Present: All the Justices
SUFFOLK CITY SCHOOL BOARD
v. Record No. 970414
OPINION BY JUSTICE LAWRENCE L. KOONTZ, JR.
January 9, 1998
CONRAD BROTHERS, INC.
FROM THE CIRCUIT COURT OF THE CITY OF SUFFOLK
Westbrook J. Parker, Judge
This appeal arises from a suit by the Suffolk City School
Board (the Board) against a general contractor engaged to build
two high schools. The Board alleges that the contractor, Conrad
Brothers, Inc., installed defective roofs in the schools,
resulting in damage to both. The trial court ruled that the suit
was barred by the applicable five-year statute of limitations.
Code § 8.01-246(2). The issue we consider on appeal is whether
the trial court erred in this ruling. Specifically, we determine
when the Board's cause of action accrued pursuant to the
provisions of Code § 8.01-230.
The essential facts are not in dispute. On February 26,
1986, the Board entered into a contract with Shriver and Holland
Associates (the architects) to provide architectural services and
representation throughout the various phases of the planned
construction of the two high schools (the architects' contract).
For purposes of determining the architects' obligations and
right to compensation, this contract contained a provision that
"[t]he Construction Phase . . . will terminate when final payment
to the Contractor is due, or in the absence of a final
Certificate for Payment or of such due date, sixty days after the
Date of Substantial Completion of the Work, whichever occurs
first." On October 14, 1988, the Board entered into two
separate, but substantially similar, contracts with Conrad
Brothers as the general contractor for the construction of the
two high schools under the direction of the architects (the
construction contracts). The construction contracts fixed the
time for final completion of construction as the date of issuance
of a "final Certificate for Payment" by the architects.
Thereafter, Conrad Brothers commenced work on both schools
and the architects issued certificates noting substantial
completion for both schools as of September 3, 1990. The
architects' "punch lists" appended to each certificate showing
what further work was to be completed by the contractor before
final payment would be authorized included references to
correction of the defective roofs. On November 27, 1990, and on
several occasions thereafter, the Board contacted Conrad Brothers
to report leaks in the roofs of both schools. Conrad Brothers
received these notices and took steps to remedy the defective
condition of the roofs.
On February 4, 1991, Conrad Brothers submitted to the
architects an application for final payment with respect to
construction of both high schools. The architects issued
certifications for payment of Conrad Brothers to the Board on
March 13, 1991. The Board filed the present suit against Conrad
Brothers on February 13, 1996. 1 Conrad Brothers filed a plea of
1
The Board's suit also asserts a negligence claim against
Conrad Brothers. See Code § 8.01-272 (permitting a party to join
a claim in tort with one in contract provided that such claims
arise out of the same transaction or occurrence); see also Code
§ 8.01-243(B) (providing a five-year limitations period for
the statute of limitations, asserting that the Board had notice
of the defective conditions of the roofs on or before September
12, 1990.
Following a hearing on Conrad Brothers' plea, the trial
court issued a letter opinion in which it referenced the
previously noted provisions of the architects' contract which
specified that the "construction phase" of the projects would
expire sixty days after the issuance of the certificates of
substantial completion. Determining that this date was November
2, 1990, the trial court set the commencement of the limitations
periods at that point. Based upon this determination, the trial
court held that the statute of limitations ran on November 2,
1995, more than three months prior to the filing of the Board's
motion for judgment. A final order was entered on December 4,
1996, adopting by reference the reasons stated in the trial
court's initial opinion letter. We awarded the Board this
appeal.
We first consider the trial court's reliance on the terms of
the architects' contract to determine the termination date of the
construction contracts. The construction contracts contain
express terms addressing their duration and termination, and
nothing within the construction contracts links their termination
to the termination of the construction phase defined in the
(..continued)
actions for injury to property). Because the trial court did not
specifically address this claim and the parties have not
addressed it on appeal, we will not address it in this opinion.
The Board also asserted a claim for breach of contract against
the architects, but that claim is not a part of this appeal.
architects' contract. Although using similar terms and related
to the same projects, the contracts are independent expressions
of the agreements between the Board and the architects, on the
one hand, and the Board and Conrad Brothers on the other.
Accordingly, the trial court's determination that the Board's
cause of action against Conrad Brothers accrued on November 2,
1990 pursuant to the architects' contract was in error. Under
the applicable provisions of the construction contracts the
construction was complete upon the issuance of a "final
Certificate for Payment," which did not occur here until March
13, 1991, less than five years before the litigation was
commenced.
Conrad Brothers asserts, however, that the trial court's
judgment can be sustained under a "right result, wrong reason"
analysis. See, e.g., Harrison & Bates, Inc. v. Featherstone
Associates Ltd. Partnership, 253 Va. 364, 369, 484 S.E.2d 883,
886 (1997). Conrad Brothers contends that Code § 8.01-230
abrogates the common law rule permitting a party to an
indivisible executory contract to elect between pursuing his
remedy when an action which would constitute a breach occurs or
awaiting the time fixed by the contract for full and final
performance. Continuing, Conrad Brothers contends that Code
§ 8.01-230 provides that the statute of limitations on any cause
of action for breach of contract involving damage to property
commences upon the occurrence of the breach, regardless of
whether the breaching party continues to perform. Thus, in the
present case, Conrad Brothers asserts that the statute of
limitations began to run at least prior to November 27, 1990 when
the Board first acknowledged that the roofs were defective.
