Zufari v. Architecture Plus

Annotate this Case
M. Munir ZUFARI, M.D., P.A. v. ARCHITECTURE
PLUS, a Partnership, and Paul Hill, Michael
G. Johnson, and Anthony Leraris

95-935                                             ___ S.W.2d ___

                    Supreme Court of Arkansas
               Opinion delivered February 12, 1996


1.   Limitation of actions -- Ark. Code Ann.  16-56-111(b) is
     applicable statute of limitations for written-contract actions
     -- held applicable to present case. -- Arkansas Code Annotated
      16-56-111(b) (Supp. 1995) is the applicable statute of
     limitations for written-contract actions; a written contract
     was involved in the present case; the existence of Ark. Code
     Ann.  16-56-112 (1987), which pertains to contract actions to
     recover damages caused by any deficiency in the design,
     planning, supervision, or observation of construction, does
     not extend the statute of limitations under section 16-56-
     111(b) or otherwise affect its applicability; the supreme
     court held that section 16-56-111(b) was the applicable
     statute of limitations in the present case.

2.   Limitation of actions -- appellant's cause of action accrued
     more than five years before complaint was filed -- test for
     determining when breach-of-contract action accrues. -- The
     supreme court held that appellant's breach-of-contract cause
     of action against appellee accrued before August 3, 1988,
     which was five years before his complaint was filed; in
     routine contract actions, the statute of limitations begins to
     run upon the occurrence of the last element essential to the
     cause of action; the test for determining when a breach-of-
     contract action accrues is to establish the point when the
     plaintiff could have first maintained the action to a
     successful conclusion; a cause of action accrues the moment
     the right to commence an action comes into existence; if the
     right of action depends upon some contingency or condition
     precedent, the cause of action accrues and the statute of
     limitations begins to run when the contingency occurs or the
     condition precedent is complied with.

3.   Contracts -- breach of contract -- acquiring government
     approval was material element of contract -- non-performance
     of contractual duty constitutes breach. -- Where the contract
     for construction of a medical clinic required the architect to
     assist in getting government approval of the project, without
     which the facility would not be licensed and could not
     operate, the supreme court concluded that acquiring government
     approval was a material element of the contract and noted that
     approval was denied as of December 4, 1987, when the design
     work was complete; when performance of a duty under a contract
     is contemplated, any non-performance of that duty is a breach.

4.   Limitation of actions -- appellant filed suit well after
     applicable statute of limitations had expired -- action was
     time-barred. -- The supreme court concluded that the trial
     court correctly found that the relevant date for accrual of
     the cause of action for breach was December 4, 1987, the date
     on which appellee architect's plans were rejected by the
     Health Department; on that date, the cause of action was
     complete, and appellant was entitled to sue for breach; he
     chose not to do so but instead allowed appellee architect to
     attempt to rectify the problem; the fact that appellee
     architect attempted to mitigate and correct the breach,
     however, did not alter the fact that a breach had occurred;
     appellant did not file suit until August 3, 1993, and the
     applicable statute of limitations under  16-56-111(b) had
     expired well before that date; thus, the action was time-
     barred.

5.   Evidence -- letter erroneously admitted under business-record
     exception to hearsay rule -- evidence was cumulative and
     therefore harmless. -- Where the trial court erroneously
     admitted a December 4, 1987 letter from the Health Department
     to appellee architect under the business-record exception to
     the hearsay rule, any error was rendered harmless because
     admission of the letter was cumulative to other evidence
     admitted without objection.

6.   Limitation of actions -- request for trial court to order
     arbitration was time-barred. -- Where appellant made a request
     for arbitration in his complaint dated August 3, 1993, and
     where the contract between appellant and appellee architect
     provided that demand for arbitration could not be made after
     the date when the claim wuld be barred by the applicable
     statute of limitations, the request for the trial court to
     order arbitration was time-barred.


