Opinion ID: 2197720
Heading Depth: 3
Heading Rank: 1

Heading: Breach of Contract Claim Against GE Capital

Text: Count one of the complaint alleges that GE Capital breached a 1999 settlement agreement by failing to advise credit reporting agencies that the first foreclosure on the property was mistakenly initiated by GE Capital. The trial court dismissed that claim against GE Capital because the complaint was filed more than three years after the contract at issue was signed. The trial court noted that a three-year statute of limitations generally applies to a breach of contract claim. It also explained that a cause of action for breach of contract accrues when the contract is first breached. As the contract at issue here did not specify a date for performance, the trial court determined that performance was to take place within a reasonable time. The settlement agreement was executed on July 29, 1999, and appellants filed their complaint on June 6, 2005. The owners argue, however, that the settlement agreement was a sealed instrument and as a result, their breach of contract claim is subject to a twelve-year statute of limitations. Appellees respond that the three-year statute of limitations applies because the settlement agreement does not meet the requirements for an instrument under seal.
The statute of limitations applicable to an action requires that a claim be brought within a certain period `from the time the right to maintain the action accrues.' Capitol Place I Assocs. L.P. v. George Hyman Const. Co., 673 A.2d 194, 198 (D.C. 1996) (quoting D.C.Code § 12-301 (1995)). For a contract-based action, the statute of limitations is ordinarily three years. D.C.Code § 12-301(7) (2001). The statute of limitations for an action brought on an instrument under seal however is twelve years, D.C.Code § 12-301(6) (2001), a period of time from breach to filing well beyond the time that elapsed here. Therefore we must first determine whether the settlement agreement in question here is an instrument under seal. The copy of the settlement agreement presented by the owners includes the signatures of Winston Murray and Naomi Smith, but it does not include the signature of any representative of GE Capital. [1] At the top of the signature page for Murray, there is a recitation that: IN WITNESS WHEREOF, we have hereunto set our hands and seal[.] However, the word seal is not found next to the signatures of either Murray or Smith. In fact, outside of the entry recited above, the word seal is found nowhere on the Murray and Smith signature pages. Below the signatures of Murray and Smith, two different notaries public certify that the signer has appeared before them and executed the document and both notaries have affixed their stamps. [2] Courts have been reluctant to declare a document to be sealed in the absence of evidence that the parties intended it to be under seal. Huntley v. Bortolussi, 667 A.2d 1362, 1365 (D.C.1995). See also President and Dirs. of Georgetown Coll. v. Madden, 505 F.Supp. 557, 585 (D.Md.1980) (explaining that [a] sealed instrument is not created by accident and the intent of the parties is what controls.) While such evidence may well be dispositive, a party is not required to provide extrinsic evidence to prove their intent to create a sealed instrument. Burgess v. Square 3324 Hampshire Gardens Apartments, Inc., 691 A.2d 1153, 1156 (D.C.1997). Instead, a proper determination of whether a document is under seal is limited in the first instance to an examination of the face of the document itself. Id. The prevailing view is that the seal may consist of any substance affixed to the document or the use of an impression such as that customarily used by notaries and corporations, or the use of any other mark, work, symbol, scrawl, or sign intended to operate as a seal. 1 WILLISTON ON CONTRACTS § 2:4 (2007). When the instrument is made by an individual, the word seal next to the signature is standing alone, sufficient to create a sealed instrument entitled to the twelve-year statute of limitations. Burgess, supra, 691 A.2d at 1156-57. See also Phillips v. A & C Adjusters, Inc., 213 A.2d 586, 586-87 (D.C.1965). To that end, we have said that the presence of the word seal, in parentheses, and opposite the signature `undoubtedly evinces an intention to make the instrument a sealed instrument[.]' Burgess, supra, 691 A.2d at 1156 (quoting Harrod v. Kelly Adjustment Co., 179 A.2d 431, 432 (D.C.1962)). Here, neither the signature of Murray nor Smith included the word seal next to it. Moreover, the inclusion of language in a contract such as witness my hand and seal is not, standing alone, enough to make a contract an instrument under seal. Such language, in the absence of a seal, does not operate to make the instrument one under seal. It is the attachment or adoption of a seal that is the operative fact. Vaccaro v. Andresen, 201 A.2d 26, 28 (D.C. 1964). Where, however, the word seal appears on the instrument opposite the signature, the words `witness my hand and seal' lend added and conclusive force of an intention to make a sealed contract[.] Harrod, supra, 179 A.2d at 432. As indicated by Vaccaro, a party to a contract may adopt the seal of another as his own[.] McNulty v. Med. Serv. of District of Columbia, 176 A.2d 783, 784 (D.C.1962). There is no required procedure that one must complete to adopt a seal. 78A C.J.S. Seals § 5 (1995). [W]hen one party signs an instrument to which another has affixed his seal, there is a presumption that he has adopted that seal. McNulty, supra, 176 A.2d at 784. But, the adoption by an individual of a seal printed on a document which he signs is largely a matter of intention. 