SANTEE PORTLAND CEMENT COMPANY, Appellant v. DANIEL INTERNATIONAL CORPORATION, Respondent.
23028
Supreme Court
Decided June 5, 1989.
384 S. E. (2d) 693
Heard Oct. 3, 1988.
Decided June 5, 1989.
HARWELL, Justice:
This appeal involves the application of the “discovery rule” to contract actions. We affirm in part, reverse in part, and remand.
I. FACTS
On May 18, 1965, Santee Portland Cement Company (Santee) entered into a contract with Daniel International Corporation (Daniel) for the construction of a cement plant at Santee‘s place of business in Orangeburg, South Carolina. The plant was to be constructed in accordance with plans and specifications prepared by Daniel. As part of the contract, Daniel and its sub-contractors constructed a cement storage silo complex consisting of twelve circular concrete silos, six interstices, and three pocket bins.
In 1969, a small crack was found in one of the pocket bins, known as Bin #12. This crack was repaired by Marbury-Pittillo, Daniel‘s sub-contractor on the project, for $2000.00.
In 1975, another crack appeared in Bin #12. Santee contacted the W & P Construction Company (W & P), consisting of Mr. Frank Wall and Mr. Pittillo (both previously of Marbury-Pittillo). W & P repaired the crack. Santee introduced testimony that W & P characterized this as “permanent repair” of Bin #12, and that W & P inspected the remaining silos and advised that they were in good condition. Santee‘s witnesses characterized the repairs as relatively minor in nature compared to the annual maintenance costs on the $2,000,000 project.
On September 12, 1980, another of the pocket bins, Bin #13, ruptured causing extensive damage. Cement from the silo covered the weigh station, burying an “eighteen-wheeler” which was parked nearby. Two people were killed in the collapse. Bin #13 and the remaining silos were then examined by experts. Investigation revealed that #13, as well as the remaining silos were all structurally unsound
Santee commenced an action in April 1986 alleging causes of action in tort and contract and pleading for a total of $750,000 for damages due to the collapse of Bin #13 and $2,120,000.00 for loss of capacity and the cost of construction to correct the remaining silos.
The trial court granted summary judgment on the tort cause of action, ruling that appellant‘s exclusive remedy was in contract. The trial court also granted Daniel‘s motion for a directed verdict as to the contract cause of action, holding it barred by the statute of limitations. This appeal follows.
II. DISCUSSION
A. “DISCOVERY RULE”
The trial court held that Santee‘s cause of action for breach of contract was barred by the statute of limitations. See
One policy behind the statute of limitations is the protection of a defendant from false or fraudulent claims that might be difficult to disprove if not brought until after relevant evidence has been lost or destroyed and witnesses have become unavailable. Gates Rubber Company v. USM Corporation, 508 F. (2d) 603 (7th Cir. 1975). It affords defendants an opportunity to gather evidence while facts are still fresh. April Enterprises, Inc. v. KTTV, 147 Cal. App. (3d) 805, 195 Cal. Rptr. 421 (2d Dist. 1983) citing Davies v. Krasna, 14 Cal. (3d) 502, 121 Cal. Rptr. 705, 535 P. (2d) 1161 (1975). This concern must be balanced against a plaintiff‘s interest in prosecuting an action and pursuing his rights. Plaintiffs should not suffer where circumstances prevent them from knowing they have been harmed. April Enter-prises, Inc., supra. “[S]tatutes of limitation which are susceptible to judicial construction should not be applied mechanically but rather construed in the manner most consistent with both their underlying purposes and the requirements of substantial justice for all parties involved.” Gattis v. Chavez, 413 F. Supp. 33, 39 (D.S.C. 1976).