     Appeal from Sebastian Circuit Court; Floyd Rogers, Judge;
affirmed.
     Bethell, Callaway, Robertson, Beasley & Cowan, by: Kenneth W.
Cowan, for appellant.
     Jones, Jackson & Moll, by: Mark Moll, for appellees
Architecture Plus, Michael G. Johnson, and Anthony Leraris.
     Warner, Smith & Harris, PLC, by: James M. Dunn, for appellee
Paul Hill.

     Robert L. Brown, Justice.
Associate Justice Robert L. Brown
February 12, 1996 *ADVREP11*






M. MUNIR ZUFARI, M.D., P.A.,
                    APPELLANT,

V.

ARCHITECTURE PLUS, A
PARTNERSHIP, AND PAUL HILL,
MICHAEL G. JOHNSON, AND ANTHONY
LERARIS,
                    APPELLEES,

95-935




APPEAL FROM THE SEBASTIAN
COUNTY CIRCUIT COURT,
NO. CIV-93-552(I)
HON. FLOYD G. ROGERS, JUDGE,




AFFIRMED.






     Appellant Dr. M. Munir Zufari appeals a judgment barring his
claim for breach of contract on limitations grounds.  Zufari had
sued appellee Architecture Plus and those persons who were partners
during the time of the events in question -- appellees Paul Hill,
Michael G. Johnson, and Anthony Leraris.  Zufari contends on appeal
that the complaint was timely filed because the cause of action did
not accrue until the project was substantially completed and,
further, that the trial court erred in concluding that his request
for arbitration was also barred by time.  We disagree, and we
affirm the judgment.
     On August 3, 1993, Zufari filed his complaint against
Architecture Plus and the other appellees.  He alleged that on or
about September 1, 1987, he and Architecture Plus entered into a
contract where Architecture Plus would design a medical clinic
which would contain an ambulatory surgical center.  Under the terms
of the agreement, Architecture Plus was to design the facility
according to Health Department regulations, prepare construction
documents, and assist in the administration of the construction
contract.  The complaint asserted that after substantial completion
of the facility, the Health Department refused to certify the
project due to design defects.  As a result, Zufari was forced to
incur the additional expense of hiring another architectural firm
to modify the design.  The complaint further alleged that Zufari
relied on Architecture Plus to make certain that the building
complied with Health Department requirements.  The complaint also
contains a request for the trial court to order arbitration, as
provided in the contract.  In an amended complaint, Zufari sought
damages in the amount of $114,742.38.  Architecture Plus filed a
counterclaim and alleged that Zufari owed it a balance of $9,874.95
for services rendered.  
     Architecture Plus and the appellee partners answered, raising
the affirmative defense of statute of limitations, and moved to
dismiss Zufari's complaint on the same grounds.  A hearing was held
on the affirmative defense, and proof was presented.  Paul Hill,
who was previously a partner in Architecture Plus, testified that
his firm was hired by Zufari to construct the medical clinic and
that the first design was completed on November 23, 1987, and
submitted to the Health Department for approval.  In a return
letter dated December 4, 1987, the Health Department informed
Architecture Plus that in order to license the facility, the design
would have to incorporate these changes:
          1. Flip-flop O.R. [operating room] and vascular lab.
          2. Provide a sterile barrier and a traffic route for   
     surgery personnel to get from street clothes, to a gowning
     space, and into the surgery corridor.
          3. Smooth washable ceiling and walls in the  
     anesthetizing location and in the surgery corridor.  Lay-in
     ceiling is not permitted in the O.R.
          4. Provide for dumping a bed pan without traveling     
     through other functional areas.  
          5. Tell us how and where you will incinerate excised   
     tissue.
          6. Label preop and postop space.
          7. Make the O.R. 250 square feet in area.
          8. Provide a smoke barrier.
     When you get your plumbing approval, this office approves
     construction to begin.  Note that this does not
     constitute city approval.  To be licensed and certified
     as an ambulatory surgery center, you must satisfy our
     requirements.
Zufari was shown as having been sent a copy of the letter.  The
court permitted Hill to testify about the contents of the letter
over hearsay objections by Zufari.  
     Hill testified that the absence of a sterile corridor is what
