## Facts

- John J. Kassner & Co., Inc. contracted with the City of New York to arrange relocation of utility facilities for a Manhattan police headquarters project.
- The contract provided for progress payments and stated payments were “subject to audit and revision” by the City Comptroller.
- The contract also required any action to be brought within six months after the Comptroller filed the certificate for final payment and purported to exclude CPLR Article 2 limitations provisions.
- In December 1967, Kassner submitted an itemized statement asserting completion and claiming a balance of $39,523.69.
- After audit, the Comptroller disallowed $38,423.69 for “technical services” and authorized only $1,100 as the final payment.
- Kassner protested and demanded full payment by letter no later than July 1, 1968, demonstrating knowledge of the disallowance and the amount in dispute.
- Kassner took no litigation steps for more than six years.
- In September 1974, Kassner requested payment of the undisputed $1,100; the City processed the voucher, and on November 8, 1974, Kassner received $1,100 and the final-payment certificate was filed in the Comptroller’s office.
- In April 1975, Kassner sued to recover the disallowed amount; the City asserted the six-year statute of limitations for contract actions under CPLR 213(2).

## Issues

1. Whether parties may, by advance contract, postpone accrual (and thereby effectively extend the statutory limitations period) by tying suit to a later “final payment” event controlled by the obligor.
2. When Kassner’s breach-of-contract claim accrued: upon the Comptroller’s audit disallowance known to Kassner by July 1968, or upon the filing of the final-payment certificate in November 1974.

## Decision

- The Court of Appeals reversed the lower courts and upheld the City’s statute of limitations defense.
- The court held that a contract claim accrues at breach; here, breach occurred when the Comptroller refused to pay the disputed amount after audit, and Kassner knew of that refusal no later than July 1968.
- The court held parties may agree to a reasonable shorter limitations period, but an advance agreement that effectively extends the statutory period by delaying accrual is unenforceable as against public policy.
- Because the six-year period under CPLR 213(2) began running in 1968 and expired before April 1975, the action was time-barred; the later filing of the final-payment certificate could not revive the claim.

## Legal Principles

- A breach-of-contract cause of action accrues at the time of breach, not at a later contractual payment or administrative milestone.
- Contracting parties may shorten a limitations period by agreement if the shortened period is reasonable and consistent with public policy.
- Parties generally may not, in advance of accrual, extend the statute of limitations by postponing accrual to a later event, particularly one within the unilateral control of the debtor or defendant.
- A contractual provision cannot displace statutory limitations rules in a manner that defeats the legislative purpose of repose and certainty.

## Conclusion

The court held that Kassner’s claim accrued when the City, through the Comptroller’s audit, refused to pay the disputed amount and Kassner knew of that refusal by July 1968; the suit filed in 1975 was therefore untimely under the six-year contract statute of limitations, and the contract’s final-payment-triggered limitations clause could not validly extend the statutory period by delaying accrual.


John J. Kassner & Co. v. City of New York, 46 N.Y.2d 544 (N.Y. 1979)