The opinion of the court was delivered by: Walker, Judge.
Appeal by defendant from judgments entered 31 July 1996 by Judge Henry V. Barnette, Jr. and 7 April 1997 by Judge Robert L. Farmer in Wake County Superior Court. Heard in the Court of Appeals 19 May 1998.
Plaintiff filed this action on 30 October 1995 alleging claims of breach of contract, fraud and unfair and deceptive trade practices against the defendant. On 31 July 1996, plaintiff's claims for fraud and unfair and deceptive trade practices were dismissed; however, the trial court denied the defendant's motion for summary judgment as to the breach of contract claim. Thereafter, plaintiff moved for summary judgment on the breach of contract claim and this motion was granted on 7 April 1997.
The undisputed facts of this case are as follows: On 13 August 1992, a tractor-trailer belonging to plaintiff was involved in a motor vehicle accident which resulted in damages in excess of $30,000.00. The defendant's insured, Frank White (Mr. White), the driver of the other vehicle involved in the accident, was found to be at fault.
On 8 October 1992, Tommy Rogers, president of the plaintiff corporation, signed a release of all claims against defendant's insured in exchange for $48,403.21 to be paid to plaintiff by defendant for damages resulting from this accident. Defendant issued a check to plaintiff for $36,621.21 on 5 October 1992 as partial payment towards the settlement sum. The settlement balance of $11,782.00 was paid to plaintiff by check number T80816 on 20 October 1992.
Defendant subsequently determined that it had mistakenly paid the plaintiff more than the limits of coverage available to Mr. White. Thus, a decision was made to stop payment on the outstanding check number T80816 and the record reveals that the bank processed the stop payment request on 28 October 1992. Thereafter on 9 November 1992, when plaintiff presented check number T80816 to its local bank for payment, it learned for the first time that defendant had stopped payment on the check. On 15 November 1992, defendant returned the signed release to the plaintiff advising it had inadequate coverage to meet the terms of the release.
Defendant argues that it was entitled to summary judgment on the breach of contract claim as it was barred by the statute of limitations.
As the defendant asserts, summary judgment is proper where a plaintiff's claim is barred by the statute of limitations. We disagree, however, that the statute of limitations bars the plaintiff's claim in the instant case.
The parties agree that the applicable statute of limitations for a contract action is three years and begins to run on the date the contract is breached. Ready Mix Concrete v. Sales Corp., 36 N.C. App. 778, 245 S.E.2d 234 (1978).
Defendant argues that the contract was breached on 28 October 1992, the date the stop payment request was processed by the bank, and therefore since plaintiff did not commence its action until 30 October 1995, the three-year statute of limitations had run and the claim was barred. Moreover, defendant argues it is immaterial that plaintiff did not become aware of the breach until 8 November 1992, the date the check was actually dishonored.
Defendant relies primarily on Pearce v. Highway Patrol Vol. Pledge Committee, 310 N.C. 445, 312 S.E.2d 421 (1984) and Martin v. Ray Lackey Enterprises, 100 N.C. App. 349, 396 S.E.2d 327 (1990) in support of its position.
In Pearce, the plaintiff brought a breach of contract action against the defendant to recover monetary benefits from the North Carolina Highway Patrol Voluntary Pledge Fund pursuant to a contractual agreement. Pearce, 310 N.C. at 446, 312 S.E.2d at 422-23. The agreement provided that qualifying members would be paid benefits from the fund within thirty days of their retirement. Id. at 447, 312 S.E.2d at 423. Plaintiff retired on 30 June 1975 and therefore should have been paid benefits on or before 30 July 1975. However, sometime between 15 April and 15 June 1975, the plaintiff was informed that he did not qualify for benefits. Id.
The plaintiff requested a hearing, which was held on 15 December 1978, and by letter dated 18 December 1978, plaintiff was denied benefits. Id. The plaintiff thereafter filed his action on 18 December 1981. Id. at 448, 312 S.E.2d at 424.
Our Supreme Court held that because the express terms of the contract provided that plaintiff was to receive monetary benefits within thirty days of retirement, the contract was breached on 31 July 1975, thirty-one days after plaintiff retired. Id. at 449, 312 S.E.2d at 424. Thus, the plaintiff's claim was barred as it was not filed until 18 December 1981.
The plaintiff argued that because he did not have knowledge that he was going to be denied benefits until the defendant issued the 18 December 1978 letter, the statute of limitations did not start running until that time. Id. at 451, 312 S.E.2d at 425. The Supreme Court disagreed, concluding that plaintiff, not being under any disability, was at liberty to bring his claim on 31 July 1975 to enforce his rights under the contract. Further, the Court stated that "plaintiff's lack of knowledge concerning his claim does not postpone or suspend the running of the statute of limitations" and "`equity will not afford relief to those who sleep on their rights, or whose condition is traceable to that want of diligence ...