Prior to the enactment of Code § 8.01-230, the rule with
respect to the running of a statute of limitations for a breach
of an indivisible executory contract was clear:
In the case of an indivisible or entire contract,
a party seeking to recover for a breach committed while
the contract remained executory, or for an anticipatory
breach committed before expiration of the time agreed
upon for full and final performance, has the election
of pursuing his remedy when the breach occurs, or of
awaiting the time fixed by the contract for full and
final performance. If he elects the latter course, the
statute of limitations does not begin to run against
his right of action until the time for final
performance fixed by the contract has passed. Andrews
v. Sams, 233 Va. 55, 58, 353 S.E.2d 735, 738 (1987);
County School Bd. v. Beiro, 223 Va. 161, 163, 286
S.E.2d 232, 233 (1982); Simpson v. Scott, 189 Va. 392,
400, 53 S.E.2d 21, 24 (1949).
Roberts v. Coal Processing Corp., 235 Va. 556, 561, 369 S.E.2d
188, 190 (1988). 2
When the present construction contracts were executed, Code
§ 8.01-230 provided in pertinent part: 3
In every action for which a limitation period is
prescribed, the cause of action shall be deemed to
2
Although Roberts and several of the cases cited therein
were decided after the enactment of Code § 8.01-230, these cases
dealt with contracts which predated the revision of the Code.
3
In 1996, Code § 8.01-230 was amended, and the term "right
of action" was substituted for "cause of action." The Board has
concentrated much of its argument on the distinction between
these two terms, asserting that its "right of action" accrued,
and, thus, in the Board's estimation, the running of the statute
of limitations commenced, upon the termination of the
construction contracts, even if its "cause of action" accrued
earlier. Cf. Stone v. Ethan Allen, Inc., 232 Va. 365, 368-70,
350 S.E.2d 629, 631-32 (1986). We express no opinion as to the
merits of this assertion, as the distinction between the Board's
"cause" and the "right" of action is not relevant to our
resolution of this appeal.
accrue and the prescribed limitation period shall begin
to run from the date . . . when the breach of contract
or duty occurs in the case of damage to property and
not when the resulting damage is discovered . . . .
Conrad Brothers' essentially contends that Code § 8.01-230
eliminates the distinction between divisible and indivisible
executory contracts. We disagree.
The revisers' note to Code § 8.01-230 is instructive here:
"Section 8.01-230 retains the traditional rule of Virginia case
law that a cause of action accrues when the wrongful act or
breach of duty or contract occurs." The express provisions of
this code section are consistent with the distinction we have
previously noted between divisible and indivisible contracts in
determining when a cause of action accrues. Thus, we conclude
that Code § 8.01-230 merely codified existing law in this respect
and, accordingly, we reject Conrad Brothers' contention that it
4
overruled cases decided under the former common law rule. That
being so, County School Bd. v. Beiro, 223 Va. 161, 286 S.E.2d 232
(1982), is almost directly on point with the facts of the present
case and controls the outcome of this appeal.
In Beiro, the owner of a public school building brought an
action against the contractor claiming damages due to a defective
4
See Roberts, 235 Va. at 242, 368 S.E.2d at 247
(distinguishing Beiro not on the basis of the intervening
enactment of Code § 8.01-230 but based on the nature of the
contract itself). See generally Harris v. K & K Ins. Agency, 249
Va. 157, 161 at n.*, 453 S.E.2d 284, 286 at n.* (1995)(citing
Nelson v. Commonwealth, 235 Va. 228, 243, 368 S.E.2d 239, 248
(1988), and Virginia Military Inst. v. King, 217 Va. 751, 759,
232 S.E.2d 895, 900 (1977), and noting the distinction between
contracts divisible into separate and distinct phases and
contracts not set up in such phases).
roof. There, as in the present case, the contract was not
divisible. Although the contractor had completed his work on the
roof well before the architect issued the certificate of final
payment, we held that no cause of action accrued until the date
of that certificate. Beiro, 233 Va. at 163, 286 S.E.2d at 233.
The circumstances of the present case are indistinguishable and
the same result must apply. 5
For these reasons, we hold that with respect to Conrad
Brothers' potential liability for the defective condition of the
roofs, the five-year statute of limitations commenced upon the
date of the architects' submission of the "final Certificate[s]
for Payment" to the Board on March 13, 1991, and, thus, the
Board's suit was timely filed on February 13, 1996.
We will reverse the judgment order of the trial court
sustaining Conrad Brothers' plea of the statute of limitations
and remand the case for a trial on the merits.
Reversed and remanded.
5
As an alternative position that the Board's cause of
action for breach of contract accrued on the date of substantial
completion rather than upon the termination date, Conrad Brothers
relies upon a post-substantial completion warranty provision
which, by its express terms, was not to be "construed to
establish a period of limitation with respect to any other
obligation" under the contracts. The record is clear, however,
that at the time the certificate of substantial completion was
issued, the architects had not accepted the roofs as complete.
Thus, it is evident that the Board's requests to Conrad Brothers
to remedy the defective condition of the roofs were merely
requests for the contractor to comply with its duties under the
contract, and not notices that a previously accepted condition
had subsequently been found to be defective and was subject to
repair under the post-completion warranty.