78A C.J.S. Seals § 5 (1995). Based on these authorities and the circumstances presented, we conclude the settlement agreement is not an instrument under seal. As Huntley indicates, we must determine whether the parties intended to create a sealed instrument. 667 A.2d at 1365. In this case, the body of the contract here in question makes no recital to the effect that the contract is under seal. Madden, supra, 505 F.Supp. at 587. While Madden is not controlling authority, we think the absence of language in the body of the contract suggesting that the document is an instrument under seal is a relevant consideration in our effort to determine the intent of the parties. Although the language witness our hand and seal is included on Murray's signature page, such a recitation by itself is not enough to make the instrument under seal. See Vaccaro, supra, 201 A.2d at 28. More importantly, the owners did not include the word seal next to their signatures or anywhere else in the document. As we said above, placing seal next to the signatures is sufficient by itself to create a sealed instrument. At oral argument, counsel argued that the owners adopted the seals of the notaries public as their own. [3] McNulty makes clear that a contractee can create a sealed instrument by adopting the seal of another as his own. 176 A.2d at 784. Moreover, a party may adopt as his seal any other mark ... intended to operate as a seal. 1 WILLISTON ON CONTRACTS § 2:4 (2007). The question of whether a party adopts as his own a seal that is on a document he signs is resolved by determining the intent of the party. 78A C.J.S. Seals § 5 (1995). Here, there is no indication that the owners intended to adopt the notary stamps as their seals. Indeed their signatures were affixed before the notary seals were placed on the document. The language above the notary stamps certifies that Murray and Smith each signed the agreement in front of a notary public, but it suggests nothing further. Thus, there is insufficient indication that the owners intended to adopt the seals of the notaries as their own. Nor is there any indication that GE Capital intended that the contract be one under seal that would bind it to a twelve-year statute of limitations. As noted earlier, the copy of the settlement agreement before the trial court and this court includes no signature and no seal on behalf of GE Capital. There is no requirement that there be as many seals as signatures to an instrument. McNulty, supra, 176 A.2d at 784. In fact, one seal attached to an instrument could be the seal of each and all if they so intended to adopt it. 3 CORBIN ON CONTRACTS § 10.3 (1996) (emphasis added). However, in cases where a contract does not include language tending to show that all the signers executed it under seal, the mere fact that a signature to which no seal is affixed follows a signature which itself is sealed is not conclusive evidence that the subsequent signers adopted the prior seal. 1 WILLISTON ON CONTRACTS § 2:5 (2007). Furthermore, when the first signer adds his signature to an instrument and subsequent signers add their signatures and seals, it was early held that the court cannot presume that the first signer adopted the later affixed seals. 3 CORBIN ON CONTRACTS § 10.3 (1996). GE Capital does not dispute that it executed the settlement agreement; however, there is no assertion when, or under what circumstances it did so. In short, there is nothing in the record that would allow the trial court to determine the order in which the settlement agreement was signed. Indeed there is no claim that GE Capital signed the settlement agreement after Murray and Smith both signed the agreement and the notaries affixed their stamps or that the signer for GE Capital even saw the owners' signatures before signing. As such, this case can be distinguished from the circumstances described in McNulty, supra, 176 A.2d at 784, where one party signed an agreement and affixed his seal, and, it was assumed that the second signer intended to adopt the seal of the first. In sum, we hold that the settlement agreement is a simple contract and not a sealed instrument because the word seal does not appear opposite the owners' signatures, there is no clause in the body of the contract indicating the parties' intent to create a sealed instrument, and there is no indication that the owners intended to adopt the notary stamps as their seals. Nor is there any claim that GE Capital intended the document to be one under seal.