prevented the facility from being licensed.  He further testified
that Zufari was aware of the Department's rejection of the design
in December 1987.  Hill continued to communicate with the Health
Department during the construction of the building.  On December
22, 1987, Hill presented Zufari with a bill from Architecture Plus
which showed that the design phase was 100% complete and that the
construction documents and working drawings were 100% complete.
     Hill also testified that on January 26, 1988, he submitted
revised plans of the Zufari clinic to the Health Department in an
effort to incorporate the required changes.  These were the last
plans that Hill prepared on the facility, although he made minor
design changes later.  Over Zufari's objection, the trial court
admitted a reply letter from Glenn Anderson, a construction engi-
neer with the Division of Health Facility Services of the Health
Department.  In the letter dated February 4, 1988, Anderson wrote:
          We did fail to point out that the type construction
     required does include steel door frames.  Steel door
     frames with an integral steel stop across the top and
     down both sides are required.  
          I have noted on my sheet A2 of eight (8) that Hall-
     10 (the surgery corridor) is "off limits" to the public
     and that the gowning alcove is just north of door 21B
     with scrub sink just south of that door in the surgery
     corridor.  
          We must have Dr. Zufari's written policy on how he
     will get proper incineration of all infectious,
     pathological and anatomical waste before we can recommend
     licensing of his facility.  He must also give us a signed
     agreement with a hospital that will give him back-up
     service.
A notation at the bottom of this letter showed a copy going to
Zufari.
     On September 22, 1988, Hill wrote Zufari that the project was
substantially completed.  The medical clinic had opened for
business on September 16, 1988.  Hill testified that Zufari had
expressed dissatisfaction with his work during a walk-through of
the facility in December 1988.  On February 15, 1989, Hill left
Architecture Plus, and Hill's work for Zufari ended.
     Anthony Leraris, another partner with Architecture Plus,
testified that Zufari's contract was a standard form contract used
by the firm and that it contained an arbitration provision. 
Leraris testified that he never received any request for
arbitration from Zufari.  On March 15, 1989, Leraris wrote the
director of the Health Department, Dr. Joycelyn Elders, and
complained that Glenn Anderson had approved the plans for the
Zufari medical clinic by letter dated February 4, 1988, but that
his successor, Tom Saunders, had later denied them.  In the letter,
Leraris blamed personnel turnover in the department for the denial
of the license.  Leraris testified that he did not become aware of
any problems until after the medical clinic was substantially
complete.  As Leraris understood the problem, the addition of steel
doors to the substerile surgery corridor would have met the Health
Department's demands.  Zufari never consented to the addition of
the steel doors, according to Leraris, and Hill never revised the
plans to include steel doors.
     The Health Department responded in a letter to Zufari dated
March 30, 1989, regarding license denial:
          Our office has reviewed our position regarding
     license denial at your facility and wish to offer further
     comments.  We feel that the only subject sufficient to
     limit acceptance is the need for a distinguished sub-
     sterile (surgery) corridor.  The surgery corridor must be
     physically separated by walls or doors from adjacent
     physician office space.  The physical barrier with
     appropriate signage allows the necessary limited access
     to the corridor and proper aseptic technique with regards
     to cross contamination.
          Throughout correspondence in our files, there are
     references to the need for a sterile barrier before
     entering into the surgery corridor.  Item #2 of our
     letter dated December 4, 1987 to Architecture Plus was
     the first reference.
          Our letter to Architecture Plus dated February 4,
     1988, reaffirms our position that the surgery corridor is
     to be "off limits" to the public.  The "public" would be
     extended to be anyone not properly attired to enter the
     corridor.  Due to the arrangement of the facility, the
