Does the statute of limitations bar an owner from seeking damages against a contractor for a defectively constructed retaining wall where the owner's small claims case was started more than six years after the contractor substantially completed work on the retaining wall? Under the unique circumstances of this case, the statute of limitations may not have expired, where the gravamen of the action is based upon the contractor's failure to respond to the owner's complaints within a five-year warranty period.

The plaintiff, Heather Dale Sagman ("owner"), filed a small claims case against the defendant, Ted Collins Associates, Ltd. ("contractor") on November 2, 2012, in Canandaigua City Court. The claim seeks $5,000 for "work done on wall (retaining) has fallen apart after 5 years. Work accd. to expert—wrong materials used for driveway—should not use pavers— & no drainage ever installed." The small claim was scheduled to be heard in Canandaigua City Court on December 6, 2012. On November 26, 2012, the contractor filed a notice of motion seeking a dismissal of the owner's claim on the grounds that the claim is barred by the statute of limitations. The motion is supported by an affidavit of Gregory Frank, vice-president of the defendant-contractor. Mr. Frank alleges that the parties entered into a contract in the year 2005; that the contractor was to install a retaining wall planter and perform other work for $3,960; that the work was performed from August 23 to 26, 2005; and that on August 31, 2005, the contractor sent the owner an invoice for the work. The invoice is attached to the motion papers.

On December 6, 2012, at 8:30 am, the contractor appeared with counsel at Canandaigua [*2]City Court. The defendant called the clerk in the early morning to request an adjournment because she was ill. When the case was called, the contractor's attorney requested a ruling on the motion to dismiss. The court decided to allow the owner an opportunity to respond to the contractor's argument that the claim is barred by the six-year statute of limitations. (Uniform City Court Act § 1804 permits courts to conduct hearings in a manner intended to perform substantial justice to the parties; the court is not bound by statutory procedural rules and laws.) A letter was sent by the court to the owner asking her to communicate her reasons why the case should not be dismissed.

On December 17, 2012, the court received a letter from the owner accompanied by several documents (2005 insurance letters; contractor's estimate from 2005; the parties' 2005 contract; copy of 2005 deposit check; capital improvement certificate; invoice from August 31, 2005; correspondence between the parties from October 2010; estimate from Zaretsky and Associates, Inc. from 2012; photos; and assessment by Recon Retaining Wall Systems from 2012). In her letter, the owner alleges, in words or substance, that she complained to the contractor about the deteriorating retaining wall within five years of the completion of the job; that her complaints were made within a five-year warranty period; and that the contractor would not honor the warranty. The contractor's attorney responded that the owner's letter confirms that all the work was performed by the contractor in 2005 and that the cause of action is time barred.

In every small claims case, the court is bound to perform substantial justice to the parties in accordance with principles of substantive law (Uniform City Court Act § 1804). Under the substantive law of New York in construction cases where a cause of action is based upon breach of contract, a six-year statute of limitations begins to run when the construction is substantially completed (New York Central Mutual Fire Insurance Company v. Glider Oil Company, Inc., 190 AD3d 1638 [4th Dept 2011]). However, the six-year statute of limitations begins to run when a contract is breached or when one party omits the performance of a contractual obligation (Id. at 1641; Airco Alloys Division, Airco Inc. v. Niagara Mohawk Power Corporation, 76 AD2d 68, 80 [4th Dept 1980]).

In this case, if there was a five-year warranty and if the owner's complaint was made within five years of the completion of the construction of the retaining wall, then a six-year statute of limitations for breach of contract may have begun to run when the contractor omitted the performance of its contractual obligation, i.e., from the time that the contractor failed to respond to the owner's request for redress under the warranty. This issue cannot be decided as a matter of law on the motion papers; the record needs to be developed at the small claims hearing to resolve this issue (Stalis v. Sugar Creek Stores, Inc., 295 AD2d 939, 941 [4th Dept 2002]).

Accordingly, the motion to dismiss is denied, and the parties are directed to be present for a hearing on February 21, 2013, at 8:30 am.

THIS CONSTITUTES THE DECISION AND ORDER OF THE COURT.

_____________________________________

Stephen D. Aronson

Canandaigua City Court Judge [*3]

Dated: January 10, 2013

Canandaigua, New York