Debt Statute of Limitations Georgia by fhz16141

VIEWS: 60 PAGES: 6

More Info
									                   OPEN ACCOUNT UNDER VIRGINIA LAW
                 STATUTE OF LIMITATIONS ON AN OPEN ACCOUNT
Is an Open Account the same as a contract? Is the statute of limitations different for
the two?

     Consumer Legal         Issues
        Vignettes           Determining whether an obligation is based in contract,
  LSNV Home Page            Open Account or some third category (quasi-contract, oral
  Forms & Pleadings Index
                            contract or implied contract) is a daunting task because of
   Updated 11/22/05
                            an almost complete lack of definition of this term in the
Virginia Code and common law.
Yet the Warrant in Debt [Form DC 412] calls for the Plaintiff to state whether the claim
is “[ ] Open Account [ ] Contract [ ] Note [ ] Other (EXPLAIN).” See the Claim section of
the Warrant in Debt page 2.
The judge needs to know this information to rule on the claim, including the appropriate
statute of limitations.

What is a Contract?
The Fairfax County Circuit Court held that AIn order to constitute a written contract, the
>essential terms of the agreement must be obvious on the face of the writing without
recourse to parol evidence.=@i The Virginia Supreme Court has stated that "[u]ntil all
understand alike, there can be no assent, and, therefore, no contract."ii

Virginia courts have further discussed >service= contracts and have found "certainty
and completeness" as essential elements of that type of contract.iii The essential
elements include the:
              1. nature and extent of the services to be performed,
              2. person to whom the services will be rendered, and
              3. compensation to be paid for the service.




                                 [Deliberately left blank]




www.lsnv.org                            Page 1 of 6
The Claim section of the Warrant in Debt [DC-412]




An Open Account usually lacks: 1.) Specific mention of the nature and extent of the
goods or services (medical treatment, hardware, etc.) to be purchased or performed
except in a very general way and; 2.) there is no mention of the nature of charges or
the payments required.

Open Accounts usually lack certainty and completeness. For instance, many give the
beginning time but there is no contemplated ending date, simply because the
agreement is open-ended; many specify the goods or services only in the most general
terms; many may be signed by only one of the parties; and some make no mention of a
contract but like in some medical treatment documents, may refer only to a Apolicy@
regarding financial responsibility.

Virginia common law, as well as the common law of other states, has drawn a
distinction between contracts and Open Accounts. Whereas a contract envisions a
single, defined interaction between parties, an Open Account is essentially a
relationship in which a Aseries of individual but related transactions@ take place
between the offeror and offeree.iv

The Supreme Court of Virginia settled the matter of first impression by distinguishing
between running accounts that operate under a single continuing contract and Open
Accounts.v The plaintiff-suppliers asserted that the builders= initial application for
credit constituted a single contract between the supplier and builder that encompassed
all subsequent orders and deliveries of building materials. Under this view, the supplier
could file a mechanic=s lien against any property that benefited from the material
supplied in the orders placed by the builder, as long as the lien was filed within the
statutory period of ninety days after the last delivery.vi
 The defendant-builders, however, maintained that the initial credit application served
to create an Open Account. Pursuant to this legal theory, there was no single
www.lsnv.org                            Page 2 of 6
continuous contract formed between the supplier and builder. Rather, each order and
delivery of supplies constituted a separate contract. Therefore, the ninety-day statutory
period to file a lien would begin to accrue upon the breach of each delivery contract.
The Virginia Supreme Court found for the builders, holding that in each instance, the
initial credit application served to create an Open Account rather than a continuous
contract. In doing so, the Court noted that the applications did not require the builders
to purchase materials nor did they obligate the suppliers to provide materials in any
definite time.

In a case of real Open Account, an agreement would not obligate a vendor to provide
goods or services or a purchaser to seek goods or services from that vendor. Further,
there would be an understanding that some type of line of credit was being extended to
the purchaser for the purchase(s).

       OPEN ACCOUNTS FOR MEDICAL SERVICES
A number of states classify a patient=s relationship with a physician as an Open
Account. Perhaps the most prominent is Louisiana that has statutorily defined an Open
Account to "include debts incurred for professional services, including, but not limited to
legal and medical services."vii Common law in Louisiana has further defined Open
Accounts as existing in "a situation where there had been running or current dealings
between the parties and the account had been kept open with the expectation of
further dealings." viii

In determining whether a relationship may be classified as an Open Account, Louisiana
courts consider whether:ix
       - there are other business transactions between the parties;
       - a line of credit was extended to one party;
       - there are "running or current" dealings; and
       - there are expectations of future dealings.

A decision by the Circuit Court of Richmond xis illustrative of how Open Accounts may
be established in the context of medical services in Virginia. In this case, Chippenham
Hospital sought to recover for medical fees and hospital charges incurred by Mr. Shelton
when he remained in the hospital for ten days past the twenty-one day period covered
by Medicaid.

In finding for the hospital, the Richmond Circuit Court stated that by presenting himself
to the emergency room at the Hospital, Mr. Shelton Aimpliedly agreed that if medical
treatment was rendered, he would pay for it.@ xi Using this reasoning, the court found
an implied contract.
       Therefore, as to Mr. Shelton, the patient, we have a contract to pay for medical
       treatment on an open account, and , of course, the three-year statute of
       limitations applies to him. xii
www.lsnv.org                            Page 3 of 6
There are clear distinctions between written contract, oral contract, quasi-contract or
implied contract and Open Accounts but since some of the definitions are not specified
in the Code of Virginia, it is up to the individual to research the operative case law to
make these distinctions.
                              STATUTE OF LIMITATIONS
There may be a significant difference in the appropriate Statute of Limitations applied to
different types of documents. If a document is an Open Account, as differentiated from
a traditional written contract, a Plaintiff cannot avail itself of the five-year statute of
limitations under the Code of Virginia (1950) Section 8.01-246(2.).

