Chickasaw Telephone Company, an Oklahoma Corporation, and Chickasaw Cellular Company, an Oklahoma Corporation v. Southwestern Bell Mobile Systems, Inc., a Delaware and Virginia Corporation
Docket: 96-6357
Court: Court of Appeals for the Tenth Circuit; May 27, 1997; Federal Appellate Court
Chickasaw Telephone Company and Chickasaw Cellular Company appeal a district court's summary judgment favoring Southwestern Bell Mobile Systems, asserting that their claims were barred by Oklahoma's statutes of limitations related to written contracts and breach of fiduciary duty. The court affirmed this judgment. The dispute arose from a June 1984 partnership agreement that established the Oklahoma City SMSA Limited Partnership, in which Southwestern Bell and Chickasaw participated. The agreement allowed Southwestern Bell to independently provide cellular service outside the partnership's designated area while requiring it to act in the partnership's best interests and distribute funds quarterly. In 1988, Southwestern Bell notified Chickasaw of its intent to apply for cellular service in rural service areas (RSAs) independently, which Chickasaw contested, claiming rights to the RSAs based on the partnership agreement. Despite multiple letters asserting these rights, Chickasaw did not receive written responses from Southwestern Bell. An affidavit indicated ongoing negotiations until a 1991 meeting, where Southwestern Bell allegedly denied Chickasaw's asserted rights. The court ruled that the claims were untimely, affirming Southwestern Bell's entitlement to judgment.
On June 7, 1996, Chickasaw filed a complaint against Southwestern Bell, alleging breaches of a partnership agreement and fiduciary duties due to Southwestern Bell's failure to recognize its FCC applications as partnership applications and to share benefits with Chickasaw. Southwestern Bell responded with a motion for summary judgment, claiming Chickasaw's claims were barred by a five-year statute of limitations. Chickasaw countered that Southwestern Bell's continuous breaches of the agreement extended the limitation period. The district court ruled in favor of Southwestern Bell, determining that Chickasaw's claims accrued in October 1988 or, at the latest, October 2, 1990, when Chickasaw acknowledged its claims. The court rejected Chickasaw's argument of a "continuing wrong," stating that the breach occurred with the filing of the FCC application, while subsequent damages were merely results of that breach. On appeal, Chickasaw contends that the district court erred by not recognizing evidence of ongoing breaches and argues that even if the breaches were not continuous, they were not repudiated until November 7, 1991, which falls within the five-year limit. The appeal focuses on whether Southwestern Bell's actions constituted ongoing breaches of contract and fiduciary duties, thereby affecting the statute of limitations. In Oklahoma, the statute of limitations for written contracts and fiduciary duty torts is five years, and the accrual of claims depends on the nature of the right in question and when the plaintiff could have effectively pursued the action.
The parties dispute the application of Oklahoma's statute of limitations, which does not begin until a plaintiff has a legal right to sue. While Oklahoma courts have established specific accrual standards for certain contract and tort actions, no cases directly address the claims in this instance. A breach of the partnership agreement occurred when Southwestern Bell filed an FCC application independently, declaring that the partnership had no interest in it. This constituted a material breach of contract under Oklahoma law, as the partnership agreement required applications for cellular services to be filed on behalf of the partnership. Consequently, the statute of limitations began to run on October 19, 1988, when the application was filed, and since Chickasaw did not file its claim until June 7, 1996, the district court correctly ruled that the breach of contract claim was barred by the five-year statute of limitations.
Chickasaw contends that Southwestern Bell continuously breaches specific sections of the partnership agreement, arguing that this prevents the statute of limitations from applying. Chickasaw cites Paul Holt Drilling, where a series of breaches were recognized due to an insurer's ongoing duty to defend its insureds. However, the court distinguishes this case from Paul Holt Drilling, stating that the relevant contract in this matter does not establish a continuing obligation, as the breach related to a specific event rather than ongoing duties. The contract's terms did not imply a requirement for continuous performance akin to that seen in installment contracts, thus reinforcing the conclusion that the breach occurred at a fixed point in time, leading to the dismissal of Chickasaw's claim.