     corridor can not be considered "off limits" properly
     without physical separation.
     The trial court first refused to bar Zufari's complaint for
limitations reasons.  A motion for reconsideration was filed by the
appellees, and after a second hearing, the trial court ruled that
the statute of limitations did bar the cause of action for breach
of contract.  In its order, the court found that Zufari's cause of
action against Architecture Plus accrued on December 4, 1987, when
the Health Department initially rejected the design.
     Zufari's first four points on appeal all relate to his claim
that the trial court erred in dismissing his complaint on the basis
of limitations.  He argues that his complaint was timely filed
under the statute of limitations codified at Ark. Code Ann.  16-
56-112 (1987).  He further argues that notwithstanding the clear
application of section 16-56-112, his complaint is also timely
under Ark. Code. Ann.  16-56-111(b) (Supp. 1995), because under
the contract Architecture Plus was to guard against defects until
issuance of the certificate for final payment or 60 days after
substantial completion.  Architecture Plus counters that  16-56-
111(b) applies exclusively, and that under that statute, the cause
of action accrued on December 4, 1987, when the Health Department
rejected the plans. 
     The first statute of limitations in question,  16-56-111(b),
reads:
          (b) Actions on writings under seal shall be
     commenced within five (5) years after the cause of action
     shall accrue, and not afterward.
Ark. Code Ann.  16-56-111(b) (Supp. 1995).  Section 16-56-112
reads in part:
          (a)  No action in contract, whether oral or written,
     sealed or unsealed, to recover damages caused by any
     deficiency in the design, planning, supervision, or
     observation of construction ... shall be brought against
     any person performing or furnishing the design, planning,
     supervision, or observation of construction or the
     construction or repair of the improvement more than five
     (5) years after substantial completion of the
     improvement.
                              ....
          (f)  Nothing in this section shall be construed as
     extending the period prescribed by the laws of this state
     for the bringing of any cause of action, ....
Ark. Code Ann.  16-56-112 (1987).
     This court had occasion to interpret  16-56-112, as it
related to other statutes of limitation, in East Poinsett County
School Dist. No. 14 v. Union Standard Ins. Co., 304 Ark. 32, 800 S.W.2d 415 (1990).  There, the issue was a breach of an oral
contract to repair a gymnasium roof and the applicable statute of
limitations.  The plaintiff filed the complaint beyond the time of
the 3-year statute of limitations for breach of an oral contract
and sought to extend the limitations period by means of  16-56-
112.  We stated:
     Before the enactment of  16-56-112, a third party could
     sue architects and people in the construction and
     building field at any time after completion of work, so
     long as the third party brought suit within the
     applicable statute of limitations period commencing from
     when an injury or breach occurred.  In recognition of
     this fact, states, including Arkansas, adopted statutes
     to limit the time within which actions could be brought
     against persons in the construction and building field.
                              ....
     Section 16-56-112, by its own terms, is not meant to
     extend existing statutes of limitations.
304 Ark. at 33-34, 800 S.W.2d  at 417.  Hence, we held that the
three-year limitations period for oral contracts applied, as did 
16-56-112.  We added:
     But, in bringing such a suit, the injured party must
     still bring the action within the statute of limitations
     for that type of cause of action.
304 Ark. at 34, 800 S.W.2d  at 417.
     Section 16-56-111(b) is the applicable statute of limitations
for written contract actions.  See Ernest F. Loewer, Jr. Farms,
Inc. v. National Bank of Arkansas, 316 Ark. 54, 870 S.W.2d 726
(1994).  A written contract is what is involved in this case.  In
light of East Poinsett County School Dist., the existence of  16-
56-112 does not extend the statute of limitations under  16-56-
111(b) or otherwise affect its applicability.  We hold that  16-
56-111(b) is the applicable statute of limitations in the case
before us.
