Default on installment plan or re-payment schedule

Accrual of claim when periodic payments are required and not made under a contract and acceleration does not apply.

BREACH OF A CONTRACT REQUIRING PAYMENT IN INSTALLMENTS ENTAILS MULTIPLE CAUSES OF ACTION    

 

When the debtor/obligor defaults on a payment or re-payment schedule involving periodic installments, each missed payment gives rise to separate cause of action. Therefore, a claim for earlier missed installment payments may be time-barred, whereas a claim for more recent ones may be within the limitations period.

The limitations period for breach of contract claims is four years. TEX. CIV. PRAC. & REM. CODE ANN. § 16.051 (West 2008); Stine v. Stewart, 80 S.W.3d 586, 592 (Tex. 2002). "Limitations begins to run upon accrual of the cause of action." Barker v. Eckman, 213 S.W.3d 306, 311 (Tex. 2006). A breach of contract claim accrues when the contract is breached. Stine, 80 S.W.3d at 592. When recovery is sought on an obligation payable in installments, the statute of limitations runs against each installment from the time it becomes due. Hollander v. Capon, 853 S.W.2d 723, 726 (Tex. App.-Houston [1st Dist.] 1993, writ denied).

SOURCE: DALLAS COURT OF APPEALS - 05-10-00252-CV – 1/3/12 [Name of Plaintiff replaced with “PLANTIFF”]

Default on Installment Payment Plan: SoL and accrual of claim for breach of a contract that requires payments at regular intervals

    
ACCRUAL OF DEBT CLAIM WHEN CONTRACT REQUIRES PERIODIC PAYMENTS: EACH MISSED PAYMENT DATE TRIGGERS RUNNING OF LIMITATIONS SEPARATELY
 
A four-year statute of limitations applies to contract actions. Tex. Civ. Prac. & Rem. Code Ann. § 16.004 (Vernon 2002). A breach of contract claim accrues at the time of breach. Stine v. Stewart, 80 S.W.3d 586, 592 (Tex. 2002). When recovery is sought on an obligation payable in installments, the statute of limitations runs against each installment from the time it becomes due. Intermedics, Inc. v. Grady, 683 S.W.2d 842, 845 (Tex.App.-Houston [1st Dist.] 1984, writ ref'd n.r.e.). Thus, a suit for the breach of a contract requiring payment in periodic installments may include all payments due within the four-year statute of limitations period, even if the initial breach was beyond the limitations period. Recovery of any payment more than four years overdue is barred. Hollander v. Capon, 853 S.W.2d 723, 726-27 (Tex.App.-Houston [1st Dist.] 1993, writ denied).

RELATED TERMS: Retail Installment Contract, financing, closed-ended consumer loan requiring monthly payments in equal amounts, monthly payment-due dates, missing monthly loan repayment, payment schedule 

SOURCE: 05-08-00458-CV (9/18/09) (Dallas Court of Appeals)