Unreported / Non-Citable
Background
Avenue Entertainment Group, Inc. (“Avenue”), the operator of Theory Nightclub in Dallas, sued its point-of-sale (POS) system provider, NCR Voyix Corporation (“NCRV”), for breach of contract. In December 2021, the parties signed an agreement for NCRV to install an upgraded POS system at the nightclub. The agreement included a provision shortening the statute of limitations for any claims to two years and selected New York law to govern the contract.
Avenue alleged that an “auto-settle” feature included in the new software automatically closed all open customer tabs at midnight. This resulted in bartenders losing out on tips for any tabs that were closed out before midnight but had not yet had gratuity added. Avenue claimed it lost $76,926.38 in tips as a result.
Avenue claimed it did not discover the issue until August 2023. It filed its lawsuit in state court in March 2025. NCRV removed the case to federal court and moved for summary judgment, arguing that the claim was filed too late and that it had not breached the contract.
The Court’s Holding
The court granted summary judgment for NCRV, dismissing Avenue’s lawsuit with prejudice. The court found that the breach of contract claim was barred by the two-year statute of limitations set forth in the parties’ agreement. The court held that such a contractual shortening of the limitations period was valid and enforceable under both Texas and New York law.
The court determined that the cause of action accrued in February 2022, when NCRV installed the POS system with the allegedly problematic feature. Therefore, the two-year period to file a lawsuit expired in February 2024, more than a year before Avenue filed its petition. The court rejected Avenue’s argument that the “discovery rule” should have delayed the start of the limitations period until it discovered the missing tips in August 2023. The court reasoned that the injury was not “inherently undiscoverable,” as Avenue could have found the discrepancies earlier through the exercise of reasonable diligence in reviewing its own financial records.
As an alternative basis for its ruling, the court held that even if the claim were not time-barred, Avenue had failed to prove its case. Avenue’s lawsuit failed to identify any specific provision of the contract that NCRV had actually breached by installing the POS system with the auto-settle feature.
Key Takeaways
- Contractual agreements to shorten the statute of limitations are generally enforceable, provided the shortened period is reasonable.
- The discovery rule is a narrow exception that does not apply to injuries that could have been discovered through reasonable diligence, such as by reviewing business and financial records.
- To win a breach of contract claim, a plaintiff must be able to point to the specific contractual provision that the defendant allegedly violated.
Why It Matters
This decision serves as a critical reminder for businesses to meticulously review vendor and service agreements before signing, paying special attention to provisions that alter standard legal timelines, such as statutes of limitation. The court’s strict enforcement of the two-year contractual deadline, despite the plaintiff’s significant alleged financial loss, underscores that parties are generally bound by the terms they agree to, even if those terms are unfavorable later on.
Furthermore, the case highlights the high bar for invoking the “discovery rule” and emphasizes the legal expectation that businesses will maintain diligent oversight of their own finances. The court was unsympathetic to the nightclub’s failure to notice a substantial revenue leak for over a year and a half, effectively stating that a party cannot rely on the courts to protect it from a failure to exercise reasonable care in its own operations.