     The issue then becomes a factual one.  Did Zufari's cause of
action against Architecture Plus accrue before August 3, 1988,
which was five years before his complaint was filed?  We hold that
it did.  In routine contract actions, the statute of limitations
begins to run upon the occurrence of the last element essential to
the cause of action.  Hunter v. Connelly, 247 Ark. 486, 446 S.W.2d 654 (1969).  The test for determining when a breach of contract
action accrues is the point when the plaintiff could have first
maintained the action to a successful conclusion.  Dupree v. Twin
City Bank, 300 Ark. 188, 777 S.W.2d 856 (1989).  We stated in
Dupree:
     As we stated on the question of statute of limitations
     for contracts, a cause of action "accrues the moment the
     right to commence an action comes into existence." 
     Hunter v. Connelly, 247 Ark. 486, 446 S.W.2d 654 (1969). 
     And if the right of action depends upon some contingency
     or condition precedent, the cause of action accrues and
     the statute of limitations begins to run when the
     contingency occurs or the condition precedent is complied
     with.
300 Ark. at 191, 777 S.W.2d  at 858.
     Using these principles, the ultimate question to be answered
in this case is whether the submission of the defective design on
November 27, 1987, and its rejection by the Health Department on
December 4, 1987, constituted a material breach.  Section 2.3.2 of
the contract states:
          2.3.2  The Architect shall assist the owner in
     connection with the Owner's responsibility for filing
     documents required for the approval of governmental
     authorities having jurisdiction over the project.
This section requires the architect to assist in getting government
approval of the project.  Without approved plans, the facility
would not be licensed, and without licensure, the ambulatory
surgery center could not operate.  See Ark. Code Ann.  20-9-213
(Repl. 1991).  Acquiring government approval was, therefore, a
material element of the contract, and that approval was denied as
of December 4, 1987, when the design work was 100% complete.  When
performance of a duty under a contract is contemplated, any non-
performance of that duty is a breach.  Restatement (Second) of
Contracts  235 (2) (1981).
     We conclude that the trial court correctly found that the
relevant date for accrual of the cause of action for breach was the
date the plans were rejected by the Health Department -- December
4, 1987.  On that date, the cause of action was complete, and
Zufari was entitled to sue for breach.  He chose not to do so but,
rather, chose to allow Architecture Plus to attempt to rectify the
problem.  The fact that Architecture Plus attempted to mitigate and
correct the breach, however, does not alter the fact that a breach
had occurred.  Zufari did not file suit until August 3, 1993, and
the applicable statute of limitations under  16-56-111(b) had
expired well before that date.  Thus, the action was time-barred.
     Zufari did object to the introduction of the Health
Department's December 4, 1987 letter at the hearing on hearsay
grounds, but the trial court admitted it under the business-record
exception to the hearsay rule.  Architecture Plus concedes that
this was error, but argues that the error was harmless.  We agree
with Architecture Plus that any error was rendered harmless,
primarily because admission of the letter was cumulative to other
evidence admitted without objection.  See Luedemann v. Wade, 323
Ark. 161, ___ S.W.2d ___ (1996); Williams v. Southwestern Bell Tel.
Co., 319 Ark. 626, 893 S.W.2d 770 (1995).  For example, Hill
testified that Zufari knew about the Health Department's rejection
of the design work in 1987.
     For his final point, Zufari urges that the trial court erred
in concluding that Zufari's claim for arbitration was also time-
barred.  Zufari made a request for arbitration in his complaint
dated August 3, 1993.  Section 7.2 of the contract between Zufari
and Architecture Plus provides:
     In no event shall the demand for arbitration be made
     after the date when institution of legal or equitable
     proceedings based on such a claim, dispute or other
     matter in question would be barred by the applicable
     statutes of limitations.  
Under our analysis, as set forth above, the request for the trial
court to order arbitration was also late.
     Affirmed.
     Jesson, C.J., not participating.

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