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‘Account-stated’ claim governed by contract-breach limitations period

Where you have a contract for the sale of goods between merchants, a delivery and a subsequent failure to pay according to the contract, that’s a breach of contract. It is subject to a four-year statute of limitations under the Uniform Commercial Code, and putting an “account stated” label on it doesn’t change that.

That was the ruling of the Court of Appeals in Trebelhorn v. Agrawal, et al., a case of first impression in Minnesota.

“Minnesota cases have not addressed the question of whether an account-stated claim, premised on the same underlying facts as a sale-of-goods transaction governed by the UCC, is subject to the UCC’s four-year limitations period. This is therefore an issue of first impression in Minnesota,” wrote Judge John Rodenberg for the Court of Appeals.

The court determined that a legal remedy for breach of contract and an equitable remedy for account stated should have the same statute of limitations under the UCC, said the respondent’s attorney, Brian Rude. “You have to look beyond the remedy to the source of the claim.”

Appellant’s attorney, Christopher Heinze, said he believed there were facts in the record that the court overlooked or ignored that might have changed the outcome. He said he will talk with his client and determine his next steps.

Jointly, severally and personally liable

Appellant Scott Trebelhorn and respondent Abhishek Agrawal in 2006 executed a “supply agreement” for petroleum products to be delivered to respondent’s gas station in Belle Plaine. The supply agreement recited that it included all agreements between the parties, including a credit agreement and personal guarantee previously signed by the respondent. It said that the signatory on behalf of the dealer (Agrawal) was jointly, severally and personally liable for all the dealer’s financial obligations. The dealer was identified as Abhishek Agrawal d/b/a AKSK Financial Corp d/b/a BP/Super Stop & Wash.

In 2010, Agrawal failed to pay for the fuel he received and appellant hired RTS Financial Group, a co-respondent to collect an outstanding balance of $58,630. RTS settled with AKSK for $34,000 and said it would no longer pursue Agrawal or AKSK.

Nevertheless, appellant sued Agrawal on December 26, 2014 for breach of contract, account stated, and promissory estoppel/unjust enrichment. Appellant also sued RTS for breach of contract, alleging that RTS breached its agreement with appellant by communicating with Agrawal while negotiating with AKSK.

The District Court granted Agrawal summary judgment in 2016, finding the claims barred by the statute of limitations. The court found that the supply agreement unambiguously provided that Agrawal was a party to it and the claims arising under it, including the account-stated claim, were subject to the UCC’s four-year statute of limitations. In 2017, the District Court granted RTS’s motion for summary judgment and dismissed the last of appellant’s claims.

Unambiguous

The Court of Appeals affirmed. The court began by determining that the supply agreement unambiguously names Agrawal as a party to it. The District Court found three specific areas that indicated the parties’ intent to include Agrawal as a party. First, the supply agreement states that it is an agreement between Agrawal and Trebelhorn. It also states that each of the signatories on behalf of the dealer shall be jointly, severally and personally liable for all financial obligations of the dealer. Third, the signature line is labeled “Dealer—Abhishek Agrawal” and was signed by him.

Since Agrawal was personally bound by the contract, he was a co-maker and not a guarantor, the court said.

The court rejected the appellant’s attempt to demonstrate ambiguity with extrinsic evidence.

Four years

The appellant argued that his account-stated claim is subject to a six-year statute of limitations, even if it is a reframed breach of contract claim. The court disagreed. It rejected his argument that his claims arose under the personal guarantee in the credit application and not the supply agreement. Section 12 of the supply agreement includes a merger clause explicitly stating that there are no other agreements regarding the subject matter of the supply agreement.

The court also said that the account-stated claim, which arises out of the same underlying facts as the breach-of-contract claim, is subject to the four-year statute of limitations. The appellant argued that the account-stated claim has different elements and remedies than a breach-of-contract claim, but the court said that was irrelevant.

“Minnesota law … does not allow us to determine the applicable statute of limitations based on the nature of the remedy; the applicable limitations period is determined by the nature of the wrong,” Rodenberg wrote. The only wrong of which appellant complained was failure to pay for the petroleum products, the court continued.

“Appellant’s claim against Agrawal accrued when Agrawal failed to pay for the petroleum that was delivered in April of 2010. At the latest, the claim accrued when appellant sent Agrawal notice of default of the Supply Agreement on May 14, 2010. Appellant did not serve the summons and complaint on Agrawal until December 26, 2014. As such, appellant did not sue Agrawal within the applicable four-year limitations period. His claims are therefore barred, and the district court did not err in summarily dismissing appellant’s claims against Agrawal on this basis,” Rodenberg said.

The court also affirmed the dismissal of claims against RTS.

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