The statute of limitations for an Open Account requires a reading of three Virginia Code
Sections. First, the Code of Virginia (1950) Section 8.01- 249(8.) states that:
       In actions on an open account, [the accrual period begins] from the later of the
       last payment or last charge for goods or services rendered on the account.

The legislature carved out a specific accrual time for an Open Account thereby giving
plaintiffs a major time advantage in pursuing their claim. By so doing, and not
addressing an Open Account in ' 8.01-246, the legislature thereby considers an Open
Account to be distinct from a written contract, oral contract quasi-contract or implied
contract. To bolster this position, the Supreme Court recognizes (as stated above) that
an Open Account is distinct from a contract by providing a choice of AOpen Account@
or AContract@ on a Warrant in Debt.

Therefore, one can argue that you look to the limitation Acatchall@ statute, ' 8.01-248,
and use the two-year limitations period.

This is a situation where the law has failed to keep up with the substantial increase in
the types of on-going services now being offered where contractual basics need to be
reduced to writing. Clarity in the definition of an Open Account and the statute of
limitation for an Open Account would substantially narrow this gap.

Burden
The burden is on the Defendant to plead statute of limitations.

Supreme Court Rule
Rule 3:16 General Provisions as to Pleadings.
(e) An allegation that an action is barred by the statute of limitations is sufficient
without specifying the particular statute relied on.


Virginia Code
8.01-235. Bar of expiration of limitation period raised only as affirmative defense in
responsive pleading.
www.lsnv.org                             Page 4 of 6
Statute of Limitations Must be Pleaded
Since the case of Hickman v. Stout, 2 Leigh (29 Va.) 6, decided in 1830, it has been the
settled rule in Virginia that the statute of limitations cannot be relied on in equity
without being pleaded, and that a demurrer will not lie.xiii See also 8.01-235. Bar of
expiration of limitation period raised only as affirmative defense in responsive pleading.

For actions sounding in contract, the general rule is that the action accrues when a
breach of the contract occurs. The date of accrual will thus depend on the type of the
contract and the terms of the contract in issue. The statute of limitations period for a
contract for continuing professional services starts to run when the services are
terminated.




                                [DELIBERATELY LEFT BLANK.]




www.lsnv.org                            Page 5 of 6
SUGGESTED INFORMATION FOR THE GROUNDS OF DEFENSE
                                  Answer

                                  Grounds of Defense
Action Barred by the Statute of Limitations
   1. The Supreme Court recognizes that an Open Account is distinct from a contract
      by providing a choice of AOpen Account@ or AContract@ on a Warrant in Debt.
   2. This was an Open Account as there was a situation where there had been
      running or current dealings between the parties and the account had been kept
      open with the expectation of further dealings.
   3. The Virginia legislature carved out a specific accrual time for an Open Account.
      Code of Virginia (1950) Section 8.01- 249(8.)
        In actions on an open account, [the accrual period begins] from the later of the
        last payment or last charge for goods or services rendered on the account.
   4. By so doing, and not addressing an Open Account in ' 8.01-246, the legislature
      thereby considers an Open Account to be distinct from a written contract, oral
      contract quasi-contract or implied contract.
   5. From information and belief, the last charge for goods or services was _____
   6. From information and belief, the last payment made by the Defendant was ____
   7. This action is time-barred by the Statute of Limitations as it have been longer
      than 3 years since either the last charge for goods or services or the last
      payment.


Laurence E. Fann lfann@lsnv.org and Buz Brinig jbrinig@lsnv.org, July 2005
i
  Digital Support Corp. v. Avery, 49 Va. Cir. 324, 326 (1999)(citing Janus v. Sproul, 250 Va. 90, 91 (1995))
ii
    Smith v. Farrell, 199 Va. 121,128 (1957)(quoting 17 C.J.S. Contracts ' 31)
iii
    4 Michie's Jurisprudence of Virginia and West Virginia ' 27 (2002).
iv
    Addington-Beam Lumber Co., Inc. v. Lincoln Sav. And Loan Ass=n, 241 Va. 436, 440 (1991).
v
    United Sav. Ass=n of Tex. V. Jim Carpenter Co., 252 Va. 252 (1996)
vi
    See Va. Code ' 43-3.
vii
     La. Rev. Stat. Ann. ' 2781 (2002).
viii
      Monlezun v. Fontenot, 379 So. 2d 43, 45 (1979)(citing Colonial Products Company v. Park Place Homes, Inc.,
282 So.2d 574 (La.App. 4th Cir. 1973))
ix
    Herb's Machine Shop, Inc. v. John Mecom Co, 426 So. 2d 762, 765 (La. App. 3rd Cir. 1983)(citing Womack
Brothers, Inc. v. Equipment Rental Services, Inc., 399 So.2d 661 (La. App. 1 Cir. 1981)).
x
    Chippenham Hosp., Inc. v. Shelton, 19 Va. Cir. 298 (1990)
xi
    Id. at 299-300
xii
     Id. at 300
xiii
      J. S. Salyer Company, Inc., et al. V. A. J. Doss Coal Company, Inc., et al,
157 Va. 144; 160 S.E. 54 (1931) See also Thomas Dozier, et al. v. Lenord Parker, et al., 57 Va. Cir. 480 (2000)
(Fairfax County Circuit Court)




www.lsnv.org                                      Page 6 of 6

								
To top