(Posted September 27, 2018) In two published opinions handed down this morning, the Supreme Court of Virginia provides a careful explication of accrual dates for statutes of limitations, and fashions a new pleading rule in assumed-duty tort cases.

Limitations of actions

Meticulous lawyers know that there’s a difference between a cause of action and a right of action. In Kerns v. Wells Fargo Bank, the Supreme Court analyzes when a claim for breach of contract accrues in the context of a mortgage. Remember the housing bubble and meltdown of roughly ten years ago? Of course you do. This appeal stems from that.

In 2009, when the housing market was in turmoil, Kerns decided to buy some real property. He financed the purchase with a mortgage loan; the lender eventually assigned the note to Wells Fargo. Within a year, Kerns fell behind on his payments (as millions of other Americans were doing back then). The bank sent him a notice, giving him the contractually required 30 days to bring the payments current, or else it would accelerate the balance and foreclose. The letter was dated June 20, 2010, and gave Kerns until July 20 to make good on the loan. That, you will readily understand, is 30 days.

Except Kerns noticed that the letter from the bank actually bore a Post Office mark showing a mailing date of June 21. That makes this a 29-day notice, and that doesn’t comply with the language in the note. The next year, with the loan still in default, the bank advertised a foreclosure sale. That sale took place on August 23, 2011.

The bank subsequently evicted the now former owner from the property. Five years to the day after the sale date, Kerns sued the bank for breach of contract, claiming that the improper notice deprived him of the contractual right to redeem the property, as set out in the note. The bank filed a special plea of the statute of limitations, asserting that while the SoL for this claim is indeed five years, that time had expired.

The trial court agreed with the bank and dismissed the case. The justices agreed to take a look, and today they unanimously affirm. Justice Kelsey’s opinion for the court is must-read for those who want to understand the nuances of this area of the law.

The problem starts across Ninth Street, where those notorious troublemakers in the General Assembly have used two different terms in what is at least facially a confusing way. We start with the basic statute of limitations for contract claims: five years after the cause of action accrues. That’s Code §8.01-246, and that language has been intact since 1964.

So when does a cause of action for breach of contract accrue? For that, we turn to Code § 8.01-230, which originally stated, “In every action for which a limitation period is prescribed, the cause of action shall be deemed to accrue and the prescribed limitation period shall begin to run … when the breach of contract occurs in actions ex contractu and not when the resulting damage is discovered …” That language dates to 1977.

In 1996, the legislature amended this to replace cause of action with right of action. Now, why’d they have to go and do that? We had a perfectly parallel statutory scheme, both provisions of which used the same phrase. This change creates ambiguity where none existed before. Now you see why I referred to them above as troublemakers. But without ambiguity, there would be far less work for lawyers, so I shouldn’t complain. In this case, it generates the need for a Supreme Court opinion to explain when, exactly, the statute of limitations begins to tick.

The court today notes that a cause of action is a set of operative facts, while a right of action is a present right to sue based on those facts. In many contexts – think of most tort claims – the dates of those two are the same. But in some contract claims, they might be different. Any sort of claim has to include at least some damage; without that, there’s neither a cause of action nor a right of action. In many cases, the real damage occurs well after the date of the breach.

That seems to be the case here: Kerns’s real complaint is that because of the bank’s wrongful acceleration, he lost his house. He regarded that loss as the damage that completed the cause of action, and triggered the right of action. The justices see it otherwise: This is a claim for breach of contract, and the identified breach was the wrongful acceleration of the note balance. That definitely occurred before the foreclosure date, so the five-year SoL had definitely expired before the date on which Kerns filed suit.

I’ll repeat that this opinion deserves a careful read from anyone who deals with statutes of limitations, and I’m assuming that that includes most of you.


The story behind Terry v. Irish Fleet, Inc. is a genuine tragedy. Irish Fleet is a taxi-dispatch company that serves several cab drivers in the Tri-Cities area (Petersburg, Hopewell, and Colonial Heights). One night it received a series of highly suspicious calls from a single phone number. The dispatcher originally dispatched a cab to pick up the fare, but then quickly decided against it, fearing for the driver’s safety. She also called another dispatch company to warn it about the caller. That dispatcher had a duty to log this suspicious set of calls in a book, so other Irish Fleet dispatchers would know about it.

