Opinion ID: 495492
Heading Depth: 1
Heading Rank: 1

Heading: millgard's contract claims against mckee/mays

Text: 9 Citing Godde v. Wood, 509 S.W.2d 435, 441-43 (Tex.Civ.App.--Corpus Christi 1974, writ ref'd n.r.e.), the district court held that Millgard's cause of action accrued no later than May 2, 1980, when Millgard made written demand for the additional amount. Consequently, the court concluded that because the instant action was filed June 7, 1984, it was barred by Texas' four year statute of limitations for contract claims, Tex.Rev.Civ.Stat. Art. 5527(1) (now codified as Tex.Civ.Prac. & Rem.Code Sec. 16.004(a)(3) (Vernon's 1986)). Millgard asserts that its cause of action accrued no sooner than June 12, 1980, when McKee/Mays rejected its request for additional compensation, or June 16, 1980, when Millgard learned of the rejection. 10 It is not disputed that under Texas law, a contract cause of action accrues upon breach. Jackson v. J.R. Neatherlin Corp., 557 S.W.2d 327, 329 (Tex.Civ.App.--Houston 1977, writ ref'd n.r.e.); Hurbrough v. Cain, 571 S.W.2d 216, 221 (Tex.Civ.App.--Tyler 1978, no writ). The issue before us is at what point breach occurred. Millgard contends that breach occurred when McKee/Mays repudiated the contract by refusing its request for equitable adjustment in compensation due to unexpected subsurface conditions. Defendants argue that because the contract is silent as to the payment date for the equitable adjustment, payment was due when Millgard completed its performance under the contract (January 1980). Contending that Millgard could have filed suit for nonpayment at any time thereafter, defendants assert that breach must date from that time. 11 We find defendants' arguments unpersuasive. The general rule that a right to recover under a contract accrues at the time performance is completed, unless otherwise specified in the contract, has been invoked in the context of setting the earliest time when suit could be brought for payment under a construction contract, see Jim Walter Homes, Inc. v. Valencia, 679 S.W.2d 29 (Tex.App.--Corpus Christi 1984, modified on other grounds 690 S.W.2d 239); Wade & Sons, Inc. v. Waco Construction, Inc., 612 S.W.2d 261 (Tex.Civ.App.--San Antonio 1981, no writ), or for defining the payment date for interest calculation purposes, Irrigation Construction Co. v. Motheral Contractors, Inc., 599 S.W.2d 336 (Tex.Civ.App.--Corpus Christi 1980, no writ); McDaniel v. Tucker, 520 S.W.2d 543, (Tex.Civ.App.--Corpus Christi 1975, no writ); Beck v. Lawler, 422 S.W.2d 816 (Tex.Civ.App.--Fort Worth 1967, writ ref'd n.r.e.). It has not been unambiguously invoked in a limitations context. 2 Moreover, as will be seen, the existence of provisions otherwise specified in the contract renders this case different from the general accrual rule. 12 We agree with Millgard that in this case, the proper test is based upon the parties' contract and derives from McKee's repudiation of Millgard's proposed Change Order. See Terry County Airport Board v. Clark, 378 S.W.2d 932, 934 (Tex.Civ.App.--Amarillo 1964, no writ); Permian Building, Inc. v. Greenblatt, 442 S.W.2d 831, 834-35 (Tex.Civ.App.--Fort Worth 1969, writ ref'd n.r.e.). The case of Stribling v. Moore, 33 Tex.Civ.App. 297, 76 S.W. 593 (1903, no writ) is instructive here. In that case, plaintiff sold a tract of land to defendant, and the sale contract also provided that the defendant would pay the reasonable value of the fences on the property after the parties measured their length. Two years passed, during which time plaintiff repeatedly sought to meet to measure the fences and defendant repeatedly claimed that each proposed meeting date was not convenient. Finally, defendant repudiated his obligation to pay for the fences, and the trial court dismissed plaintiff's action as barred by the statute of limitations. Reversing, the court of appeals held that the proper date for limitations purposes was the date of repudiation. 13 This case eerily resembles Stribling. Article 12.2.1 of the contract called for an equitable adjustment of the contract price in the case of concealed conditions and set out procedures to be followed in such event. The record indicates that Millgard followed these contract procedures, by giving McKee/Mays prompt notice upon discovery of the unexpected conditions and providing it with requested documentation. Even after completing the construction work, it continued, as called for in the contract, to negotiate the equitable adjustment; all the while, Millgard was told that the matter was being considered or that additional documentation was required. McKee/Mays, in turn, submitted the proposed Change Order to its architect for his review and interpretation of the contract provisions on this subject. This request for adjudication was authorized by Articles 2.2.7-2.2.11 and 2.2.15. It was not until June 16 that Millgard learned McKee/Mays, acting upon the architect's advice, intended to deny that the subsoil conditions encountered by Millgard were concealed conditions supporting a change order. Under these circumstances, the parties were continuing to act under the express provisions of the contract after Millgard's construction work was completed, and we find that breach occurred as a matter of law no earlier than June 12, 1987. 3 Millgard's contract action was thus filed within the four year prescriptive period. 4 14