The “discovery rule” has previously been applied, either judicially or legislatively, to other causes of action under
In 1979, this Court addressed the applicability of the “discovery rule” to actions for professional negligence and recognized that “... the accrual upon discovery rule represents the more equitable and rational view.” Mills v. Killian, 273 S. C. 66, 70, 254 S. E. (2d) 556, 558 (1979). In the same year, a South Carolina District Court held the discovery rule applicable to actions brought under
“When legislative history is inadequate or unavailable, the inclusion of certain provisions in a statute may be some evidence that the exclusion of others was purposeful, but the weight accorded this evidence may vary.” Gattis, supra at 37. Considering these two provisions in light of the fact that they were enacted just after Gattis, it appears that the legislature addressed issues raised by the Gattis decision. There is nothing to indicate that the legislature considered the applicability of the rule to other causes of action.
Daniel also contends that Livingston v. Sims, 197 S. C. 458, 15 S. E. (2d) 770 (1941), which held that an action for breach of contract accrues at the time of the breach, although substantial damages are not sustained until afterward, is controlling authority. We disagree. In recent years, the trend has been toward recognition and expansion of the discovery rule. See, e.g., Mills v. Killian, supra. We see no justification for refusing to extend the discovery rule to contract causes of action. To the extent that Livingston is inconsistent with this conclusion, it is overruled.
B. NOTICE
The trial court ruled that even if it were to apply the “discovery rule” to Santee‘s contract claim, this claim was still timebarred because Santee knew or should have known it had a cause of action against Daniel in 1969 (first crack in Bin #12) or at least in 1975 (second crack in Bin #12). Santee asserts that this was error. We agree.
In ruling on a directed verdict motion, the trial court must view the evidence and all favorable inferences in a light most favorable to the non-moving party, and if
Santee introduced expert testimony that the defects in the silos were latent; the defective placement of the steel reinforcements was not detectable because the rods were inside the concrete walls. Although Santee did experience cracks in Bin #12 prior to the 1980 collapse of Bin #13, experts testified that small cracks are common in cement structures. Repairs of Bin #12 totalled approximately $11,000 and were characterized as relatively small for the $2,000,000 project. Further testimony was introduced that Daniel‘s sub-contractor characterized the repairs to # 12 as permanent and inspected the remaining silos and found them to be in good condition. Santee also introduced evidence that the silos were inspected visually by employees and periodically checked by the Mine Safety and Health Administration.
All of the evidence introduced went to the reasonableness of Santee‘s actions, which was an issue to be decided by the jury. Brown v. Finger, 240 S. C. 102, 124 S. E. (2d) 781 (1962).
II. CONCLUSION
We reverse the trial court as to the following: 1) finding that the “discovery rule” is not applicable to contract actions; and 2) finding that even applying the “discovery rule” to Santee‘s contract claim, such claim was still time-barred because Santee had notice of defects in the project in 1975 at the latest, this being a question of fact for the jury. Appellant‘s remaining exceptions are dismissed pursuant to Supreme Court Rule 23.
Affirmed in part; reversed in part; and remanded.
CHANDLER and FINNEY, JJ., concur.
GREGORY, C. J., and LITTLEJOHN, Acting J., dissent in separate opinion.
I respectfully dissent. I disagree with the majority‘s decision to overrule valid precedent of this Court regarding application of the discovery rule to an action for breach of contract.
In Livingston v. Sims, 197 S. C. 458, 15 S. E. (2d) 770 (1941), this Court specifically held that in an action for breach of contract, the statute of limitations begins to run at the time the cause of action accrues. This occurs when the defendant breaches its duty to the plaintiff. In so holding, the Court stated:
The fact that substantial damages were not discovered or did not occur until later is of no consequence. The act itself, which is the ground of action, cannot be legally separated from its consequences. Were this so, successive actions might be brought in many cases of contract and tort as the damages developed, although all the consequential injuries had one common root in the single original breach or wrong. 197 S. C. at 464, 15 S. E. (2d) at 773.
The legislature has since enacted
Applying Livingston v. Sims to the facts at hand, I would hold the statute of limitations ran six years from Daniel‘s completion of its performance of the contract in 1966 and affirm the circuit court‘s ruling that Santee‘s action was barred.