The Singer Company, Link Simulation Systems Division v. Baltimore Gas & Electric Co

In The Singer Company, Link Simulation Systems Division v. Baltimore Gas & Electric Co., 79 Md. App. 461, 558 A.2d 419 (1989), the Court considered the application of the statute of limitations to claims based upon contract and negligence theories with respect to a series of power outages. The circuit court had dismissed the complaint as barred by limitations because it was filed more than three years after the plaintiff first experienced a power interruption. Id. at 472. On appeal, the plaintiff argued that "each successive breach commenced a separate cause of action for limitations purposes." Id. The Court concluded that the plaintiff had alleged a series of breaches of the defendant's obligations, and could therefore pursue recovery for those that had occurred within the three years preceding the suit. The Court stated, id. at 473-75: In the present case, it is undisputed that, subject to certain limitations, BG & E had a continuing contractual obligation to provide Singer with electricity. See Md. Regs. Code tit. 20, 50.04.06 and 50.07.05. We thus perceive that our resolution of the issue sub judice turns upon a determination of whether a contract action based upon various alleged breaches of a continuing contractual obligation accrues for all time upon the first breach of that obligation of which the aggrieved party is aware or should have been aware, or whether each successive breach of such an obligation begins the running of the statute of limitations anew. Although there is an absence of reported Maryland caselaw on point, appellate courts from other jurisdictions have addressed this issue in a variety of contractual scenarios. See Airco Alloys Div., Airco, Inc. v. Niagara Mohawk Power Corp., 76 A.D.2d 68, 430 N.Y.S.2d 179 (Sup.Ct., App.Div.1980); Dameron v. Sinai Hospital of Baltimore, Inc., 815 F.2d 975 (4th Cir.1987); Barker v. Jeremiasen, 676 P.2d 1259 (Colo.App.1984); Bulova Watch Co. v. Celotex Corp., 46 N.Y.2d 606, 415 N.Y.S.2d 817, 389 N.E.2d 130 (1979); Green v. Petersen, 218 N.Y. 280, 112 N.E. 746 (1916); Mead Reinsurance Corp. v. Town of Oyster Bay, 138 A.D.2d 578, 526 N.Y.S.2d 159 (1988); Franza's Universal Scrap Metal, Inc. v. Town of Islip, 89 A.D.2d 843, 453 N.Y.S.2d 24 (1982). Indian Territory Illuminating Oil Co. v. Rosamond, 1941 OK 410, 190 Okla. 46, 120 P.2d 349 (1941); Sims v. Falvey, 234 S.W.2d 465 (Tex.Civ.App.1950). For example, in Airco Alloys, supra, a case involving a utility company's failure to provide certain customers with relinquished replacement power, the court ruled that "where a contract provides for continuing performance over a period of time, each breach may begin the running of the statute (of limitations) anew such that accrual occurs continuously and plaintiffs may assert claims for damages occurring (within the limitations period)." 76 A.D.2d at 80; 430 N.Y.S.2d at 186 . In Barker, supra, the plaintiffs brought suit in 1979 alleging that the defendants' horse operation violated certain protective covenants. In response, the defendants, noting that the record unequivocally established violations of the covenants commencing in 1974, argued, inter alia, that the action was time-barred under a statute requiring the bringing of such an action within three years after the cause accrued. The court, after observing that the covenants imposed a continuing obligation upon the defendants and that repeated and successive breaches of the covenants had continued within three years of the suit, held that any damage claims resulting from breaches which occurred within the limitations period were not time-barred. We believe the rationale expressed by the foregoing cases is sound. For that reason, and because barring such claims would not serve to promote the policies that statutes of limitations reflect, see Pierce v. Johns-Manville Sales Corp., 296 Md. 656, 665, 464 A.2d 1020 (1983), we conclude that where a contract provides for continuing performance over a period of time, each successive breach of that obligation begins the running of the statute of limitations anew, with the result being that accrual occurs continuously and a plaintiff may assert claims for damages occurring within the statutory period of limitations. In the present case, we have already noted that, subject to certain limitations, BG & E had an ongoing contractual obligation to supply Singer with electrical power. Furthermore, we are mindful that the contract claims asserted by Singer in the complaint are limited to those alleged breaches and resulting damages which occurred within three years of the filing of the suit. Accordingly, we hold that the trial court erred, as a matter of law, in determining that Singer's common law contract claims were barred by limitations.