Question: What is the law regarding collecting money owed to you by a non-paying client? The amounts owed me range from $1,300- $7,000. What is the procedure, how long does it take and how long can you pursue them? (from Michelle, Phx)
Answer: Arizona law permits suits for breach of contract in situations where one defaults on a written contract. Typically, the statute of limitations for breach of a written contracts involving debt is six years. (see LA CANADA HILLS LIMITED PARTNERSHIP v. FLORENCE KITE 2 CA-CV 2006-0159).
You are free to sue the clients just as you would have in NY or MA. (see, CHAMPAGNE’S HOME DÉCOR, LLC v. GERALD D.W. NORTH 1 CA-CV 10-0600). A claim for breach of contract requires the plaintiff to prove the existence of a contract, a breach by the opposing party, and the damages caused by such breach. Arizona upholds verbal contracts as well as written contracts. The Plaintiff, however, does have to show privity of contract with the Defendant. For example, a subcontractor may not bring a breach of contract claim against an owner, because the subcontractor and the owner are not in direct contract with one another. The subcontractor in this example can only bring a breach of contract claim against the general contractor. Arizona allows the prevailing party in any claim arising out of a contract to be awarded its reasonable attorneys’ fees and costs incurred in bringing its claim, within the judge’s discretion.
Note that pursuant to the Arizona Statute of Frauds “no action shall be brought in any court in the following cases unless the promise or agreement upon which the action is brought, or some memorandum thereof, is in writing and signed by the party to be charged, or by some person by him thereunto lawfully authorized . . .4. Upon a contract to sell or a sale of goods of the value of five hundred dollars or more . . .”
In addition to suing for monetary damages, in Arizona, one of the remedies available to a party who has been the victim of a contract breach is specific performance. Specific performance refers to the situation where a court orders the breaching party to honor his or her obligations under the contract. Specific performance is not always available as a remedy and sometimes specific performance is not desired. For example, when in the case of unique goods where money damages will not be sufficient to compensate the non-breaching party. For example, if you enter into a contract to purchase a rare, vintage automobile and the seller later refuses to honor the agreement, you may be able to sue the seller to obtain an order from the court requiring the seller to complete the sale pursuant to the agreed-upon terms.
Like all lawsuits, a breach of contract claim can be resolved in a few months or, if the contract is disputed, years.