from the Superior Court in Maricopa County No. CV2016-003476
The Honorable Dawn M. Bergin, Judge
Wilenchik & Bartness, P.C., Phoenix By Dennis I.
Wilenchik (argued) Co-Counsel for Plaintiff/Appellant
Provident Law, PLLC, Scottsdale By Christopher J. Charles,
Edwin G. Anderson Co-Counsel for Plaintiff/Appellant
Law Firm, PLLC, Phoenix By Lori V. Berke (argued), Jody C.
Corbett Counsel for Defendants/Appellees
Paul J. McMurdie delivered the opinion of the Court, in which
Presiding Judge Lawrence F. Winthrop and Judge Jennifer B.
Broadband Dynamics, LLC ("Broadband") appeals the
superior court's order dismissing its complaint against
SatCom Marketing, Inc. and SatCom Marketing, LLC
("SatCom"). We reverse and remand to the superior
court, holding that when a written contract provides for
obligations that would give rise to both a claim for debt on
an open account and a claim for breach of contract, the
six-year statute of limitations under Arizona Revised
Statutes ("A.R.S.") section 12-548 applies to the
claims that are based on damages arising from the breach of
contract. Broadband's breach of contract claim was based
on obligations provided for in the written contract between
the parties, which were separate from the open account
obligations, and therefore the superior court erred by
barring Broadband's claim under the three-year statute of
limitations under A.R.S. § 12-543.
AND PROCEDURAL BACKGROUND
In September 2008, Broadband and SatCom entered a Service
Agreement in which Broadband would provide SatCom with
dedicated voice and telecommunications services. The term of
the Service Agreement was 12 months, with an effective date
of October 22, 2008. The agreement provided an automatic
12-month renewal that could be canceled with 90 days'
notice prior to the anniversary date. The Service Agreement
provided, in relevant part: (1) the parties intended to
establish an open account; (2) Broadband would invoice
monthly based on usage; and (3) SatCom would pay the amount
due by the 21st of the following month. The Service Agreement
also provided for liquidated damages as follows:
Termination Charge. If Customer terminates the
Agreement without cause, or if Broadband terminates the
agreement for cause, Customer will pay their total dollar
commitment to Broadband as defined as the term of this
agreement or any months remaining in term inclusive of any
renewal periods multiplied by the total of the revenue
and usage commitments. Customer hereby acknowledges that
any termination charges payable under this section are a
realistic estimate of the damages Broadband will suffer for
the termination. (Emphasis added).
In January 2016, Broadband sued SatCom for breach of contract
and requested the principal sum, calculated per the
Termination Charge, of $100, 044.93 ($14, 334.43 (revenue
commitment) plus $85, 710.50 (usage commitment)), plus
interest from April 20, 2011. SatCom moved to dismiss,
arguing that Broadband's claim was barred by the
three-year limitations period governing open accounts.
See A.R.S. § 12-543(2). In response, Broadband
argued the six-year limitations period applied because the
claim was premised on SatCom's termination of the Service
Agreement, not the balance due on an open account.
See A.R.S. § 12-548(A)(1). Following
supplemental briefing, the superior court agreed with SatCom
and dismissed the complaint as time barred, concluding:
[T]he Termination Charge is part of an open account agreement
between the same parties and constitutes a penalty for
failing to comply with the terms of the open account. In
addition, the calculation of the Termination Charge is based
upon prior usage or service. In short, the Termination Charge
is too intertwined with the services required by the
Agreement to treat it as a separate contract.
entry of a final judgment, see Ariz. R. Civ. P.
54(c), Broadband timely appealed. We have jurisdiction