Richard v. Carroll Home Services, LLC
165 A.3d 475
| Md. | 2017Background
- Richard and Daphne Ceccone entered a pre-printed residential furnace maintenance agreement with Carroll Home Services (CHS) that included “General Terms and Conditions.”
- Paragraph 10 of the agreement limited any action by the buyer (the Ceccones) — tort or contract — to be commenced within one year of accrual; CHS’s right to sue was not similarly time-limited and Paragraph 9 allowed CHS to delay enforcing rights.
- In April 2014 an incident damaged the Ceccones’ home; they investigated and later filed a small-claims action in December 2015 (within three years but arguably after one year from accrual).
- The District Court dismissed the claim based on the one-year contractual limitations clause; on de novo review the Circuit Court also granted judgment for CHS, treating the contract term as controlling.
- The Maryland Court of Appeals granted review to determine whether a contractually shortened limitations period is enforceable and remanded because the trial court did not evaluate contract defenses or the clause’s reasonableness.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a contract can validly shorten the statutory 3-year limitations period for tort and contract claims | Ceccone: the one-year clause is invalid here because of alleged misrepresentations/fraud and is unreasonable given the circumstances | CHS: parties may contractually shorten limitations; the one-year provision is clear and should be enforced | A contractual shortening is enforceable only if (1) no controlling statute forbids it, (2) it is not procured by fraud/duress/misrepresentation, and (3) it is reasonable; remand for trial court to apply those criteria |
| Whether the Circuit Court properly dismissed without evaluating defenses to contract formation (fraud/misrepresentation) | Ceccone: alleged misrepresentations about licensing/insurance undermine the clause and may permit rescission or avoid enforcement | CHS: no liability; claim accrued over a year earlier so clause bars suit | Held: Trial court failed to consider those allegations; on remand it must evaluate any evidence of fraud/misrepresentation before enforcing the clause |
| Whether the trial court adequately assessed the clause’s reasonableness | Ceccone: one year is unreasonably short given investigation needs and disparate bargaining power | CHS: the clause is reasonable and commonplace; parties may agree to shorter periods | Held: Trial court did not make an explicit reasonableness finding; remand to evaluate totality of circumstances (length, relation to statute, bargaining power, one-sidedness, subject matter) |
| Whether statutory law categorically prohibits such contractual shortening in this context | Ceccone: no statutory bar cited specific to home services agreements | CHS: no statute prohibits contracting shorter limitations here | Held: No statute analogous to Insurance Code §12-104 was shown; absence of a controlling statute means clause may be enforceable if criteria are met |
Key Cases Cited
- Pennwalt Corp. v. Nasios, 314 Md. 433 (discussing balancing interests underlying statutes of limitation)
- Pierce v. Johns-Manville Sales Corp., 296 Md. 656 (policy role of limitations periods)
- College of Notre Dame of Md., Inc. v. Morabito Consultants, Inc., 132 Md. App. 158 (setting three-part test: no controlling statute, not procured by fraud/duress, and reasonable)
- St. Paul Travelers v. Millstone, 412 Md. 424 (application of Insurance Code prohibition on shortening limitations in insurance context)
- Barrie School v. Patch, 401 Md. 497 (reasonableness standard applied to contractual provisions overriding governing law)