Because we have concluded that the settlement agreement does not meet the requirements for an instrument under seal, our next step is to determine whether appellants' breach of contract claim is barred by the three-year statute of limitations applicable to a breach of contract action. We are satisfied that it is so barred. A cause of action for breach of contract accrues, and the statute of limitations begins to run, at the time of the breach[.] Eastbanc, Inc. v. Georgetown Park Assoc. Ii, L.P., 940 A.2d 996, 1004 (D.C.2008) (internal citation omitted). See also Bembery v. District of Columbia, 758 A.2d 518, 520 (D.C.2000); and Capitol Place, supra, 673 A.2d at 198. A contract is breached if a party fails to perform when performance is due. Eastbanc, supra, 940 A.2d at 1004 (citing 9 ARTHUR L. CORBIN, CORBIN ON CONTRACTS § 943 (interim ed.2002)). See also 8 CORBIN ON CONTRACTS § 30.13 (1999) (Breach of contract is always the non-performance of some duty created by a promise.) Here, appellants claim that GE Capital failed to advise credit reporting agencies that the foreclosure was mistakenly commenced, as required by the settlement agreement. However, the agreement does not require that GE complete its reporting obligation within a specified time frame. When a contract fails to specify a time for the performance of an act, the law implies that it must be done within a reasonable time. Independence Mgmt. Co., Inc. v. Anderson & Summers, LLC, 874 A.2d 862, 869 (D.C.2005) (internal citation omitted). The owners and Aisha Murray brought this action against GE five years and ten months after signing the settlement agreement. Thus, for appellants' claim to be within the statute of limitations, we would have to hold that two years and ten months was a reasonable time for GE to complete its performance under the settlement agreement. What constitutes a reasonable time for performance depends on the circumstances of each case. Drazin v. American Oil Co., 395 A.2d 32, 35 (D.C.1978). GE argues that it was required to perform its reporting obligation during the year 1999. The owners have expressed no view as to when performance was required by GE, however, relying entirely on their argument that the contract is an instrument under seal. When a foreclosure appears on a consumer's credit report, that individual will often experience severe financial difficulties as a result. See, e.g., EMC Mortgage Corp. v. Jones, 252 S.W.3d 857, 873 (Tex.App.2008) (appellee was denied home refinance loan because an erroneous foreclosure appeared on his credit report); Harmon v. Regions Bank, 961 So.2d 693, 696 (Miss.2007) (appellant was denied a business loan because an erroneous foreclosure appeared on her credit report); and Cairns v. GMAC Mortgage Corp., No. CIV 04-1840-PHX-SMM, 2007 WL 735564, at  (D.Ariz. Mar.5, 2007) (plaintiffs were denied credit to buy a car after their credit report showed a foreclosure stemming from a debt that had been discharged by bankruptcy). We cannot, and need not, say with specificity what constitutes a reasonable time to inform the credit agencies. We are satisfied, however, that given the serious consequences that can result when a foreclosure appears on a consumer credit report, that it would not have been reasonable for GE to wait as long as two years and ten months before completing its reporting obligations. Therefore, we conclude that the breach occurred at an earlier time. Accordingly, we hold that appellants breach of contract action is barred by the three-year statute of limitations.