In Bay Colony, Judge Salinger denied the defendants’ motion to dismiss a contract claim as time barred even though one defendant (AMB) had sent a letter to the plaintiffs more than six years earlier disputing the existence of a binding agreement between the parties.
Judge Salinger found that the letter itself did not constitute a breach of contract because the plaintiffs did not allege that AMB had no right to terminate the contract. Nor was it an unequivocal repudiation of future obligations under the contract. Notably, AMB did not assert in the letter that it would not pay the plaintiffs for services rendered; instead, AMB merely disputed the existence of a binding agreement and stated that AMB would respond further in writing. AMB’s letter, wrote Judge Salinger, “is not a repudiation of the alleged contract because it is not ‘a definite and unequivocal manifestation of intention [not to render performance]’.” Because no claim for breach of contract or quantum meruit/unjust enrichment had arisen at the time of the letter, the limitations period did not start to run.
Judge Salinger noted that Massachusetts does not generally recognize a cause of action for anticipatory breach of contract. KGM Custom Homes, Inc. v. Prosky, 468 Mass. 247, 253 (2014). The most notable exception to this general rule is where an actual breach accompanies an anticipated breach—for example, if a defendant refuses to pay amounts currently owed while also clearly repudiating an obligation to make future payments. In those circumstances, the statute of limitations would begin to run on claims for both the past and future damages upon repudiation. Callendar v. Suffolk Cty., 57 Mass. App. Ct. 361, 364 (2003).
Bay Colony Prop. Dev. Co., et. al. v. Headlands Realty Corp., et al.
June 7, 2017
Full decision here.
- Senior Editor, Co-Chair, Business Litigation Practice Group