Pursuant to California Code of Civil Procedure § 337, claims based on breach of a written contract generally must be brought within four years. But when does the four-year period begin?
Consistent with common sense, California courts have made clear that the period begins from the date of the breach:
[A] breach of contract ordinarily occurs upon the promisor’s failure to render the promised performance. Therefore, to pinpoint the time of an alleged breach for purposes of the statute of limitations, it is necessary to establish what it was the defendant promised to do, or refrain from doing, and when its conduct diverged from that promise.
McCaskey v. Cal. State Auto. Assn., 189 Cal. App. 4th 947, 958 (2010) (emphasis in original).
Nevertheless, determining the date of a breach can sometimes be a fact-intensive inquiry. In McCaskey, the California Court of Appeal held that the four-year period did not begin when the defendant announced its intention to breach the relevant contract. See id. Instead, such an announcement provided the plaintiff with “the choice between suing immediately to vindicate his rights, and waiting to see whether the promisor will redeem himself when the time for performance comes.” Id. at 958.
Despite the result in McCaskey, prudence, of course, counsels that a party to a dispute should be conservative when considering when to bring a claim because of the consequences of failing to do so within the applicable statute of limitations.