The next morning, with a different dispatcher on duty, another call came in from the same number. The new dispatcher sent a cab to the indicated location. That driver picked up a man there. The fare then murdered the driver.

The driver’s personal rep sued the two dispatchers and the company. Claiming that either the first dispatcher didn’t log in the suspicious calls, or the second dispatcher failed to check the log book, the personal rep sought wrongful-death damages. The defendants demurred, contending that there was no legally imposed duty on the dispatchers to protect the driver from criminal activity.

But the personal rep had pleaded an assumed duty, as discussed in Kellermann v. McDonough in 2009 and Burns v. Gagnon in 2012. Unlike a duty imposed by law, which is a legal issue, assumed duty is a question for the factfinder. The personal rep contended that this was a jury issue. The trial court agreed with the defendants and dismissed the suit. It considered the following language in the complaint, and ruled that it was insufficient to allege an assumed duty:

[The defendants] undertook, gratuitously or for consideration, to render services, including but not limited to[,] screening calls of potential cab fares callers, pick up locations, drop off locations[,] including the Caller as described in this complaint, and determining the safety risk of the call, caller, and/or location for the health and safety of cab drivers they dispatch, using ordinary car[e] in the screening and selection process of whom they accept fares from and when, or if, they dispatch a cab to the potential callers and location, and the warning of known dangerous or troubling callers or fares to Irish Fleet and all other employees and/or agents of Irish Fleet which Irish Fleet, [the two dispatchers], and/or John Doe should recognize as necessary for the protection of people and other cab drivers, including [the cab driver].

The first key issue in this appeal is whether an allegation of an assumed duty presents a question of law for the court or of fact for a jury. Justice McClanahan, writing for a bare majority of the court, decides this key issue in favor of Irish fleet. Here’s the language, from footnote 6 of the slip opinion: “[T]he court determines whether the law recognizes an assumed duty based on the facts alleged and the fact-finder determines whether plaintiff has proven those facts.”

The majority then addresses what will be the dispositive ruling in the case. Kellermann and Burns had both held that a defendant may, by his conduct, assume a duty to protect someone, even where the law doesn’t impose such a duty. The personal rep had alleged that Irish Fleet and the dispatchers had done just that – not by an express undertaking, but by their actions.

The court today rules that when it comes to protecting others from criminal activity, assumption by conduct won’t suffice; it has to be an express statement: “[W]e believe the recognition of a voluntarily assumed duty to warn or protect against the danger of criminal assault by a third person should be confined to express undertakings.” Four justices thus vote to affirm the dismissal of the suit.

Justice McCullough dissents, joined by Justices Mims and Powell. He notes that in an effort to rule the way it did, the majority had to create a brand-new pleading rule that’s unique to Virginia. He examined authorities from elsewhere, plus treatises and law-review articles, but that search “yields no support for the proposition a duty to warn or protect of a crime, uniquely among all assumed duties, can be assumed only by an express promise.” The dissent would include claims like this within the traditional assumption-by-conduct doctrine, subject to five conditions:

  1. Purposeful conduct is required. You can’t accidentally assume a duty.
  2. An isolated act does not qualify. Doing something once doesn’t obligate you in perpetuity.
  3. The assumed duty must be toward a specific person or an identifiable and limited class.
  4. Liability is limited by the extent of the undertaking.
  5. The plaintiff must have detrimentally relied on the assumed duty.

Applying these parameters to this case, the dissent would reverse this case for further proceedings. Needless to say, this is an important change in Virginia tort law. It affects pleadings and proof, and will leave some injured parties without recourse despite their detrimental reliance, a fact that Justice McCullough points out in his conclusion.

One last point: This was obviously a complex and difficult decision for the justices. I can dispel any doubt on that point by noting that it took the court 30 weeks to decide it. Since I began analyzing these decisions almost fourteen years ago, that’s the longest delay we’ve seen between oral argument and decision. The court is taking its time with tough judgment calls.