Injuries claimed by Chickasaw following a breach are categorized as damages resulting from that breach rather than as ongoing breaches. Citing Hinson v. United Financial Servs. Inc., it is established that damages resulting from delayed notice are merely consequences of the original breach, not separate violations. The statute of limitations for claims begins at the time of the breach, regardless of when damages become apparent, as supported by Corman's analysis and the Delaware Supreme Court's decision in United States Cellular Inv. Co. of Allentown v. Bell Atlantic Mobile Systems, Inc. In that case, the statute began to run when Bell Atlantic filed an FCC application, which breached the partnership agreement by competing against it. Similarly, Southwestern Bell's actions clearly indicated it was acting independently, constituting a breach.
Chickasaw's argument that its breach of fiduciary duty claim is ongoing, drawing parallels to cases of slander of title and trade secret misappropriation, is countered by the determination that this case does not involve a continuing tort. Chickasaw had the opportunity to pursue its claim when Southwestern Bell filed its FCC application or when it acquired service rights before October 2, 1990. Since Chickasaw was aware of its injury and could have acted but did not, its claim is barred by the five-year statute of limitations under Oklahoma law. Subsequent injuries are merely damages from the original breach rather than new causes of action. This conclusion is reinforced by precedent indicating that continued effects from a single wrongful act do not constitute a continuing tort.
Chickasaw's reliance on prior cases is found to be misplaced as they are not analogous to the current situation. The case of Tiberi involved fraud where the defendant misled plaintiffs about the viability of an insurance program, leading to significant losses when the program was abruptly terminated. In contrast, Southwestern Bell's actions in this case do not suggest a similar ongoing deception; they filed an FCC application independently and informed Chickasaw, who did not claim that Southwestern Bell obstructed its ability to act. Additionally, the misappropriation of trade secrets and slander of title cases mentioned differ as they involve ongoing tortious conduct rather than damages from a single act. Chickasaw contends that the statute of limitations should not start until November 7, 1991, claiming that Southwestern Bell did not fully renounce its obligations until then. However, the court finds that Southwestern Bell breached the contract when it filed the FCC application, indicating anticipatory repudiation. The definitions of breach and repudiation in contract law support this conclusion. Ultimately, the court affirms the district court's summary judgment against Chickasaw, citing that its claims are barred by Oklahoma's statutes of limitations. The court's order is not considered binding precedent, except under specific legal doctrines, and citation of such orders is generally disfavored, though permitted under certain conditions. The partnership agreement explicitly grants the general partner the authority to apply for FCC permits on behalf of the partnership.
Southwestern Bell's rights to provide cellular services in certain RSAs were acknowledged by Chickasaw's counsel in a letter dated October 2, 1990, indicating that Southwestern Bell had filed applications and secured interests in markets near Oklahoma City. Carry-on rights allow limited partners to participate in cellular service provision in areas adjacent to the Oklahoma City MSA. The district court classified Chickasaw's breach of fiduciary duty claim as a tort action arising from a contract, governed by Oklahoma's catchall statute of limitations, which allows for claims to be filed within five years of the cause of action accruing. Although the Oklahoma legislature re-numbered the relevant statute effective November 1, 1996, Chickasaw’s claim, filed on June 7, 1996, is referenced under the prior numbering. The court noted that limitations on contract and tort claims should be considered separately and rejected Chickasaw's argument of a "continuing wrong" as this doctrine applies only to tort actions. The district court's decision relied heavily on the precedent set in United States Cellular, which involved a similar partnership agreement clause regarding applications for cellular service in adjoining RSAs. Chickasaw's claims include Southwestern Bell's alleged failure to distribute profits as mandated by the partnership agreement. Notably, Chickasaw did not raise a claim for equitable estoppel regarding the statute of limitations.
