When does the statute of limitations begin for breach of contract claims involving dissolved corporations? Hunter v. Finau Explained

The Utah Court of Appeals in Hunter v. Finau addressed a critical timing question: when does the statute of limitations begin to run for breach of contract claims when the contracting entity has been dissolved? The court’s analysis provides important guidance for practitioners handling corporate investment disputes.

Background and Facts

In 2007, ICON Sports entered into loan and equity agreements with the Finau Corporation, created to facilitate investment in the professional golf careers of Tony and Gipper Finau. The Loan Agreement provided a $495,000 interest-free loan to be repaid through “50% of all Finau Corporation revenue and winnings of participant golfers.” The Equity Agreement gave ICON a 20% equity position, with the understanding that “all monies, contracts and business properties” would flow into the corporation for members’ benefit. The Finau Corporation was dissolved in 2009, but the Finau brothers later achieved substantial professional success. David Hunter, ICON’s assignee, sued the Finaus personally in 2021 for breach of contract, breach of the covenant of good faith and fair dealing, and unjust enrichment.

Key Legal Issues

The primary issue was whether the statute of limitations began running when the Finau Corporation was dissolved in 2009, or later when the Finau brothers began earning substantial money from their golf careers. Hunter argued that no breach occurred until the Finaus had money to pay, invoking both condition precedent and anticipatory breach theories. He also claimed the discovery rule should toll the limitations period.

Court’s Analysis and Holding

The court of appeals reviewed the dismissal for correctness and affirmed. The court emphasized that the plain language of the agreements placed the Finau Corporation in a “central role” and “key position” within the contractual relationship. Crucially, Hunter’s own complaint alleged that dissolution was “a deliberate attempt to avoid paying” and was “contrary to the Parties’ intent.” The court found these allegations demonstrated that dissolution constituted the breach by rendering continued performance impossible. The court rejected Hunter’s anticipatory breach argument as unpreserved, noting the distinction between condition precedent and anticipatory breach theories. The discovery rule did not apply because Hunter’s predecessor was aware of the dissolution when it occurred.

Practice Implications

This decision highlights the importance of careful pleading in contract cases involving dissolved entities. Hunter’s detailed allegations about the corporation’s central role and the deliberate nature of dissolution ultimately undermined his statute of limitations arguments. Practitioners should also note the court’s strict approach to preservation requirements—Hunter’s failure to raise anticipatory breach theories below prevented appellate review. For transactional attorneys, the case demonstrates the need for clear language about post-dissolution obligations when drafting investment agreements involving corporate entities.