges that a course of conduct can indicate a knowing waiver. Id. However, because Jay does not offer any evidence that JCI intentionally relinquished its rights, Jay's claim is without merit. Therefore, judgment as a matter of law based on waiver of the price contract term was not warranted. 27 Jay obviously cannot assert that JCI waived its rights under the contract after July 8, 2001, because JCI expressed its objection on that date. Rather, Jay argues that JCI's retraction of the alleged waiver was improper pursuant to Michigan Compiled Laws § 440.2209(5) (U.C.C. § 2-209). 10 Because JCI did not waive its rights as to the packaging charges, however, § 440.2209(5) is inapplicable. The district court correctly denied Jay's claim with regard to waiver.