Iler Group, Inc. v. Discrete Wireless, Inc.
2015 WL 1035250, 90 F.Supp.3d 1329, 2015 U.S. Dist. LEXIS 32038 (2015)
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Rule of Law:
For a divisible installment contract governed by the Uniform Commercial Code (UCC), the statute of limitations runs separately for each missed installment. Therefore, while a cause of action accrues at the time of an initial anticipatory repudiation, claims for individual payments due within the statutory period immediately preceding the filing of the lawsuit are not time-barred.
Facts:
- On July 11, 2006, Plaintiff and Defendant, Discrete Wireless, entered into a Dealer Agreement for the purchase and resale of GPS tracking devices.
- Under the agreement, Plaintiff purchased GPS 'Units' from Discrete Wireless, resold them to customers, secured Service Orders for Discrete Wireless's tracking service, and provided customer support.
- In exchange, Discrete Wireless was obligated to pay Plaintiff a monthly commission based on the service fees it collected from customers Plaintiff had secured.
- On or around December 15, 2008, Discrete Wireless informed Plaintiff that it would no longer pay commissions related to 'Mobitex network based devices.'
- Discrete Wireless subsequently stopped paying these commissions beginning with the December 2008 billing cycle.
- The agreement continued until Discrete Wireless provided a notice of termination on January 7, 2014.
- After termination, an employee of Discrete Wireless contacted one of Plaintiff's direct customers, introduced himself as the customer's 'new account manager,' and stated his goal was to 'exceed the experience you may have had with [Plaintiff].'
Procedural Posture:
- Plaintiff filed an initial complaint on February 18, 2014, in U.S. District Court, alleging breach of contract.
- Defendant filed a motion to dismiss the complaint.
- Plaintiff filed a First Amended Complaint, reasserting the breach of contract claim and adding a claim under the Georgia Uniform Deceptive Trade Practices Act (GUDTPA).
- Defendant filed a second Motion to Dismiss, arguing against both claims, which is the subject of this order.
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Issue:
Does the four-year statute of limitations under the Uniform Commercial Code (UCC) bar a claim for unpaid monthly commissions when the defendant repudiated its payment obligation more than four years before the suit was filed, but the agreement constituted a divisible installment contract?
Opinions:
Majority - Jones, J.
No. The statute of limitations does not completely bar the claim. Although the initial repudiation occurred outside the four-year limitations period, the agreement is a divisible installment contract, and a new cause of action accrues with each missed monthly payment. The predominant purpose of the hybrid agreement was the sale of goods (GPS units), making it subject to the UCC's four-year statute of limitations, rather than Georgia's six-year statute for general written contracts. The cause of action first accrued on December 15, 2008, when Discrete Wireless anticipatorily repudiated its obligation to pay, as Plaintiff could have sued for breach at that moment. However, the court supplemented the UCC with Georgia's general contract law principle regarding divisible contracts. Because the agreement required monthly commission payments of an indefinite total amount over an uncertain period, it is a divisible installment contract. Consequently, the statute of limitations runs separately for each installment as it becomes due. Therefore, Plaintiff's claims for missed monthly commissions that were due within the four years preceding the filing of the complaint are not time-barred.
Analysis:
This case provides a key clarification on the application of the statute of limitations to hybrid, long-term contracts under the UCC. By integrating the common law concept of a 'divisible contract' into the UCC framework, the court establishes that an anticipatory repudiation does not create a single, all-or-nothing deadline for filing suit. Instead, each failure to make an installment payment creates a new, separate breach with its own limitations period. This prevents a breaching party from repudiating a long-term payment obligation and then using the statute of limitations as a shield against liability for all future payments that would have fallen within the statutory window.
